Frank K. Cooper Real Estate #1, Inc. v. Cendant Corp.
| Decision Date | 06 December 2018 |
| Docket Number | DOCKET NO. A-1579-16T3,DOCKET NO. A-1482-16T3 |
| Parties | FRANK K. COOPER REAL ESTATE #1, INC., a Florida corporation, SILM ENTERPRISES d/b/a CENTURY 21 PROPERTY MART, INC., a Michigan corporation, CENTRE POINT REAL ESTATE d/b/a CENTURY 21 CENTRE POINT, a sole proprietorship, and DAVID NICHOLS and KIM COMBS, INC. d/b/a CENTURY 21 SUNLAND REALTY, an Arizona corporation, on behalf of themselves and all others similarly situated, and QUALITY ASSOCIATES II d/b/a CENTURY 21 PROFESSIONAL CORPORATION, a New Jersey corporation, Plaintiffs, v. CENDANT CORPORATION f/k/a HOSPITALITY FRANCHISE SYSTEMS and CENTURY 21 REAL ESTATE CORPORATION, Defendants. IN THE MATTER OF KEEFE BARTELS, LLC, n/k/a KEEFE LAW FIRM, and KOPELOWITZ OSTROW PA, Appellants, v. ZWERLING, SCHACHTER & ZWERLING, LLP, Respondents. IN THE MATTER OF ZWERLING, SCHACHTER & ZWERLING, LLP, Appellants, v. KEEFE BARTELS, LLC, n/k/a KEEFE LAW FIRM, and KOPELOWITZ OSTROW PA, Respondents. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Before Judges Yannotti, Rothstadt, and Gilson.
On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-0377-02.
Joseph P. LaSala argued the cause for appellants in A-1482-16 and respondents in A-1579-16 (McElroy, Deutsch, Mulvaney & Carpenter, LLP, attorneys; Joseph P. LaSala, on the briefs).
Stephen R. Knox argued the cause for respondents in A-1482-16 and appellants in A-1579-16 (Bressler,Amery & Ross, PC, attorneys; Stephen R. Knox and Gerd W. Stabbert, Jr., on the briefs).
These two appeals involve a dispute over the apportionment of approximately $11.3 million in attorneys' fees awarded in connection with a class action settlement. Three law firms represented the class of plaintiffs and claim a portion of the fees: Zwerling, Schachter & Zwerling, LLP (ZSZ); Keefe Bartels, LLC, n/k/a Keefe Law Firm (Keefe); and Kopelowitz Ostrow, PA. (KO). ZSZ contends that it is entitled to substantially more than one-third of the fees based on the number of hours it worked and the responsibility it undertook during the class action. Keefe and KO, in contrast, argue that the firms agreed to split equally any attorneys' fees, with each firm receiving one-third of the fee award. To try to resolve the dispute, Keefe and KO made an offer of judgment, but ZSZ did not accept that offer.
Eventually, the firms agreed to arbitrate the fee dispute. The arbitrator found that the firms had agreed to split the fee award equally, with each firm receiving one-third "despite any unequal division of work and responsibility in the underlying class action." Thus, the arbitrator directed that each of the three firms "share the attorneys' fee award in equal thirds[.]" The trial court affirmed the arbitration award. The trial court also denied a motion by Keefe and KO toaward them costs and fees incurred after ZSZ did not accept their offer of judgment.
ZSZ appeals from orders entered on June 10, 2016 confirming the arbitration award and denying its motion to vacate the arbitration award. Keefe and KO appeal from a November 2, 2016 order denying their motion for an award of fees and costs incurred after their offer of judgment was rejected. In this consolidated opinion, we affirm all three orders. The arbitrator acted within the scope of his authority and there is no basis to overturn the arbitration award. Moreover, the amount of the arbitration award was not sufficient to trigger the shifting of fees and costs under Rule 4:58, the offer of judgment rule.
Counsel began investigating the potential class action in 2000, suit was filed in 2002, and the class action eventually settled over ten years later in 2012. Accordingly, some background concerning how the three firms came to represent the class and how they dealt with each other is relevant to understanding their fee dispute.
In 2000, a Florida law firm, which ultimately turned over its interests to KO, began investigating claims against Century 21 Real Estate Corporation (Century 21) by disgruntled franchisees. The Florida law firm was originallyAtlas Pearlman, PA. Thereafter, Atlas became Adorno & Yoss, PA. That firm then dissolved and the attorneys who were working on the class action joined KO. We refer to these firms collectively as KO.
In 2001, KO entered into an attorney-class representative agreement with two Century 21 franchisees. KO believed that the class action should be pursued as a nationwide class action. At that time, however, KO had a limited number of attorneys and limited experience with class actions. Consequently, KO reached out to ZSZ, which was a firm with substantial class action experience.
KO and ZSZ decided to file the class action in New Jersey. One of the lawyers involved explained that the decision was based on a choice-of-law provision in the franchise agreements. ZSZ and KO then approached McElroy, Deutsch & Mulvaney, LLP (MDM), a New Jersey law firm, to act as additional class counsel.
In January 2002, the three firms entered into an attorneys-class representative agreement with a class representative plaintiff, Frank K. Cooper Real Estate #1, Inc. Relevant to their roles and potential attorneys' fees, the agreement provided:
I further understand that [KO], [ZSZ] and [MDM] will be co-counsel to me in this matter, and that they shall be apportioning the fees recovered with [KO] receiving 33 1/3 %, [ZSZ] receiving 33 1/3% and [MDM]receiving 33 1/3% of any attorneys' fee earned in this case. I agree to the fee sharing set forth in this agreement. More specifically that each of the law firms named herein shall share the fee which is in accordance with their anticipated division of work and responsibility in this matter.
On January 30, 2002, the class action lawsuit was filed in the Superior Court of New Jersey. Thereafter, the three firms entered into two more attorneys-class representative agreements with additional class plaintiffs. The second and third agreements were signed on January 30, 2004, and April 5, 2004. Both of those agreements contained the same fee-splitting language as in the first agreement. Moreover, all three agreements provided that if any attorney withdrew as counsel, that attorney would be entitled to compensation at his or her standard hourly rate in effect when the agreement was signed, provided there was a recovery against the defendants in the class action.
In 2004, MDM withdrew as one of the class counsel, and the New Jersey firm that ultimately became Keefe substituted in to replace MDM. Before us, the parties agree that KO, Keefe, and ZSZ are the three firms with a right to share in the apportionment of the class attorneys' fees under the attorneys-class representative agreements signed in 2002 and 2004. Keefe also acknowledges that MDM will receive its fees out of Keefe's share of the fees.
The class action was actively litigated for years. Following a series of motions, a class was certified in August 2010. Just before that certification, in late 2009, ZSZ sent an email to KO and Keefe seeking their lodestars. A lodestar is a composite of "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Rendine v. Pantzer, 141 N.J. 292, 334-35 (1995) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). Thereafter, in January 2010, ZSZ sent an email stating that KO had not assumed an equal amount of the work and that it was "a good time . . . to determine what a fair allocation of fees would be." In October 2010, ZSZ sought to modify the apportionment of attorneys' fees from the allocation set forth in the attorneys-class representative agreements. Because ZSZ maintained it had done more work on the class action than the other two firms, it proposed allocating the fees based on the hours actually spent on the case. Although the firms thereafter exchanged communications and met to discuss the fee allocation, no new allocation agreement was reached.
As noted earlier, the class action was settled in February 2012. The court approved that settlement in June 2012. In connection with approving the settlement, the court also awarded $11,299,727 in attorneys' fees to class counsel and $2,969,773 in costs incurred by class counsel.
The firms could not agree on how to apportion the fee award. Thus, in 2013, ZSZ filed a motion for summary judgment on the issue of apportionment, and Keefe and KO cross-moved for summary judgment. ZSZ argued that the apportionment should be based on hours spent and responsibility assumed during the class action. KO and Keefe contended that the attorneys-class representative agreements governed and required the firms to share the fee equally, with each firm receiving one-third of the fee award.
After hearing oral argument, the trial court denied both motions for summary judgment in orders entered on March 8, 2013. In its oral decision, the court reasoned that there was some ambiguity in the attorneys-class representative agreements as to whether the firms were agreeing to split the fees on an equal one-third basis, or whether the fees were to be allocated based on the work and responsibilities undertaken in the class action. The trial court, therefore, directed that an evidentiary hearing be held.
The court also "determined that ZSZ, [Keefe, and] KO are parties to the [three]...
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