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700 Gotham, LLC v. J. Manheimer, Inc.

BER-L-673-05 (N.J. Super. Law Div. 2005) (Unpublished)

ARBITRATION; ATTORNEYS FEES—An arbitrator has the power to award 100% of contractually permitted attorneys fees even if the successful party prevailed on only a fraction of its claims.

A landlord obtained an arbitration award in its claim against its tenant for damages after it vacated the premises. Although the landlord “prevailed on only 31.84 percent” of its claim for monetary damages, it “was awarded 100 percent of its lodestar attorneys’ fees and costs.” The landlord thereafter filed an Order to Show Cause “to confirm the arbitration award, direct payment of the remainder of the award, set the post-judgment interest rate and award attorney fees.” The tenant responded that “under New Jersey law, the attorneys’ fees were excessive and this portion of the arbitration award should be modified.”

The Law Division held that it had no authority “to modify or vacate [the] arbitration award based on a mistake of law, no matter how egregious.” It based its reasoning on the fact that a “court’s role in reviewing arbitration awards is tightly circumscribed[,]” and that a modification or vacation of an award can only be made under certain criteria specified by statute. These criteria included corruption, fraud, “or similar wrongdoing on the part of the arbitrators.” The Court found that “[n]one of the statutory conditions for vacating or modifying an arbitration award [were] present in [the] case” before it. Therefore, it held that “the purported mistake of law in allowing 100 percent of attorneys’ fees clearly does not provide a basis for modification of the arbitration award.” The Court also declined “to treat attorneys’ fees as distinct when they are explicitly part of the contract between the parties.”

The Court also denied the landlord’s request for extra attorneys’ fees since its agreement with the tenant only allowed the landlord to “receive ‘reasonable’ attorneys’ fees” and it was already awarded “at least reasonable attorneys’ fees” during arbitration “in connection with the enforcement of [the tenant’s] obligations under the lease.” The Court based its reasoning on the fact that the law does not require that “attorneys’ fees ... be proportional to the underlying award.” It also denied the landlord’s request for “post-judgment interest on the arbitration award at the rate specified in the lease, running from the date of the award.” After weighing the equities and determining whether there were “unique circumstances that [would] merit awarding interest at a rate other than the legal rate,” the Court found that there were no “unusual circumstances to justify the award of post-judgment interest at the contract rate instead of the legal rate.”

Finally, the Court confirmed the arbitration award “as is,” found that the landlord was “not entitled to additional attorneys’ fees,” and ordered the tenant to “pay post-judgment interest on the balance of the award at the legal rate of interest.”

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