STATE OF NEW JERSEY VS. AJIT JAYARAM(11-06-0067, HUDSON COUNTY AND STATEWIDE), A-3392-14T3

Background

Village Sundries & Tobacco, Inc. (Village) executed an assignment for benefit of creditors (ABC) and Barry W. Frost was appointed assignee; Trenk, DiPasquale, Della Fera & Sodono, P.C. (Trenk) acted as special counsel to pursue counterclaims in related New York litigation.
Approximately thirty creditors filed claims exceeding $3 million; Direct Coast to Coast, LLC and Selective Transportation Corp. (appellants) were among them and had earlier sued Village to recover amounts owed.
Frost sought court approval of his final accounting, the statutory assignee commission (up to 20%), and payment of Trenk’s fees and costs as special counsel; appellants objected to the full commission and to Trenk’s fee request (including the $400/hour rate) as unconscionable and procedurally deficient.
The Chancery judge reviewed billing records, counsel CVs, and heard argument; he awarded Frost the full 20% commission ($32,098.11) and awarded Trenk $12,811.87 in fees and $19.20 in costs.
Appellants appealed, arguing lack of evidence of the assignee’s work, procedural defects in Trenk’s fee application (failure to address R.P.C. 1.5 factors per R. 4:42-9(b)), and that their counsel should be awarded fees for work benefitting all creditors.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether assignee’s full 20% commission was unconscionable or unsupported by evidence	Commission was excessive given limited recovery and lack of assignee billing or demonstrated work	Statutory cap permits up to 20%; judge considered nature of business, many creditors, and poor records justifying commission	Court affirmed award of full 20% commission; no abuse of discretion
Whether Trenk’s fee application was procedurally defective for failing to address R.P.C. 1.5 factors per R. 4:42-9(b)	Certification omitted explicit R.4:42-9(b)/R.P.C.1.5 factor discussion; application should be denied	Although form was deficient, the court had billing statements, CVs, and other materials to analyze the factors and determine reasonableness	Court affirmed fee award; procedural deficiency did not negate the judge’s ability to assess reasonableness
Whether $400/hour rate charged by Trenk was unreasonable	$400/hr was excessive for this matter	Counsel’s experience and local fee customs support the rate; even a reduced rate would produce additional work to re-run computations	Court found $400/hr reasonable; in any event reducing rate would not lower overall award after re-accounting
Whether appellants’ counsel should receive fee award for services benefiting all creditors	Appellants seek compensation for attorney work that benefited the creditor body	No application was made below and no evidence was presented showing services benefitted all creditors	Court declined to award appellants’ counsel fees because the issue was not raised or supported below

Key Cases Cited

In re Assignment for Benefit of Creditors of Munson-Lied Co., 68 N.J. Super. 281 (App. Div.) (standard of review for assignee commissions)
Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372 (2009) (appellate deference to trial court fee and commission determinations)
Packard-Bamberger & Co. v. Collier, N.J. (cited authority on deference to trial court) (trial court fee awards rarely overturned)
In re Francilli Carriers, Inc., 77 N.J. Super. 522 (Ch. Div.) (guidance on assignee commissions and separation of commissions from attorney fees)
In re Gen. Assignment for Benefit of Creditors of Brill's Hardware Co., 67 N.J. Super. 289 (Cty. Ct.) (assignee ‘stands in the shoes’ of assignor)
In re Xaviers, Inc., 66 N.J. Super. 561 (App. Div.) (requirement that assignee's retention of counsel be by court order)
Elizabeth Bd. of Educ. v. N.J. Transit Corp., 342 N.J. Super. 262 (App. Div.) (fee awards may be affirmed despite deficient affidavits)
Nieder v. Royal Indem. Ins. Co., 62 N.J. 229 (1973) (court will not consider issues not raised below)