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USA Home Improvement v. Park

A-4406-04T3 (N.J. Super. App. Div. 2006) (Unpublished)

CONSUMER FRAUD; ATTORNEYS FEES—In awarding attorneys fees in a Consumer Fraud Act case, a court determines which part of the claimed fees was attributable to the fraud claim and which part was attributable to other claims.

Homeowners entered into a home improvement contract with a contractor. The contract was orally extended. It was also agreed that the contractor, at additional cost, would renovate the owners’ kitchen. While the work was being done, a subcontractor stole cash from a safe in the owners’ attic. After the owners failed to pay the balance of their bill, the contractor sued. The owners filed a counterclaim, alleging negligence, consumer fraud, and negligent hiring. The parties eventually settled. The contractor withdrew its claim and agreed to pay a portion of the owners’ attorneys’ fees. After the settlement was approved by the lower court, that court found that the oral modifications to the contract violated the Consumer Fraud Act. Further, it found that, as the prevailing party in the consumer fraud case, the owners were entitled to reimbursement of their attorneys’ fees in connection with the consumer fraud case. The owners’ attorney submitted a bill for more than $44,000, but the lower court held that $5,000 in fees and $1,000 in expenses would be fair. It believed that the balance of the owners’ attorneys’ bill was attributable to other elements of the case, unrelated to the consumer fraud claim, such as the negligent hiring of the subcontractors who stole the owners’ money. The owners appealed, but the Appellate Division affirmed, holding that the lower court appropriately segregated the legal services applicable to the consumer fraud portion of the owners’ claim from those services directed to the recovery of the stolen money. It also found that the lower court properly valued the services in light of the complexity of the different aspects of the owners’ claims. It noted that the consumer fraud claim was significantly less complex and required less effort, particularly since the contractor admitted that the modification of the contract to include the kitchen renovations was oral, and therefore violated the Consumer Fraud Act.

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