Appellate Division Finds Attorney’s Fees To Be Excessive And An Abuse Of Discretion

Excessive fees and abuse of discretion were the hot topic of the recent unreported decision in the Appellate Division.  In Garzon v. Morris County Golf Club, A-1100-21 (App. Div. December 23, 2022), the Appellate Division agreed with Respondent that the Judge of Compensation abused his discretion in issuing excessive and unsupported fee awards.  The Appellate Division found that the lodestar concept was not utilized when the petitioner attorney was awarded $123,415 in fees based on a motion to enforce, motion to compel and petitioner’s permanency award.

This case stems from an accident for which respondent provided medical treatment and temporary disability benefits until the petitioner went on a two-week vacation to Columbia.  Respondent ceased paying temporary disability benefits from December 29, 2016 through January 24, 2017.  The adjuster wrote a letter to Dr. Fodero, the authorized doctor, asking he reconsider his opinion regarding petitioner’s disability as she had left the country for vacation. Dr. Fodero opined her vacation “had no bearing on her care”, noting she already had swelling.  The adjuster terminated treatment with Dr. Fodero on February 15, 2017 and redirected care.

Petitioner filed a motion to compel temporary disability benefits and treatment to her hand.  Respondent denied petitioner was entitled to same. As such, a hearing commenced. Petitioner testified that Dr. Fodero did not recommend she start physical therapy prior to her vacation and further had approved of her travel plans.  She testified that the Respondent Country Club was closed from December 24, 2016 to March 4, 2017 and did not expect to receive payment while on vacation for that reason. The Judge was “extremely disturbed” by the adjuster’s actions.   The parties came to an agreement regarding temporary disability benefits and treatment.  The parties further agreed fees would be deferred until the end of the case.  An Order was entered on April 17, 2017 memorializing the agreement.

The case continued uninterrupted until August 2018 when the treating physician gave petitioner permanent restrictions.  Petitioner’s temporary disability benefits were terminated until a conference on December 17, 2018 at which time Respondent agreed to reinstate the benefits.

However, the issue was not immediately rectified and petitioner moved to enforce the April 2017 order on January 15, 2019. Instead of opposing the motion, Respondent resumed temporary disability benefits as of March 1, 2019.

Another Order was entered on June 3, 2019 confirming temporary disability benefits were being paid and reserving the issue of fees, again.

The parties were able to reach a resolution regarding permanency, leaving the attorney’s fees to be the final hurdle of this case.

Petitioner’s attorney submitted vague affidavits in support of the fee application, as opposed to an invoice detailing the work and time expended on legal services related to the case.  Counsel contended 25 hours were spent on the case and if time was converted to an hourly rate, he would be entitled to $500.00 per hour.

Petitioner was granted a permanent disability award of $164,577.00. After hearing the parties’ arguments regarding attorney’s fees and penalties, the Judge granted a full 20% of the permanency award assessed against respondent as “it has been a struggle for petitioner the entire time right up until the commencement of the trial to get the protection that she’s entitled to under the law under the Workers’ Compensation statute.”

Regarding the motion to compel, the Judge faulted respondent for suspending benefits during petitioner’s vacation and assessed a penalty equal to 25% of the amount withheld pursuant to N.J.S.A. 34:15-28.2.  The penalty was not based on the actual amount withheld ($1,880.84), rather on $2,194.32 which would amount to four weeks. The Judge also awarded fees for $78,000.00 or 20% of the amount paid in medical and temporary benefits as a result of the motion to compel. The Judge then assessed a 25% penalty as a result of the 2019 motion to enforce, or $1,391.04.  The Judge reviewed the proofs submitted by petitioner’s attorney, felt the 25 hours was reasonable, and awarded $12,500.00 in attorney’s fees.

But wait, there’s more….

The Judge also assessed an additional penalty of $5,000.00 as to the motions to compel and enforce to be paid into the Second Injury Fund. The Judge determined this to be an appropriate penalty due to the “reckless conduct” of respondent. Lastly, all transcript and translator costs were to be paid by respondent.

Were these fees excessive, arbitrary and an abuse of discretion?  Respondent filed an appeal on those grounds. Respondent argued there was no rational basis for the fees awarded and the Judge did not look at the case in its entirety.  The Appellate Division agreed noting a compensation Judge’s findings will be reversed if “they are ‘manifestly unsupported by or inconsistent with competent relevant and reasonably credible evidence as to offend the interests of justice.’” McGory v. SLS Landscaping, 463 N.J. Super. 437, 452-53 (App. Div. 2020) (quoting Perez v. Monmouth Cable Vision, 278 N.J. Super. 275, 282 (App. Div. 1994)).

The Appellate Division opined the Judge of compensation did not look at the matter as a whole, rather applied the 20% to the permanency award, 20% to the benefits obtained through the Motion to compel and 20% to petitioner’s attorney’s time spent on Motion to enforce without analysis.  The Judge took the petitioner’s attorney’s word and did not do a full analysis applying the lodestar.

The lodestar takes into consideration the reasonable amount of hours spent on a case and a reasonable rate when determining attorney fees. Jacobs v. Mark Lindsay & Son Plumbing & Heating, Inc., 458 N.J. Super. 194, 209 (App. Div. 2019) (quoting Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004) (quoting Rendine v. Pantzer, 141 N.J. 335, 355 (1995))).

The Judge in this case simply took the number of hours petitioner’s attorney claimed he spent working on the case and/or motion and multiplied at the hourly rate which petitioner’s attorney purported to be reasonable without any further analysis. Had the Judge done the appropriate analysis, the Judge would have found that the $390,000.00 (as represented by the petitioner’s attorney) was not an accurate number since respondent had resumed temporary disability benefits prior to the filing of the Claim Petition and motion. The Judge would also have found that the attorney’s affidavits included conflicting information by, for example, claiming that a total of 25 hours were spent on the “temporary disability benefits issue” while also claiming 25 hours spent “on this matter”.

There are a few takeaways from this case…

  1. Attorney’s fees are to be fair and reasonable, based on the entirety of the case.  Do not hesitate to litigate a fee issue if an Order is entered without the appropriate    underlying analysis and application of the law.
  2. Compare and contrast dates of motions and orders to your medical and indemnity ledgers, and make sure to apply the timeline accurately to assess potential fees.
  3. Respondents should consider the appellate process, when necessary. An appeal can be effective and financially worthwhile when the law is explicit (as it is in the lodestar analysis).

By:  Alexis Malandro, Associate at Brown & Connery, LLP