Posted on July 7, 2009 by Sandra C. Fava

WHO PAYS THE COUNSEL FEES?

If you've ever been involved in any type of litigation you are probably aware of how expensive the process can be.  Attorneys bill for their time.  In addition there are the copying costs, facsimiles, postage, etc.   When experts are involved those fees must also be accounted for. When a  trial is involved the fees can quickly mount.  Trials involve preparation not to mention days and hours of an attorney's time.

Almost every client or prospective client asks the same question, "How much will this cost me?"  The answer is an unsatisfying it depends.  We often tell clients that we do our best to control our side of the case, however we have no control over the other side.  It's nearly impossible to give clients an accurate fee estimate as things change on a daily basis.  In family law, the minute an emergency arises that requires an emergent application to the court for relief, fees are expended.  So who pays these fees?

The issue of fees can be addressed in one of two ways.  One, the parties reach an agreement as to the responsibility of fees.  Or, the parties can leave it up to the judge to decide.

In a recent unpublished Appellate Division decision of Bonder v. Bonder, decided June 11, 2009, A-1262-08T3, the Court revisited the issue of payment of counsel fees in a divorce matter.

These parties had acrimonious dealings during the pendente lite phase of their matter. After a day of trial they reached an agreement as to all issues except for the distribution of marital debt and payment of plaintiff-wife's counsel fees. Seven more days of trial continued as to those two issues. At the end, the attorneys agreed to submit Certifications of Services as to the fees expended for the trial judge to review. Before the Certifications were filed, the judge telephoned the attorneys to get the amount of fees spent and issued his written opinion. The judge denied the request for counsel fees.

Plaintiff filed a motion for reconsideration arguing that the judge erred by failing to allow the filing of the Certifications of Services and that the judge failed to consider defendant-husband's bad faith dealings, especially during the pendente lite phase of the litigation. The motion for reconsideration was denied and plaintiff's appealed followed.

The Court affirmed the trial court's opinion finding that defendant's pendente lite obligations were excessive, plaintiff would leave the marriage with substantial cash assets vis a vis defendant's debt, and defendant did not act in bad faith.

N.J.S.A. 2A:34-23 permits an award of counsel fees in a family law matter and requires a judge to "consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good faith or bad faith of either party." Rule 5:3-5(c) provides that the court may, in its discretion, make an award of attorney's fees to the parties in a family law matter upon consideration of the financial circumstances of the parties, their ability to pay their own fees or contribute to the fees of the other party, the good faith of each, party the extent of fees incurred and any fees previously awarded or paid, the results obtained, and the degree to which fees were incurred to enforce existing orders or compel discovery.

In assessing a request for an award of counsel fees, the judge must determine whether the party requesting the fees has a financial need; the party who's requested to pay the fees has the financial ability to do so; and when the first two factors have been established, whether the party seeking the award acted in good faith.

In the Bonder matter, plaintiff-wife was employed as a teacher and defendant-husband as a doctor. Despite the large discrepancy in their incomes, the Court still did not find a need or a basis for an award of fees to the plaintiff.

During litigation, especially in family law matters where emotions tend to run high, litigants who act in bad faith and have the financial wherewithal, run the risk of being forced to pay the other side's counsel fees.
 
Tags: ,
Posted on April 20, 2009 by Robert A. Epstein

Appellate Division Explores Counsel Fee Awards and Requests for Oral Argument on Motions

 We have previously blogged on the issues of counsel fee awards and a trial court's decision to grant or deny a party's request for oral argument on a pending motion.  Two of these prior postings can be found here and here.  Both of these issues framed the Appellate Division's recent unpublished opinion in Bove v. Bove, found here. 

The parties at issue were divorced on June 28, 2001 and three children were born of the marriage (two adult sons and a 16-year old daughter).  A supplemental Judgment of Divorce established that the Wife would have sole physical custody and the parties would share joint legal custody.  Additionally, the Husband was required to create trust funds for the children's college expenses and to be responsible for 80% of the daughter's college tuition.

The Wife sought to enroll the daughter in a private high school, informing the Husband that she could not pay for any part of private school tuition, that she was taking the daughter to open houses and that she asked for the Husband's "thoughts on the matter."  The Husband responded in a letter that he would not contribute to tuition prior to college and was displeased that the issue was broached with their daughter before him.  Nevertheless the Wife moved forward with the process and, when the Husband sought to have the Wife confirm in writing that she would not seek contribution from him for high school tuition, she refused.  The Wife also contended that the Husband was using the college trust funds for non-college expenses, as defined by the supplemental JOD, and the Husband contended that the Wife ignored, and then hedged, on his timely requests for vacation with the children. 

The Husband filed an application for an order regarding the issues of vacation, pre-college tuition for their daughter, and the definition of "college expenses" as set forth in the supplemental JOD.  He also sought counsel fees.  The trial court entered an order on March 28, 2008 allowing the Husband to take the daughter on the scheduled vacation outside of the United States.  As the wife had only previously submitted an opposing certification as to the vacation issue, she waited until the date of oral argument to submit an opposition to the remaining issue.  In his subsequent reply, the Husband added that the Wife had also recently sold investment property, the proceeds from which should be used to reimburse the Husband for counsel fees.  He filed a certification of services with his application pursuant to R. 4:42-9. 

The trial court later informed the parties that it would decide on the remainder of the Husband's motion on the papers, to which both parties objected and the Wife responded by filing a brief that failed to contest the Husband's claim regarding her sale of the investment property.  In finding for the Husband on his motion, the trial court also granted him $5,000 in counsel fees pursuant to R. 5:3-5(c)(3), (7) and (9).  In this regard, the trial court specifically found that the Wife could not make unilateral decisions and then refuse to sign a proposed consent order, as well as seek payment for things not covered by the supplemental JOD. 

The Wife filed a motion for reconsideration of the trial court's order stating, as to the counsel fees issue, that the Court erred by failing to make findings regarding bad faith by the Wife and the parties' mutual ability to pay.  The Husband filed a cross-motion and, as part of same, again sought counsel fees.  The trial court again chose to decide the motion on the papers, despite the Wife's request for oral argument.  As to the issue of counsel fees, the trial court affirmed its award again in reliance on R. 5:3-5(c) - as to (c)(3) that the Wife's position as to the daughter's enrollment in private school was unreasonable and her doing so despite the Husband's contrary view was deemed bad faith; as to (c)(7) that the Husband had prevailed on his motion; and as to (c)(9) that the Wife had resisted the vacation request without a sufficient basis.  The trial court rejected the Wife's argument that the fees award was inappropriate because it did not consider the parties' ability to pay because the Wife had failed to provide any financial information and, additionally, found that she had the ability to pay based on the proceeds received from sale of the investment property.  The court then granted the Husband a $1,000 in counsel fees, finding that the Wife's reconsideration application lacked merit. 

On appeal, the Appellate Division affirmed the initial grant of $5,000 in counsel fees on the Husband's first application.  In so holding, the Appellate Division considered N.J.S.A. 2A:34-23, which requires a court to "consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party."  The Appellate Division then referenced certain factors laid out in R. 5:3-5(c), including whether the party seeking fees is in financial need; whether the party against whom fees are sought has the ability to pay; the good or bad faith of either party in pursuing/defending the action; the nature and extent of the services rendered; and the reasonableness of the fees sought.

In light of these factors, the Appellate Division noted that the responsibility to provide information as to financial circumstances rests with the parties.  Interestingly, it supported this notion by referencing how a court may dismiss a party's pleadings when a Case Information Statement is not properly submitted pursuant to R. 5:5-2.  As the trial court only had the Husband's financial-related information to rely on, as the Wife had failed to rebut his assertions, the Appellate Division found that the trial court had not abused its discretion in rendering the award. 

As to the fee award granted to the Husband on the Wife's motion for reconsideration, the Appellate Division analyzed whether the Wife acted reasonably and in good faith under R. 5:3-5(c).  It noted that, where both parties litigate in good faith, fees are not awarded unless the parties exhibit unequal economic positions and, where one party acts in bad faith, such economic positions carry little relevance because the award becomes a protection for the "innocent party" and a "punish[ment]" for the "guilty party."  Further, the Appellate Division stated that a finding of bad faith is not required.  Rather, it concluded that only the good faith of the parties' positions should be considered, referencing the definition of "good faith" in Black's Law Dictionary as, "a state of mind consisting in . . . honesty in belief and purpose . . . ." With these legal principles in mind, the Appellate Division affirmed the trial court's finding that the Wife had acted "without good faith," and had the ability to pay the $1,000 counsel fee award to the Husband. 

Finally, the Appellate Division held that the trial court erred in not holding oral argument on the Wife's motion for reconsideration pursuant to R. 5:5-4.  It noted that, while the grant of oral argument is discretionary, a strong presumption exists favoring oral argument on motions other than "calendar matters and routine discovery applications."  Nevertheless, the Appellate Division declined to remand the matter because it found that doing so would only increase the parties' expenses and add nothing more to an "already ample record" in light of the trial court "evidential[ ] aware[ness] of the issues and familiar with the parties' arguments."  
Tags: , , , , , , , ,
Posted on April 2, 2009 by Eric S. Solotoff

IF I WIN, DO I GET COUNSEL FEES? - ANOTHER PERSPECTIVE

Apple Sulit-Peralejo, a partner in our Atlantic City office blogged earlier today regarding counsel fees and bad faith. 

Often counsel fee decisions come down to findings of bad faith and the case law certainly is replete with references to bad faith.  However, when Court Rule 5:3-5(c) was revised about 10 years ago, the standard was relaxed such that bad faith was no longer necessary, but rather, the "reasonableness" of the positions became the standard.  Or did it?  Reading the cases, such as the one cited in Apple's post. a lot of time was spent on the issue of bad faith.

That said, when you see large counsel fee awards, it is usually after a trial.  In my experience, though few cases are tried (about 1 to 2%), when cases get tried, it is because one party's conduct or the positions that the took were so absurd that a finding of bad faith is almost inevitable.

Earlier this week, after a 5 day trial that took place over the better part of a year, my client was awarded $40,000 in legal fees.  In this case, she was the parent of primary residence in the parties' divorce agreement.  She told her ex-husband that she was going to move to Monmouth County from Hudson County with the parties' child, to live with her fiance'.  The husband made a motion for custody, essentially seeking to preclude our client from moving with her child.  The case law is pretty clear that the custodial parent can move within the state of NJ.  After we cited that in our brief in opposition to the motion, he concocted a new argument that he was the de facto custodial parent and the trial followed on this issue.  During the trial we were able to prove that his claim was bogus and that for a very short period of time post divorce when he had the child more than 50% of the time, it was because he violated the Agreement and refused to return the child.  This conduct as well as his lies were simply unreasonable.  Similarly, the Court found that he was actively trying to remove our client from the child's life.  This too was unreasonable.

In another trial that took place last summer, despite the fact that our client had a greater income and greater assets (she had certain exempt assets) than her husband,  he was ordered to pay $25,000 toward my client's fees after a 6 day trial.  Why?  He sought alimony and his position was bogus.  In reality, he earned more than our client until the deterioration of the marriage and then he essentially refused to work as he had.  He also took absurd position as to issues where the law and facts made the result a certainty.  In addition, he conduct throughout the matter was bad.

Last year, after another 5 day custody trial, the Court awarded my client $81,000 out of about $90,000 in legal and expert fees because of her husband's "extreme bad faith."  In this case, despite an adverse expert report, no expert of his own and no real evidence, he forced this custody trial.  His only basis for his position, other than his unyielding and unbending personality, was his claim that the children wanted to spend more time with him.  That said, one reason for this was that he was improperly involving the children in the litigation.  He insisted that the children be interviewed despite the fact that (1) the joint expert said that it would be harmful for the children to speak to the Court; (2) the joint expert conceded that the kids would state that the children wanted to spend more time with the father, but that that was not in their best interests, and (3) the fact that I stipulated that the kids would say whatever he said they would say.  He couldn't do any better than my stipulation but he still forced the kids to meet with the judge.  There were certainly ancillary issues where the husband took unreasonable positions which he forced to be tried and lost. 

In another case, after a 10 1/2 day trial, my client was awarded $100,000 in legal fees and $60,000 in expert fees after a finding of bad faith.  In fact, the Court cited at least 10 reasons that fees were merited, citing bad conduct, discovery abuses, taking bad positions, financial manipulations, making false claims, etc.  This case was tried because despite a $400,000 difference in income and a 16+ year marriage, he refused to pay alimony.  In fact, he never tried to settle the case.  In fact, much of the case revolved around the fact that the accounts receivable in his business increased $150,000 in the 6 months between when my client said she wanted a divorce and when she filed.  Of course, he claimed that his income, which had been steadily rising was down too.  This was even though his billings were up by about $100,000 in that year and his expenses down about $100,000.  Almost every position was absurd. 

Interesting, at the recent argument of the appeal on that case, his attorney argued that the fee award was "piling on".  I remarked that I did not know that the standing had been changed to "piling on."

In another trial about 2  1/2 s ago, my client was awarded $50,000 in legal fees.  Again, bad faith was found.  The husband in that case was incapable of being truthful on any issue or fact.  On top of that, he was trying to enforce a mediation agreement signed by neither party, followed by neither party, and containing factual representations provided by him regarding the exemption of assets that was fraudulent.  Similarly fraudulent was the fact that the single largest asset was never disclosed.

What is the common denominator in each of these large fee awards after trial?  One party's conduct and/or positions advanced was outrageous.  The bottom line is that though reasonableness may be the standard, in those 1 to 2% of cases that get to trial, you will probably see bad faith by one of the parties.
Tags: , , ,
Posted on September 3, 2008 by Eric S. Solotoff

ENFORCEMENT OF ORDERS - ABSOLUTE OR ELUSIVE

One of the hardest questions to answer for a client is "why didn't the judge enforce the Order?" 

Unfortunately, there is no good answer for this question.  Some judges are extremely literal in interpreting an Order and strict with regard to non-compliance.  Others are inexplicably not.

In a matter today where a client who has custody sought sanctions and counsel fees against his former spouse who refused to return the child to him in the state that he now lives after the child's summer visit, the judge's rulings were somewhat contradictory. The mother argued that the Consent Order was only a temporary one but the judge rejected the argument and said that the Order was clearly not temporary.  One would think that that decision would naturally lead to sanctions for interference with a custody Order under the Court Rules and at the very least, would give rise to an award of counsel fees for having to file an emergent application to have the child returned (which was granted when filed and confirmed today).  Wrong.  Despite clear defiance of an Order, including defiance after the mother got an attorney who could explain the legal ramifications of her conduct, there were no repercussions in terms of an award of fees or sanctions. 

I have had other matters throughout the years where the result would have been entirely different.  However, in my experience, once a party knows that a judge is not strident in enforcement, they could become empowered to be even more brash in their defiance. 

With all due respect, this does not serve the legal system.  Moreover, the Court Rules suggest that a party who is forced to file an enforcement motion should be entitled to an award of fees if successful.  From a policy standpoint, they should be made whole because they would not have had to file an application but for the other person's failure to comply with an Order.  One could argue that unless 100% of the fees are ordered, that the belligerent party has gained some measure of victory, or at least, was able to inflict some measure of pain on the other party.  That result is unfortunate and for policy reasons, should not be countenanced by a Court.  Enforcing Orders and awarding a full measure of fees would be a way to remedy this and perhaps prevent future non-compliance.

Tags: , ,
Posted on August 26, 2008 by Eric S. Solotoff

ANOTHER CELEBRITY DIVORCE - CHILD SUPPORT IN HIGH INCOME CASES - THE APPELLATE DIVISION WEIGHS IN ON THE STRAHAN MATTER

Previously I blogged about child support in cases where the combined net income exceeds the upper levels of the Child Support Guidelines.  To see that post, click here.

That issue was prominent in the Appellate Division's decision in the Strahan case which was released on August 26, 2008 as a reported decision (meaning that the case has precedential effect). To see the full text of the case, click here.

This case involved the divorce of Michael Strahan, formerly of the New York Giants and his former wife, Jean.  At issue as to child support was support for their three year old twin daughters.

The trial court found that the basic child support amount under the guidelines was $35,984 a year but then found that the children had a supplemental need of $200,000 a year, for a total
of $235,984 a year.  Mr. Strahan was ordered to pay 91% of this.

The Appellate Division found several errors in the amount and allocation of child support. First, the trial court took as both accurate and reasonable Jean's budget, which included $27,000 per year in clothes, $30,000 per year in landscaping, gifts of diamonds for grandparents, a vacation for the nanny, etc.  The Appellate Division found that there was duplication between the children's needs and Jean's needs, that certain items should have been eliminated and that others were not reasonable. Further, the court held that while Mr. Strahan expressed  at trial his desire not "to spoil" the children and to teach them the value of money, the trial court  failed to address
plaintiff's "legitimate right . . . to determine the appropriate lifestyle of [his] child[ren]."

The Appellate Division also found that it was error not to impute income to Jean, who had earned $70,000 per year previously.  Interestingly, they commented that "employment opportunities were, in all likelihood, enhanced by her celebrity marriage. There is no question that as a healthy, educated, 41-year-old, (she) is capable of earning her own income."

The Appellate Division also reversed the requirement that Mr. Strahan maintain $7.5 million in disability insurance, in part because he had retired, and in part because it exceeded the life insurance that he was required to maintain.  The Court noted that if he became disabled, he would be entitled to file the same change of circumstances motion as any other litigant. 

However, Mr. Strahan's request to have the matter remanded to a new judge was denied.  The Appellate Division noted, once again, that an adverse ruling does not equate to bias. 

Tags: , , , , ,
Posted on August 9, 2008 by Eric S. Solotoff

The McGreevey Divorce - The Decision is In

Previously, I blogged about the trial in the McGreevey divorce.  In that entry, I wondered whether it was the desire for retribution that was driving the case and whether the legal and expert fees exceeded the matters at issue.  To see my prior post, click here.

The decision of the Court was released yesterday and unfortunately I was right.  As for the one party playing the victim throughout and until the end, that was evidenced by Ms. Matos McGreevey's statement released even before the decision was released. 

As to the decision, it was decidedly in favor of Mr. McGreevey on the major issues raised by his wife.  Whether the issues raised were ever real and bona fide issues, that is another story.  In any event, the trial judge was clearly frustrated with the parties and it showed in her decision.  To read the decision click here.

Some of the highlights of the decision and Judgment of Divorce are as follows:

-There is no obligation to pay alimony.  In fact, the Judge found that to the extent that there was a need for alimony, it was caused by the legal fee debt associated with the case.

-Mr. McGreevey's income for support purposes was $175,000 - approximately $25,000 more than his employability expert opined and significantly more than he claimed he could earn as a seminary student. Child support was based upon that income and his wife's former income (she was laid off just prior to the end of the trial.) The Child Support Guidelines were used and then enhanced slightly due in large part to the fact that Mr. McGreevey was being supported by his partner.  He did not get a credit for the support for his other child because he was not currently paying it.


-The wife's claim for celebrity goodwill did not fly nor did her claim that marital lifestyle should be fixed based upon the lifestyle provided by the State of New Jersey to the Governor and First Lady.

-Each side had to pay their own legal fees. 

-The wife's fees total fees were more than $525,000   after receiving a courtesy discount of approximately $125,000.  Only $50,500 had been paid to date.  Mr. McGreevey's fees totaled $498,000 and he had paid only approximately $170,000. 

Given the costs and the results, could it have possibly been all worth it?  Based upon the Court's decision, it seems unlikely.  That is, unless there was a desire to drag the other through the mud and exact vengeance in a public arena.  If that was the victory sought and received by either or both of the parties, then the system failed.

Tags: , , , , , , , , ,
Posted on August 6, 2008 by Eric S. Solotoff

SOME TIMES YOU JUST HAVE TO TRY A CASE

Several months ago, I posted a blog entry entitled "All Cases Have a Life of Their Own"  To view that entry click here.  The premise was that while most cases settle, they usually will not settle until both parties are ready, emotionally and otherwise, to move on.  That may be the case even if a party's best case resolution is on the table from the outset.  If they are not ready to settle at that time, they will not.

In a more rare occasion, a party is never ready emotionally to settle and a case just has to get tried.  That is unfortunately the case in a matter that I have that is going to trial next week.  Because of the other party's mind set, my adversary has for many months told me that the case would be tried.  He did not tell me this as a threat or to get leverage - just as a fact.  In fact, a settlement proposal we made has been pending for about a year without a response.  In addition, no bona fide efforts were made by the other side to settle at either the Early Settlement Panel, mandatory economic mediation or the Intensive Settlement Conference.  During the party's recent deposition, he said that "it was too late" to settle, once my client hired an attorney. 

Obviously, this is no consolation to my client who has been eager to try to resolve this matter from the start.   Hopefully, the remedy will be a generous award of counsel fees at the end of the trial to compensate my client for having to endure the husband's conduct which has been nothing short of unreasonable, if not bad faith.

Tags: , , , , , , , ,
Posted on June 12, 2008 by Eric S. Solotoff

IS THERE A PENALTY FOR LYING

Frequently in divorce, and I am sure many other cases, there are diverging versions of an event.  Often that is caused by the fact that people have a different perception of events.  Maybe it is a Mars/Venus thing when it comes to husband/wife relationships.  in these cases, both people honestly believe their version of events.

Then again, there are people that just lie, including lying under oath. 

A client that I was speaking to today asked me how "they" can get away with lying.  She was talking about her husband and his counsel.  The fact that litigants are not always truthful is a sad fact.  The fact that their counsel was not truthful is eminently worse.

Lawyers have an ethical  duty of candor to the court and fairness to the other side.  That means that you cannot make misrepresentations to a court or opposing counsel.  It means that you cannot omit clearly important information when there is a duty, expectation and obligation to provide it.  You should not cobble together out of context parts of a trial record in an attempt to mislead an appellate court.  You should not stay silent if you told your adversary that the case was settled and then your client backed out. You should not make representations to a court that simply are not true.  Sadly, it happens too often and undermines litigants' confidence in the system.  It also results in absurd squabbling which can take time away from dealing with the real issues in the case.  There are ethics committees to deal with these issues and hopefully there is a remedy for such flagrant dishonesty.

For litigant's, perjury is still a crime though this author has never seen a divorce litigant referred to a prosecutor for perjury.  However, at trial, these lies, when inevitably debunked, go to destroy a party's credibility.  Often, cases are won or lost on credibility determinations.  In addition, the lying can lead to a finding of bad faith, which leads to counsel fees. 

These cases can be difficult enough when even when every one is on the up and up.  So don't lie.  

 

Tags: , , , , , ,