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Chase Bank USA, N.A. v. Staffenberg

419 N.J. Super. 386, 17 A.3d 239 (App. Div. 2011)

ATTORNEYS FEES — The law that allows the award of statutory attorney’s fees in collection cases does not bar a creditor from collecting those attorney’s fees even though the creditor used its in-house attorneys.

A credit card issuer sued a cardholder to recover the outstanding credit card balance. The attorneys who prosecuted the suit on behalf of the credit card issuer were employed as salaried, in-house attorneys. The card holder did not respond to the complaint, and the lower court entered a default judgment in favor of the issuer. It awarded the balance, interest, court costs, and statutory attorney fees. The lower court subsequently denied the cardholder’s motion for relief from judgment, notably as to the statutory attorney’s fees. The cardholder had argued that the issuer had improperly charged counsel fees because such fees should not be statutorily recoverable when the legal services are provided by the creditor’s own salaried, in-house attorneys. The cardholder appealed.

The Appellate Division affirmed, holding that the two specific New Jersey statutes relied upon by the cardholder, the Retail Installment Sales Act (RISA) and the Market Rate Consumer Loan Act, prohibited the issuer from recovering statutory attorney fees as part of taxed costs.

The Court held that the statutory award of attorney fees was not designed to reflect the actual or reasonably spent time of a judgment creditor’s attorney; rather, it was intended to shift a portion of the costs for the attorney’s services, but only in a modest amounts, to the judgment debtor. By example in this case, the disputed amount was less than $140. Further, it pointed out that the attorney’s fees are recoverable under the relevant statute against all judgment creditors.

In sum, the Court found that the two statutes cited by the cardholder, offered as arguments to prohibit the collection of fees by a credit card issuer’s in-house counsel, did not expressly or by implication repeal the statutory mandatory award of attorney fees to be taxed as costs. It concluded that attorney fees under the RISA and the Act are contractually based, whereas the statutory fees at issue are nominal and essentially automatic charges.

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