BELLA'S BAIL BOND, LLC VS. BRIAN MUHLBAIER ESQ. (L-0471-15, CUMBERLAND COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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
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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.
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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.
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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.
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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.
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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.
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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 . . . ."
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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
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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.
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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
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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
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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
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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).
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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.
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