Court Opinion

ID: 4564307
Source: CourtListenerOpinion
Date Created: 2020-09-10 14:10:15.313186+00
Date Added: 2024-06-11T08:52:34.102726
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-4278-17T3

BELLA'S BAIL BOND, LLC,

          Plaintiff-Respondent/
          Cross-Appellant,

and

KATHERINE PARKER,

          Plaintiff,

v.

BRIAN MUHLBAIER, ESQ.,

     Defendant-Appellant/
     Cross-Respondent.
__________________________

                    Submitted March 26, 2020 – Decided September 10, 2020

                    Before Judges Suter and DeAlmeida.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Cumberland County, Docket No. L-0471-15.

                    Brian Muhlbaier, appellant/cross-respondent pro se.
            Steven D. Janel, attorney for respondent/cross-
            appellant Bella's Bail Bond, LLC.

PER CURIAM

      Defendant Brian Muhlbaier, Esq., appeals from the February 6, 2018 order

of the Law Division awarding plaintiff Bella's Bail Bond, LLC (Bella's)

$18,832.06, plus costs, after the court revised legal services agreements between

the parties it found to be unreasonable. Bella's cross-appeals from the provisions

of the order granting summary judgment in favor of defendant on its professional

negligence claim, and dismissing its breach of fiduciary duty and conversion

claims. We affirm in part, reverse in part, and remand.

                                        I.

      The following facts are derived from the record. Defendant is an attorney

admitted to practice law in this State. Bella's is a licensed provider of bail

services. In September 2010, Bella's entered into two legal services agreements

with defendant in which defendant agreed to: (1) file applications to vacate

forfeitures of bail Bella's had posted on behalf of clients who were no longer in

fugitive status; and (2) collect on the judgments he obtained in the forfeiture

actions, as well as judgments Bella's had previously obtained in other matters.

      For the forfeiture matters, Bella's agreed to pay defendant a contingent fee

of one third of the first $500,000 of the amount of the judgments entered in favor

                                                                          A-4278-17T3
                                        2
of Bella's, plus costs, regardless of whether funds were collected on the

judgments.    On the collections matters, Bella's agreed to pay defendant a

contingent fee of one third of the first $500,000 of the amount collected on the

existing judgments, plus costs.      The agreements provide that "costs and

attorney[']s fees are calculated across all collections files and are due and

payable before the client receives any money."

             As an example[,] if [defendant] obtains two judgments
             for $500 with costs of $50 for each judgment[,]
             payments will be applied first to the $100 costs and then
             to the $300 [sic] attorney fees and then to [Bella's]. If
             only $400 dollars is collected the client will receive no
             money. If $400 is received on one of the judgments
             that $400 will be used to pay [c]osts and [a]ttorney fees
             across all collection files before [Bella's] receives any
             money. This agreement reflects the risk and expense
             [defendant] will incur to prosecute these claims and
             [Bella's] acknowledges these risks and expenses.

      In January 2011, Bella's terminated the agreements.           At that time,

defendant had completed some, but not all, of the work for which he was

retained. While the agreements were in place, defendant kept all of the money

he collected on behalf of Bella's on the theory that under the agreements those

funds represented a portion of his fee. In addition, at the time of the termination

of the agreements, Bella's had paid defendant $2,800 for costs.

                                                                           A-4278-17T3
                                        3
      On April 2, 2015, Bella's filed a complaint in the Law Division alleging

defendant provided inadequate legal representation. In addition to other claimed

shortcomings, Bella's asserted defendant failed to move to vacate some bail

forfeitures prior to the statutory deadline for doing so. In addition, defendant

obtained two judgments vacating forfeitures in the name of Bail Group

Management, LLC (BGM), an unrelated entity. Bella's also alleged that after it

terminated the agreements, defendant refused to turn over its files or provide an

accounting of the funds he collected the Bella's judgments. Bella's sought

damages for professional negligence, breach of fiduciary duty, breach of

contract, misrepresentation, conversion, and unjust enrichment, along with a

return of its property, an accounting, and other forms of equitable relief.1

      The parties cross-moved for summary judgment. On the return date of the

motions, the court invalidated the fee provisions of the agreements, finding them

grossly unfair to Bella's and contrary to defendant's ethical obligations as an

attorney. The court held that a contingent fee must be based on the successful

completion of the contemplated representation and, as applied here, merely

obtaining a judgment vacating a bail forfeiture is not the successful completion

1
  Katherine Parker, managing member of Bella's is also named as a plaintiff.
She has not appeared in this matter in her individual capacity.
                                                                           A-4278-17T3
                                        4
of the representation contemplated by the agreements. This is so, the court

reasoned, because the objective of the client is to collect on the judgment. Thus,

the court concluded, it is unreasonable to determine defendant's contingent fee

based solely on the value of the judgments he obtained for Bella's . In addition,

the court concluded that the fee provisions of the agreements were unreasonable

in allocating collected funds first to defendant's fees and costs across all files,

resulting in a lack of incentive for defendant to act once his fee was paid.

      Relying on the holding in Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528

(1967), the court concluded public policy required it to reform the fee

provisions. The court concluded defendant's fee for the work he performed in

obtaining judgments would be fixed based on the reasonable value of the

services rendered. Thus, defendant was entitled to $1200 for filing six motions

at a rate of $200 per motion, and $200 for making one appearance. Because

Bella's had paid defendant $2800 for his work on these matters, the court

determined Bella's was entitled to a credit of $1400. With respect to collections,

the court revised the agreements, setting defendant's fee at one third of the funds

received after costs, but without requiring full payment of defendant's fee across

all files before payments to Bella's.

                                                                           A-4278-17T3
                                        5
      The court found it was undisputed defendant collected, at a minimum,

$13,113.67 and incurred costs of $2,048.75 on Bella's judgments. On the two

miscaptioned matters, the court found defendant collected $10,513.15 and

$4,499.69,2 respectively with costs of $357.67 and $72.00. The court added

$13,113.67, $10,513.15, and $4,499.69 to conclude defendant collected a total

of $28,626.51. This was a mathematical error, as the sum of those numbers is

$28,126.51.

      The court then deducted costs of $2,478.42 ($2048.75 + $357.67 + $72

= $2478.42), leaving an amount collected of $26,148.09 on which the fee was

to be determined. The court divided that amount by three, concluding defendant

was entitled to a reasonable fee of $8,716.03.

      Because defendant had collected and retained $26,148.09 on the

judgments, the court subtracted defendant's $8,716.03 fee on the collection

matters to arrive at $17,432.06 due to Bella's. To $17,432.06 the court added

the $1400 due to Bella's with respect to the cost of defendant having filed

motions and made an appearance.

2
   During the judge's colloquy with counsel prior to issuing his opinion,
defendant stated that $5,904.69 was collected in one of the miscaptioned
matters. It is not clear from the record how the judge determined $4,499.69 had
been collected on that matter.
                                                                       A-4278-17T3
                                       6
      In the incorrectly captioned cases, the court granted summary judgment

to defendant on the professional negligence claim. Finding the facts undisputed

on this point, the court held that defendant

            did file something. He did file it, albeit the wrong
            person, but he did [d]o something. He got that done on
            those two jobs and actually did a good job on them in
            terms of the amount of monies that he collected on both
            those cases.

            He did finish the job and there's no objection to
            amending the caption on either side, so the [c]ourt at
            this point is, in order to get it done, the [c]ourt's going
            to enter two Orders . . . amending the captions. 3

                   ....

            I don't see it rising to the level of malpractice, in the
            sense that it's a caption that's wrong.

      The court also concluded defendant's failure to file motions to vacate in

several forfeiture matters did not constitute professional negligence. At the time

Bella's terminated the agreements, the statutory deadline for filing the motions

had not expired. N.J.S.A. 2A:162-8. Thus, defendant's actions did not leave

Bella's without an avenue to vacate the bail forfeitures. The court declined to

address the remainder of Bella's claims.

3
  A representative of BGM was present in the courtroom, acknowledged BGM
had no interest in the two matters, and consented to amending the judgments.
                                                                          A-4278-17T3
                                        7
      On February 6, 2018, the court entered a $18,832.06 judgment in favor of

Bella's, without prejudice to Bella's should an audit of defendant's attorney trust

account reveal he collected more on the judgments than calculated by the court.4

The judgment does not mention the remaining counts of the complaint, but the

parties agree the court intended to dismiss them.

      This appeal and cross-appeal followed. Defendant makes the following

arguments for our consideration.

            POINT I

            THE COURT ERRED IN GRANTING SUMMARY
            JUDGMENT AGAINST DEFENDANT AS A
            MATTER OF LAW AND ERRED IN ANALYSIS OF
            THE UNDISPUTED MATERIAL FACTS AS THE
            ONLY ISSUE ON SUMMARY JUDGMENT WAS
            THE REASONABLENESS OF THE LEGAL
            REPRESENTATION AGREEMENTS.

            POINT II

            THE TRIAL COURT ERRED IN ENTERTAINING
            JUDGMENT AS DAMAGES WERE UNCERTAIN
            AND DISPUTED REQUIRING A TRIAL ON THE
            FACTS.

            POINT III

            THE TRIAL COURT SHOULD HAVE DISMISSED
            THE COMPLAINT AND GRANTED SUMMARY

4
  The court made a referral to the Office of Attorney Ethics, having concluded
defendant's client trust fund records were "wholly inadequate . . . ."
                                                                           A-4278-17T3
                                        8
            JUDGMENT TO DEFENDANT APPELLANT AS NO
            DISPUTED   MATERIAL    FACTS    WERE
            PRESENTED AND THE LAW WAS IMPROPERLY
            APPLIED.

      In its cross-appeal, Bella's raises the following arguments for our

consideration.

            POINT I

            THE LOWER COURT ERRED BY DISMISSING
            PLAINTIFF'S PROFESSIONAL  NEGLIGENCE
            CLAIMS AGAINST DEFENDANT MUHLBAIER.

            POINT II

            THE LOWER COURT ERRED BY DISMISSING
            PLAINTIFF'S BREACH OF FIDUCIARY DUTY
            CLAIMS AGAINST DEFENDANT MUHLBAIER.

            POINT III

            THE LOWER COURT ERRED BY DISMISSING
            PLAINTIFF'S CONVERSION CLAIMS AGAINST
            DEFENDANT MUHLBAIER.

                                     II.

      We review the court's decision granting summary judgment de novo, using

"the same standard that governs trial courts in reviewing summary judgment

orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167

(App. Div. 1998). Rule 4:46-2(c) provides that a court should grant summary

judgment when "the pleadings, depositions, answers to interrogatories and

                                                                      A-4278-17T3
                                      9
admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact challenged and that the moving party is

entitled to a judgment or order as a matter of law." "Thus, the movant must

show that there does not exist a 'genuine issue' as to a material fact and not

simply one 'of an insubstantial nature'; a non-movant will be unsuccessful

'merely by pointing to any fact in dispute.'" Prudential, 307 N.J. Super. at 167.

We review the record "based on our consideration of the evidence in the light

most favorable to the parties opposing summary judgment." Brill v. Guardian

Life Ins. Co., 142 N.J. 520, 523-24 (1995).

      Although not expressly stated by the court, we consider it to have granted

summary judgment to Bella's on its request for equitable relief when it revised

the agreements. Courts have the authority to regulate the conduct of attorneys

that "extends to every aspect of the attorney-client relationship, including

agreements for fees." Cohen v. Radio-Elec. Officers Union, 146 N.J. 140, 155

(1996). We "remain especially vigilant when attorneys and clients contract with

each other [and] scrutinize contracts between attorneys and clients to ensure that

they are fair." Ibid.

      "An otherwise enforceable agreement between an attorney and client

would be invalid if it runs afoul of ethical rules governing that relationship." Id.

                                                                            A-4278-17T3
                                        10
at 156; see also In re Educational Law Center, 86 N.J. 124 (1981). A retainer

agreement may not contain provisions for unreasonable fees or an unreasonable

waiver of the clients' rights. Cohen, 146 N.J. at 156; see also RPC 1.5; RPC

1.16. The burden is on the attorney to establish the fairness and reasonableness

of an agreement. In re Nichols, 95 N.J. 126, 131 (1984).

      Having carefully considered the record, we agree with the court's

conclusion that the fee provisions of the agreements were unreasonable in two

ways. First, it was unreasonable for defendant to receive one-third of the amount

of judgments entered, regardless of whether he collected any funds on those

judgments. While securing a judgment for a client is consequential, the true

value of a judgment is in the amounts actually collected.        Second, it was

unreasonable for defendant to collect his fee and costs across all files prior to

Bella's receiving any distribution. Once defendant collected enough to satisfy

his fee and costs on all of the judgments, he had no incentive to collect any

further funds, given that any amount collected afterwards would be distributed

to Bella's.

      We find support for the court's conclusions in the holding in Ellsworth

Dobbs, on which the court relied. There, the Court considered the legality of an

arrangement in which a real estate broker was entitled to a commission from a

                                                                         A-4278-17T3
                                      11
seller when a purchaser brought forward by the broker signed a purchase

agreement, whether or not the sale closed. 50 N.J. at 534-43. The Court found

the agreement to be "so contrary to the common understanding of men [and

women], and also so contrary to common fairness, as to require a court to

condemn it as unconscionable." Id. at 555.

      We see no error in the court's quantum meruit analysis of defendant's fee

for filing motions and making an appearance. See Cohen, 146 N.J. at 162-63

(stating that "when a client discharges an attorney, the attorney may recover the

fair value of his or her services, not damages under the retainer agreement"). In

addition, apart from the mathematical error noted above, we find the method

used by the court to set defendant's fee to be supported by the record, including

its correction of the miscaptioned judgments. As a result, we affirm the portion

of the February 6, 2018 order granting equitable relief to Bella's through

reformation of the agreements.

                                       III.

      In order to establish legal malpractice, a form of professional negligence,

a plaintiff must demonstrate: (1) the existence of an attorney-client relationship

creating a duty of care upon the attorney; (2) that the attorney breached the duty

                                                                          A-4278-17T3
                                       12
owed; and (3) that the breach was the proximate cause of any damages sustained.

Albright v. Burns, 206 N.J. Super. 625, 632 (App. Div. 1986).

      "[A]n attorney is obligated to exercise that degree of reasonable

knowledge and skill that lawyers of ordinary ability and skill possess and

exercise." St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 588

(1982).   Necessary steps to the proper handling of a case include careful

investigation of the facts of the matter, formulation of legal strategy, filing of

appropriate papers, and maintenance of communication with the client.

Ziegelheim v. Apollo, 128 N.J. 250, 260-61 (1992).

      To support its claim of professional negligence, Bella's relies on defendant

having obtained two judgments in the name of BGM and his failure to correct

those errors until Bella's filed suit against him. Bella's argues that although the

court corrected the captions on the judgments, it had to incur unnecessary

attorney's fees to obtain that relief. We see no basis to reverse the court's

conclusion that defendant's did not constitute professional negligence.

      The miscaptioned judgments, while clearly the result of defendant's lack

of precision, were easily correctable and Bella's suffered no harm. Defendant

did not distribute the amounts collected to BGM, apparently because he knew

that the judgments should have named Bella's.          He retained the proceeds

                                                                           A-4278-17T3
                                       13
pursuant to the agreements' fee provisions, which he would have done in any

event. Defendant's delay in turning over the collected funds was occasioned by

defendant's reliance on the provisions of the agreements the court later found to

be unreasonable. Bella's would have had to seek judicial relief to obtain those

funds regardless of the mistake.

      We, therefore, affirm the February 6, 2018 order to the extent it granted

summary judgment to defendant on Bella's professional malpractice claims.

                                         IV.

      The court did not address Bella's breach of fiduciary duty and conversion

claims before entering an order dismissing those claims. Those claims are based

on more than the issues resolved by the court.

      Rule 1:7-4(a) provides a court shall "find the facts and state its

conclusions of law . . . on every motion decided by a written order that is

appealable as of right . . . ." "[A]n articulation of reasons is essential to the fair

resolution of a case." Schwarz v. Schwarz, 328 N.J. Super. 275, 282 (App. Div.

2000). In addition, effective appellate review of a court's decision requires

examination of the findings of fact and conclusions of law on which the court

relied. Raspantini v. Arocho, 364 N.J. Super. 528, 534 (App. Div. 2003).

                                                                              A-4278-17T3
                                         14
      We are, therefore, constrained to reverse the February 6, 2018 order to the

extent it dismisses Bella's breach of fiduciary duty and conversion claims and

remand for further proceedings on those causes of action.

      To the extent we have not specifically addressed the parties' remaining

arguments, we conclude they lack sufficient merit to warrant discussion in a

written opinion. R. 2:11-3(e)(1)(E).

      Affirmed in part, reversed in part, and remanded for further proceedings

consistent with this opinion. Either party may move pursuant to Rule 4:50-1 to

recalculate the amount awarded to Bella's to account for the mathematical error

noted in this opinion. We do not retain jurisdiction.

                                                                         A-4278-17T3
                                       15