A recent New Jersey Law Journal story, by Charles Toutant, “Court: Plaintiff’s Deep Pockets Aren’t Cause to Deny Fee Application,” reports that a New Jersey appeals court has ruled that a plaintiff was wrongly denied counsel fees after winning a dispute with a municipality over an ordinance imposing regulations on landlords.

The appeals court remanded the case to the Law Division for reconsideration of the fee application for the City of Orange Property Owner's Association, which won its suit to overturn an apartment inspection fee ordinance adopted by Orange.  The plaintiff maintained it was entitled to fees as the prevailing party under the New Jersey Civil Rights Act.  But the trial court cited the prompt dismissal of the case, and the minimal damage to the plaintiff as a result, to justify its denial of fees.  The court also relied on its own assessment of the parties' financial assets, and the purported financial stresses facing Orange, as a basis for denying the fee application.

But the appeals court said the trial court erred because the association succeeded in overturning the ordinance, and held that the fact that the ordinance had not yet damaged the association was not a reason to deny attorney fees.  The appeals court also said the city's financial position as a taxpayer-funded government agency was not a defense to an application for fee-shifting.  The panel, consisting of Judges Jack Sabatino and William Nugent, did say that the remand judge was not precluded from considering "the realities of economic factors" when calculating a fee award.

The suit was prompted by a series of ordinances adopted by Orange in 2010 that increased the periodic fees charged to landlords for city inspections of multifamily rental properties.  The suit was filed by two property owners, and the City of Orange Property Owner's Association later intervened, charging that the ordinances were invalid.  The association sought to invalidate the ordinances under three grounds—violation of a state statute governing inspections of residential rental units, violation of equal protection principles under the state constitution, and violation of the Civil Rights Act.

Superior Court Judge James Rothschild, who has since retired, granted summary judgment declaring the inspection fees invalid.  But he denied the association's fee application, stating in a handwritten note at the bottom of an order that the plaintiff's fee request was distinguished from the one in New Jerseyans for a Death Penalty Moratorium v. New Jersey Department of Corrections, in which "a pro bono lawyer for a grass roots association" was granted a fee award by the Supreme Court in 2005.  In contrast, Rothschild said, the present case was not one where "the ordinary citizen would be waging a quixotic battle against a public entity [vested] with almost inexhaustible resources."

But the trial judge erred in denying a fee award because the court granted partial summary judgment at an early point in the litigation, the appeals court said.  "If anything, the rapid success achieved by plaintiff's counsel could be fairly considered a sign of the quality of counsel's advocacy, which the trial judge here did acknowledge despite denying the fee application," the panel said.

The trial judge further erred in totally denying fees to the association because it is composed of a group of parties who own and operate multifamily apartment complexes, while the city has experienced financial distress, Sabatino and Nugent said.

"The fact that the party to be charged is a taxpayer-supported [governmental] agency [is] not a defense to a prevailing party's claim for counsel fees," the panel said, citing Dunn v. Department of Human Services, a 1998 Appellate Division case.  "That said, we do not preclude the trial court from considering the realities of economic factors in calibrating an award of what must be "reasonable" counsel fees."

David Klein of Brach Eichler in Roseland, who represented the plaintiff association along with Charles Gormally of the same firm, said the decision was notable as one of a few cases that address the issue of a prevailing party in a claim under the Civil Rights Act being denied fees.  The ruling also is notable because judges are generally granted deference.  Judges "are given deference on their decision on fees unless it's an abuse of discretion.  In this case, the judge relied on some impermissible factors," Klein said.