UNIVERSITY OF MASSACHUSETTS MEMORIAL MEDICAL CENTER, INC., et al. v. ALLEN S. GOLDBERGER, ESQ., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3866-04T33866-04T3

UNIVERSITY OF MASSACHUSETTS

MEMORIAL MEDICAL CENTER, INC., and

UNIVERSITY OF MASSACHUSETTS GROUP

PRACTICE,

Plaintiffs-Respondents,

Cross-Appellants,

v.

ALLEN S. GOLDBERGER, ESQ. and

GOLDBERGER, SELIGSHON & SHINROD, P.A.,

Defendants-Appellants

Cross-Respondents and

Third-Party Plaintiffs,

v.

PETER V. KENT,

Third-Party Defendant.

_____________________________________________________________

 

Argued October 18, 2005 - Decided

Before Judges Coburn, Collester and Lisa

On appeal from the Superior Court of New Jersey,

Law Division, Essex County, L-1825-01.

Robert A. Vort argued the cause for appellants.

Richard Ringle argued the cause for respondents

cross-appellants (Doyle & Brady, attorneys;

Mr. Ringle, on the brief).

PER CURIAM

This is a legal malpractice action brought by non-clients who allege that they reasonably relied to their detriment on misrepresentations made to them by an attorney. It was filed in Essex County. Allen S. Goldberger, Esq., and his law firm, Goldberger, Seligsohn & Shinrod, P.A. (collectively "Goldberger") moved for summary judgment, and the University of Massachusetts Memorial Medical Center, Inc., and University of Massachusetts Group Practice (the "Medical Providers") cross-moved for summary judgment. The trial court denied both motions, and we granted both sides leave to appeal.

We are confronted by a somewhat complex procedural setting, which it will be useful to summarize before describing that setting and the relevant facts in full. This Essex County action arose, in part, as a result of litigation in the Division of Workers' Compensation brought on behalf of a deceased employee and his parents, as alleged dependents. Petitioners alleged that the employee was injured during the course of his employment, and died after receiving over $700,000 in medical care from plaintiffs. The case was settled with a $50,000 payment to the employee's parents. The Medical Providers allege that they were unable to obtain reimbursement for the over $700,000 in the compensation action because of the malpractice committed as to them by Goldberger, who was petitioners' attorney. This Essex County action is also related to another Law Division action filed by the Medical Providers in Hudson County as a result of their inability to vindicate their $700,000 claim in the compensation action. In Hudson County, their claim was tried against the petitioners, the employer and its workers' compensation insurance representatives. After obtaining a judgment for $585,304.34, which reserved on their additional claims for counsel fees and interest, the Medical Providers settled for $625,000. Based on the outcome in Hudson County, Goldberger contends that the trial court erred in denying their motion for summary judgment for three reasons: (1) the action is barred by the entire controversy doctrine because it was not included in the Hudson County action; (2) the Medical Providers recovered all of their damages in the Hudson County action; and (3) the settlement in Hudson County bars this action.

The Medical Providers contend that Goldberger is wrong in all respects, and they also claim that the trial court in this Essex County action erred in denying their motion for summary judgment on the legal malpractice claim against Goldberger. They also contend that they were entitled to a judgment for "approximately $115,000," representing the fees incurred in the Hudson County case, plus an unstated amount of attorneys fees incurred in the Essex County case.

We are satisfied that the trial court correctly denied both motions, although for somewhat different reasons.

In June 1996, Mario S. Christodoulou was severely injured in an automobile accident in Massachusetts. He was taken to the University of Massachusetts Memorial Medical Center, where he remained for almost two months until his death. The hospital and the University of Massachusetts Group Practice provided him with medical services at a cost of $712,683.85.

In September 1996, Mario's father, Steve, filed a claim for his son's estate and dependency claims for himself and his wife, Despina, with the New Jersey Division of Workers' Compensation, alleging that the accident occurred in the course of his son's employment with Auto Auction Land of Jersey City. Granite State Insurance Company was Auto Auction's compensation carrier, and AIG Claim Services, Inc. was the claims administrator. Auto Auction denied that the accident occurred in the course of employment and that Mario was providing support to his parents.

While the petition was pending, there was an exchange of correspondence between Goldberger and the medical providers' in-house counsel, Peter V. Kent, a Massachusetts attorney. The malpractice claim is based on that correspondence and the conduct of Goldberger in the compensation action. The first letter, dated April 2, 1997, from Kent to the Goldberger reads, in pertinent part, as follows:

This office represents University of Massachusetts Medical Center relative to the above entitled matter.

We have been informed by our client that you represent the above referenced patient in a worker's compensation claim.

Please advise this office as to when you expect this matter to be heard or settled with the Department of Industrial Accident Board. If you need copies of our client's bills or medical records for your file, please do not hesitate to contact me.

Thank you for your attention to this matter.

The responding letter, dated April 7, 1997, says this:

This will acknowledge receipt of your letter of April 2, 1997. I do represent both the Estate of the late Marios Christodoulou and his dependent parents in claims for Workers' Compensation in the State of New Jersey.

In view of your advice that the bill for his treatment was not paid, I will greatly appreciate your forwarding an itemized bill on account of same to me.

I in turn will present same to the Court at the time of Hearing.

On April 14, 1997, Kent sent Goldberger the requested hospital bills and medical records "for presentation to the Court at the time of Hearing," and on August 29, 1997, Kent sent the bills for physicians' services. On June 3, 1998, Goldberger wrote as follows:

This will acknowledge receipt of your letter of June 1, 1998 concerning the outstanding balances resulting from treatment rendered to Mario S. Christodoulou. Your client's bills have been noted and will be presented to the Court at the time of Hearing.

In view of the nature of this case, however, and the nature and extent of the bills, there is every probability that a representative of the hospital will have to attend Court in Hackensack, New Jersey to prove these bills.

Will you kindly note your records accordingly.

On September 17, and October 28, 1998, Kent asked Goldberger for the status of the case because his clients had not yet been paid. Goldberger gave this response on October 30, 1998:

This will acknowledge receipt of your letter dated October 28, 1998. Your client's bill has been noted.

The matter should be listed for trial in the very near future. As previously indicated, in view of the size of your client's lien, arrangements will have to be made for your office to have a representative of both the hospital and medical providers appear in New Jersey, to testify as to the reasonableness and nature and extent of their respective bills.

This matter should be listed for trial in the next three or four months. Kindly note yo[u]r records accordingly.

On May 10, 1999, Goldberger settled the compensation action during a hearing conducted pursuant to N.J.S.A. 34:15-20. Auto Auction agreed to pay petitioners $50,000 and to indemnify them with respect to any claim for the medical providers' bills. Plaintiffs received no notice of this hearing and did not participate in or approve of the settlement.

On August 9, 1999, Goldberger sent a letter to Kent, which in pertinent part reads as follows:

I note that your office represents both the University of Mass. Medical Center and University of Mass. Group Practice, in their claim for medical bills resulting from an injury sustained by Marios Christodoulou, deceased.

As you know, I filed a workers' compensation claim in this matter both on his behalf, and on behalf of his Estate.

Due to a serious question of liability, we entered into a Dismissal of the matter pursuant to Section 20 of the New Jersey Workers' Compensation Act.

However, your clients rights have been preserved in that the Dismissal specifically provided that the AIG Claim Services would hold the Petitioner harmless, for any medical and hospital bill arising out of the accident in question.

Should you desire to proceed to collect any of the outstanding bills, I suggest you immediately contact the AIG Claim Services. . . .

When the Medical Providers followed that course, Auto Auction and its compensation carrier denied liability, claiming that they had only agreed to hold Steve harmless, not Mario's estate, and that Steve was not responsible for his son's bills. In August and October 2000, the Medical Providers tried to intervene in the compensation proceedings to set aside the settlement and to prove their right to payment from Auto Auction. The motions were denied, and they appealed. We affirmed in an unpublished decision, Christodoulou v. Auto Auction Land Inc., No. A-2860-00T2 (App. Div. April 10, 2002), certif. denied, 174 N.J. 191 (2002).

While that appeal was pending, the Medical Providers filed their complaint in the Hudson County Law Division against the estate, Steve, Auto Auction, Granite State Insurance Company, and AIG Claim Services, Inc., to recover the cost of the medical services provided to Mario, and against Goldberger for discovery purposes only. Shortly before the trial date, the Medical Providers moved to amend their complaint to allege their malpractice claim against Goldberger. The motion was denied. The defendants in the Hudson County action moved for summary judgment. The trial court denied the motion, and we granted those defendants leave to appeal. We reversed in part, holding, among other things, that the common law action could not be maintained because of the Medical Providers' failure to intervene, or file their own claim, in a timely manner in the compensation action. Univ. of Mass. Mem'l Med. Ctr., Inc. v. Christodoulou, 360 N.J. Super. 313, 320 (2003). But the Supreme Court reversed that aspect of our decision, reinstated the complaint, and remanded the case to the Law Division for trial. Univ. of Mass. Mem'l Ctr., Inc. v. Christodoulou, 180 N.J. 334, 353 (2004).

In the meantime, on May 7, 2003, the Medical Providers filed the instant legal malpractice action in Essex County against Goldberger. As noted, both sides moved unsuccessfully for summary judgment, and this appeal ensued.

The legal malpractice claim asserted by the Medical Providers requires proof of a breach of duty that was a proximate cause of their damages. Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 341 (1980). There is no dispute about the facts bearing on Goldberger's breach of duty, consisting of his correspondence with Kent and his conduct in settling the workers' compensation case without notice to Kent, the attorney for the Medical Providers. An attorney owes a duty of care to non-clients when the attorney knows, or should know, that the non-client will rely on the attorney's representations and the non-client is not too remote from the attorney to be entitled to protection. Petrillo v. Bachenberg, 139 N.J. 472, 485 (1995).

In University of Massachusetts, supra, the Supreme Court, after summarizing the correspondence we have quoted above, had this to say about the relationship between Goldberger and the Medical Providers:

Plaintiffs [the Medical Providers] relied on the repeated representations of the Christodoulous' attorney that the bills for plaintiffs' medical services would be presented to the compensation court. In light of those representations, we cannot find that plaintiffs acted unreasonably by not filing their own petition or by not intervening by motion in the compensation action. The Christodoulous did not advise plaintiffs of the settlement discussions or the date of the Section 20 hearing, and assigned no portion of the settlement to pay their son's medical bills. Having lulled plaintiffs into believing that their bills would be presented for payment in the compensation court when they knew otherwise, the Christodoulous cannot now be heard to argue that plaintiffs' only forum for relief was in the Division of Workers' Compensation.

[180 N.J. at 349 (citation omitted).]

The Court also observed that there is "no salutary purpose in imposing . . . a burden [to intervene in the compensation action] on medical providers who reasonably believe that their bills will be processed in the compensation hearing." Id. at 347. Of course, it was Goldberger, and not Steve, who failed to advise the Medical Providers of the settlement and who lulled them into believing that their bills would be presented for payment. Consequently, Goldberger clearly breached his duty to the Medical Providers.

But, as noted, the Medical Providers must also prove that the breach was a proximate cause of the claimed damages. Although their right to payment from Mario's estate, and from Steve because of his approval of his attorney's handling of the compensation case, was sustained by the Supreme Court, their right to obtain payment from Mario's employer and compensation representatives was purely derivative and entirely dependent on the indemnification contract. In short, to prevail against those entities directly, the Medical Providers would have had to prove in the compensation action that the accident arose out of and in the course of Mario's employment. N.J.S.A. 34:15-1. The judgment obtained in the Hudson County action did not establish that point. To recover in this action, the Medical Providers would still have to prove the case within the case; that is, that had they been given the opportunity to intervene in the compensation action they would have won their case on liability. Lieberman, supra, 84 N.J. at 342; see also Jerista v. Murray, ____ N.J. ____, ____ (2005) (slip op. at 25) (stating that [o]nly if plaintiffs can prove that they would have obtained a favorable verdict . . . are they entitled to damages in the legal malpractice action). If they can prove that, then they would be entitled to what they are now seeking; namely, their legal expenses in pursuing the Hudson County and Essex County actions. See Estate of Lash, 169 N.J. 20, 36 (2001) (a plaintiff forced by the tort of another to institute litigation against a third party is entitled to recover the fees incurred in that litigation from the original tortfeasor); Saffer v. Willoughby, 143 N.J. 256, 272 (1996)(a negligent attorney is responsible for the reasonable legal expenses and attorney fees incurred by the plaintiff in the malpractice action). Therefore, the trial court correctly denied the Medical Provider's motion for summary judgment.

Next, we turn to Goldberger's contention that the entire controversy doctrine bars this claim because the Medical Providers failed to include it in the Hudson County action. The Medical Providers respond, in part, by citing Olds v. Donnelly, 150 N.J. 424 (1997), which said that "[t]he better response is

. . . to exempt all attorney-malpractice actions from the entire controversy doctrine," id. at 442, and held that "the entire controversy doctrine no longer compels the assertion of a legal-malpractice claim in an underlying action that gives rise to the claim." Id. at 443.

Olds is inapplicable to this case because the underlying action that gave rise to the malpractice claim is the compensation case, not the case in Hudson County, which had to be brought because of the earlier committed malpractice. Thus, when the Court said it was exempting all attorney malpractice actions from the entire controversy doctrine, it did not mean that a party could sue the attorney on one affirmative claim and not join a related malpractice claim. Party joinder is no longer required under the entire controversy doctrine. R. 4:30A; R. 4:5-1(b); R. 4:29-1(b). Thus, Goldberger cannot succeed on a party-joinder argument. But the entire controversy doctrine still requires appropriate joinder of claims. Goldberger's argument, however, assumes that under the entire controversy doctrine a claim against an attorney for discovery only should be treated just like a claim for damages. No case has so held, and we see no reason for extending the doctrine to protect a party whose assets were not at risk in the case and who is customarily dismissed early from the litigation once the discovery has been provided. Indeed, the doctrine is concerned with the presentation of "affirmative claims" Olds, supra, 150 N.J. at 431, and a suit for discovery is not within that category. Furthermore, the entire controversy doctrine does not require that all claims culminate in one litigation. DiTrolio v. Antiles, 142 N.J. 253, 272 (1994). Rather, it imposes a duty on parties to join the claims, leaving it to the court to decide whether they should be tried together or apart. Ibid. Here, though perhaps somewhat tardily, the Medical Providers did advise the Hudson County trial court of their malpractice claim and their desire to join it in the action. Having opposed that motion, and given the limited nature of the already pending claim, Goldberger cannot rely on the entire controversy doctrine, whose essential nature is equitable. Olds, supra, 150 N.J. at 432, 446. The Court has "always emphasized that preclusion is a remedy of last resort." Id. at 446. It obviously has no place here. Cf. Transit Rail v. Cleaning Services, 277 N.J. Super. 367, 372-73 (Law Div. 1994)("where a party to the action makes a motion to join another party and the Court denies that motion, a subsequent lawsuit against the parties sought to be joined cannot be precluded").

Goldberger's other arguments, that the Medical Providers recovered all of their damages in the Hudson County action, and that the settlement of the Hudson County action bars this action, are without sufficient merit to warrant discussion.

R. 2:11-3(e)(1)(E). As previously noted, the Medical Providers are seeking, and, if proximate cause can be established, are entitled to the attorneys fees and costs that they incurred in the Hudson County action, Estate of Lash, supra, and in this malpractice action, Saffer, supra. We note that the Medical Providers' attorney certified to the Hudson County trial court that he had taken the case on a contingency agreement that entitled him to over $117,000 from his clients. On a somewhat convoluted theory he asked that court for only $30,000 from the Hudson County defendants, noting that he had not kept time records in the case because his fee was contingent. We cannot determine on this record whether the settlement of the Hudson County case included a partial payment of the fees incurred by the Medical Providers in that action, or was based on the amount of the bills, which exceeded the judgment, or on the claim for interest. Since this point has not been specifically addressed by the parties, or by the trial court, we will not discuss it, other than to say that the trial court may consider the issue on remand.

 
Affirmed and remanded for further proceedings consistent with this opinion.

The Medical Providers' motion for fees in the Hudson County case actually asked for a fee of $30,000.00. Whether the settlement involved that sum, or not, is unclear.

(continued)

(continued)

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A-3866-04T3

November 2, 2005