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Bishop v. Panas Auto, Inc.

A-4573-07T2 (N.J. Super. App. Div. 2009) (Unpublished)

CONSUMER FRAUD ACT; ATTORNEYS FEES — When determining the amount of attorneys fees to be paid in connection with a violation of the Consumer Fraud Act, a court is required to use the “lodestar” approach and cannot merely base an award on a percentage of the amount of underlying damages when compared to the total amount of damages claimed by the consumer.

The owner of a classic car entered into an oral agreement with a repair shop to restore and repair the car. The repair shop owner never provided the consumer with a written estimate of the repair cost. The consumer paid an initial deposit and then paid an additional deposit after some of the work was completed. About three years later, the consumer advised the repair shop that he had sold the car and would arrange to have it picked up. The sale never took place. Two years later, the consumer returned to pick up the car. The repair shop refused to release the car unless the consumer signed a release. When the consumer refused to sign the release, the repair shop imposed a daily storage charge for the entire period the car was in the garage. The repair shop never previously disclosed the storage charge to the consumer.

The car owner sued the repair shop for loss of the use of his car. He also sued under the Consumer Fraud Act, alleging that the repair shop violated that statute by its failure to provide a written estimate of the repair charges and its failure to disclose the storage charges. The repair shop counterclaimed for the storage charges. The consumer sought $17,250 in damages, but the jury awarded him only $3,500 for the consumer fraud claim and $500 for the loss of use claim. The lower court tripled the consumer fraud award, for a total award of $11,000. The consumer then moved for payment of his attorney’s fees and court costs as provided for under the Consumer Fraud Act for the hours expended at his attorney’s customary rate. The lower court found that the consumer’s hourly rate was reasonable. However, it noted that the repair shop owner was not deceitful and only was being punished for a technical violation of the statute. Thus, instead of determining whether or not the consumer’s request for attorneys’ fees was reasonable, the lower court used a mathematical approach to set the legal fees. It measured the success of the consumer’s suit based on the award he received as a percentage of the award he sought for the fraud claim and concluded that since the consumer only received nineteen percent of its claim, it was entitled to only nineteen percent of the attorney time expended on proving the fraud claim.

The consumer appealed and the Appellate Division reversed, noting that the New Jersey Supreme Court had previously rejected any mathematical approach that compares the total issues in a case with the issues on which it prevailed. The Court noted that the Supreme Court had adopted a “lodestar” approach which requires a court to determine the reasonable number of hours expended and then to multiply that number by a reasonable hourly rate. The result then can be decreased if the prevailing party achieved limited success. Here, the Court found that the lower court failed to use the loadstar approach. The Court also found that the lower court demonstrated bias in favor of the repair shop because the Consumer Fraud Act does not provide for a relaxation of, or exemption from, an award of attorneys’ fees, nor does it provide any exemption based on a determination that the violation was merely technical or that the repair shop owner had good character. The lower court’s statements regarding these matters were improper.

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