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Goodwin v. O’Donnell

Superior Court of New Jersey

Appellate Division

Docket No. A-3476-10T2

Decided December 30, 2011

OPERATIVE FACTS:

The legal malpractice Plaintiff Mr. Goodwin filed for divorce in October 2006. In July of 2007 he retained the defendant law firm, well known for their excellence and expertise in Family Law matters, to represent him.

According to the opinion, “On the scheduled trial date” partner Edward J. O’Donnell, Esq., a brilliant trial lawyer (I have seen him “on his feet”) recommended that Mr. Goodwin agreed to proceed in arbitration as “the least expensive and most expeditious means of resolving the marital dispute.”

Husband and wife executed an arbitration agreement setting the ground rules and the fees for the arbitrator, and the Family Part judge signed an Order that day referring the matter to arbitration.

Six months later and prior to the commencement of the arbitration, the Plaintiff again switched lawyers, and the matter went to arbitration. More than nine months after that, the arbitrator issued his award.

Mr. Goodwin was apparently dissatisfied with the result, because in September of 2009 he filed the instant malpractice lawsuit against the Defendant. His claim was that he spent an additional $200,000, which was neither quicker nor cheaper than a court proceeding.

After discovery the Defendant law firm moved for Summary Judgment. There was no expert designated on behalf of the Plaintiff because the Trial Court allowed limited discovery.

The Trial Court in the persona of Judge Dumont dismissed the legal malpractice Complaint for the following reasons:

(1) The delay or increased costs could not be attributed to the Defendant law firm. “The fact that it did not go to arbitration until many months later…cannot be considered the fault of the Defendant.”

(2) The core issue is whether or not the advice to go to arbitration was reasonable. While the law firm alleged and the Plaintiff disputed there were tax issues, apparently of a Sheridan v. Sheridan nature (possible income tax implications) that was of no moment.

“…that does not take away from the fact that the advice that arbitration was less expensive and more expeditious is a reasonable strategy. Otherwise, every lawyer would be subject to suit when he recommends arbitration over continuing litigation. This obviously would not be fair.”

CASE HOLDING:

The Appellate Division affirmed “substantially for the reasons stated by Judge Dumont in his oral decision…”

However, the Appellate Court added the following comments:

“Here, there is no legal duty on the part of Defendant to refrain from recommending arbitration in as much as our State’s strong public policy favors this alternative means of dispute resolution…”

“A fortiori, no reasonable jury could find the requisite breach of duty in Defendant’s recommendation of arbitration as a speedy and inexpensive course of action to pursue.”

“Nor could Plaintiff establish other than by pure speculation the third element of proximate causation, namely that the arbitration in fact was more costly and time consuming than the trial that never occurred.”

COMMENT:

The Plaintiff’s attorney was my former partner Peter Ouda, Esq., known in legal malpractice circles as “the Dragon Slayer”. He has had quite an impressive string of victories representing legal malpractice Plaintiffs and others at the Appellate level. However, the buck stops here. When it comes to reasons for dismissing a legal malpractice Complaint, between the opinion of Judge Dumont and the Appellate Division it was “let me count the ways”.

There were lots of things that puzzled me about this case, so I called Peter. I was particularly interested in the identity of the expert, because the opinion notes that the Motion for Summary Judgment occurred after “Defendant answered and following discovery,…”.

Peter advised that although there was an Affidavit of Merit, Judge Dumont allowed limited discovery only, i.e., the deposition of Mr. O’Donnell. Thus, there was no opportunity to provide a full expert report, or, at least, a full expert report based upon the “normal” discovery.

Obviously, neither Judge Dumont nor the Appellate Division thought this case was worthy of further discovery.

This opinion, if taken literally and applied to every piece of litigation, provides for lawyers perhaps broader immunity than was intended. While there are a couple of very minor caveats which can be considered dicta, essentially this opinion says that if you recommend arbitration and the client accepts it that your judgment is unassailable because of the strong public policy favoring Alternative Dispute Resolution.

Presumably, this approach would apply not only to matrimonial cases, but to any type of case. All you have to do is recommend that you take the case to arbitration, since that is a per se “reasonable” recommendation, and you are off the hook for the result. I wonder whether this was intended.

Also, it seems to me that this opinion in its praise of arbitration is unnecessarily harsh on our judicial system. I have had experience with arbitration, and very frankly I respectfully disagree with the judicial presumption that arbitration should be favored. In my opinion, the judicial system should be favored.

I hate to disagree with my learned former partner, but to me this is a very clear case for the application of the “error of judgment” defense, which doctrine would have been sufficient in and of itself to warrant dismissal. At least in my opinion.

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In the Matter of Ty Hyderally, an Attorney at Law

(D-134-10) (068701)

Decided December 20, 2011

OPERATIVE FACTS:

         This is an attorney disciplinary matter in which the Supreme Court considered whether New Jersey attorney Ty Hyderally violated R.P.C. 8.4(c) which prohibits “conduct involving dishonesty, fraud, deceit or misrepresentation” by displaying on his law firm website the seal of the New Jersey Board on Attorney Certification although he had not been certified by the Supreme Court in one of the practice areas designated for certification pursuant to R. 1:39. Only certified attorneys may display this seal in their advertising on their communications. 

         Hyderally explained that he retained his cousin in California, a website designer, to design a website for his law practice in 2005. It was the designer who added the seal, which included the language “New Jersey Supreme Court Certified Attorney” to the website. The website designing cousin had surveyed other lawyer websites to look for law related imagery to add to his cousin’s website, and simply assumed that if an attorney practiced in New Jersey he was entitled to display this seal. Therefore he included the seal without any real knowledge of its import. 

            Hyderally said that he knew the website had been designed but “never looked at its content in detail” and did not learn of the presence of the seal until 2 years later when he was contacted about it. He immediately removed the seal. 

            He testified that he had received none of the benefits of a certified attorney, for example, payment of referral fees without the necessity of work nor had he benefitted in any other fashion (at least to his knowledge) from use of the seal. 

            Thus, Hyderally explained, his use of the seal was unintentional and inadvertent.

        After a rather checkered procedural history including recommendations both for dismissal of the Complaint and for imposition of sanctions by the various ethical reviewing organizations, the Supreme Court took this case on its own motion.

            The Supreme Court found that there was no clear and convincing evidence that Hyderally either intentionally included the Supreme Court seal or approved its continued presence on the website created for him by his cousin. Therefore there was not clear and convincing proof that Mr. Hyderally was engaged in “dishonesty, fraud, deceit or misrepresentation” within the meaning of R.P.C. 8.4(c). The Supreme Court dismissed the case against Hyderally. 

            However, the Supreme Court was not finished. It said to the rest of us “We remind the Bar that attorneys are responsible for monitoring the content of all communications with the public – including their websites – to ensure that those communications conform at all times with the Rules of Professional Conduct.”

            Although Hyderally escaped with a dismissal of his Complaint, the Supreme Court made it clear that future misrepresentations of this type on a website will subject the attorney to discipline. The Court also sent a strong message to non-certified attorneys that use of the “certified attorney” seal improperly will also subject an attorney to discipline. 

COMMENT:

            My question is what happens when there is a similar problem with the website and the firm is a large one? Who is disciplined? The partners? The strong message contained in this decision adds a new element of risk management, particularly with larger firms having substantial websites.

            As a certified civil trial attorney for more than 25 years, I am pleased that the strong message the Court sent to “uncertified” attorneys in the various certified fields who may be tempted to use the Supreme Court seal which I have worked long and hard to be entitled to use.  

          I note that Mr. Hyderally benefitted from representation by the brilliant Frederick Dennehy of the Wilentz firm. Mr. Dennehy has had a heck of a good couple of weeks in the Appellate Division and the Supreme Court.

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Delage Landen Financial Services, Inc. v. Leighton K. Lee Law Office and Leighton K. Lee

Superior Court of New Jersey

Appellate Division Docket No. A-3148-10T2

             This is not a legal malpractice case, but I comment on it just because it stands as a cautionary note to practitioners who enter into lease agreements or purchase agreements for other legal services (such as legal research services) and they routinely agree to a forum selection clause which is always in the fine print.

            Here, Mr. Lee, a Hawaiian attorney, leased a photocopying machine at $360.00 from Ricoh. I know from personal experience that Ricoh (from whom I originally leased my copier) transmogrified into the Plaintiff Delage Landen Financial Services Inc., to whom I now pay my monthly copier lease payments.

            The lease agreement had a forum selection clause for New Jersey. Delage Landen sued in New Jersey. Mr. Lee asserted that it would be inequitable etc., etc., etc. to force him to leave the warms climes of Hawaii to litigate in the frigid air of New Jersey. 

            The Court disagreed and enforced a forum selection clause requiring Mr. Lee to come to New Jersey.

            The lesson here, particularly for solos and small firm practitioners, is that you should indeed take the forum selection clause very seriously. If it is not negotiable and you are not happy with it, there are plenty of legal services you could lease or purchase without having to litigate your claims someplace not very enticing to you.

            We all wish Mr. Lee good luck, and hope that January is a lot warmer than usual.  

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Smith v. Grayson v. Epstein

Superior Court of New Jersey

    Appellate Division

Docket No. A-1072-10T4

A-1460-10T4

Decided December 19, 2011

OPERATIVE FACTS:

                In this matrimonial legal malpractice matter, the Plaintiff Ms. Smith sued her former attorney, Bette Grayson, alleging negligence in advising her to accept an inadequate divorce settlement.

            In a very unusual fact setting, Grayson then filed a Third Party Complaint against Jeffrey Epstein and his former firm, Wilentz. Epstein was retained by Leslie (the Plaintiff here – no disrespect intended) as a “consultant” rather than as an attorney actively prosecuting her divorce case. 

            The Plaintiff had been married to Lorre Smith, Esq. for some 23 years. She was an audiologist, 46 years old, with an earning history of $42,000 per year dating from the time she returned to full time work. Her husband, a 48 year old attorney with a solo practice, averaged reported income of $246,000 per annum for the years in question. There were 2 children born in 1985 and 1989. 

            Typically, this was a nasty divorce action. Plaintiff and Grayson devolved upon a strategy to use the Plaintiff’s entitlement to permanent alimony as leverage to get another result. Plaintiff wanted to use this entitlement to “trade off” to get either a disproportionate share of equitable distribution or higher limited duration alimony.

             The problem is, she got neither. 

            The Plaintiff claimed that negotiations became highly accelerated close to a trial date, and that the ultimate deal to which she agreed “came out of nowhere”, that Grayson “encouraged and pushed” her to accept the deal, and said that if she did not accept the deal she “was never going to get divorced”. 

            Upon getting a hint that Grayson’s performance may have been substandard, she filed suit against Grayson, but not against Mr. Epstein, who had a very limited role in this transaction, basically proposing alternatives forms of dispute resolution and settlement terms. 

            The Trial Court dismissed the legal malpractice Complaint against Ms. Grayson for 2 reasons:

(1)    She accepted the settlement and, the Trial Court held, this bars her claim under Puder. 

(2)    The report of Plaintiff’s expert was a “net opinion” and, once that report was suppressed, the legal malpractice Complaint must fail. 

The Trial Court also dismissed the Third Party Complaint by Grayson against Epstein and Wilentz, apparently because there is no expert report to establish a breach of duty on the part of Mr. Epstein, nor was there any “co-counsel” relationship of the type found in Connell, Foley, & Geiser, LLP v. Israel Travel Advisory Service, Inc., 377 N.J. Super. 350, particularly at page 364 (App. Div. 2005) which held that “co-counsel” should be entitled to contribution only in matters where there was a case “both were handling at the same time.” Here, the Trial Court found that Mr. Epstein’s engagement was less than “complete” and Lerner v. Laufer, 359 N.J. Super. 201 (App. Div. 2003) limitations are appropriate.

CASE HOLDING:

            The Appellate Division affirmed the dismissal of the Third Party Complaint against the Wilentz firm and Mr. Epstein. The Appellate Court found that Grayson had an independent obligation to obtain an expert to define the standard of care which applied to Mr. Epstein and Wilentz, and it failed to do so. Additionally, the fact that 2 attorneys represent the same person does not mean that they are doing the same thing for the same case at the same time, and the Appellate Division agreed with the Trial Court that Lerner v. Laufer exceptions should apply.

            On the issue of the dismissal of the Complaint, the Appellate Division reversed and remanded to the Trial Court. 

            On the Puder issue, the Court held that Puder simply did not apply. 

            The Appellate Division also found that the report submitted by Plaintiff was far from “net opinion”. The Appellate Division discusses the virtues and method of analysis of the expert report at pages 19-28 of its opinion. 

            The Complaint was reversed and remanded.

COMMENT:

            This case allows me to comment on 2 of my favorite topics. One of them is the necessity for getting an expert who knows what he or she is talking about rather than getting some “generalist” who will opine to virtually anything.

            While the opinion does not say so, my sources reveal that the Plaintiff’s expert in this case was the very able Dale Console, Esq., and indeed the opinion referred to her as a matrimonial expert. Selecting someone of this high quality showed when it came to an analysis of her report, which took up 9 pages of this opinion. It is clear that Ms. Console ably and methodically set forth appropriate standards and discussed the “whys and wherefores” of the alleged deviation and the causal link to damages, and further that she made an appropriate calculation with regard to damages.

            What particularly interested me was the Court’s discussion of the range of alimony to which this expert opined the Plaintiff would have received had this case gone to trial. The expert cited Crews v. Crews and Lipis v. Lipis (no citations – everybody knows them) and:

“The expert then estimated the range of yearly permanent alimony to be between $65,000 and $72,000 based upon each party’s historical earnings and utilization of a formula widely accepted amongst members of the matrimonial bar.”

(Page 22 of the opinion)

            Also at page 22, in discussing this calculation, the Court noted about her calculations:

“In doing so, the expert relied on a generally accepted objective standard of matrimonial attorney practice and not simply standards personal to her.”

            The Court also seemingly approved the number that Plaintiff came to because the report was so thorough. 

            In getting to the bottom line, the Court observed at page 27:

“The expert properly identifies the facts and data on which her opinion is founded; accurately analyzes the relevant law, both statutory and common; correctly describes the generally accepted professional standards; and adequate explains the methodology employed in ascertaining breach of measuring damages.”

            The Appellate Division recognized that alimony calculations are:

“Inexact, but such imprecision does not render any less valid the expert’s use of her knowledge and experience in the matrimonial field to estimate the range of an alimony award she would have received had she rejected the settlement agreement and proceeded to trial.”

            The Appellate Division also recognized that, although solid, any opinion regarding the quantum of alimony is assailable, “that the deficiencies identified by Defendant go to the weight, rather than the admissibility of this proof, and are appropriate for attack on cross examination.”

            This is a very thorough and analytical opinion which defense attorneys in particular should read with great care. In matrimonial cases, Puder Motions and “net opinion” Motions are almost reflexive on the part of defense counsel, and at the Trial Court these Motions have met with some degree of success, as here. However, once the appropriate legal analysis is applied to both issues, it is very rare indeed that cases of this type are dismissed. 

            Another recent example is the case for which I have a personal affection for since I represented the Plaintiff, Bunkers v. Snyder (link to the Appellate Division decision here), Union County Docket Number UNN-L-916-08, Appellate Division Docket Number A-3390-09T4, Supreme Court Docket Number 69,564.

            The real shame here seems to be the recognition among lawyers that we are not superhuman and invulnerable to mistakes. Most lawyers, particularly matrimonial lawyers, rely upon their carrier-designated defense counsel for legal advice with regard to whether or not to try the case or to settle. The problem is, as many matrimonial practitioners have told me, that defense attorneys don’t understand matrimonial law. 

            My own personal experience and my own personal opinion is that insurance defense attorneys in legal malpractice matrimonial cases routinely underestimate both exposure for liability and the upper limits of exposure for damages. Unfortunately, if insurance defense counsel underestimates either liability or damages, their insureds are unnecessarily exposed to excessive verdicts. In cases where the stakes are really high, the glare of the spotlight of publicity (and sometimes the glare of the spotlight of national publicity) may be an unbargained-for byproduct of defense counsel’s mistaken analysis.   

            I hope that matrimonial attorneys read this case and this blog, applying their years of experience and objective intellectual judgment for their own benefit. It is really sad to see good attorneys dragged through the mud when they should resolve their cases and go on with their productive lives. 

            I also note the appearance of the Wilentz firm in their own defense. In particular, I note the participation of Frederick Dennehy, Esq., who is, for my money, a brilliant legal scholar. I have seen other Wilentz attorneys represent Defendants in legal malpractice cases (Willard Shih, Esq. and Brian Molloy, Esq.) and it is my opinion that they do a superb job in defending their legal malpractice clients. Congratulations in this case.

            Congratulations are also in order to Ken Thyne, Esq. the attorney for the Plaintiff, who chose to rely upon Ms. Console rather than to tap into the “usual” expert’s pool, including experts who will testify to virtually anything.   

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Mahesh Uberoi, Madhu Uberoi, and Uberoi International, Inc. v. Stark & Stark, P.C.

Superior Court of New Jersey

Appellate Division

Docket No. A-2096-10T2

OPERATIVE FACTS:

            The Plaintiffs entered into a business deal.  While the business arrangement was quite complicated and takes up about 8 pages of this opinion in description of its particulars, suffice it to say that there was roughly $3.5 million dollars involved.

            I should add here that I am not doing the facts justice, or even close to it.  To me, the facts are less important than the ultimate holding.

            The Plaintiffs engaged the Defendant law firm to represent their interests. 

            The thrust of the allegations against the law firm was that it simply missed an inclusion or addition to the ultimate calculations which went into the closing.  As a result of this miscalculation, Plaintiffs say, they were deprived of some $1,132,280 in post-closing adjustments.

            Plaintiffs engaged Barry Levine, Esq. to provide an expert report.  Mr. Levine testified that there was a change in the final draft of the contract for sale of purchase that the Defendant law firm failed to notice, and accordingly failed to advise the clients of it. 

            The Defendants challenged Levine’s report as a “net opinion”.  Among other things, Defendants alleged that Mr. Levine offered a “mere conclusion” that is not supported by factual evidence or other data.  The Trial Court agreed.

CASE HOLDING:

            The Appellate Division reversed.  They found that although the factual basis for Mr. Levine’s opinion was disputed, it did indeed have a factual basis. 

            The Appellate Court here went ahead to touch upon an important subject which, in context of this case, appears to be dicta. 

            The subject is “How do you prove damages in a transactional legal malpractice case?”.  By that I mean, for example, if the claim is that an attorney (as here) left out an important term of the agreement, that the other side would have agreed to the other important term.  This is a problem that has been plaguing malpractice attorneys nationally, and the leading case is the California case of Viner v. Sweet, 30 Cal. 4^th 1232 (2003).  In Viner, the Plaintiff’s malpractice claim was dismissed because the Plaintiff could not prove that the “other side” of the transaction would have agreed to the mistakenly excluded provisions. 

            Here, the Defendant law firm contended that:

“Even assuming it was negligent in failing to notice and inform the Uberois that the final draft of the SPA had been amended to include the Deutsche LOC as a liability for purposes of calculating UII’s WCR, Plaintiffs have not shown that such negligence as a proximate cause of the damages allegedly sustained by the Uberois.”

            The Appellate Court here examined the leading cases on the causal link/transactional malpractice cases, 2175 Lemoine Avenue v. Finko, 272 N.J. Super. 478, 488 (App. Div. 1994) and Froom v. Perel, 377 N.J. Super. 298, 315 (App. Div. 2005) (certif. denied, 185 N.J. 267 (2005)).  Both of those cases found that the Plaintiff had failed to establish his burden of proving that, even though there may have been negligence on the part of the attorney, the “other side” would have agreed to do things the Plaintiff’s way.

            Here the Appellate Division distinguished those cases, finding that there had already been an agreement which did not include the offending language, and, seemingly, this prior agreement removed this case from the 2175 Lemoine Avenue and Froom v. Perel category. 

COMMENT:

            My former partner Peter A. Ouda, Esq. who represented the Plaintiffs here has become, along with my former partner Diane M. Acciavatti, Esq., a member of the “Dragon Slayer” club.  Each of them fear not to tread in difficult areas, and this was certainly one of them.  Mr. Ouda faced off against Robert J. Reilly, Esq., as skillful and as fierce an adversary as you would care to find.  Mr. Ouda emerged from the other side of this crucible with the opportunity to go to trial against the Defendant law firm. 

            This case is another example of a growing trend.  The Trial Courts, in my opinion, are unnecessarily harsh on legal malpractice expert reports when it comes to applying the “net opinion” rule.  I am not sure why this is, but within the past 5 or 6 months or so several cases in which the legal malpractice Plaintiff case has been dismissed because of “net opinion”, the Appellate Division has properly applied the abuse of discretion rule to determine that the net opinion rule was not indeed applicable, resulting in reversal and remand. 

            I am going to be very interested to see whether or not this trend continues.

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John Rogers v. Cape May Office of the Public Defender (A-63-10) (067048)
Argued September 27, 2011 – Decided December 5, 2011

OPERATIVE FACTS:

Mr. Rogers changed neighborhoods in 1999 when he marched off to the slammer after having been convicted of various drug offenses. 

Eight long years later, in October of 2007, his conviction was reversed by the Appellate Division on a PCR based on ineffective assistance of counsel.  The case was remanded. 

In July of 2008 the indictment was dismissed with prejudice.

In November of 2008, Mr. Rogers, through his attorney, filed a “Notice of Tort Claim” against his Public Defender lawyers for malpractice (this Notice must be filed within 90 days of the commission of the tort, or “accrual” of the cause of action).

The major question for decision by the Supreme Court was whether or not Mr. Rogers was “exonerated” at the point at which his conviction was reversed (October 2007) or at the point where the indictment was dismissed with prejudice (July 2008)

The answer was important to Mr. Rogers because the former date would subject his claim to an absolute one year time bar under New Jersey’s Tort Claim Act and the latter date would not.  The Appellate Division had previously ruled that the earlier date was the date upon which exoneration (reversal) occurred and that therefore his action was precluded.

CASE HOLDING:

The Supreme Court reversed. It examined the term “exoneration” under the definition of the major case in the area of accrual of cause of action for purposes of starting the time clock in legal malpractice cases of this type (McKnight v. Office of the Public Defender, 197 N.J. 180 (2008)). That case defined the term “accrual” of a cause of action as the point in time when "exoneration" occurred.

This Court unanimously held that the PCR judge’s determination in the McKnight case (and in this case as well) to reverse and remand based upon ineffective assistance was merely an interim step on the road to possible “exoneration”. The Defendant was sent back to face a new trial which had the potential to extinguish his damage claim if he was reconvicted of the same or greater offense. 

The Court cited (as it did in McKnight) Judge Stern’s dissenting opinion in the Appellate Division in the McKnight case. Judge Stern pointed out that there was no hard and fast determination of the phrase “exoneration”. It might be a vacation of a guilty plea and dismissal of all of the charges, entry of a judgment on a lesser offense after spending substantial time in custody following the condition of a greater offense, dismissal of the charges, or acquittal on re-trial. In short, “exoneration” was a disposition more beneficial to the criminal defendant than the original judgment.  

The Court cited Judge Stern’s dissenting opinion which may be found in the Appellate Division of McKnight at 397 N.J. Super 299. 

Applying that definition to the facts of the instant case, Mr. Rogers was not “exonerated” by the mere reversal and remand of his criminal charges. Rather, he was “exonerated” by the dismissal of the indictment in July of 2008 and it was at that point that his cause of action “accrued” for the purposes of the legal malpractice time clock.

Under the holding of this case, then, the Supreme Court remanded the dismissal of Mr. Rogers’ application for leave to file a late Notice (within 1 year of accrual of cause of action) under the New Jersey Tort Claims Act. 

COMMENT:

The number of legal malpractice decisions here in New Jersey has been low for the last few months, both in reported and unreported cases. This case is an important development, however.

Not only does it define the accrual of the “legal malpractice time clock” in criminal cases, it has other applicability, for example to civil cases.

Legal malpractice lawyers have long puzzled over the “true meaning” of a case called Grunwald v. Bronkesh, 131 N.J. 383 (1993) which held that the discovery rule applies in legal malpractice cases and postpones the “accrual date” until such time as the client suffers actual damages and discovers it or should have. In that case, the Court found that the legal malpractice time clock began to run when the Trial Court rendered a decision adverse to Grunwald rather than when the Appellate Division affirmed that decision even though, theoretically, it was possible that the Appellate Division could have reversed and avoided the harm.

You will notice that throughout this I have used the phrase “legal malpractice time clock”. This refers to the time of the “accrual” of the cause of action, something which is significant both for purposes of Statute of Limitations and for purposes of the New Jersey Tort Claims Act. It would certainly apply, it seems to me, to other statutorily created time bar statutes, whatever they might be (securities issues come to mind).

The critical term for this Supreme Court was the word “finality”. It pointed out that the judgment of the Trial Court in Grunwald was “final”. Similarly, there was nothing “final” about the remand of Mr. Rogers criminal charges since he could have been found guilty on the same charges again. The “finality” didn’t occur until he received “exoneration” in the form of dismissal of the charges. 

For me personally this is a bit difficult to understand. While the judgment of the Trial Court in Grunwald may have been “final” for purposes of appeal, there was certainly nothing “final” about it in the sense that it could have been reversed. I have to say I am afraid I do not understand the distinction. 

As usual, however, I very well understand the thoughtful analysis of the now-retired Judge Stern. We will certainly miss his incredible mind.

I think we should congratulate Frank L. Corrado, Esq.. He faced off against the Attorney General’s Office, and in addition to the “nominal” inclusion of Ms. Dow in the caption, I counted no less than four other attorneys who had a hand in this file. Clearly, a triumph for the “little guy”.

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In The Matter of Alan E. Welch, An Attorney at Law

Supreme Court of New Jersey

Disciplinary Review Board

Docket No. DRB 11-117

District Docket No. XIII-09-033E

Decided and Opinion Posted November 18, 2011, Filed November 17, 2011

 I am privileged to be called upon frequently by my legal colleagues who have ethical questions. Two very common ethical questions are addressed in this case, and rather than use the usual format I thought I would simply comment upon them.

                                                 RELEASE OF ESCROWED FUNDS TO CLIENT

Many attorneys call me with this question, “I am holding an escrow. Both sides (my client and the adverse party) are making claim to it. I want to release it to my client because he is clearly entitled to it. The other side is just trying to unfairly exact leverage from my client. What should I do?”

My answer is that, if your client and the adverse party cannot agree you should interplead the funds.

In this case, Mr. Welch was holding the princely sum of $1,257.89 representing a homestead rebate payment. The Respondent was representing the husband in a contentious divorce. The money was being held in Mr. Welch’s trust account. How it got there is a bit of a mystery (but not part of this case) since it was paid to both husband and wife but only endorsed by the husband.

The Respondent distributed the settlement proceeds to his client without authorization from the adverse party. Mr. Welch’s client claimed that the money (or half of it) should be applied to expenses he had incurred which were reimbursable by the wife.

The DRB found that Mr. Welch had a fiduciary duty not to release the funds in question and therefore he violated R.P.C. 1.15(a) (failure to safeguard property belonging to a client or third party) and R.P.C. 8.4(d) (conduct prejudicial to the administration of justice).

In discussion the conundrum of whether or not to release funds under circumstances such as this, the DRB cited a string of cases on pages 10-11 which directly address the issue.

In the Matter of Joel Albert, DRB 97-092 (February 23, 1998), In re Spizz, 140 N.J. 38 (1995), In re Holland, 164 N.J. 246 (2000), In re Milstead, 162 N.J. 96 (1999), In re Margolis, 161 N.J.139 (1999), In re Flayer, 130 N.J. 21 (1992), In the Matter of Karl A. Fenske, DRB 98-211 (May 25, 1999)

If you ever have any questions, you can turn to these cases for your simple answer – hold on to the money or pay it into Court.

                                         ATTEMPT TO INSULATE ATTORNEY FROM ETHICAL ACTION

Needless to say, the wife was not too thrilled by Mr. Welch’s release of funds to her husband and in early 2009 filed an ethical grievance complaining about the release of the funds.

However, the divorce was not yet over. The husband wanted the Respondent to continue with his divorce representation “unfettered” by a potential conflict of interest.

The Respondent prepared a Property Settlement Agreement. It contained a provision which reads as follows:

“The wife also waives and forever relinquishes any ethics grievance against husband’s attorney or his law office regarding the previous process and clearance of the real estate tax refund check payable to the parties.”

There was some discussion about this language. The Respondent was absolutely adamant that this language by included in the agreement. In a letter to the wife’s attorney he wrote:

“…your client has filed an ethics complaint against me, this agreement will not be signed until I have a full Release from her…In fact, please contact me regarding your client’s Release of any potential claims against this office. If I do not have a Release, this matter will not be resolved.”
Interestingly, everybody agreed that the provision in the Property Settlement Agreement exculpating the Respondent was unenforceable. It was signed anyway on that basis. The Respondent said it was his intention simply to “freeze” the wife from any further action. Recognizing that everyone did think it was unenforceable, the DRB noted that this action was “…at the very least, Respondent attempted to interfere with the administration of justice.”

The DRB found that Respondent’s actions were an attempt to restrict the ex-wife’s rights in violation of R.P.C. 8.4(d).

On pages 13 and 14 of the decision the Court cited In Re Matter of Harry J. Levin, DRB 07-132 (January 15, 2008) (admonition for attorney who contacted the grievant’s son and convinced him to obtain his mother’s withdrawal of her grievance; the attorney also wrote a letter to the grievant containing threats of lawsuits and of court-ordered psychiatric examinations, which threats frightened the grievant into withdrawing her allegations); In the Matter of R. Tyler Tomlinson, DRB 01-284 (November 2, 2001) (admonition for attorney who improperly conditioned the resolution of a collection case on the dismissal of an ethics grievance filed by the client’s parents; and In Re Mella, 153 N.J. 35 (1998) (reprimand imposed for conduct prejudicial to the administration of justice; the attorney communicated with the grievant in an attempt to have the grievance against him dismissed in exchange for a fee refund and some additional remedial conduct; the attorney was also guilty of lack of diligence and failure to communicate with clients).

CONCLUSION:

This case and the citations contained therein (which are handy resources for future reference) make it crystal clear that attorneys cannot favor their own client over an adverse party by releasing escrows. Further, it is crystal clear that an attorney cannot attempt to bludgeon a client or an adverse party by attempting to obtain a Release from future ethical actions.

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Lorraine Manger v. Shari B. Veisblatt, Esq. et al.

Unpublished, Hunterdon County Law Division

Docket No. HNT-L-76-11

Decided October 11, 2011

OPERATIVE FACTS:

This is a legal malpractice claim arising out of the Defendant’s representation of Plaintiff Manger in a matrimonial matter. Plaintiff filed suit against the Defendant lawyer and her law firm.

Plaintiff submitted an Affidavit of Merit authored by Marc E. Lesser, Esq., a litigator who practices predominantly in the personal injury area.

The lawyer Defendant, joined by her prior firm, moved to object to the Affidavit of Merit and strike it. According to the lawyer, Mr. Lesser does not have the “requisite experience” in matrimonial law to qualify as the author of an Affidavit of Merit.

Further, the Defendant claimed that the Affidavit fails to specifically address the allegations of the Complaint and link those allegations to the Defendant.

Plaintiff replies that Mr. Lesser, a certified civil trial attorney, is qualified to opine as to the competency of Defendant’s legal performance because the allegations are based in civil litigation issues. It is not necessary for Mr. Lesser, according to Plaintiff, to specialize in Family Law.

CASE HOLDING:

The purpose of the Affidavit of Merit is to weed out merit-less lawsuits, not to “create a minefield of hyper-technicalities in order to doom innocent litigants possessing meritorious claims.”

In ruling that the Affidavit of Merit was sufficient, the Trial Court observed there is no evidence that the legislature intended a legal malpractice claim to require an Affidavit of Merit from a specialist in the particular area of law at issue. Rather, the specialty requirement arose from the context of medical malpractice claims. The Court ruled that the Statute requires an affiant experienced in the “general area”, a phrase which is not statutorily defined. According to the Trial Court here, it makes sense for the “general area” to cover litigation, including discovery, which is precisely the type of practice in which Mr. Lesser engages.

The Court ruled that where the law is not perfectly clear, the Plaintiff should receive the benefit of any ambiguity in the Statute. The Court pointed out that the Affidavit of Merit Statute does not require specific reference to the allegations in the Complaint, but rather simply states that the Statute requires an attestation that “there exists a reasonable probability that the care, skill, or knowledge exercised or exhibited in the treatment, practice,…fell outside acceptable professional or occupational standards of practices.” That attestation was given here.

COMMENT:

This is another thoughtful and concise legal analysis by Judge Buchsbaum. I follow his written opinions diligently.

I have always been of the opinion that the requirements of the Affidavit of Merit Statute are minimal indeed when it comes to professions other than medical doctors. Among other things, the Statute does not specify what, if any, due diligence is required. As Judge Buchsbaum observes, the Statute certainly does not require anything more than a simple sentence or two that conforms to the wording of the Statute. It certainly does not require a lengthy analysis akin to an expert report which requires the affiant to “tie in” the allegations of the Complaint to specific damages.

Most legal malpractice Plaintiff’s lawyers that I know share my opinion. My esteemed colleagues on the defense side of the courtroom disagree with me, but to date they have no law which backs them up. When the Affidavit of Merit Statute first passed, there were many attempts to strike a particular Affidavit at the Trial Court level for various reasons, and, unless the challenge was based on timing, by and large these challenges all failed.

As far as the Affidavit of Merit is concerned for legal and other non -medical cases, getting one is no difficult task. Right now, the Affidavit of Merit requirement is an annoying and relatively expensive preliminary hurdle. The Statute does not specify what due diligence is required and has a minimal “merit” threshold. It seems to me that in most non –medical cases it has questionable utility, certainly with regard to legal malpractice cases.

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Rand, Algeier, Tosti & Woodruff v. Ray Braun

Appellate Division
Docket NO. A-3241-09T3

2011 N.J. Super. Unpub. LEXIS 2581

October 14, 2011, Decided
 

OPERATIVE FACTS:

Rand, Algeier sued their former client Braun for some $28,000 in unpaid legal fees arising out of the firm’s representation of Braun in Chancery litigation. Braun and his individual corporate partner were arguing over many things, and the partner moved for a dissolution of the business entity, appointment of a receiver, and the sale or partition of the land owned by the businesses.

Braun counterclaimed and brought in a third party claim alleging legal malpractice.

The firm moved to dismiss the legal malpractice claim for several reasons, including an Order striking the expert report without which they said no legal malpractice claim could be proved.

Alternatively, the firm asserted that the former client needed to conduct a “trial within a trial” to prove his case, and that since the underlying matter was a Chancery matter the “trial within a trial” had to be a bench trial only.

The former client claimed a right to a jury trial.

CASE HOLDING:

“The core issue raised on appeal is whether the trial judge correctly determined that Braun could not have prevailed in his efforts to obtain a division of the property owned by Montview so that each owner of Montview would acquire buildable lots. Braun argues that she utilized the wrong procedure by holding a bench trial and that, in any event, she reached the wrong result. We have concluded that the issue was amenable to determination as a matter of law, based on the record of the parties' relationship with each other, and that, consequently, a trial within a trial, whether a judge or a jury, was not needed.”

COMMENT:

The issue of a trial within a trial in a legal malpractice case is an important one. There is no uniform clear, bright line rule here in New Jersey. Case law can be interpreted either way, depending upon the type of case involved.

Here, the Appellate Division elected not to take up the question, finding that it did not have to do so.

This case has lessons for attorneys who consider legal malpractice Counterclaims. If the experienced legal malpractice Plaintiff’s attorney here (Ken Thyne) had this case on a contingency, he did a whole lot of work for absolutely nothing. If he had the case on an hourly basis, no doubt his client paid more to Ken than he would have had to pay had he simply agreed to pay the Rand firm its $28,000.

Our colleagues at the law firm made the classic mistake of letting their client get “ahead” by almost $30,000. You can see what happens when the firm feels it has to start suit – they get dragged into a quagmire of litigation, with this case having taken its second trip to the Appellate Division.

Fortunately, it appears from the identity of counsel that the firm had malpractice insurance which was footing the bill for the litigation, otherwise it certainly would have been cost-prohibitive to defend this all the way.

This is another case in a long line of cases about which I have commented which illustrate to lawyers the dangers of suing for a fee.

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