Fight continues over split of $4.8 million fee in dram shop case

Two law firms fighting over nearly $5 million in legal fees in a record-setting dram shop case will battle on, thanks to an appeals court decision Thursday that reversed the award of more than $4.6 million to one of them.

At issue are the fees in Verni v. Lanzaro, A-4058-07, in which a jury in 2005 awarded $105 million in damages over a 1999 drunken-driving crash that paralyzed Antonia Verni, then 2 years old.

The verdict was overturned on appeal and the case ultimately settled for $25 million in June 2007, with $4,853,146 designated for legal fees.

Since then, Rosemarie Arnold, whose firm originated the case, and David Mazie, who took it over and brought it to trial and settlement, have been vying over their share of the money.

The decision Thursday reversed a 2008 ruling that set Arnold's share at $227,500, leaving $4.6 million for Mazie. Arnold's portion was far less than the 50 percent to which she claimed she was entitled, but more than the zero amount Mazie argued was due her.

The appeals court said Bergen County Superior Court Judge Robert Wilson had a basis for reducing the 2,500 hours Arnold claimed she spent on the case to 827 hours and analyzed the question properly by looking at the eight factors specified in Rule of Professional Conduct 1.5(a) for determining a reasonable fee.

For example, Arnold claimed 400 hours for legal research, but the file contained not a single memorandum, the appeals court said.

It reversed, however, because Wilson did not explain how he arrived at the number 827.

The "drastic" size of the reduction "requires substantially more specific findings" than he provided, wrote Appellate Division Judges Mary Catherine Cuff, Edith Payne and Alexander Waugh Jr. in their unpublished, per curiam opinion.

They sent the case back for findings of fact and conclusions of law and required that a different judge be assigned because of how Wilson conducted the five-day evidentiary hearing over the disputed fees.

Without being asked, Wilson struck testimony by Dennis Drasco, one of Arnold's experts, about how she had created and developed the culture-of- intoxication theme used at trial.

The judges stated that Wilson's "dismissive manner" and his "undue intrusion" during Drasco's testimony displayed arrogance and impatience that would have warranted reversal in a jury trial and left them with "no confidence that the judge fully and fairly considered all of the evidence in this case."

They also said the record suggested Wilson might have been disposed against Drasco because he testified right after Arnold, whom Wilson did not seem to find credible.

On remand, the new judge can look beyond the existing record and re-call witnesses, and, at minimum, must give Drasco another chance to testify.

The opinion left it unclear whether the remand judge can jettison Wilson's contract-based approach in favor of a quantum meruit analysis, as urged by Arnold.

In deciding the fee split, Wilson applied a clause from Arnold's contingency-fee retainer agreement that required payment of hourly fees if the client chose to discontinue Arnold's services.

Arnold argued that the clause only applied if the case was dropped entirely and not when another attorney took it over, but Wilson disagreed. The $227,500 fee he awarded Arnold represented the 827-hour figure multiplied by an hourly rate of $275.

The appeals court differed with Arnold's reading of the clause.

But noting the absence of New Jersey authority addressing termination provisions in retainer agreements, it added "we cannot rule out an interpretation that the provision solely governs the calculation of the fees between the ... lawyer and the clients, but does not limit the attorney's ability to seek a larger share of the contingent fee awarded to a substituted law firm."

Arnold, who heads a firm in Fort Lee, N.J., referred a request for comment to her lawyer, Leonard Rosa, of Norton Sheehy Higgins & Rosa in Woodland Park, N.J.

Rosa says quantum meruit should be used on remand and would yield a higher fee for Arnold based on the four-and-a-half years she spent on the case and the novel theories of recovery she developed.

He points out that the drunken driver, Daniel Lanzaro, had only $100,000 in insurance so Arnold brought in other defendants, including the New York Giants, the National Football League, Giants stadium and the New Jersey Sports & Exposition Authority because Lanzaro had attended a game the day of the crash.

Arnold also sued Aramark Corp., the stadium vendor that served beer to Lanzaro and was hit with the $105 million verdict, including $75 million in punitive damages.

Mazie, of Mazie Slater Katz & Freeman in Roseland, N.J., says he expects to "end with the same result" and that any ambiguity in the contract language should be construed against Arnold.

"I don't think she deserved a dime," he adds.

Despite the hours Arnold claimed, he says little had been done on the case when he was brought in to replace her by the court-appointed guardian ad litem, Albert Burstein, of Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz in Hackensack, N.J.

Drasco, of Lum, Drasco and Positan in Roseland, did not return a call.

(Published by Law - August 16, 2010)