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Tuesday, November 19, 2019

New Jersey appeals court reverses $1.3 million fee reduction, finds Ocean County Judge lacked jurisdiction

State Court

By Karen Kidd | Aug 22, 2019


TRENTON, N.J. (Legal Newsline) – An Ocean County judge was out of line when he knocked a plaintiff's attorneys fees from about $1.7 million down to $359,000 in a fee-dispute between an Illinois-based law firm and its former client, a New Jersey appeals court ruled earlier this month.

In its 14-page decision issued Aug. 9, an Appellate Division of New Jersey Superior Court three-judge panel reversed the fee-trimming done by an Ocean County Superior Court law division judge in Susan Lucas' legal malpractice lawsuit against Chicago-based Freeborn & Peters. The Ocean County judge reduced the fees before either Lucas or the law firm had filed a formal complaint or a petition about the fees, according to the decision.

"The fee dispute between plaintiff and her attorneys is not part of the underlying legal malpractice action," Judge Jose Fuentes wrote. "Plaintiff's attorneys were not a party in the case and had not filed a collection action against plaintiff nor sought relief under N.J.S.A. 2A:13-5, commonly known as the Attorney's Lien Act. Under these facts, the trial judge did not have subject matter jurisdiction to adjudicate this counsel fee dispute."

Freeborn & Peters attorneys had successfully represented Lucas her in a malpractice lawsuit against Arnold Schancupp & Associates, based in Fairfield, New Jersey, which had advised her about purchasing a home in Mantoloking, a borough in Ocean County. Lucas alleged that Arnold Schancupp failed to advise her that the home was subject to a storm water easement.

Lucas also sued the New Jersey Department of Transportation over negligence allegations in installing a storm water pipe under the home's foundation.

In late spring 2016, Lucas prevailed in her litigation against Arnold Schancupp with a jury award of $980,000 in compensatory damages. The trial judge subsequently awarded Lucas an additional $99,506 in consequential damages.

Lucas settled her of her counsel-fees claims against Arnold Schancupp but Freeborn & Peters fees remained outstanding.

"Lucas paid Freeborn over $400,000 in the course of the litigation," Fuentes wrote. "At the conclusion of the trial, Freeborn submitted a statement of account for $1,727,168.52, reflecting the balance of attorney's fees Lucas owed to Freeborn."

After the Ocean County judge trimmed the fees, Freeborn & Peters appealed, arguing the lower court lacked jurisdiction to set the fee.

"We agree with Freeborn that under these circumstances, the law division did not have jurisdiction to decide this fee dispute," Fuentes wrote. "The fee dispute between Lucas and Freeborn was not part of the legal malpractice action against Schancupp."

Judge Francis J. Vernoia and Judge Scott J. Moynihan concurred.

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