Will our prevailing-party fee clause be enforced as written in New Jersey?
Where fee-shifting is controlled by a contractual provision, the provision is STRICTLY CONSTRUED in light of New Jersey's general policy disfavouring the award of attorneys' fees; and the amount is not the invoice: the Court applies the same test for reasonable attorneys' fees in contract cases that it uses in other attorneys' fee award cases, the next step of which is the lodestar: hours reasonably expended multiplied by a reasonable hourly rate. New Jersey disfavors fee-shifting, but "a prevailing party can recover those fees if they are expressly provided for by statute, court rule, or contract." In a residential lease the statute goes further than the implied covenant: a lease clause that lets the landlord recover fees or expenses must itself contain, in bold type at least one point larger than the rest of the clause or 11 points, whichever is larger, the sentence that the tenant shall recover fees or expenses from the landlord to the same extent (§ 2A:18-61.67); the tenant's award is money damages or a credit against future rent at the tenant's election; a tenant who merely pays the rent due after the complaint and presents no other meritorious defence has not 'successfully defended'; and 'expenses' means litigation expenses such as court costs and witnesses, not travel, lost work time or child care (§ 2A:18-61.66).
The trap
Two New Jersey-specific consequences. (1) Drafting: because the clause is strictly construed against fee shifting, a generic indemnity or 'losses' definition may or may not reach first-party litigation costs; in Litton it did only because 'reasonable attorneys' fees and costs' was written into the contractual definition of "Losses". (2) Amount: winning does not mean collecting what you spent. The court runs a prevailing-party threshold, a lodestar, a reduction for limited success, and a proportionality comparison against the recovery, so a clause promising all fees actually incurred does not displace judicial reasonableness review. Separately, in a RESIDENTIAL LEASE a landlord-only fee clause is converted by statute into a mutual one: § 2A:18-61.66 reads a parallel implied covenant into the lease requiring the landlord to pay the tenant's reasonable fees on the tenant's successful defence, and any waiver of that section is void as against public policy. Litton itself shows both halves of the answer: the fee clause worked (the plaintiffs satisfied the tests for an award and the Agreement provided for fees and costs), and the Supreme Court still reversed in part and remanded so the amount could be reconsidered.
12 authorities
- case200 N.J. 372Litton Industries, Inc. v. IMO Industries, Inc.N.J.decided 2009read it at the source ↗
The words that state the rule
In general, New Jersey disfavors the shifting of attorneys' fees. N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 , 730 A. 2d 843 (1999). However, "a prevailing party can recover those fees if they are expressly provided for by statute, court rule, or contract." Packard-Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 440 , 771 A. 2d 1194 (2001). When the fee-shifting is controlled by a *428 contractual provision, the provision should be strictly construed in light of our general policy disfavoring the award of attorneys' fees.
- case200 N.J. 372Litton Industries, Inc. v. IMO Industries, Inc.N.J.decided 2009read it at the source ↗
The words that state the rule
We have applied the same test for reasonable attorneys' fees in contract cases that we use in other attorneys' fee award cases in New Jersey. See N. Bergen, supra, 158 N.J. at 570 , 730 A. 2d 843 . In determining the reasonableness of an attorneys' fee award, the threshold issue "is whether the party seeking the fee prevailed in the litigation."
- case200 N.J. 372Litton Industries, Inc. v. IMO Industries, Inc.N.J.decided 2009read it at the source ↗
The words that state the rule
In the present case, plaintiffs satisfied the tests for the award of fees. They prevailed on one of their breach of contract claims, and the contract required defendants to indemnify plaintiffs for their losses in the event of a breach. The next step in determining the amount of the award is to calculate the "lodestar," which is that number of hours reasonably expended by the successful party's counsel in the litigation, multiplied by a reasonable hourly rate.
- case200 N.J. 372Litton Industries, Inc. v. IMO Industries, Inc.N.J.decided 2009read it at the source ↗
The words that state the rule
Although the words "reasonable attorneys' fees and costs" are located in a parenthetical, that does not detract from the intent in the Agreement that attorneys' fees and costs would be recoverable as part of plaintiffs' losses.
- statuteN.J. Stat. Ann. § 2A:18-61.66enactment date not established
The words that state the rule
If a residential lease agreement provides that the landlord is or may be entitled to recover either attorney's fees or expenses, or both, incurred as a result of the failure of the tenant to perform any covenant or agreement in the lease, or if the lease provides that such costs may be recovered as additional rent, the court shall read an additional parallel implied covenant into the lease. This implied covenant shall require the landlord to pay the tenant either the reasonable attorney's fees or the reasonable expenses, or both, incurred by that tenant as the result of the tenant's successful defense of any action or summary proceeding commenced by the landlord against the tenant, arising out of an alleged failure of the tenant to perform any covenant or agreement in the lease, or as the result of any successful action or summary proceeding commenced by the tenant against the landlord, arising out of the failure of the landlord to perform any covenant or agreement in the lease.
The words that state the rule
We reverse in part and remand. We hold that the agreement provided for attorneys' fees and costs and that the amount of the fee award is governed by traditional principles applicable to attorneys' fee awards, within the context of the contract. We also hold that the trial court did not abuse its discretion in the amount awarded for prejudgment interest or commit error in the claimed trial deviations.
The words that state the rule
Beyond the lodestar amount, in cases in which the fee requested far exceeds the damages recovered, "the trial court should consider the damages sought and the damages actually recovered." Packard-Bamberger & Co., supra, 167 N.J. at 446 , 771 A. 2d 1194 . In addition to that proportionality analysis, the court must evaluate the reasonableness of the total fee requested as compared to the amount of the jury award. That is, when the amount actually recovered is less than the attorney's fee request, the court must consider that fact in determining the overall reasonableness of the attorney's fee award.
The words that state the rule
That is, although enhancement is not a concern, the relationship between the fee requested and the damages recovered is a factor to be considered by the trial court because the notion of proportionality is integral to contract fee-shifting to meet the reasonable expectation of the parties.
- statuteN.J. Stat. Ann. § 2A:18-61.67enactment date not established
The words that state the rule
If a residential lease agreement provides that the landlord is or may be entitled to recover attorney's fees or expenses, or both from the tenant for any action or summary proceeding arising out of the lease, as described in section 1 of P.L.2013, c.206 (C.2A:18-61.66), the lease clause shall also contain the following provision in a bold typeface in a font size no less than one point larger than the point size of the rest of the lease clause or 11 points, whichever is larger: IF THE TENANT IS SUCCESSFUL IN ANY ACTION OR SUMMARY PROCEEDING ARISING OUT OF THIS LEASE, THE TENANT SHALL RECOVER ATTORNEY'S FEES OR EXPENSES, OR BOTH FROM THE LANDLORD TO THE SAME EXTENT THE LANDLORD IS ENTITLED TO RECOVER ATTORNEY'S FEES OR EXPENSES, OR BOTH AS PROVIDED IN THIS LEASE.
- statuteN.J. Stat. Ann. § 2A:18-61.66enactment date not established
The words that state the rule
The court shall order the landlord to pay such attorney's fees or expenses, or both, that are actually and reasonably incurred by a tenant who is the successful party in such actions or proceedings to the same extent the landlord is entitled to recover attorney's fees and expenses, or both, as provided in the lease. The court shall have discretion with respect to awards of attorney's fees or expenses, or both, for tenants to the same degree as it has with respect to awards of attorney's fees or expenses, or both, for landlords as provided under the lease either explicitly or implicitly. An order based on this implied covenant shall require the landlord to pay the tenant such costs either as money damages or a credit against future rent, as determined by the tenant. Any waiver of this section shall be void as against public policy. Notwithstanding the foregoing, in an action or summary proceeding for non-payment of rent a tenant who pays all rent currently due and owing on or after the filing of the complaint but prior to entry of a final judgment, and whom the court finds presented no meritorious defense to the complaint other than said payment, shall not be deemed to have successfully defended against the action or summary proceeding for the purposes of the award of attorney's fees or expenses, or both. As used in this act "expenses" shall include expenses directly related to the litigation including, but not limited to, court costs and expenses for witnesses. "Expenses" shall not include personal expenses for travel, reimbursement for missed work time, or child care.
- case200 N.J. 372Litton Industries, Inc. v. IMO Industries, Inc.N.J.decided 2009read it at the source ↗
The words that state the rule
Further, the court must consider the degree of success in determining the reasonableness of the time expended. Furst, supra, 182 N.J. at 23, 860 A. 2d 435 . Thus, when a party has succeeded on only some of its claims for relief, the trial court should reduce the lodestar to account for the limited success.
- case200 N.J. 372Litton Industries, Inc. v. IMO Industries, Inc.N.J.decided 2009read it at the source ↗
The words that state the rule
"Losses" were defined as "all demands, claims, claims for reimbursement, actions or causes of action, assessments, losses, damages, costs, expenses, liabilities, judgments, awards ... and amounts paid in settlement (including reasonable attorneys' fees and costs incident to any of the foregoing). ..."
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.