RODNEY FREENEY VS. GUY J. CARNAZZA (L-5178-14, MIDDLESEX COUNTY AND STATEWIDE)

Court: New Jersey Superior Court Appellate Division
Date filed: 2019-06-18
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                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-3233-17T2

RODNEY FREENEY,

           Plaintiff-Respondent,

v.

GUY J. CARNAZZA,
CINEMACAR LEASING, INC.
and CINEMACAR II, INC.,

           Defendants-Appellants,

and

LAMBROS MOTITIS, KILLER
CARZ, LLC and SAM SANKAR,

     Defendants.
_____________________________

                    Argued telephonically May 30, 2019 – Decided June 18, 2019

                    Before Judges Hoffman and Geiger.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Middlesex County, Docket No. L-5178-14.
             Thomas A. Lodato argued the cause for appellants
             (Alampi & DeMarrais, attorneys; Thomas A. Lodato, on
             the briefs).

             Andrew R. Wolf argued the cause for respondent (The
             Wolf Law Firm, LLC, attorneys; Lisa R. Bouckenooghe,
             on the brief).

PER CURIAM

      Appellants Guy J. Carnazza, Cinemacar Leasing, Inc. (Cinemacar Leasing),

and Cinemacar II, Inc. (Cinemacar) appeal from a Law Division order awarding

plaintiff Rodney Freeney attorney's fees and costs pursuant to N.J.S.A. 56:8-19, the

fee-shifting section of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. We

affirm.

                                         I.

      In August 2012, plaintiff and his uncle travelled to defendant Killer Carz, LLC

(Killer Carz) to inspect a 2006 Acura TL with an advertised sales price of $12,900.

Plaintiff expressed interest in purchasing and financing the Acura. Plaintiff made a

$500 down payment and signed a payment receipt. The sales representative also

offered plaintiff a vehicle service contract, which plaintiff accepted. Plaintiff did

not receive or sign any document at the sales lot, other than the down payment

receipt. Plaintiff then completed a credit application and was denied. He was




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referred to defendant Lambros Motitis, a representative of defendant Cinemacar to

obtain financing for the purchase of the Acura.

      Upon plaintiff's arrival at Cinemacar, Motitis arranged the financing through

an agreement whereby Capital One Auto Finance would accept assignment of a

Retail Installment Sale Contract (RISC) between Cinemacar and plaintiff. Motitis

prepared the RISC, the agreement was executed, and it was assigned to Capital One

Auto Finance. A down payment of $3500 was agreed upon. Motitis provided

plaintiff with a Bill of Sale that stated a sales price of $15,000; sales tax of $1190;

"Doc Prep Fee" of $345; "Tag & Title Fee" of $250; and a "Svc Contract/Warranty"

for $2000. The Bill of Sale stated the total price was $18,785, a down payment of

$3500 had been paid, and a balance of $15,285 remained.

      The RISC prepared by Motitis listed the amount financed as $15,285; a

finance charge of $4761.72; a down payment of $3500; and a total sale price

(inclusive of down payment) of $23,546.72. The RISC itemized the financed

$15,285 as follows: (1) the outstanding balance for the purchase of the vehicle of

$12,690,1 plus (2) the total other charges paid to others on the plaintiff's behalf, in



1
  $15,000 paid to Cinemacar, for the Acura at Killer Carz, plus $1190 in sales tax,
for a total sale price of $16,190, minus the $3500 down payment, yielding an unpaid
balance of $12,690.


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the amount of $2595, comprised of the $2000 service contract fee to "AUL

Administrators," $250 "Government Certificate of Title Fees," and a $345 "Doc Prep

Fee" paid to Cinemacar II. The sales price reflected in the RISC was thus $2100

greater than the $12,900 price stated in the Killer Carz advertisement.

      Plaintiff then returned to Killer Carz to pay the remainder of the down

payment before travelling to Cinemacar. The next day, Cinemacar issued a 30-day

temporary license plate for the Acura. The temporary tag displayed Cinemacar's

dealer identification number, despite Killer Carz still holding title to the Acura.

Plaintiff took possession of the Acura the same day.

      When plaintiff subsequently attempted to pick up his license plates and

registration from Killer Carz, he was asked to pay $300 despite the RISC indicating

$250 for official government title fees. As a result, he went to Cinemacar to collect

his plates and registration.     Cinemacar paid $46.50 to the Motor Vehicle

Commission (MVC) for plaintiff's registration, $85 to the MVC for plaintiff's title,

and $5 to the MVC for plaintiff's temporary plates.2 The total cost of $136.50




2
  The receipt from the MVC only indicates the registration and title fees, but at the
time, the agency charged dealerships $5 for a temporary license plate issued to a
New Jersey resident.



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differed from $250 charge by $113.50. Plaintiff did not receive a refund. Neither

the Bill of Sale nor the RISC itemized the $345 document preparation fee.

      The RISC was assigned to Capital One on September 5, 2012. Capital One

paid $14,995 to Cinemacar Leasing3 for assignment of the RISC, and charged

Cinemacar a $295 "Dealer Fee" in conjunction therewith. At this time, however,

Cinemacar did not hold title to the vehicle.

      Plaintiff alleged Cinemacar obtained title through the following process.

About a month after the purchase, Cinemacar submitted a "Reassignment of

Certificate of Ownership by New Jersey Car Dealership" to the MVC, which stated

Cinemacar purchased the Acura from Killer Carz the same day. Six days later,

Cinemacar filed a "Reassignment of Certificate of Ownership by New Jersey Car

Dealership" that stated Cinemacar sold the Acura to plaintiff on October 4, 2012.

      Plaintiff never received a valid service contract. He alleged defendants did

not remit the funds necessary to purchase the service contract from a third-party for

which plaintiff was charged $2000. In June 2013 the Acura developed transmission

troubles and was towed. Plaintiff then learned he did not have a valid service

contract and that Auto Service of America, Killer Carz's service contractor, and AUL


3
  Plaintiff's amended complaint alleges Capital One paid Cinemacar Leasing, yet
appellants argue Cinemacar Leasing was not involved in this transaction.


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Administrators, the company listed on the RISC, did not have the Acura's Vehicle

Identification Number in their systems, nor any processed paperwork. The Killer

Carz sales representative who sold plaintiff the Acura claimed he did not process the

service contract because plaintiff owed still $300.            Another Killer Carz

representative informed plaintiff that Cinemacar was responsible for processing the

service contract. Plaintiff paid for the transmission repairs out-of-pocket.

      Plaintiff retained counsel and filed suit against defendants.            The 135

paragraph, four count amended complaint alleged numerous violations of the CFA;

the Truth-in-Consumer Contract, Warranty, and Notice Act, N.J.S.A. 56:12-15

(TCCWNA); the Automotive Sales Practices Regulations (ASP Regulations),

N.J.A.C. 13:45A-26B.1 to -26B.4; and the Motor Vehicle Advertising Practices

Regulations (MVAP Regulations), N.J.A.C. 13:45A-26A.4(a)(1). Plaintiff alleged

he suffered an ascertainable loss comprised of: (1) the $2100 difference between the

advertised sale price and the final sale price; (2) the overcharge for the title and

registration fees; (3) the unitemized $345 documentation preparation fee; (4) the

$2000 charge for the service contract plaintiff never received; (5) the amount

financed that plaintiff remains obligated to pay; (6) the damages caused by the

knowingly false statements filed with the MVC; and (7) the out-of-pocket repair

costs due to the lack of a service contract.


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      Plaintiff alleged defendants' fraudulent activity included: (1) fraudulently

representing that Cinemacar was selling a vehicle to plaintiff and inducing him to

obtain financing when Cinemacar did not hold title to that vehicle; (2) filing

documents with the MVC that contained knowingly false statements, including

inaccurate odometer readings and representations of sales that never took place,

causing plaintiff's title to contain false and unreliable information thereby reducing

the resale value of the vehicle; (3) charging plaintiff $2100 more than the advertised

price in violation of the bait-and-switch prohibitions in the MVAP Regulations; (4)

charging plaintiff $2000 for a service contract without providing any such coverage;

(5) overcharging plaintiff for MVC fees and charging an unitemized documentary

service fee in violation of the ASP Regulations; and (6) unlawfully allowing a

business to use the licenses of another individual or business to sell vehicles and

offer credit. Plaintiff sought joint and several liability against defendants for

monetary relief, including treble damages available under the CFA, statutory and

actual damages under the TCCWNA, declaratory and injunctive relief, and

reasonable attorney's fees and costs as authorized by those statutes.

      Defendants Carnazza and Cinemacar filed an answer with defenses and cross-

claimed for contribution and indemnity from the remaining co-defendants under

common law and the Joint Tortfeasors Contribution Act, N.J.S.A. 2A:53A-1 to -48,


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and the Comparative Negligence Act, N.J.S.A. 2A:15-51 to -58. Killer Carz did not

answer the complaint and plaintiff filed a request to enter default against them.

      On December 3, 2014, plaintiff sent a settlement offer, inclusive of attorney's

fees and costs, to counsel for defendants Cinemacar and Carnazza. The offer was

not accepted. Shortly thereafter, the court issued a Mediation Referral Order

appointing a mediator.

      In early 2015, counsel for defendants Cinemacar and Carnazza relayed the

existence of another necessary party to plaintiff's counsel. This led to plaintiff filing

an amended complaint naming Sam Sankar, Motitis, and Cinemacar Leasing as

additional defendants. Defendants Sankar and Motitis did not answer the amended

complaint and plaintiff entered default against them.

      The parties engaged in substantial pretrial discovery.           Plaintiff served

interrogatories, requests for production of documents and deposition notices on

appellants, but did not receive timely responses. Killer Carz, Sankar, and Motitis

(collectively, the Killer Carz defendants), requested plaintiff's consent to vacate

default against the Killer Carz defendants. Plaintiff granted the request and served

interrogatories and a document demand on each of the Killer Carz defendants.

      Plaintiff subsequently moved to extend discovery and compel depositions of

appellants. On October 1, 2015, plaintiff withdrew his motion to compel depositions


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and the court entered an order extending the discovery end date to January 11, 2016.

On the same day, plaintiff sent counsel for all defendants a global settlement demand

inclusive of attorney's fees and costs.

      On October 6, 2015, plaintiff moved to compel appellants to answer plaintiff's

interrogatories and document demands, or in the alternative, to suppress their

answers. The court entered an order compelling appellants to provide discovery

responses by a date certain.

      Thereafter, the mediation conducted by the court-appointed mediator was

unsuccessful. Plaintiff then moved to compel the Killer Carz defendants to answer

interrogatories and provide documents, or in the alternative, to suppress their answer.

The court entered an order suppressing the answer filed by the Killer Carz defendants

without prejudice. At the same time, plaintiff served all defendants with requests

for admissions.

      On December 22, 2015, plaintiff moved to suppress the appellants' answer for

failing to abide by the prior order compelling discovery responses by a date certain.

While the motion was pending, appellants served plaintiff with responses to

discovery, an opposition to plaintiff's motion, and a motion to extend the discovery

end date. Plaintiff subsequently withdrew the motion to suppress the answers of

appellants. However, the Killer Carz defendants remained delinquent in answering


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discovery. On February 2, 2016, the trial court granted plaintiff's motion to suppress

the answer filed by the Killer Carz defendants with prejudice.

      Following several adjournments, trial was ultimately scheduled for May 16,

2016. Leading up to trial, plaintiff discussed settlement with appellants several times

without success. Moments before trial was to begin, plaintiff reached a settlement

agreement as to damages with all defendants. The terms of the settlement were set

forth in a handwritten agreement signed by all parties. The agreement provided:

             1) By no later than May 27, 2016 Defendants shall pay
             Rodney Freeney $6,000 via a check made payable to him
             and delivered to the Wolf Law Firm. If the payment is not
             received by May 27, 2016, Plaintiff shall be entitled to
             obtain an entry of judgment against Defendants in the sum
             of $13,500.

             2) After payment is received, Plaintiff will file a motion
             for an award of attorney's fees and costs. Defendants agree
             to pay the amount awarded by the Court, and Defendants
             shall not contest Plaintiff's counsel's entitlement to
             reasonable attorney's fees and costs but may contest the
             reasonableness of the time and rates.

      After the settlement was reached, plaintiff's joint counsel filed a fee

application, which appellants opposed. The application stated The Wolf Law Firm

expended a total of 90.9 hours billed at the rate of $310 to $710 per hour, yielding a

lodestar (Time Spent x Hourly Rate) of $36,357.50. The firm incurred costs and

expenses totaling $2359.69. Co-counsel Christopher J. McGinn expended 35.9


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                                         10
hours at an hourly rate of $460 for a total of $16,514. Plaintiff also sought a lodestar

enhancement.

      Appellants did not object to plaintiff's entitlement to an award of reasonable

attorney's fees and costs under the settlement agreement. Notably, appellants did

not object to the hourly rates sought or the time entries claimed by plaintiff's counsel.

Instead, appellants limited their opposition to reducing the fee award to an amount

proportionate to the conduct attributable to them, which they claim was no more than

"failing to itemize the motor vehicle fees charged to plaintiff." In that regard,

appellants asserted they were not liable for the conduct alleged in counts three and

four. They further claim they became involved only after plaintiff's initial credit

application was denied. Appellant's opposing papers admit that the sale they

"completed" "included a twelve month, twelve thousand mile service warranty"

effective September 1, 2012.

      The trial court granted plaintiff's motion for attorney's fees and costs on June

22, 2017. In its written opinion, the court framed the issue as "whether a prevailing

plaintiff under a multi-defendant . . . settlement is entitled to all of its fees from a

solvent settling party, under a theory of joint and several liability, or whether each

defendant should bear the burden of costs for the claims against it." First, the judge

analyzed whether the settlement agreement was an enforceable contract capable of


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binding each settling defendant to all fees incurred. The court found the agreement

did not expressly "ascribe to [any defendant] the joint liability asserted by plaintiff

[nor the] several liability asserted by defendant." Accordingly, the court was

"constrained to allocate costs based upon general principles of law." To that end,

the court concluded, "the nexus between the fee award and the litigation is

determined neither by the amount of recovery, nor the percentage of liability, but

ought to reflect the costs of pursuing the claims against each and all defendants."

The court stated it was "obvious . . . that defendant Killer Carz would likely have

been solely responsible for counts three and four, and the trier of fact would have

determined if either, neither, or both defendants were responsible for counts one and

two." After noting the settlement agreement was silent as to allocation of liability

or responsibility for payment of legal fees, the court determined the reasonable costs

imposed under the statue by analyzing "the costs attendant to commencing and

maintaining the litigation against each and every party." The court concluded:

             For those costs solely attributable to Killer Carz, they
             should be severally liable, and no costs should be imposed
             on [Cinemacar]. For those costs solely attributable to
             [Cinemacar], they should be severally liable, and no costs
             should be imposed on Killer Carz. An example of several
             liability would be for communications solely with one
             defendant, which would not have any direct relevance to,
             or impact on, the other parties to this litigation.



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                                         12
                    For those costs that cannot be fairly segregated to
             be attributable to either defendant solely, they shall be
             allocated to all defendants, and each party should therefore
             be jointly and severally liable for such costs. An example
             of such costs would be for the preparation and research of
             the complaint, and all costs of litigation and settlement.
             Although arguably [Cinemacar and Cinemacar Leasing]
             may have played no role in counts III and IV, the entire
             complaint had to be prepared, filed and litigated. Much
             like the duty to defend versus the duty to indemnify, to the
             extent that a party is alleged to have violated a fee-shifting
             statute, until such time as those allegations are dismissed
             against it, it would be jointly and severally liable for such
             costs as may be reasonably necessary to prosecute the
             claims asserted.

      With regard to the hourly rates sought, the trial court determined the rates

charged were "within the upper limit of what the court finds reasonable." The court

reasoned that, since the hourly rates charged were "well above median rates, the

lodestar enhancement frequently used to compensate for risk of non-payment" was

reflected in the rates charged. Thus, as there was no "significant issue of difficulty

in the underlying litigation," the lodestar enhancement was denied.

      The order granted the following attorney's fees and costs: (1) $854.00 against

defendants the Killer Carz defendants; (2) $1190.00 against defendants Carnazza,

Cinemacar Leasing, and Cinemacar; and (3) $53,187.19 against all defendants

jointly and severally.




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                                         13
      This appeal followed. The Killer Carz defendants did not join in the appeal.

Appellants concede plaintiff is entitled to an award of reasonable attorney's fees and

costs, but argue the attorney's fees awarded were disproportionate to the amount of

the settlement and did not address the respective liability of the defendants.

                                          II.

      Our review of a trial court's fee award is limited. A.W. v. Mount Holly Twp.

Bd. of Educ., 453 N.J. Super. 110, 118 (App. Div. 2018). "A reviewing court should

not set aside an award of attorneys' fees except 'on the rarest occasions, and then

only because of a clear abuse of discretion.'" Garmeaux v. DNV Concepts, Inc., 448

N.J. Super. 148, 155 (App. Div. 2016) (quoting Rendine v. Pantzer, 141 N.J. 292,

317 (1995)).    "An abuse of discretion in the award of counsel fees may be

demonstrated 'if the discretionary act was not premised upon consideration of all

relevant factors, was based upon consideration of irrelevant or inappropriate factors,

or amounts to a clear error in judgment.'" Heyert v. Taddese, 431 N.J. Super. 388,

444 (App. Div. 2013) (quoting Masone v. Levine, 382 N.J. Super. 181, 193 (App.

Div. 2005)).

      "The CFA is a remedial statute which encourages its use by, among other

things, reasonably compensating those who prevail through fee shifting."

Garmeaux, 448 N.J. Super. at 159 (citing Coleman v. Fiore Bros., Inc., 113 N.J. 594,


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                                         14
598 (1989)). "[T]he CFA's fee-shifting provision advances the statute's policy of

ensuring that plaintiffs with bona fide claims are able to find lawyers to represent

them and encourages counsel to take on private cases involving an infringement of

statutory rights." Id. at 156 (citing Coleman, 113 N.J. at 598). Prevailing CFA

plaintiffs are entitled to reasonable attorneys' fees because of the "strong legislative

policy in favor of fees both to make whole the victims of consumer fraud and to

deter unconscionable practices." Coleman, 113 N.J. at 599 n.1.

      "When fee shifting is permissible, a court must ascertain the 'lodestar'; that is,

the 'number of hours reasonably expended by the successful party's counsel in the

litigation, multiplied by a reasonable hourly rate.'" Garmeaux, 448 N.J. Super at 159

(quoting Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009)). First, the

trial court "should evaluate the rate of the prevailing attorney in comparison to rates

'for similar services by lawyers of reasonably comparable skill, experience, and

reputation' in the community." Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 22 (2004)

(quoting Rendine, 141 N.J. at 337). "Second, a trial court must determine whether

the time expended in pursuit of the 'interests to be vindicated,' the 'underlying

statutory objectives,' and recoverable damages is equivalent to the time 'competent

counsel reasonably would have expended to achieve a comparable result. . . .'" Ibid.

(alteration in original) (quoting Rendine, 141 N.J. at 336). If the trial court finds


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"that the hours expended 'exceed those that competent counsel reasonably would

have expended to achieve a comparable result, a trial court may exercise its

discretion to exclude excessive hours from the lodestar calculation.'" Szczepanski

v. Newcomb Med. Ctr., Inc., 141 N.J. 346, 367 (1995) (quoting Rendine, 141 N.J.

at 336). Third, the trial court should decrease the lodestar if the plaintiff achieved

only limited success in relation to the relief sought. Furst, 182 N.J. at 23 (citing

Rendine, 141 N.J. at 336).

      "The trial court's responsibility to review carefully the lodestar fee request is

heightened in cases in which the fee requested is disproportionate to the damages

recovered."    Szczepanski, 141 N.J. at 366.           "However, there need not be

proportionality between the damages recovered and the attorney-fee award itself."

Furst, 182 N.J. at 23 (citing Rendine, 141 N.J. at 336). When the fees sought are

disproportionate to the damages recovered, "the trial court should evaluate not only

the damages prospectively recoverable and actually recovered, but also the interest

to be vindicated in the context of the statutory objectives, as well as any

circumstances incidental to the litigation that directly or indirectly affected the extent

of counsel's efforts." Szczepanski, 141 N.J. at 366-67.

      Appellants elected not to challenge the hourly rates sought by plaintiff's

counsel. They also did not object to any specific hours expended or services


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performed as being unnecessary, duplicative, or otherwise excessive. The party

opposing a counsel fee application must identify specific areas of factual dispute in

a contested fee application, rather than a generalized objection. Chattin v. Cape May

Greene, Inc., 243 N.J. Super. 590, 615 n.8 (App. Div. 1990). Instead, appellants

limit their argument to the disproportionality of the fee award to the amount of the

settlement, and the claimed failure to apportion responsibility for the fees in accord

with the respective responsibility of the parties.

      Our review of the record reveals that unlike in many instances, plaintiff did

not achieve limited success in relation to the relief sought. None of plaintiff's claims

were dismissed pretrial. Indeed, appellants did not move to dismiss any of plaintiff's

claims. Moreover, the settlement reached did not allocate responsibility between

appellants and the Killer Carz defendants.

      Our review further reveals that plaintiff's counsel did not engage in prolix or

repetitious legal maneuvering, unnecessary discovery, or unsuccessful motion

practice. On the contrary, some of the motion practice is directly attributable to

appellants' failure to timely provide discovery. We further note appellants moved to

extend discovery.

      Despite plaintiff's proposed settlement offers and participation in court-

ordered mediation, defendants rejected those attempts to resolve the matter until the


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morning of trial, when the settlement agreement was reached. This course of action

required plaintiff to complete discovery and prepare for trial. In addition, this

litigation served not only to vindicate plaintiff's rights under the CFA, but also to

deter defendants and other used car dealers from engaging in deceptive sales

practices and failing to provide service warranties required by the sales contract.

      In assessing appellants' argument that the fee award is disproportionate to the

settlement amount, we are mindful the trial court declined to award a lodestar

enhancement because of the hourly rates awarded. Ordinarily, the trial court "should

consider whether to increase [the lodestar] fee to reflect the risk of nonpayment in

all cases in which the attorney's compensation entirely or substantially is contingent

on a successful outcome."       Rendine, 141 N.J. at 337.        Such "contingency

enhancements in fee-shifting cases ordinarily should range between five and fifty-

percent of the lodestar fee, with the enhancement in typical contingency cases

ranging between twenty and thirty-five percent of the lodestar." Id. at 343. The trial

court noted the hourly rates claimed were at the upper end of reasonableness and

counterbalanced that observation by declining to award the lodestar enhancement.

      We find no merit in appellants' argument that the trial court erred by not

allocating the fee award in relation to the respective liability of the defendants.

Cogar v. Monmouth Toyota, 331 N.J. Super. 197, 211 (App. Div. 2000). Plaintiff's


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                                         18
damage claims were settled as to all defendants without allocation of fault. The

"denial of fee apportionment" is "faithful to the legislative intent under the fee-

shifting provision of the CFA to 'encourage attorneys to take small claims in order

to serve the important public policy behind the statue.'" Grubbs v. Knoll, 376 N.J.

Super. 420, 446 (App. Div. 2005) (quoting Cogar, 331 N.J. Super. at 211). The

imposition of "a limitation on the amount of fees recoverable based on allocation

would dilute the significant policy underpinnings of the fee provision of the

legislation.'" Ibid. (quoting Cogar, 331 N.J. Super. at 211).

      Appellants claim their role in the sales scheme was limited, and they are not

liable for the claims asserted in counts three and four of the amended complaint. It

is clear, however, that they were the seller of the vehicle according to the MVC

documents. The RISC that they prepared included provision of the service warranty.

Moreover, even if we accepted appellants' argument their role in the underlying

transaction was limited as compared to the Killer Carz defendants, we concur with

the trial court's finding that, with few exceptions, the services rendered by plaintiff's

counsel were necessary to pursue "the 'interests to be vindicated,' the 'underlying

statutory objectives,' and recoverable damages." Furst, 182 N.J. at 22 (quoting

Rendine, 141 N.J. at 335-36).




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      In sum, the trial court properly considered the claims made, the results

obtained, the time records submitted by counsel, and the relevant factors in reaching

its decision. We find no clear abuse of discretion or error in judgment by the trial

court. Accordingly, we discern no basis to disturb the trial court's ruling.

      Affirmed.




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