A recent Law 360 story by Nick Muscavage, “NJ Atty Can Pursue $126K Fee Bid Without Written Retainer”, reports that a New Jersey attorney can pursue her bid for $126,000 in legal fees for a matter she never put into a retainer agreement after an appellate panel reversed an earlier court's dismissal of the case, noting that "it is well settled that an attorney-client relationship can be found without a written agreement." On July 9, a two-judge appellate panel reversed the summary judgment granted to the clients of Theresa C. Grabowski, who retained the Marlton-based attorney to bring claims against their insurer for not fully covering lightning damage to their home.
The couple, William and Amanda Baskay, signed a written retainer agreement for Grabowski, according to court documents. The retainer included a provision that said, "If, after completion of the matter at the trial level, either you or the opposing party appeals the result, a new retainer agreement will be drawn which will set forth our agreement with respect to the retention of this firm on appeal."
In May 2009, Grabowski filed a 16-count complaint against the insurance company that included breach of contract and violation of the Consumer Fraud Act, or CFA, among other things. After the trial court dismissed the CFA and punitive damages claims, a jury returned a verdict in favor of the couple against the insurer in the amount of $9,025. The accounts of what occurred next between Grabowski and her clients "are dramatically different," the appellate panel wrote in its July 9 opinion.
Grabowski claims that as she was leaving the courthouse with the couple following the jury's verdict, they asked her to pursue an appeal seeking to overturn the trial court's dismissal of their claims for damages under the CFA, punitive damages, and additional counsel fees and costs, according to court documents. "Grabowski alleged she agreed to represent [the couple] on appeal, and further consented to continue representing them at no additional charge," according to court documents. "Grabowski alleged she did not insist that the parties execute a new retainer agreement because she would not be charging [the couple] any additional fees."
The couple disputed Grabowski's claims and said they did not ask her to file an appeal, but that the attorney "did so on her own," according to court documents. They also said they never signed a new retainer agreement for the appeal. Grabowski filed a notice of appeal on the couple's behalf using the money from the jury verdict to fund the action. In response, the insurer filed a cross-appeal, challenging the verdict in the couple's favor. Grabowski sent an email to the couple inquiring about her outstanding legal fees.
William Baskay responded by email, telling Grabowski, "As it stands now there is to be no appeal," according to court documents. In response, Grabowski told William by email that "[t]he appeal has already been filed — which you knew, approved of and agreed to throughout (since the adverse rulings). As you know, the appeal was filed back in September, as I forwarded copies of it to you." William did not reply to this email, according to court documents, and Grabowski continued to represent the defendants in the appeal and cross-appeal.
Ultimately, in April 2014, a state appellate panel affirmed the earlier dismissal of the couple's claims under the CFA and for punitive damages. Three years later, Grabowski filed a complaint against the couple seeking to recover attorney fees "in excess of $126,678" for representing them against their insurance company. William and Amanda Baskay filed separate answers to the complaint, both claiming that Grabowski's claims were barred by the six-year statute of limitations.
New Jersey state law requires that a claim for breach of contract be filed within six years from the date the cause of action accrues, but the appellate panel noted that a "contract for legal services is not like other contracts." Previous case law in New Jersey holds that because of "the unique and special relationship between an attorney and a client, ordinary contract principles governing agreements between parties must give way to the higher ethical and professional standards enunciated by our Supreme Court."
The appellate panel, in its July 9 opinion, further noted that the "facts of this case are disputed and far from settled." "However, the law applicable to the statute of limitations in attorney fee collection actions is not," the appellate panel added. If the six-year statute of limitations began when the couple's appeal concluded in April 2014, then Grabowski's claims against the couple were filed within the legally-permitted timeframe, the appellate panel noted. The panel also rejected the couple's argument that Grabowski's representation ended in 2011 when William sent the attorney the email stating that, "As it stands now there is to be no appeal."
"This email is hardly an unambiguous statement that Williams intended to terminate Grabowski's services," the appellate panel wrote. "Indeed, when Grabowski informed him the next day that the appeal had already been filed, William failed to respond." On remand, the appellate panel instructed the trial court to consider the couple's claim that Grabowski's complaint against them should have been barred because she did not give them "pre-action notice" of their right to seek fee arbitration.