Case Title: Kathleen L. Lettenmaier v. Lube Connection, Inc.

Citation: 

Docket Number: a-73-98

State: new-jersey

Court: New Jersey Supreme Court

Date: 1999-12-01T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). LONG, J., writing for a unanimous Court. The issue before the Court is whether counsel fees under the Consumer Fraud Act should be considered part of the amount in controversy in calculating the $10,000 jurisdictional limit established by Rule 6:1-1(c) for access to the Special Civil Part of the Superior Court. On October 11, 1995, Kathleen Lettenmaier filed suit in the Special Civil Part, alleging negligence and common law fraud against Lube Connection, Inc. as a result of maintenance work Lube Connection did on Lettenmaier's car. She also alleged a violation of the Consumer Fraud Act and sought treble (triple) damages not to exceed the jurisdicational limit of the court, which was $10,000, plus interest, attorneys' fees, and costs of suit. The matter was arbitrated. The arbitrator found in favor of Lettenmaier in the amount of $3,080, but would not decide whether Lube Connection had committed an act of consumer fraud. Lube Connection sought a trial in the Special Civil Part. Thereafter, Lube Connection failed to respond to Lettenmaier's discovery demands and the trial court entered an order of default. A proof hearing was held and a final judgment of default was entered in Lettenmaier's favor in the amount of $9,240 ($3,080 trebled). Lettenmaier requested attorneys' fees. Although she sought a greater amount, the court capped Lettenmaier's fee award at the difference between the award and the $10,000 jurisdictional limit, or $760. The trial court noted that Lettenmaier was entitled to more in attorneys' fees, but concluded that such fees are an element of the amount in controversy for jurisdictional purposes. In ruling as it did, the trial court expressed its concern about assessing attorneys' fees in excess of the $10,000 jurisdictional limit against a defendant who is not aware of such a possibility. The court gave Lettenmaier the option of transferring the matter to the Superior Court, Law Division. Instead, Lettenmaier agreed to waive recovery of any additional amount and accepted the $10,000 award. A total award of $11,028.25 represented the treble damages, attorneys' fees and costs of suit. Lettenmaier moved for reconsideration, seeking the full amount of her attorneys' fees, which by then were growing as a result of her motion and Lube Connection's motion to set aside the default judgment. Lettenmaier argued that counsel fees under the Consumer Fraud Act can be awarded in excess of the jurisdictional limit. The trial court disagreed, concluding that consumer fraud counsel fees are part of the amount in controversy. On Lettenmaier's appeal, the Appellate Division affirmed, concluding that the costs considered in Rule 6: 1-2(c) do not include consumer fraud counsel fees. The Supreme Court granted certification. HELD: Counsel fees under the Consumer Fraud Act are not part of the amount in controversy in calculating the $10,000 jurisdictional limit established by Rule 6:1-1(c) for access to the Special Civil Part of the Superior Court. 1. The remedies under the Consumer Fraud Act are treble damages, attorneys' fees, and costs. The Act has three main purposes: to compensate the victim for his or her actual loss; to punish the wrongdoer through the award of treble damages; and, through the award of counsel fees, to attract competent counsel willing to take a case of minor monetary value. The Act is remedial in nature; therefore it is to be construed liberally in favor of the consumer. (Pp. 5-8) 2. Structurally, the Consumer Fraud Act distinguishes between damages and non-damages. The damages are the ascertainable loss that is to be trebled. The non-damages are reasonable attorneys' fees, filing fees, and reasonable costs of suit. The Legislature did not specifically state that counsel fees are costs; nonetheless, it implicitly recognized counsel fees as outside the class of damages and as a component of fees and costs. (Pp. 8-9) 3. The Court's conclusion is bolstered by the State's longstanding approach to the issue of the nature of counsel fees. In addition, the only New Jersey case decided under a similar scheme has reached the same conclusion. Moreover, a majority of the out-of-state courts have held that counsel fees, not otherwise characterized, are to be considered as costs. (Pp. 9-13) 4. Consumer fraud counsel fees can properly be characterized as costs, but they need not be. It does not follow that if consumer fraud counsel fees are not costs within Rule 6:1-2(c), that they are necessarily part of the amount in controversy. Important public policy arguments lead to the conclusion that, even if consumer fraud counsel fees cannot be considered true costs, they cannot be included in the jurisdictional amount in controversy. (Pp. 13-16) Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Special Civil Part for further proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES O'HERN, GARIBALDI, STEIN, COLEMAN and VERNIERO join in JUSTICE LONG'S opinion. SUPREME COURT OF NEW JERSEY A- 73 September Term 1998 KATHLEEN L. LETTENMAIER, Plaintiff-Appellant, v. LUBE CONNECTION, Inc., a New Jersey Corporation trading as LUBE CONNECTION, Defendant-Respondent, and JOHN DOE, a fictitious name, Defendant. Argued October 13, 1999 -- Decided December 1, 1999 On certification to the Superior Court, Appellate Division, whose opinion is reported at 316 N.J. Super. 319 (1998). Thomas E. Maxim argued the cause for appellant. William P. Robertson argued the cause for respondent (Miller, Robertson and Rodgers, attorneys). The opinion of the Court was delivered by LONG, J. We are here called upon to determine whether counsel fees under the Consumer Fraud Act (N.J.S.A. 56:8-19) should be considered part of the amount in controversy in calculating the $10,000 jurisdictional limit established by Rule 6:1-1(c) for access to the Special Civil Part of the Superior Court. We have concluded that such fees are not part of the jurisdictional calculus. I The case arose on October 11, 1995, when plaintiff Kathleen Lettenmaier filed suit in the Special Civil Part alleging negligence and common law fraud against defendant Lube Connection, Inc., as a result of certain maintenance work defendant performed on her automobile. The details of plaintiff's complaint are irrelevant to the issues presented here. She also alleged a violation of the Consumer Fraud Act (N.J.S.A. 56:8-1 to -91), and demanded treble damages not to exceed the jurisdictional limit of the court, plus interest, attorney's fees and costs of suit. Defendant filed an answer and pre-trial discovery ensued. An arbitrator found in favor of plaintiff in the amount of $3,080, but refused to decide whether defendant committed an act of consumer fraud. Defendant filed a notice seeking a trial de novo. Thereafter, defendant failed to respond to plaintiff's discovery demands and the trial court entered an order of default. A proof hearing was held and a final judgment of default was entered in plaintiff's favor in the amount of $9,240 ($3,080 trebled). Plaintiff requested attorneys' fees. Although plaintiff sought a greater amount and the trial court acknowledged plaintiff's entitlement thereto, the court capped plaintiff's fee award at $760, the difference between the treble damages of $9,080 and the $l0,000 jurisdictional limit of the court. Although concluding that attorneys' fees are not part of damages, the trial court held that such fees are an element of the amount in controversy for jurisdictional purposes. In ruling as it did, the trial court expressed concern about assessing attorneys' fees in excess of the $10,000 limit against a defendant who is not aware of such a possibility. The trial court then gave plaintiff the option of transferring the case to the Superior Court, Law Division. Instead, plaintiff agreed to waive recovery of any additional amount and accepted the $10,000 award pursuant to Rule 6:1-2(c). Final judgment was entered in the amount of $11,028.25, consisting of the treble damage award plus $760 in counsel fees and costs of suit. Plaintiff moved for reconsideration, seeking the full amount of her attorney's fees, which by then were mounting as a result of her motion and defendant's motion to set aside the default judgment. Citing Nieves v. Baran, 164 N.J. Super. 86, 89 (App. Div. 1978), plaintiff argued that counsel fees under the Consumer Fraud Act can be awarded in excess of the jurisdictional limit. The trial court disagreed, reasoning that counsel fees are unlike the kinds of costs that are excluded from the jurisdictional limit of the Special Civil Part. . . . The only types of additional money awards that can be added to the $10,000 limit in the Special Civil Part . . . are . . . filing fees, court officer commissions, mileage fees, those types of costs that are provided in [the] statute and that are predictable based on the dollar amount of the judgment and the fee schedules established by Rule or statute. Thus, the trial court concluded that Consumer Fraud Act counsel fees must be part of the amount in controversy. On plaintiff's appeal the Appellate Division affirmed. Lettenmaier v. Lube Connection, Inc. 316 N.J. Super. 319 (1998). Relying on Wisser v. Kaufman Carpet Co., 188 N.J. Super. 574 (App. Div. 1983), the panel concluded that [c]osts as used in R. 6:1-2(c), simply put, do not include consumer fraud counsel fees. In reaching its conclusion, the Appellate Division considered a number of federal diversity cases in which statutory counsel fees were used to reach the jurisdictional minimum. Lettenmaier, supra, 316 N.J. Super. at 324 (citing Garcia v. Gen. Motors Corp., 910 F. Supp. 160 (D.N.J. 1995)). Because a party suing under the Consumer Fraud Act is entitled to counsel fees, the Appellate Division reasoned that those fees are part of the amount recoverable and thus subject to the Special Civil Part's jurisdictional limit. Id. at 321. We granted plaintiff's petition for certification. 158 N.J. 74 (1999). (1) Civil actions seeking legal relief when the amount in controversy does not exceed $10,000; . . . (c) Where the amount recoverable on a claim exceeds the monetary limit of the Special Civil Part . . ., the party asserting the claim may waive the excess over the applicable limit and recover a sum not exceeding the limit plus costs. (Emphasis added). Additionally, Rule 6:6-4 prescribes that: Upon receipt of the verdict of a jury . . . the clerk shall note the judgment on the jacket and it shall take effect forthwith. The clerk shall thereupon enter the judgment and tax the costs. (Emphasis added). Rule 6:1-1(c), which addresses the subject of fees states: The fees charged for actions in the Special Civil Part shall be in accordance with N.J.S.A. 22A:2-37.1, provided that the face of the pleading and summons alleges the amount in controversy does not exceed $10,000, and the fees for actions which are not filed in the Special Civil Part shall be in accordance with N.J.S.A. 22A:2-6 et. seq. N.J.S.A. 22A:2-37.1 enumerates the fees to be charged by the clerk in a Special Civil Part action. They include fees for filing, service of process, jury, warrants, and sale of property. Importantly, N.J.S.A. 22A:2-42 provides for a nominal award of attorneys' fees in Special Civil Part cases to be taxed by the clerk: There shall be taxed by the clerk of the Superior Court, Law Division, Special Civil Part in the costs against the judgment debtor, a fee to the attorney of the prevailing party, of five per centum (5") of the first five hundred dollars ($500.00) of the judgment, and two per centum (2") of any excess thereof. That statute comes into play in cases in which counsel fees are not otherwise awardable under the Rules or under a specific fee shifting provision. Alba v. Sopher, 296 N.J. Super. 501 (App. Div. 1997). The Consumer Fraud Act became law in 1960 to combat the increasingly widespread practice of defrauding the consumer. Cox v. Sears Roebuck & Co., 138 N.J. 2, 14 (1994) (citing Senate Committee Statement to the Senate Bill No. 199 (1960)). In its original form, only the Attorney General could bring an enforcement action. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604 (1996). In 1971, however, the Act was amended to allow private citizens to enforce its provisions. Ibid. The amendment also expanded the remedies available to include treble damages along with attorneys' fees and costs. The Consumer Fraud Act has three main purposes: to compensate the victim for his or her actual loss; to punish the wrongdoer through the award of treble damages, Roberts v. Cowgill, 316 N.J. Super. 33, 45 (App. Div. 1998); and, by way of the counsel fee provision, to attract competent counsel to counteract the community scourge of fraud by providing an incentive for an attorney to take a case involving a minor loss to the individual. Silva v. Autos of Amboy, Inc., 267 N.J. Super. 546, 555 (App. Div. 1993). Because it is a remedial statute, its provisions are construed liberally in favor of the consumer to accomplish its deterrent and protective purposes. Cox, supra, 138 N.J. at 15-16; Roberts, supra, 316 N.J. Super. at 45; Gennari, supra, 148 N.J. at 604 (stating that [t]he history of the Consumer Fraud Act is one of constant expansion of consumer protection ). The question presented here is how to reconcile the counsel fee provisions of the Consumer Fraud Act with the jurisdictional limits of the Special Civil Part. As we understand it, both the trial court and the Appellate Division ruled that, because consumer fraud counsel fees are not costs under Rule 6:1-2(c), they therefore must be part of the jurisdictional amount in controversy in Rule 6:1-2. We disagree with that conclusion for several reasons. First, we doubt the basic conclusion that counsel fees under the Consumer Fraud Act are not to be considered costs within the meaning of the Part VI rules. To be sure, unlike some fee shifting statutes, Consumer Fraud Act counsel fees are not explicitly denominated as costs. See, e.g., N.J.S.A. 10:5-27.1 (providing that prevailing party in suit under New Jersey Law Against Discrimination may be awarded reasonable attorneys' fees as part of the costs ). The Consumer Fraud Act prescribes: Any person who suffers any ascertainable loss of moneys or property . . . as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act . . . may bring an action . . . in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit. Structurally, that statute provides clues about the appropriate characterization of Consumer Fraud Act counsel fees. It broadly distinguishes between damages on the one hand and non-damages on the other. The damages are the ascertainable loss (referred to in sentence one), which is to be trebled (referred to in sentence two). The non-damages are reasonable attorneys fees, filing fees and reasonable costs of suit. In fact, those are the costs that a litigant incurs in suing for a Consumer Fraud Act violation. Thus, while the Legislature did not specifically state that counsel fees are costs, it implicitly recognized counsel fees as outside the class of damages and as a component of fees and costs by lumping counsel fees, filing fees and costs together. See Maday v. Elview-Stewart Systems, Co., 324 N.W.2d 467 (Iowa 1982) (examining structure of statute allowing counsel fees and concluding that, because such fees were grouped with costs, they were costs). That conclusion is bolstered by our State's longstanding approach to the issue of the nature of counsel fees. For example, Rule 4:42-9, the general counsel fee rule, which is incorporated by reference in Rule 6:6-1, specifically refers to the inclusion of allowable counsel fees in taxed costs. Further, in U.S. Pipe & Foundry Co. v. United Steelworkers of Am., 37 N.J. 343 (1962), this Court interpreted the former counsel fee rule, R.R. 4:56-7, and stated that, if allowable, counsel fees are included in the taxed costs. Additionally, as we have indicated, N.J.S.A. 22A:2-42 authorizes the clerk of the Special Civil Part to include an award of counsel fees in the taxed costs, where there is no other authorizing authority. Those counsel fees have been declared by the Legislature as fees to be taxed after the entry of judgment. We see no reason why counsel fees awarded under a different statute should be treated differently. The only New Jersey case decided under a similar scheme has reached the same conclusion. In Nieves v. Baran, supra, 164 N.J. Super. at 89 (1978), the Appellate Division determined that a calculation of the then jurisdictional limit of the County District Court of $3000 (under N.J.S.A. 2A:6-34(a)) included the treble damages provided in the Consumer Fraud Act but did not include Consumer Fraud Act counsel fees. At the time Nieves was decided, the County District Court statute provided for the award of a nominal counsel fee. N.J.S.A. 22A:2-42. Although not expressly stated, Nieves likely viewed that statute, which denominated counsel fees as part of taxed costs, as dispositive of the treatment the Legislature intended to accord statutory counsel fees relative to the jurisdictional limit.See footnote 11 NO. A-73 KATHLEEN L. LETTENMAIER, Plaintiff-Appellant, v. LUBE CONNECTION, Inc., a New Jersey Corporation trading as LUBE CONNECTION, Defendant-Respondent, and JOHN DOE, a fictitious name, Defendant. DECIDED