Reid v. Finch

Citation425 N.J.Super. 196,40 A.3d 100
PartiesCourtney REID, Pauline Reid, and Rachael Reid, Plaintiffs, v. Matthew J. FINCH and Abigail S. Finch, Defendants.
Decision Date06 December 2011
CourtNew Jersey Court of Chancery

OPINION TEXT STARTS HERE

Paul K. Caliendo, Woodbridge, for plaintiffs (Gill & Chamas, attorneys).

Peter DeSalvo, for defendants (Soriano, Henkel, Biehl & Matthews, attorneys).

ROTHSCHILD, J.S.C.

The court has before it a motion for an award of counsel fees in accordance with the offer of judgment rule, which presents novel questions on how that rule should be interpreted.

Facts and Procedural History

This case stems from an automobile accident which occurred on September 9, 2005. As a result of the accident, plaintiff Courtney Reid (Courtney) sustained extensive injuries, including a disrupted torn disc in his lower back, and allegedly missed ten months of work. Testimony at trial established that Courtney continues to feel pain as a result of injuries sustained in the accident, and that these injuries affect his life on a daily basis.

A complaint and jury demand was filed on August 8, 2008. On October 16, 2008, defendants filed an offer of judgment with respect to plaintiffs Courtney and Pauline Reid (Pauline) in the amount of $40,000.1 On December 17, 2009, court mandated arbitration resulted in an award of $110,000 in favor of plaintiffs. Defendants rejected the award and filed a demand for a trial de novo under Rule 4:21 A–6.

A jury trial was held before this court for four days in August 2011. On August 29, 2011, the jury returned a unanimous verdict in favor of plaintiffs, finding that Courtney suffered a permanent injury as a result of the accident; awarding Courtney $18,000 for pain suffering, disability, impairment and loss of enjoyment of life; awarding Pauline $2000 for loss of her husband's services, society, and consortium as a result of injuries sustained in the accident; and awarding Courtney $14,400 in wages lost as a result of the accident. The total amount of the verdict was $34,400. This verdict was molded by the court to $20,647 in order to take account of disability benefits received by Courtney during the periods for which lost wages were awarded by the jury.

On September 8, 2011, plaintiffs filed a motion returnable October 6, 2011, seeking either an additur or a new trial. Oral argument was held on October 6, 2011 before this court; the court denied the motion.

On October 20, 2011, defendants filed the motion at issue seeking an award of counsel fees, costs of suit, and reasonable litigation expenses in accordance with the provisions of Rule 4:58–1 to –3. Defendants' certification, dated October 19, 2011, asks for an order awarding $30 for costs, $22,920 for attorney fees, and $3400 for reasonable litigation expenses, for a total award of $26,350, or $5703 more than the molded verdict. Plaintiffs' counsel has submitted proof that plaintiffs incurred expenses of $15,215.57 in costs to litigate this case and attorney's fees of $1,810.47. Therefore, if the motion is granted, plaintiffs stand to lose $22,729.04 as a result of bringing this lawsuit.2

Legal Analysis

New Jersey Court Rule 4:58–3 provides:

(a) If the offer of a party other than the claimant is not accepted, and the claimant obtains a monetary judgment that is favorable to the offeror as defined by this rule, the offeror shall be allowed, in addition to costs of suit, the allowances as prescribed by R. 4:58–2, which shall constitute a prior charge on the judgment.

(b) A favorable determination qualifying for allowances under this rule is a money judgment in an amount, excluding allowable prejudgment interest and counsel fees, that is 80% of the offer or less.

(c) No allowances shall be granted if (1) the claimant's claim is dismissed, (2) a no-cause verdict is returned, (3) only nominal damages are awarded, (4) a fee allowance would conflict with the policies underlying a fee-shifting statute or rule of court, or (5) an allowance would impose undue hardship. If, however, undue hardship can be eliminated by reducing the allowance to a lower sum, the court shall reduce the amount of the allowance accordingly.

The rule is designed to be symmetrical to Rule 4:58–2, which provides that, in certain circumstances, a claimant who obtains a monetary judgment that is 120% of the offer of judgment or more may obtain his or her counsel fees. Both rules depart from the general “American” rule, which requires that litigants pay their own attorneys' fees regardless of the outcome at trial. See Albert Yoon, Symposium on F.R.C.P. 68: Lessons from New Jersey, 57 Mercer L.Rev. 827 (2006). This is so even though New Jersey has otherwise remained committed to the American rule “despite recurrent and considerable attention given to the history of [the] rule.” Pressler & Verniero, Current N.J. Court Rules, comment 1 on Rule 4:58 (2012). Rule 4:58–3

is designed particularly as a mechanism to encourage, promote, and stimulate early out-of-court settlement of negligence and unliquidated damages claims that in justice and reason ought to be settled without trial. The rule was intended to penalize a party who rejects a settlement offer that turns out to be more favorable than the ultimate judgment.

[ Gonzalez v. Safe & Sound Sec., 185 N.J. 100, 124–25, 881 A.2d 719 (2005) quoting Schettino v. Roizman Dev., Inc., 158 N.J. 476, 482, 730 A.2d 797 (1999).]

The offer of judgment rule, which was enacted in 1971, was amended in 1994 to abolish a $750 cap on attorneys' fees. The rule was further amended in 2004 after the Supreme Court, in Schettino, supra, 158 N.J. at 476, 730 A.2d 797, requested review by the Civil Practice Committee. The amended rule eliminates the requirement that a claimant obtain a verdict of at least $750 in order for an offer to qualify for an allowance under the rule, and instead adds the provision that [n]o allowances shall be granted if [ ] the claimant's claim is dismissed, [ ] a no-cause verdict is returned, [or] only nominal damages are awarded.” Pressler & Verniero, supra, comment 1 on Rule 4:58. 3 The rule was again amended in 2006 to add the “undue hardship” and “conflict” provisions to 4:58–3(c)(4) and (5).

“Whereas most states simply modeled their offer-of-judgment rule on Federal Rule 68, New Jersey took a different approach. From its inception ..., New Jersey's rule was more ambitious in scope.” Albert Yoon & Tom Baker, Offer–of–Judgment Rules and Civil Litigation: An Empirical Study of Automobile Insurance Litigation in the East, 59 Vand. L.Rev. 155, 163, (2006). First, the New Jersey offer of judgment rule, Rules 4:58–2 and –3, allows both the plaintiff and the defendant to issue pre-trial settlement offers; the federal rule only allows a defendant to make a pre-trial offer. Id. at 163. Second, the cost-shifting sanctions attached to the New Jersey rule are much more significant than those attached to the federal rule. A party awarded costs under the New Jersey rule will be awarded both court costs and attorneys fees, while the party may only collect court costs under the federal rule. 4 Id. at 163.

Here, defendants contend that because the final judgment as molded was less than eighty percent of the offer of Judgment (i.e., was less than $32,000), Rule 4:58–3 applies and defendants are entitled to attorney's fees and actual litigation expenses incurred after the date of non-acceptance. Plaintiffs make three arguments why the rule should not apply in this case. 5

1. The Timeliness Issue

Under Rule 4:58–6 and Rule 4:42–9(b), applications pursuant to the rule must be made within twenty days after the entry of final judgment. The parties disagree as to the definition of “final judgment.” Plaintiffs contend that the date of final judgment should be calculated from the date the jury rendered its verdict—here, August 29, 2011. Defendants argue that final judgment has still not been entered because the clerk has not yet entered a judgment on the civil docket.

The court agrees that defendant did not file this motion out of time because no final judgment has been entered in this case. Under the rule,

[t]he notation of a judgment in the Civil Docket constitutes the entry of the judgment, and the judgment shall not take effect before such entry unless the court in the judgement shall ... direct that it take effect from the time it is signed.

[ Rule 4:47 (emphasis added).]

The rule “states unambiguously that the timeliness of [most further action] is to be determined with reference to the date on which the judgment is docketed, not the date on which it is signed by the court.” Pogostin v. Leighton, 216 N.J.Super. 363, 370, 523 A.2d 1078 (App.Div.1987). The judgment does not take effect until its entry on the civil docket. Frugis v. Bracigliano, 351 N.J.Super. 328, 347–48, 798 A.2d 614 (App.Div.2002), aff'd in part and rev'd in part on other grounds, 177 N.J. 250, 827 A.2d 1040 (2003).

Here, an order of judgment was not entered at the end of the trial on August 29, 2011, because the issue of molding the verdict to take account of disability payments received by Courtney, pursuant to the collateral source rule, remained outstanding, as did the issue raised by plaintiffs' motion for an additur or new trial. The civil docket contains no entry of judgment as of the date of this motion.6 Therefore, defendants did not file this motion out of time.

2. The Nominal Damages Issue

A fee allowance under the rule is mandatory if its terms are met, subject to the exceptions laid out in Rule 4:58–3(c). Under Rule 4:58–3(c)(3), no allowances will be granted if “only nominal damages are awarded.”

Plaintiffs argue that, given plaintiffs' costs related to the suit and current and future medical costs, the jury award was nominal. Plaintiffs contend that their award should be considered in light of plaintiffs' expenses: $15,215.57 in costs to litigate this case, attorney's fees of $1,810.47, and $1200 which plaintiffs owe for medical co-payment...

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    ...to issue pre-trial settlements offers" and permits recovery of "both court costs and attorneys['] fees[.]" Reid v. Finch, 40 A.3d 100, 103 (N.J. Super. Ct. Law. Div. 2011). Federal Rule of Civil Procedure 68, by contrast, allows only a "party defending against a claim" to serve an offer of ......
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