Hatch v. T & L ASSOCIATES

• Decision Date: 01 April 1999
• Citation: 726 A.2d 308,319 N.J. Super. 644
• Parties: Harry HATCH, Plaintiff-Appellant, v. T & L ASSOCIATES, a New Jersey Partnership, Jack D. Levin, Individually and as a partner in T & L Associates, Carmine Torsiello, Individually and as a partner in T & L Associates, and Daniel Torsiello, Individually, Defendants-Respondents.
• Court: New Jersey Superior Court

726 A.2d 308

319 N.J. Super. 644

Harry HATCH, Plaintiff-Appellant, v. T & L ASSOCIATES, a New Jersey Partnership, Jack D. Levin, Individually and as a partner in T & L Associates, Carmine Torsiello, Individually and as a partner in T & L Associates, and Daniel Torsiello, Individually, Defendants-Respondents.

Superior Court of New Jersey, Appellate Division.

Calendared for argument March 16, 1999.

Decided April 1, 1999.

Gary L. Falkin, Chatham, for plaintiff-appellant.

Ronald Reichstein, West Caldwell, for defendants-respondents.

Before Judges PRESSLER, KLEINER and STEINBERG.

The opinion of the court was delivered by

PRESSLER, P.J.A.D.

This appeal arises from the customary provision of a mortgage note by which the borrower agrees to pay on default not only the balance of principal and interest due but also the lender's costs of collection, including attorney's fees. The issue before us is whether the lender, after obtaining judgment on the note, including reasonable attorney fees, is then entitled to have the judgment thereafter amended to include an additional allowance for post-judgment collection costs. Under the circumstances of this case, we agree with the trial judge, but for different reasons, that the lender's motion was properly denied.

The facts are not in dispute. On August 17, 1995, defendants, Carmine Torsiello, Jack D. Levin, and their partnership, T & L Associates, executed a three-year mortgage note in favor of plaintiff Harry Hatch in the principal amount of $299,000 at eight percent interest, the interest and a specified portion of principal payable in installments during the life of the loan. The note recited the giving by defendants on that date of a mortgage on identified property in Harmony Township to secure the loan. The note further provided that on default in making any of the scheduled payments the entire unpaid principal with interest thereon would be due together with "the Lender's costs of collection, including reasonable attorney's fees." Defendants defaulted and plaintiff sued on the note. On January 21, 1997, a default judgment was entered in plaintiff's favor in the amount of $338,316.56, inclusive of costs in the amount of $230.00 and a counsel fee in the amount of $1,250.00.

The judgment was not satisfied in full until the end of January or the beginning of February 1998. As we understand from this regrettably sparse record, after a year of supplementary discovery proceedings, issuance of writs of execution, and a partial payment, defendants agreed to pay the balance by obtaining a mortgage on other property they owned. To this end, it was apparently agreed that a warrant of satisfaction would be entered in order to clear the title on that property from the lien of this judgment, with the mortgage proceeds then placed in escrow. As we further understand it, the escrowed sum included an amount for the lender's post-judgment collection costs, including attorney fees, defendants having disputed their obligation to pay post-judgment attorney fees under the terms of the note and plaintiff insisting on his right thereto.

In view of that dispute, plaintiff filed a motion to amend the original judgment to include post-collection costs and fees, supported by his attorney's affidavit of services in which he sought fees of $12,262.50 and reimbursement for disbursements in the amount of $772.35. The trial court, relying on R. Jennings Mfg. v. Northern Elec. Supply Co., 286 N.J.Super. 413, 669 A.2d 819 (App.Div.1995), denied the motion on the ground that plaintiff's rights under the note merged into the original judgment and could not be independently pursued thereafter. We affirm the denial but on other grounds.

It has long since been well settled that our courts will enforce the customary attorney-fee clause in a promissory note or other instrument of obligation to the extent that the attorney fees requested as part of the judgment on the note are reasonable. See, e.g., Cohen v. Fair Lawn Dairies, Inc., 44 N.J. 450, 210 A.2d 73 (1965)

; Alcoa Edgewater No. 1 Fed. Credit Union v. Carroll, 44 N.J. 442, 210 A.2d 68 (1965); Bergen Builders, Inc. v. Horizon Developers, Inc., 44 N.J. 435, 210 A.2d 65 (1965). Insofar as we have been able to determine, however, we have not yet considered in a reported opinion the question of whether attorney fees incurred by the lender after entry of judgment in the effort to satisfy the judgment are also covered by that clause. We have no doubt that if such fees are covered, there are available procedural devices for enforcing the debtor's consequent obligation. We conclude, however, that under the facts of this case, the attorney-fee clause cannot be read as extending to post-judgment collection efforts.

We point out first that while there have been a variety of state and federal fee-shifting statutes enacted in recent years, this State continues, as a matter of jurisprudential principle, to adhere to the view that the sound administration of justice is best advanced by having the parties bear the burden of their own counsel fees except in those few circumstances designated by R. 4:42-9. See, e.g., Coleman v. Fiore Bros., Inc., 113 N.J. 594, 596, 552 A.2d 141 (1989)

; Satellite Gateway Communications, Inc. v. Musi Dining Car Co., 110 N.J. 280, 285, 540 A.2d 1267 (1988); Right to Choose v. Byrne, 91 N.J. 287, 316, 450 A.2d 925 (1982); Gerhardt v. Continental Ins. Cos., 48 N.J. 291, 301, 225 A.2d 328 (1966); Thomas v. Toys `R' Us, 282 N.J.Super. 569, 587-588, 660 A.2d 1236 (App.Div.),

certif. denied, 142 N.J. 574, 667 A.2d 191 (1995). Thus, while we recognize that parties may include fee-shifting provisions in their agreements, a corollary of our commitment to the so-called American rule of litigants paying their own fees is that such agreements will be strictly construed. McGuire v. City of Jersey City, 125 N.J. 310, 326-327, 593 A.2d 309 (1991).

The question then is whether a strict construction of the typical provision of a promissory note would include post-judgment collection services. We cannot conclude that it does because there is nothing in the record to suggest that that consequence was within the...