Lettenmaier v. Lube Connection, Inc.

• Decision Date: 01 December 1999
• Parties: Kathleen L. LETTENMAIER, Plaintiff-Appellant, v. LUBE CONNECTION, INC., a New Jersey Corporation trading as Lube Connection, Defendant-Respondent, and John Doe, a fictitious name, Defendant.
• Court: New Jersey Supreme Court

741 A.2d 591

162 N.J. 134

Kathleen L. LETTENMAIER, Plaintiff-Appellant, v. LUBE CONNECTION, INC., a New Jersey Corporation trading as Lube Connection, Defendant-Respondent, and John Doe, a fictitious name, Defendant.

Supreme Court of New Jersey.

Argued October 13, 1999.

Decided December 1, 1999.

Thomas E. Maxim, Bridgewater, for plaintiff-appellant.

William P. Robertson, for defendant-respondent (Miller, Robertson and Rodgers, attorneys).

The opinion of the Court was delivered by LONG, J.

We are here called upon to determine whether counsel fees under the Consumer Fraud Act (N.J.S.A. 56:8-19) should be considered part of the "amount in controversy" in calculating the $10,000 jurisdictional limit established by Rule 6:1-1(c) for access to the Special Civil Part of the Superior Court. We have concluded that such fees are not part of the jurisdictional calculus.

I

The case arose on October 11, 1995, when plaintiff Kathleen Lettenmaier filed suit in the Special Civil Part alleging negligence and common law fraud against defendant Lube Connection, Inc., as a result of certain maintenance work defendant performed on her automobile. The details of plaintiff's complaint are irrelevant to the issues presented here. She also alleged a violation of the Consumer Fraud Act (N.J.S.A. 56:8-1 to -91), and demanded treble damages not to exceed the jurisdictional limit of the court, plus interest, attorney's fees and costs of suit. Defendant filed an answer and pre-trial discovery ensued. An arbitrator found in favor of plaintiff in the amount of $3,080, but refused to decide whether defendant committed an act of consumer fraud. Defendant filed a notice seeking a trial de novo.

Thereafter, defendant failed to respond to plaintiff's discovery demands and the trial court entered an order of default. A proof hearing was held and a final judgment of default was entered in plaintiff's favor in the amount of $9,240 ($3,080 trebled).

Plaintiff requested attorneys' fees. Although plaintiff sought a greater amount and the trial court acknowledged plaintiff's entitlement thereto, the court capped plaintiff's fee award at $760, the difference between the treble damages of $9,080 and the $10,000 jurisdictional limit of the court. Although concluding that attorneys' fees are not part of "damages," the trial court held that such fees are an element of the "amount in controversy" for jurisdictional purposes. In ruling as it did, the trial court expressed concern about assessing attorneys' fees in excess of the $10,000 limit against a defendant who is not aware of such a possibility. The trial court then gave plaintiff the option of transferring the case to the Superior Court, Law Division. Instead, plaintiff agreed to waive recovery of any additional amount and accepted the $10,000 award pursuant to Rule 6:1-2(c). Final judgment was entered in the amount of $11,028.25, consisting of the treble damage award plus $760 in counsel fees and costs of suit.

Plaintiff moved for reconsideration, seeking the full amount of her attorney's fees, which by then were mounting as a result of her motion and defendant's motion to set aside the default judgment. Citing Nieves v. Baran, 164 N.J.Super. 86, 89, 395 A.2d 875 (App.Div.1978), plaintiff argued that counsel fees under the Consumer Fraud Act can be awarded in excess of the jurisdictional limit. The trial court disagreed, reasoning that counsel fees are unlike

the kinds of costs that are excluded from the jurisdictional limit of the Special Civil Part.... The only types of additional money awards that can be added to the $10,000 limit in the Special Civil Part ... are ... filing fees, court officer commissions, mileage fees, those types of costs that are provided in [the] statute and that are predictable based on the dollar amount of the judgment and the fee schedules established by Rule or statute.

Thus, the trial court concluded that Consumer Fraud Act counsel fees must be part of the amount in controversy.

On plaintiff's appeal the Appellate Division affirmed. Lettenmaier v. Lube Connection, Inc. 316 N.J.Super. 319, 720 A.2d 393 (1998). Relying on Wisser v. Kaufman Carpet Co., 188 N.J.Super. 574, 458 A.2d 119 (App.Div.1983), the panel concluded that "[c]osts as used in R. 6:1-2(c), simply put, do not include consumer fraud counsel fees." In reaching its conclusion, the Appellate Division considered a number of federal diversity cases in which statutory counsel fees were used to reach the jurisdictional minimum. Lettenmaier, supra, 316 N.J.Super. at 324, 720 A.2d 393 (citing Garcia v. Gen. Motors Corp., 910 F.Supp. 160 (D.N.J.1995)). Because a party suing under the Consumer Fraud Act is entitled to counsel fees, the Appellate Division reasoned that those fees are part of the amount recoverable and thus subject to the Special Civil Part's jurisdictional limit. Id. at 321, 720 A.2d 393. We granted plaintiff's petition for certification. 158 N.J. 74, 726 A.2d 938 (1999).

II

The precursor to the Special Civil Part was the County District Court, which was abolished by statute in 1983. That court's limited jurisdiction was then transferred to the Superior Court. "[T]he concept of a special court of limited jurisdiction, functioning in an expedited manner, was too useful not to survive the demise of the county district courts." Pressler, Current N.J. Court Rules, comment on R. 6:1-1 to -3 (1999). Thus, by Supreme Court order (dated December 13, 1982) and later by court rule (effective January 1989) the County District Court continued, nearly intact, as the Special Civil Part, governed by the Part VI rules.

Rule 6:1-2 defines the jurisdiction of the Special Civil Part:

(a) The following matters shall be cognizable in the Special Civil Part:

(1) Civil actions seeking legal relief when the amount in controversy does not exceed $10,000; ...

(c) Where the amount recoverable on a claim exceeds the monetary limit of the Special Civil Part ..., the party asserting the claim may waive the excess over the applicable limit and recover a sum not exceeding the limit plus costs. (Emphasis added).

Additionally, Rule 6:6-4 prescribes that:

Upon receipt of the verdict of a jury ... the clerk shall note the judgment on the jacket and it shall take effect forthwith. The clerk shall thereupon enter the judgment and tax the costs. (Emphasis added).

Rule 6:1-1(c), which addresses the subject of "fees" states:

The fees charged for actions in the Special Civil Part shall be in accordance with N.J.S.A. 22A:2-37.1, provided that the face of the pleading and summons alleges the amount in controversy does not exceed $10,000, and the fees for actions which are not filed in the Special Civil Part shall be in accordance with N.J.S.A. 22A:2-6 et seq.

N.J.S.A. 22A:2-37.1 enumerates the fees to be charged by the clerk in a Special Civil Part action. They include fees for filing, service of process, jury, warrants, and sale of property. Importantly, N.J.S.A. 22A:2-42 provides for a nominal award of attorneys' fees in Special Civil Part cases to be taxed by the clerk:

There shall be taxed by the clerk of the Superior Court, Law Division, Special Civil Part in the costs against the judgment debtor, a fee to the attorney of the prevailing party, of five per centum (5%) of the first five hundred dollars ($500.00) of the judgment, and two per centum (2%) of any excess thereof.

That statute comes into play in cases in which counsel fees are not otherwise awardable under the Rules or under a specific fee-shifting provision. Alba v. Sopher, 296 N.J.Super. 501, 687 A.2d 309 (App.Div.1997).

The Consumer Fraud Act became law in 1960 to "combat the increasingly widespread practice of defrauding the consumer." Cox v. Sears Roebuck & Co., 138 N.J. 2, 14, 647 A.2d 454 (1994) (citing Senate Committee Statement to the Senate Bill No. 199 (1960)). In its original form, only the Attorney General could bring an enforcement action. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604, 691 A.2d 350 (1997). In 1971, however, the Act was amended to allow private citizens to enforce its provisions. Ibid. The amendment also expanded the remedies available to include treble damages along with attorneys' fees and costs.

The Consumer Fraud Act has three main purposes: to compensate the victim for his or her actual loss; to punish the wrongdoer through the award of treble damages, Roberts v. Cowgill, 316 N.J.Super. 33, 45, 719 A.2d 668 (App.Div.1998); and, by way of the counsel fee provision, to attract competent counsel to counteract the community scourge of fraud by providing an incentive for an attorney to take a case involving a minor loss to the individual. Silva v. Autos of Amboy, Inc., 267 N.J.Super. 546, 555, 632 A.2d 291 (App. Div.1993). Because it is a remedial statute, its provisions are construed liberally in favor of the consumer to accomplish its deterrent and protective purposes. Cox, supra, 138 N.J. at 15-16,647 A.2d 454; Roberts, supra, 316 N.J.Super. at 45, 719 A.2d 668; Gennari, supra, 148 N.J. at 604,691 A.2d 350 (stating that "[t]he history of the Consumer Fraud Act is one of constant expansion of consumer protection").

The question presented here is how to reconcile the counsel fee provisions of the Consumer Fraud Act with the jurisdictional limits of the Special Civil Part. As we understand it, both the trial court and the Appellate Division ruled that, because consumer fraud counsel fees are not "costs" under Rule 6:1-2(c), they therefore must be part of the jurisdictional "amount in controversy" in Rule 6:1-2. We disagree with that conclusion for several reasons.

First, we doubt the basic conclusion that counsel fees under the Consumer Fraud Act are not to be considered costs within the meaning of the Part VI rules. To be sure, unlike some fee-shifting statutes, Consumer Fraud Act counsel fees are not explicitly denominated as costs. See, e.g., N.J.S.A. 10:5-27.1 (providing that prevailing party in suit under New Jersey...