Case Conclusion Date: April 14, 2009
Practice Area: Fraud
Outcome: Settled After Extensive Motion Practice
Description: This is a consumer fraud case in Bergen County, New Jersey which was settled by confidential agreement in April 2009. It is a rather small case, but worth noting here. Homeowners purchase kitchen cabinets from home improvement contractor (HIC). Homeowners agreed to have the HIC purchase the cabinets from large cabinet manufacturer and install them. The cabinets and installation costs about $17,000. After the cabinets were installed, the homeowners refused to pay the balance of the contract (about $11,000) claiming that the cabinets were defective. The HIC then sued the homeowners in the Special Civil Part of the Superior Court. The homeowners retained a large law firm and an attorney who charged them $3000 as an initial fee at an hourly rate of $420 per hour for a case in which the balance of the purchase price was only $11,000. That attorney filed an answer with a counterclaim alleging violation of the New Jersey Consumer Fraud Act (CFA). The firm was working on a settlement whereby the homeowners would put up the balance of the money owed ($11,000) into an escrow, and the HIC would them replace some cabinet doors. After paying $3000, the homeowners fired that firm and retained our firm. We reviewed the case and accepted it with no money from the client. We enter into a retainer agreement whereby the clientâ€™s legal fees ($245 per hour) would be paid if the case is settled and funds are received from the other side. Most attorneys do not take these types of cases without a retainer deposit. But we were confident in the case and the high likelihood that our legal fees would be paid from funds received. After reviewing the case, we concluded that the CFA was violated by the contractor. In addition, we concluded that the manufacturer of the cabinets may have also violated the CFA with respect to supplying defective cabinets. Consequently, we filed a motion to transfer the case from the Special Civil Part to the Law Division, which has no monetary limit for recovery. The motion was granted over the vigorous opposition of the HIC. We then filed a motion to file a more expansive answer and counterclaim than the one filed by the prior larger law firm. Subsequently, after a brief period of discovery, we filed a well researched and lengthy brief for summary judgment â€“ asking the court to declare that the CFA was violated by the defendants. After the brief was filed, the cabinet manufacturer and the HIC entered into negotiation with our firm. A settlement agreement was finally reached. In that settlement, the homeowners did not have to pay the balance of the $11,000, did not have to return the cabinets, and in addition, the homeowners received an additional $5000 on top of all that. Moreover, the cabinet makers and the HIC paid us a portion of our attorneysâ€™ fees. While we lost thousands of dollars in attorneysâ€™ fees litigating the case, we were thrilled to have the case concluded in the way it did- the client did not have to pay the $11,000 balance, paid us no money, got to keep the cabinets, and in addition got an extra $5000 on top of all that. The prior law firm had an agreement to charge them $420 per hour win or lose. There is a lesson in this case. It has been my experience that the size of the firm does not matter much in many cases. When you hire an attorney, you hire a lawyer and not the firm. While we normally do not directly charge the client in CFA cases, if we do, an hourly fee of $420 per hour would be extremely high for a case in which someone is suing for only $11,000, irrespective of whether the attorney has 10 years or 30 years of experience. We spent in excess of 130 hours on the case. Had that attorney charged $420 per hour, his fees would have been $54,600. For a case in which only $11,000 was at stake that charge would have been preposterous.