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NJ Appeals Court Vacates Fee Award, Citing American Rule

June 22, 2018 | Posted in : Fee Award, Fee Issues on Appeal

A recent New Jersey Law Journal story by Michael Booth, “Citing ‘American Rule,’ Appeals Court Vacates Fee Award in Pension Case,” reports that a New Jersey appeals court has ruled that successful defense of an administrative agency’s decision in the Superior Court should not lead to an award of counsel fees.

A three-judge Appellate Division panel in a published decision Monday overturned an award of counsel fees in the case of a former police chief who successfully argued that his pension was miscalculated.

“Because we adhere to the so-called American Rule, requiring litigants to bear their own litigation costs regardless of who prevails, we reverse,” Superior Court Judge Lisa Rose, temporarily assigned, wrote for the panel. Judges Mitchel Ostrer and Jack Sabatino joined in the ruling.

The case involves plaintiff William Brunt Jr., who retired as interim deputy chief of the Middletown Police Department in June 2014, according to the court.

After he began receiving his retirement benefits, Brunt realized that his payments were low because the Police and Firemen’s Retirement System had failed to account for a pay raise he received when he was named interim deputy chief. He appealed, and an administrative law judge agreed that there should be a recalculation of his benefits, according to the opinion.

However, the matter dragged on for another two years, with Middletown and state officials demanding more documentation, the opinion noted. Finally, in May 2016, Brunt filed a lawsuit in Monmouth County Superior Court against Middletown and the state, seeking enforcement of the administrative law judge’s order.

Later that year, a judge agreed with Brunt, also awarding him $4,492 in counsel fees. Monmouth County Superior Court Judge Paul Escandon said “justice would not be served” if Brunt were not awarded counsel fees, according to the Appellate Division.

The state and Middletown appealed the award of the counsel fees, and the appeals court took up their position.

“Having long-adhered to the American Rule, New Jersey generally disfavors the shifting of fees when they are not expressly authorized,” Rose said, noting that there were no statutes or rules that authorize fee-shifting in cases where petitioners successfully defend favorable administrative decisions.

Larry Loigman, a Middletown solo, represented Brunt.

“We’re obviously disappointed the Appellate Division did not agree to view the judge’s counsel fee a little more leniently,” Loigman said. “This was essentially a motion to enforce a litigant’s rights.

“He’s been battling for years to correct this error, and now he has to pay more out of his own pocket,” Loigman added, noting that no decision has been made as to whether to seek an appeal to the state Supreme Court.

A spokesman for the Attorney General’s Office, which represented the state retirement system, declined to comment on the ruling.

Michael Collins of the Red Bank office of Archer represented Middletown. He did not return a call seeking comment.