Court Opinion

ID: 9707006
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:58:15.261734+00
Date Added: 2024-06-11T18:22:26.766737
License: Public Domain

Justice RIVERA-SOTO,
concurring in part and in the result.
This is a contract case.
That obvious, self-evident statement bears repeating because it is at odds with the two basic conclusions advanced by the majority in its counsel fee-shifting analysis: that, in a contract action where the measure of damages includes counsel fees, (1) recovery can be had on unsuccessful claims—claims on which no breach of contract has occurred—when they share a “common core” of facts or related legal theories with unsuccessful claims, ante at 387-88, 982 A.2d at 429,1 and (2) after the lodestar is ascertained, a contractual award of counsel fees nevertheless must be “reasonable,” ante at 389, 982 A.2d at 430.
The majority’s approach, which imports wholesale concepts developed in the tort or statutory fee-shifting context, is ill-suited in a contract setting. In that discrete context, whether a counsel fee award is appropriate and, if so, in what amount, should be informed, but not rigidly governed, by the well-recognized methodology used in determining counsel fees awards—a lodestar analysis—-followed by the application of traditional contract prinei*395pies that eschew any enhancements and define the quantum of any recovery in terms of what is foreseeable. Because the majority fails to do so, I concur in the result.2
I.
A purchase and sale of business assets between sophisticated commercial entities represented by able counsel that devolved into now more than twelve years of litigation, including a lengthy, contentious, and expensive trial, form the backdrop for this appeal. Yet, the core facts relevant to the issues presented in this appeal are stated simply. On May 11, 1995, plaintiff Litton Industries, Inc. entered into a written purchase and sale agreement (Agreement) with defendant IMO Industries Inc.3 As provided in the recitals of the Agreement, plaintiff agreed to purchase from defendant so much of defendant’s business as was “engaged in the business of designing, developing, manufacturing, and selling image intensifier night vision components and systems, laser products, and other optical systems for military applications, commercial customers, the U.S. Government, and certain foreign governments! .J” The Agreement did not contain a specified purchase price; instead, Section 1.4 described a mechanism for ascertaining the purchase price. According to the parties, the resulting purchase price under Section 1.4 was approximately $52 million.
On June 2, 1995, the parties closed on the Agreement, and the assets were transferred. However, plaintiff later sued defendant, setting forth, in general, three separate claims: the breach of two *396provisions of the Agreement, and fraud in respect of those contract breaches.4 In its breach of contract claims, plaintiff alleged that defendant had breached Sections 3.12(a)(iv) and 5.3(ii) of the Agreement, respectively. Section 3.12(a)(iv) set forth defendant’s representation and warranty that none of the sales contracts were “reasonably anticipated to result in a Contract Loss upon completion of performance”5 (the “loss-leader” claim). In a similar vein, Section 5.3(ii) of the Agreement limited defendant’s actions during the interim between the date of the original purchase and sale agreement—May 11, 1995—-and the actual closing date on the Agreement—June 2, 1995—and provided that defendant was forbidden from entering into any agreement “for which the total cost estimate ... as estimated in good faith by [defendant], would result in a net loss” (the “prohibited-contracts” claim).
After a hotly disputed jury trial that started on September 21, 2004, concluded on November 15, 2004, and covered over 5,500 transcript pages, the jury returned a unanimous verdict. The jury found in defendant’s favor in part, rejecting both plaintiffs loss-leader or Section 3.12(a)(iv) claim and plaintiffs fraud claim. However, in respect of plaintiffs prohibited-contracts or Section 5.3(ii) claim, the jury returned a verdict in plaintiffs favor and awarded $2.3 million in damages. Defendant’s motion for judgment notwithstanding the verdict was denied. This factual setting provides the predicate for the limited issue in respect of counsel fees on which my disagreement with the majority is centered.
*397After the verdict, plaintiff filed a motion for counsel fees and costs, invoking Section 11.1 of the Agreement. That Section provides, in relevant part, as follows:
11.1 Indemnification by I defendant i.
In order to induce [plaintiff] to enter into this Agreement and to consummate the transactions contemplated hereby, [defendant 1 covenant!»] and agree[s| to and shall indemnity [plaintiff] and shall defend and hold [plaintiff] harmless against and with respect to (and shall reimburse [plaintiff] for) any and all Losses suffered or incurred by [plaintiffl (whether suffered or incurred with respect to any Third-Party Claim 6 or otherwise) and resulting from or arising out of each of the following:
(b) Breach of Covenant or Agreement.
Any breach or nonfulfillment by [defendant! of any of [its] covenant», agreements, or other obligations set forth in this Agreement].|
The indemnity obligations of Section 11.1 are triggered by a crucial contractually defined term: “Loss.” Part I of Appendix I to the Agreement defines “Loss” to “meant J all demands, claims, claims for reimbursement, actions or causes of action, assessments, losses, damages, costs, expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges, and amounts paid in settlement (in,chiding reasonable attorneys’ fees and costs incident to any of the foregoing)” (emphasis supplied). The lion’s share of the post-verdict litigation between the parties centers on the meaning and effect of that definition.
Based on the indemnity and definitional sections of the Agreement, plaintiff sought an award of counsel fees and costs totaling almost $6.5 million. Defendant resisted that application, largely noting that plaintiff had been successful only in respect of one of three claims, and that its counsel fee application was procedurally deficient. With the consent of the parties, the trial court appointed a Special Master 7 “for the purpose of assisting the Court in *398determining the amount of attorney’s fees, if any, to be awarded to the [plaintiff] in this case[.]” The Special Master was charged to
review such documents, hear arguments of counsel, and take such other steps as the Special Master deems necessary and appropriate to determine and recommend to the Court a lodestar amount for the attorney’s fees and costs reasonably incurred by [plaintiff] in the litigation of [its] claim under Section 5.3(ii) of the [Agreement], the claim on which [plaintiff] prevailed at trial.
The order of reference specifically provided, however, that “[t]he Court will conduct its proportionality analysis and determine the amount of any fee award, so the Special Master need only determine the lodestar amount for that claim.”
The parties made their presentations to the Special Master. He concluded that “the § 5.3(ii) claim on which plaintiff[ ] recovered is sufficiently related to the other contractual claims, most notably the § 3.12(a)(iv) claim, to justify including all services and costs, including those for experts, in the lodestar for the § 5.3(ii) claim.” He explained that he had “refrain[ed] from addressing the issue of proportionality, an issue that the trial court reserved in the Order of Reference.” The Special Master acknowledged, however, that “[t]he interrelationship between the contractual claims highlights the difficulty of identifying specific hours to be eliminated and suggests that the more appropriate means of adjusting the requested fee is through a proportionality analysis” (citing Szczepanski v. Newcomb Med. Ctr., Inc., 141 N.J. 346, 356, 661 A.2d 1232 (1995)).
The Special Master reasoned that “the resolution of this matter depends not so much on a detailed examination of the individual time entries by [plaintiff]’s counsel as it does on an analysis of the relationship between the § 5.3(ii) claim and the other claims on which [plaintiff] sought relief.” He found that plaintiffs “claims arise from ‘a common core of facts’ and that those claims so interrelate that the legal services on other contractual claims may be included in the lodestar for the § 5.3(ii) claim.” He concluded that “all fees and costs—-whether incurred before or after the assertion of the § 5.3(ii) claim and whether or not they specifically identify that claim—reasonably relate to the § 5.3(ii) claim for the *399purpose of determining the lodestar.” However, because plaintiff had been unsuccessful in the pursuit of its fraud claim, the Special Master endeavored to exclude from plaintiffs recovery “the fees attributable to the claims for fraud and punitive damages, the contingency fee agreement, and the interlocutory appeal.” In doing so, he determined to fix the lodestar at two-thirds of the amount of counsel fees and expenses sought, reasoning as follows:
The fraud claim was one of iplaintifffs three basic claims. It follows that a one-third reduction for the fraud and punitive damage|sj claims is both fair and reasonable. Likewise, a one-third reduction for costs related to the fraud and punitive damages claims is fair and reasonable. Accordingly the Special Master recommends that [plaintiffl’s request for attorney’s fees be reduced by $1,504,-573.00-one-third from the total amount incurred, $4,513,721.39; and, iplaintiffl’s request for costs be reduced by $346,513.43-one-third from the total amount sought, $1,039,540.44. In addition, as [plaintiff] recognizes, $34,227.99 for attorney’s fees on the contingency fee agreement and $3,625.00 for attorney’s foes on the interlocutory appeal should be | added to the deductions for] the fraud and punitive damages claim. The sum of ail deductions is $1,838,939.47, leaving a net sum of $2,971,295.00 for attorney’s fees and $693,026.96 for costs.
Summing up, the Special Master noted that, consistent with his charge, he did not address the issue of proportionality. He also downplayed his rejection of many of defendant’s objections, observing that “Lpjresumably the resolution of (the proportionality] issue will include many of the issues that trouble defendant^]” He included among them items “such as whether [plaintiffj’s limited, but substantial, success should be considered, whether the requested fee satisfies the requirements of RPC 1.5(a), whether and to what extent the fee may exceed the amount recovered, and whether the overall request is reasonable.”
Adopting the Special Master’s analytical framework, the trial court found “without qualification ... that the legal work, costs and expenses attributable to the two contractual claims may be attributed entirely to the § 5.3(ii) claim for purposes of determining the [lodestar].” Tt accepted the “common core of facts” analysis referenced by the Special Master due to the “impossibility to allocate work, costs and expenses” among the three claims plaintiff advanced, particularly as plaintiff had been unsuccessful on two of them. In the trial court’s view, the central issue was *400“whether all of the woi-k, costs and expenses, excluding that which may be allocated to [thej fraud [claim], were reasonable and warranted.” It concluded that “there is nothing in the record or in the Special Master’s report that would suggest otherwise.”
However, the trial court rejected the Special Master’s broadsword one-third/two-thirds apportionment of plaintiffs counsel fee claim. From the unique vantage point of having presided over the trial, the trial court observed that “[kjnowledge of the claims made, the discovery undertaken and the actual observed trial presentation does not allow for the conclusion that the fraud claim bears an equal one-third amount of the legal work, expenses and costs, on a quantitative basis, as do the two contractual claims.” It explained that “[ujnlike the contractual claims, the fraud claim is capable of being evaluated separately and markedly is less involved [than] the contract claims, despite [defendant’s assertion that the fraud claim should shoulder a greater share of the work, expenses and costs.” It reasoned that “the contractual issues constitute not only the foundation but also the structure of this litigation and account for the vast majority of the legal effort and expenses associated with pursuing the matter.” The trial court determined that, after appropriate offsets, “the resultant approved lodestar amount for legal fees is $4,287,472.00. Additionally, recommended expert fees of $896,920 ... are approved, as are the recommended consultant fees in the amount of $180,718.00.” The total counsel fees and costs thus preliminarily awarded to plaintiff was $5,365,110.
Shifting, then, to the application of a proportionality analysis, the trial court explained that “[generally, a proportionality analysis relates to a modification of a [lodestar] fee, by virtue of fee-shifting statutes, in order to accommodate the level of success achieved in litigation[,]” noting that “the proportionality adjustment pertains to attorney’s fees alone.” After reviewing the elements customarily applied in determining whether to enhance or decrease a lodestar, the trial court concluded that “after lengthy consideration of the singular facts and circumstances *401involved in this litigation, this court finds a reduction of 10% of the requested legal fee is both fair and reasonable. Consequently the awarded legal fee is in the amount of $3,858,725.00.”
The trial court ultimately entered a final judgment8
9in favor of plaintiff and against defendant
in the amount of $8,886,407.03, which includes the following elements:
a. $2,100,000.00 on the jury’s verdict for compensatory damages; 9
b. Prejudgment interest awarded pursuant to R. 4:42-1 l(a)(ii), in the amount of $810,504.03 (calculated on the amount of the compensatory award of $2,100,000.00 from the date of the filing of the Complaint on May 8, 1997 through October 6, 2006); and
c. Attorney’s fees, expenses and costs of litigation awarded in the amount of $5,975,903.00.
Defendant appealed, and plaintiff cross-appealed. Defendant raised four points on its direct appeal, including that the trial court’s counsel fee award was either improper or excessive.
On the award of counsel fees to plaintiff, the Appellate Division first noted that Section 12.10 of the Agreement provided that it “shall be construed, interpreted, and enforced in accordance with the law of the State of Texas without regard to its choice of law principles and controlling United States federal law.” The panel concluded, however, that “an award of counsel fees is procedural, and thus New Jersey law applies” (citing N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 568-70, 730 A.2d 843 (1999)). It noted that “[tlhough New Jersey traditionally follows the ‘American rule,’ where each party is required to pay its own fees and other litigation expenses, Rule 4:42-9(a) recognizes certain exceptions” and that “[ojne of those exceptions applies here, that is, where a claim is based on a contract, ‘the rule does not preclude a party from agreeing by contract to pay attorneys’ *402fees’ ” (quoting Kellam Assocs., Inc. v. Angel Projects, LLC, 357 N.J.Super. 132, 138, 814 A.,2d 642 (App.Div.2003)).
Addressing at the outset whether counsel fees were recoverable in this breach of contract action, the Appellate Division reasoned that “even with a strict construction of the definition of loss in the Agreement ... the only reasonable interpretation of the Agreement is that counsel fees may be awarded in connection with litigation under the Agreement.” It described the contractual definition of “Loss” as “expansive” and “eonclude[d] that an award of counsel fees was contemplated by the terms of the Agreement.”
Turning to defendant’s two-pronged claim (1) that the counsel fee award was disproportionate to the recovery, and (2) that the trial court had failed to make an adequate reduction to eliminate fees for services related to unsuccessful claims, the panel acknowledged the limited scope of review of counsel fee awards. It recognized that “[a] trial court’s counsel fee determination ‘will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion’ ” (quoting Packardr-Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 444, 771 A.2d 1194 (2001)). Without distinguishing between contractually based counsel fees claims and statutory, Rule or common law based counsel fees claims, it noted that when “successful and unsuccessful claims are related, by either a ‘common core of facts’ or ‘related legal theories,’ the court must consider ‘the overall relief obtained to determine whether those hours devoted to the unsuccessful claims should be compensated’ ” (quoting Kluczyk v. Tropicana Prods., Inc., 368 N.J.Super. 479, 500, 847 A.2d 23 (App.Div.2004)). It also considered “whether the court should have reduced the counsel fee award based on plaintiffs limited success in obtaining a $2.1 million verdict when its initial claim was for $16 million[,]” concluding that “‘when a substantial portion of a claim sought is ultimately rejected, that circumstance should be considered along with other factors’ ” (quoting N. Bergen Rex Transp., Inc., supra, 158 N.J. at 573-74, 730 A.2d 843). In the end, the panel concluded that there *403was no abuse of discretion in the trial court’s award of counsel fees or expenses.
Defendant petitioned, and plaintiff cross-petitioned, for certification; both petitions were granted. Litton Indus., Inc. v. IMO Indus., Inc., 195 N.J. 522, 950 A.2d 908 (2008).
II.
A.
Defendant’s principal claim is that there is no basis for an award of counsel fees here. That claim cannot be sustained on the record of this appeal.
The general and long-standing rule in New Jersey is that “unless legal fees are authorized by statute, court Rule, or contract, they are not recoverable.” Satellite Gateway Commc’ns, Inc. v. Musi Dining Car Co., Inc., 110 N.J. 280, 285, 540 A.2d 1267 (1988) (footnote omitted). The Agreement clearly and unambiguously contemplates that counsel fees will be part of the contractually defined “Loss” recoverable against a breaching party. The Agreement sets forth a comprehensive, indeed exhaustive list of items that constitute a “Loss”; they are: “all demands, claims, claims for reimbursement, actions or causes of action, assessments, losses, damages, costs, expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges, and amounts paid in settlement (including reasonable attorneys’ fees and costs incident to any of the foregoing)[.J” No doubt, the explicit inclusion of reasonable counsel fees and costs as part of a defined “Loss” encompasses the claims advanced here. Nothing in the language of the Agreement negotiated by these sophisticated commercial entities limits the recovery of reasonable counsel fees in the manner argued by defendant. Conversely, had those same sophisticated parties intended the result defendant now urges, that limitation would have been expressly laid out within the four *404corners of this lengthy and otherwise scrupulously detailed Agreement; it was not.
B.
Because it was proper for the trial court to award counsel fees under the Agreement, one must turn to defendant’s claim in respect of the quantum of counsel fees awarded. That challenge focuses on the methodology by which the trial court calculated the counsel fee award, the fundamental point on which the majority and I differ.
Any consideration of an award of counsel fees “must start from the proposition that New Jersey has a strong public policy against the shifting of costs and that this Court has embraced that policy by adopting the ‘American Rule,’ which prohibits recovery of counsel fees by the prevailing party against the losing party.” In re Estate of Vayda, 184 N.J. 115, 120, 875 A.2d 925 (2005) (citations, internal quotation marks and editing marks omitted). Under the American Rule, “which is the law of this State, a prevailing party may not be granted attorney’s fees unless authorized by the parties’ contract, court rule, or statute.” Rock Work, Inc. v. Pulaski Const. Co., Inc., 396 N.J.Super. 344, 350-51, 933 A.2d 988 (App.Div.2007), certif denied, 194 N.J. 272, 944 A.2d 32 (2008) (citations omitted).
Counsel fee awards, as exceptions to the American Rule, fall under four general categories. The primary and most readily recognized form are those counsel fee awards granted pursuant to a fee-shifting statute. See, e.g., New Jerseyans for a Death Penalty Moratorium v. N.J. Dep’t of Corrs., 185 N.J. 137, 152, 883 A.2d 329 (2005) (explaining that “|f]rom matters involving consumer fraud, N.J.S.A. 56:8-19, to instances of discriminatory treatment, N.J.S.A. 10:5-27.1, the New Jersey Legislature has promulgated a substantial number of statutes authorizing an award of a reasonable counsel fee to the attorney for the prevailing party” (citation and internal quotation marks omitted)). Those statutes *405“share a common rationale lor incorporating a fee-shifting measure: to ensure ‘that plaintiffs with bona fide claims are able to find lawyers to represent them, to attract competent counsel in cases involving statutory rights, and to ensure justice for all citizens.’ ” Id. at 152-53, 883 A.2d 329 (quoting Coleman v. Fiore Bros., 113 N.J. 594, 598, 552 A.2d 141 (1989) (editing marks omitted)).
The second category of counsel fee awards consists of those allowed by court rule. See In re Estate of Vayda, supra, 184 N.J. at 120, 875 A.2d 925 (“Ln general, Rule 4:42-9 codifies those specific instances where, in the absence of a separately enabling statute or contract, fee shifting is permitted.”). Thus, for example, Rule 4:42-9 allows for counsel fee shifting in eight discrete circumstances: in family actions when permitted under Ride 5:3-5(c); out of a fund in court; in certain probate actions; in mortgage foreclosure actions; in tax certificate foreclosure actions; in actions upon a liability or indemnity insurance policy; as otheiwise expressly allowed by the Rules of Court; and in all cases where statutorily allowed. R. 4:42-9(a)(1) to (a)(8).
The third category of counsel fee awards presents a tightly circumscribed common law exception to the American Rule that defies ready description, but may be titled loosely as fiduciary malfeasance cases; that category is summarized as follows:
The evolution from Saffer v. Willoughby, |143 N.J. 256, 670 A.2d 527 (1996)] (allowing as permissible consequential damages the recovery of attorneys’ fees incurred in the prosecution of an attorney malpractice case), to Packard-Bamberger & Co. v. Collier, [167 N.J. 427, 771 A.2d 1194 (2001)] (allowing the recovery of attorneys' fees incurred in the prosecution of an attorney misconduct case based on breach of fiduciary duty principles), to In re Estate of Lash, [169 N.J. 20, 776 A.2d 765 (2001)] (allowing attorneys’ lees as part of recoverable damages for attorney malfeasance in an action on a surety bond), ultimately led to In re Niles, [176 N.J. 282, 823 A.2d 1 (2003)], where we held that “when an executor or trastee commits the pernicious tort of undue influence, an exception to the American Rule is created that, permits the estate to he made whole by an assessment of all reasonable costs against the fiduciary that were incurred by the estate.” Id. at 298-99, 823 A.2d 1.
[In re Estate of Vayda, supra, 184 N.J. at 122-23, 875 A.2d 925 (footnote omitted).]
The final category where counsel fee awards are allowed in derogation of the American Rule is where parties, as a matter of *406contract, have agreed to counsel fee shifting. In short, New Jersey recognizes that “a party may agree by contract to pay attorneys’ fees.” N. Bergen Rex Transp., Inc., supra, 158 N.J. at 570, 730 A.2d 843 (citations omitted). That said, “even where attorney-fee shifting is controlled by contractual provisions, courts will strictly construe that provision in light of the general policy disfavoring the award of attorneys’ fees.” Ibid. (citations omitted). As a practical matter, this category can be further subdivided into two types. First are those contractual provisions that mirror fee-shifting statutes, namely, those instances where the parties have agreed to counsel fee shifting as an adjunct to a dispute resolution choice, see, e.g., Community Realty Mgmt., Inc. v. Harris, 155 N.J. 212, 234, 714 A.2d 282 (1998) (recognizing that “a tenant in New Jersey may contractually agree to pay reasonable legal fees related to an eviction”) (citations omitted). Second, and more germane, are those instances where, as here, the parties have bargained for an aggrieved party to recover its counsel fees and costs as part of its contract damages or “losses.”
C.
The traditional and now-standard methodology applicable to ascertaining the quantum of counsel fee claims bears repeating in full:
As a threshold matter, a plaintiff must be a “prevailing party” to recover an attorney’s fee____ Plaintiffs may be considered “prevailing parties” lor attorney’s fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parlies sought in bringing suit. Once it is determined that the plaintiff is a “prevailing party,” a two-factor computation determines the “lodestar”, that is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation is critical because it provides an objective basis on which to make an initial estimate of the value of a lawyer’s services.
Thus, determining the “lodestar” requires two separate inquiries: whether the number of hours of work claimed is reasonable, and whether the hourly rate sought is reasonable____
Once a reasonable number of hours worked and a reasonable hourly rate have been defined, a simple arithmetic calculation multiplying one by the other determines the “lodestar.” Ascertaining the “lodestar,” however, does not end the *407inquiry. Because the determination to award counsel fees and, if so, in what amount, is entrusted to the awarding court’s exercise of discretion, the amount of the “lodestar” may be reduced or enhanced.....
[R.M. v. Supreme Court of New Jersey, 190 N.J. 1, 9-11, 918 A.2d 7 (2007) (citations, internal quotation marks and editing marks omitted).]
Different, considerations arise, however, when the claim for counsel fees is based on a contract that recognizes those fees as an integral part of the contractually defined damages recoverable by a non-breaching party. In those instances, the initial—but certainly not final—inquiry is common with those of all fee-shifting eases: what is the lodestar, that is, what is a reasonable hourly rate times a reasonable number of hours?
In conducting the lodestar analysis in a contract fee-shifting setting, a trial court should be guided by several overarching principles. Because the counsel fee award must be tethered to a proven breach of contract, only those counsel fees incurred in pursuit of a successful breach of contract claim are recoverable. When, as here, a party is successful in less than all of its claims, those hours related to either unsuccessful contract claims or claims for which counsel fees are not allowed should be excluded from the calculus. Singer v. State, 95 N.J. 487, 500, 472 A.2d 138 (1984) (“While a plaintiff should recover for those hours reasonably related to or supportive of his successful claims, hours devoted to claims that are entirely distinct from the relevant successful claims should be excluded.”). That must be so because the allowance of counsel fees as part of contract damages requires a careful and precise analysis: it is a fundamental and time-honored tenet of contract law that a “defendant [in a breach of contract action] is not chargeable for loss that he did not have reason to foresee as a probable result of the breach when the contract was made.” Donovan v. Bachstadt, 91 N.J. 434, 444, 453 A.2d 160 (1982) (citing Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854)). Finally, in determining the lodestar, the trial court must be governed by the factors enumerated in Rule 4:42-9(b) and (c) and RPC 1.5(a). See generally Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21-22, 860 A.2d 435 (2004) (describing *408application of Rule 4:42-9(b) and RPC 1.5(a) as “factors [that] must inform the calculation of the reasonableness of a fee award in this and every ease”).
Once the lodestar is determined in a contractual fee-shifting case, more is required. Because these sophisticated parties voluntarily determined that counsel fees would be a component of contractually defined damages, one must revert to traditional contract principles for the proper rule of decision.
Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 921 A.2d 1100 (2007), succinctly sets forth the bedrock principles that inform any award of contract damages. As a threshold matter, it explains that “ ‘judicial remedies upon breach of contract fall into three general categories: restitution, compensatory damages and performance.’” Id. at 12, 921 A.2d 1100 (quoting Donovan, supra, 91 N.J. at 443-44, 453 A.2d 160). It noted that
[e]ach of these contract remedies serves a different purpose. Restitution returns the innocent party to the condition he or she occupied before the contract was executed. Compensatory damages put the innocent party into the position he or she would have achieved had the contract been completed. Performance makes the non-breaching party whole by requiring the breaching party to fulfill his or her obligation under the agreement.
[Id. at 12-13, 921 A.2d 1100 (citation omitted).]
Totaro, Duffy observed further that, “[mjost often, courts award compensatory damages in a breach of contract action” and that “[tjhe extent of a damage award, and its connection to the breach, has its origins in English Common Law, arising from the seminal decision in Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 (1854)[.]” Id. at 13, 921 A.2d 1100 (citations omitted).
Basic principles of contract law control. First, “ ‘[u]nder contract law, a party who breaches a contract is liable for all of the natural and probable consequences of the breach of that contract.’” Ibid. (quoting Pickett v. Lloyd’s, 131 N.J. 457, 474, 621 A.2d 445 (1993)). Second, “the goal is ‘to put the injured party in as good a position as if performance had been rendered.’ ” Ibid. (quoting Donovan, supra, 91 N.J. at 444, 453 A.2d 160) (editing *409marks omitted). Third, “in order to be compensable, ‘the loss must be a reasonably certain consequence of the breach, the exact amount of the loss need not be certain.’ ” Id. at 14, 921 A.2d 1100 (quoting Donovan, supra, 91 N.J. at 445, 453 A.2d 160) (editing marks omitted). Fourth, “mere uncertainty as to the quantum of damages is an insufficient basis on which to deny the non-breaching party relief.” Ibid. Finally, “ ‘proof of damages need not be done with exactitude.’ ” Ibid. (quoting Lane v. Oil Delivery Inc., 216 N.J.Super. 413, 420, 524 A.2d 405 (App.Div.1987)).
If parties contractually agree that counsel fees are to be included in the quantum of damages to be awarded in a breach of contract action, the question is not limited to whether plaintiffs lodestar—again, “the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate[,]” Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40, 50 (1983)—was correctly computed. Also keenly relevant is whether the counsel fees sought satisfy traditional notions of recoverable contract damages. That long-honored process requires an exploration of whether the type of damages sought were in the contemplation of the parties; whether the amount of damages were reasonably foreseeable; and whether the damages award returns the aggrieved party to the position it would have been in but for the breach. See Crater v. Binninger, 33 N.J.L. 513, 515 (E. & A. 1869) (explaining that “[tjhe principle of justice ... is, that the party injured is to be compensated, at least to the extent that redress is awarded judicially, for the actual loss sustained. The effort is to reach this measure as near as possible, and unless, in cases fit for punitive damages, nothing more than this is to be given”).
Those principles require the outright rejection of the notion that a lodestar in a breach of contract case may be eligible for enhancement, as that concept has vitality only in the context of encouraging otherwise reluctant counsel to represent a party in the first instance. Rendine v. Pantzer, 141 N.J. 292, 339, 661 A.2d 1202 (1995). Conversely, because counsel fee awards in contract *410cases must nonetheless satisfy the standards for contract damages awards, a contractually based counsel fee award properly should be reduced if it is disproportionate to the damages recovered and, hence, not foreseeable. Totaro, Duffy, supra, 191 N.J. at 13, 921 A.2d 1100. See, e.g., Peevyhouse v. Garland Coal & Mining Co., 382 P.2d 109 (Okla.1962) (holding that strip mine operator is not liable for cost to return property to its condition prior to mining operations because restoration cost is disproportionate to proper measure of damages: diminution in value of affected land). Thus, the legal precepts that limit contract damages require, in this instance, that the counsel fees to be awarded be proportional to the amount of contract damages recovered, that is, in contract parlance, that the quantum of the counsel fees must be foreseeable, a conclusion that stands in stark contrast to the principle applicable in statutory or Rule fee-shifting cases. See Furst, supra, 182 N.J. at 23, 860 A.2d 435 (stating that, in statutory fee-shifting cases, “there need not be proportionality between the damages recovered and the attorney-fee award itself’). See also Rendine, supra, 141 N.J. at 336, 661 A.2d 1202; Szczepanski supra, 141 N.J. at 365, 661 A.2d 1232; Grubbs v. Knoll, 376 N.J.Super. 420, 432, 870 A.2d 713 (App.Div.2005); Scullion v. State Farm Ins. Co., 345 N.J.Super. 431, 437, 785 A.2d 469 (App.Div.2001).
The Special Master, the trial court, the Appellate Division and now the majority have each gauged plaintiffs counsel fee damages claim as a quintessential fee-shifting matter, all without applying the contract-based distinctions drawn here. Also, once the Appellate Division remanded the case for an additional category of damages award to plaintiff on its successful contract claim, there was no final judgment on which to base the counsel fee award, see R. 4:42-9(d) (requiring that “[a]n allowance of fees made on the determination of the matter shall be included in the judgment or order stating the determination”), a necessary condition precedent to setting the full amount of plaintiffs damages claim.
*411When counsel fees are contractually part of a plaintiffs damages claim, the applicable process is simple. The trial court first should face the difficult, dual-layered task of fixing the lodestar: determining a reasonable hourly rate for the services rendered by plaintiffs counsel; setting a reasonable number of hours expended by plaintiffs counsel on plaintiff’s behalf, which must include differentiating between work performed by plaintiffs counsel on the successful portion of its case and those efforts plaintiff expended without success; and then multiplying the product of one by the other. The lion’s share of that task falls squarely on plaintiff, as it bears both the burden of production and the burden of persuasion in respect of its asserted damages. See Murphy v. Implicito, 392 N.J.Super. 245, 265, 920 A.2d 678 (App.Div.2007) (explaining that “[tjo establish a breach of contract claim, a plaintiff has the burden to show that ... the plaintiff sustained damages as a result” (citation omitted)).
Once the lodestar is determined, the trial court must squarely address the uncertainty inherent in determining the proportionality of a contractually allowed counsel fee award against the damages award plaintiff ultimately recovers. In order to give true meaning to the bargain struck between the parties, and as part of ascertaining whether the quantum of counsel fees are foreseeable, the trial court must weigh the amount of counsel fees determined as the lodestar and conclude whether, on a proportional basis, the size of the counsel fee award was within the contemplation of the parties.10
The majority, however, rejects traditional contract principles in favor of its “common core” and reasonableness analysis. Those concepts simply have no place in contract claims. The burden of *412proof on contract damages rests squarely on the plaintiff. If a contract plaintiff can prove his contract damages and they are foreseeable, they should be recoverable; if he cannot, they should not be. It is wholly inappropriate to allow a contract plaintiff to use—tacitly, if not explicitly—the gimmick of a “common core” to substitute for competent proofs. Similarly, it is wholly inappropriate to tether a contract damages counsel fees-shifting award to the “reasonable expectation of the parties,” ante at 389, 982 A.2d at 430, as that basis fails to address fundamental and available contract remedies: either restitution or compensatory damages. See Totaro, Duffy, supra, 191 N.J. at 12-13, 921 A.2d 1100.
III.
Although I concur with the majority’s rejection of all of the issues raised on plaintiffs cross-appeal, as well as with the remand ordered by the majority for the re-assessment of the counsel fees award, I cannot join with the majority in respect of the methodology to be applied concerning plaintiffs counsel fees claim on remand. That methodology should be defined by its genesis: the contract between the parties. Hence, what should be required is that plaintiff bear the joint burden of production and of persuasion in respect of its counsel fees damages, and that those proofs be examined like all other contract damages claims: what sum is necessary either to return the non-breaching party to the position it was in before the contract was entered into (restitution) or to place the non-breaching party in the position it would have been but for the breach (compensatory damages), provided, of course, any such damages were foreseeable.11 To that limited extent, I *413must reject the majority’s methodology and concur solely in the result requiring further and far more detailed examination of this counsel fees claim.
Justice HOENS joins in this opinion.
For affirmance in part/reverml in part/r&mandment—Chief Justice RABNER and Justices LONG, LaVECCHIA, ALBIN, WALLACE, RIVERA-SOTO and HOENS—7.
Opposed—None.

 Although the majority studiously avoids referring to its analysis as one based on a "common core,” see Singer v. State, 95 N.J. 487, 500, 472 A.2d 138 (1984), its affirmance of the findings below that were reached using the "common core" analysis, ante at 388-89, 982 A.2d at 429-30, unveil the true nature and extent of the methodology adopted by the majority.

 In all other respects-as raised in plaintiff’s cross- appeal-I concur with the majority’s reasoning and conclusions.

 Also listed as parties to the purchase and sale agreement, and later as parties to the lawsuit, were plaintiffs wholly owned subsidiary Litton Systems, Inc. (LSI); Baird Corporation (Baird) and Varo, Inc. (Varo), each a wholly owned subsidiary of defendant; and Optic-Electronic International, Inc. (OEII), a wholly owned subsidiary of Varo. For ease of reference, plaintiif and LSI are collectively referred to as "plaintiff" and defendant, Baird, Varo and OEII are collectively referred to as "defendant.”

 Plaintiffs complaint originally charged defendant with breach of contract; breach of contract in respect of misrepresentations made; fraudulent misrepresentations; negligent misrepresentations; breach of the implied covenant of good faith and fair dealing; unlawful conversion; unjust enrichment; imposition of a constructive trust; and punitive damages. However, plaintiff later amended its complaint to consist solely of the two breach of contract claims and the fraud claim ultimately presented to the jury for its consideration.

 Part I of Appendix I to the Agreement defines a "Contract Loss" as those instances where "the sales price ... is less than the sum of the cost incurred to dale and the estimated cost to completef.]”

Section It.3 of the Agreement defines a "Third-Party Claim" as "any claim or demand by a third party." Because the claims asserted in this litigation are limited to those made between the parties to the Agreement, there are no Third-Party Claims at issue.

 The designated Special Master was the Honorable Stewart G. Pollock, a retired Justice of this Court.

 The trial court’s original final judgment later was amended; all references are to the amended final judgment.

 Although the jury had returned a verdict ol S2.3 million, see supra at 380, 982 A.2d at 424, the trial court, with the consem of the parties, molded the judgment to $2.1 million to correct an admitted error in plaintiff's damages model.

 There is no reason to treat plaintiffs claim for an award of expenses any differently. Therefore, the trial court also should determine whether the expenses claimed by plaintiff as part of its counsel fee award were related to plaintiff's successful claim and reasonable in amount, and whether those expenses were foreseeable, that is, whether they are proportionate to plaintiffs ultimate damages recovery.

 The parties did not challenge the Appellate Division's judgment remanding the case, see n. 6, supra. Hence, a remand would have followed in any event, and the decision today as to the methodology to be applied in ascertaining the quantum of counsel fees to be awarded only further defines—albeit, in my view, incorrectly—the scope of that remand. That said, because the amount of counsel fees and costs to be awarded must be proportional to the contract damages recovered, a meaningful assessment of the quantity of counsel fee and *413costs award can be performed only after final judgment on the contract damages, and not in a piecemeal or interim manner.