A recent Law 360 story by Jeannie O’Sullivan, “NJ Fee Award Didn’t Consider Interrelated Claims, Court Says,” reports that the New Jersey state appeals court has vacated a lower court’s refusal to award counsel fees for the portion of time dedicated to allegations that were ultimately dropped from a lawsuit over a failed air conditioning repair job, ruling in a published decision that the facts surrounding the successful claim and the nixed claims were interrelated.

The three-judge panel’s decision handed a victory to Jeffrey S. Jacobs, who appealed his award of $19,800 in counsel fees in his lawsuit against Mark Lindsay and Son Plumbing & Heating Inc., John Stretavski and Mark D. Lindsay.  Jacobs — who prevailed in his Consumer Fraud Act (CFA) claims but agreed to drop common law torts of malicious prosecution, defamation and tortious interference with economic relationships — had sought a $327,776.70 counsel fee award.

In determining the fee award, an Essex County Superior Court judge had disallowed any time Jacob’s counsel had devoted to discovery related to the common law claims, because he’d only prevailed in the CFA claim.  Acknowledging that state Supreme Court precedent allows a fee determination to be overturned on only “the rarest of occasions” and when a “clear abuse of discretion” exists, the panel disagreed with the lower court’s method.  “The record shows that in reviewing plaintiff's counsel's fee application, the judge did not appreciate the interrelation between facts supporting defendants' unconscionable commercial practices claim under the CFA and the common law torts of malicious prosecution, defamation, and tortious interference with economic relationships,” the appeals decision said.

Further, that judge lacked a “correct understanding or appreciation” of the underlying material facts that prompted the first judge who had been assigned to this case to grant Jacob’s motion for summary judgment on the CFA claims, the appeals court said.  Specifically, the judge’s reasoning made no mention that Lindsay admitted in a deposition to “engaging in the unconscionable commercial practice” of filing criminal complaints with the local police in order to collect on unpaid invoices.

“Here, Lindsay admitted that MLSP has a history of instituting criminal actions as a means of collecting its unpaid invoices.  This outrageous abuse of our criminal justice system is precisely the type of unconscionable commercial practice the CFA was designed to protect consumers from and deter unscrupulous commercial entities from engaging in,” the decision said.  “However, the salutary purpose of the CFA is undercut if the professional work performed by competent private counsel in the course of representing consumers victimized by such practices is arbitrarily undervalued by the judges entrusted to enforce the CFA's fee-shifting provision,” the decision continued.

In the same decision, the appeals court also rejected the defendants’ cross-appeal challenging the $45,000 settlement the parties had reached after Jacobs prevailed in the CFA claim.  Despite the fact that the parties had acknowledged Jacobs prevailed on the CFA claim, the defendants had reserved the right to appeal the grant of summary judgment under CFA.  “Stated differently, defendants' attempt to preserve their right to appeal the Law Division's order that found them liable under the CFA is nothing more than a transparent subterfuge intended to obtain an advisory ruling from this court on a question of law,” the decision said.

After Jacobs hired the defendants to fix his home air conditioning unit, but after three service calls, they were unable to correct the problem, according to the decision.  After each call, the defendants provided an invoice describing the services performed and the parts installed.  Jacobs issued checks for the first two service calls, but placed a stop order on the checks after the defendants’ third unsuccessful repair attempt, the decision said.  Lindsay then filed a report with the Caldwell Police Department, and the police formally charged Jacobs with theft of services, the decision said.

The case is Jeffrey S. Jacobs v. Mark Lindsay and Son Plumbing & Heating Inc. et al., case no. A-3854-16T1, in the New Jersey Appellate Division.