WILLIAM HEATHCOTE v. ROBERT GIDDING, ESQ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0316-07T10316-07T1

WILLIAM HEATHCOTE,

Plaintiff-Appellant/

Cross-Respondent,

vs.

ROBERT GIDDING, ESQ.,

Defendant-Respondent/

Cross-Appellant.

__________________________________

 

Argued: October 21, 2009 - Decided:

Before Judges Cuff, Payne, and C.L. Miniman.

On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1673-04.

Neal H. Flaster argued the cause for appellant/cross-respondent (Neal H. Flaster, L.L.C., attorneys; Mr. Flaster and Susan M. Clapp, on the briefs).

Walter F. Kawalec, III, argued the cause for respondent/cross-appellant (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Howard B. Mankoff and Mr. Kawalec, on the briefs).

PER CURIAM

Plaintiff appeals from an order granting defendant Robert Gidding's motion for summary judgment. Defendant represented plaintiff in his divorce proceeding. Plaintiff filed a complaint seeking compensatory damages alleging that defendant provided negligent legal services to him during the divorce litigation causing him to enter an improvident settlement. Relying on Puder v. Buechel, 183 N.J. 428 (2005), and the absence of an expert to support some of plaintiff's claims, the motion judge granted defendant's motion and dismissed the complaint. We affirm.

Plaintiff retained defendant Gidding to represent him in his matrimonial proceeding. The parties contested custody of the children, and the entirety of the proceedings can charitably be called acrimonious. Eventually, Gidding sued plaintiff for unpaid legal fees in the Special Civil Part. Plaintiff responded with a legal negligence action filed in the Superior Court, Law Division. The matters were eventually consolidated in the Law Division; the parties settled the fee dispute in August 2007.

Plaintiff and his former wife, Joanne, entered a property settlement agreement (PSA), the terms of which were placed on the record over two days in March 2004. Judge Rubin, the matrimonial judge, questioned plaintiff closely on the various terms of the PSA to determine whether plaintiff understood and agreed to them. At the time the parties had agreed to all issues except parenting time, the resolution of which would heavily influence the child support obligation. A judgment of divorce was entered on March 10, 2004, and amended on May 10, 2004, to reflect the resolution of the parenting time dispute and the child support issue.

Post-judgment litigation commenced almost immediately. On October 12, 2004, Judge Bartlett entered an order reforming plaintiff's child support obligation from $270 to $250. During the post-judgment litigation, defendant filed his complaint in the Special Civil Part for unpaid fees.

Plaintiff asserts a variety of instances in which defendant deviated from accepted standards of professional representation. He asserts that defendant should have ensured that both parties agreed to the amount of income earned by his former wife for child support purposes. Plaintiff also contends that defendant failed to attach the Child Support Guidelines Worksheet to the Judgment of Divorce, and failed to discuss with plaintiff the ramifications of failing to attach the worksheet to the judgment.

Plaintiff argues that defendant failed to seek equitable distribution of a bonus paid to his former wife after the filing of the complaint for work performed during the marriage. He also alleges that defendant failed to recover $9000 from his wife for costs associated with refinancing the marital home one month before the complaint for divorce was filed. Plaintiff characterizes his former wife's action as dissipation of marital assets.

Plaintiff contends that defendant failed to conduct discovery that would have identified an account containing thousands of dollars and the proceeds from a loan from his wife's 401K fund. He also asserts that defendant failed to advise plaintiff of the ramifications of a joint custody agreement. Finally, plaintiff complains that defendant did not inform him that he had excused their retained custody expert before trial.

The course of the legal negligence action was marked by failure to respond to discovery requests and missed deadlines. Plaintiff's complaint was dismissed for failure to respond to discovery on September 9, 2005, and not reinstated until January 24, 2006. A May 17, 2006 scheduling order required plaintiff to serve his expert report by June 16, 2006. When plaintiff missed this deadline, the judge extended discovery and plaintiff was required to submit his expert report by January 15, 2007, which was later extended to May 4, 2007.

Meanwhile defendant filed a motion for summary judgment. The court granted plaintiff a further extension until July 6, 2007, to file his expert report. Plaintiff never produced an expert report to support his various claims of professional negligence. He did offer a "stipulation" by which the judge would recognize that neither party had presented an expert report, and if they had done so, each report would likely conflict. Therefore, the motion judge should proceed on the understanding that any expert submitted by plaintiff would support his claims of negligence and any expert submitted by defendant would rebut that opinion. The judge declined to accept this purported stipulation.

The motion judge, relying primarily on Puder, granted defendant's motion for summary judgment principally because the matrimonial proceeding had been settled, the record of that proceeding demonstrated that plaintiff understood the terms of the settlement, freely and voluntarily agreed to each term, and readily stated he believed the settlement was fair to both parties under all of the circumstances. The motion judge also noted that some of the negligence claims advanced by plaintiff were not supported by expert opinion.

The standards for determining when a client can maintain a legal malpractice action against the attorney who acted as counsel in a settled matter had been governed until recently by two cases: Ziegelheim v. Apollo, 128 N.J. 250 (1992), and Puder. The motion judge dismissed several of the claims because "P[uder] was written for this case." In Guido v. Duane Morris, LLP, ___ N.J. ___ (2010) (slip op. at 18-22), the Court clarified the effect of settlement of litigation on a legal malpractice action arising out of the settled lawsuit. We must, therefore, review the relevant authorities and consider whether the disposition of the motion is consistent with the law governing plaintiff's claims.

In Ziegelheim, the Court held that an attorney retained to represent a party to a matrimonial action is expected to "advise clients with respect to settlements with the same skill, knowledge, and diligence with which they pursue all other legal tasks. Attorneys are supposed to know the likelihood of success for the types of cases they handle and they are supposed to know the range of possible awards in those cases." 128 N.J. at 263. Furthermore, a settlement of the underlying action and a finding by the matrimonial judge that the settlement appears to be fair to each party will not bar a legal negligence action against an attorney representing a party to the settlement, if the attorney negligently failed to investigate and determine the full measure of income and assets of the other party. Id. at 265-66. The Court noted, however, that its holding did "not open the door to malpractice suits by any and every dissatisfied party to a settlement." Id. at 267. The Court directed that a plaintiff who was a party to a settlement must allege "particular facts in support of their claims of attorney incompetence." Ibid. Furthermore, "attorneys cannot be held liable simply because they are not successful in persuading an opposing party to accept certain terms," and "attorneys who pursue reasonable strategies in handling their cases and who render reasonable advice to their clients cannot be held liable for the failure of their strategies or for any unprofitable outcomes that result because their clients took their advice." Ibid.

In Puder, the Court held that the plaintiff could not pursue a negligence claim against her first matrimonial attorney when she settled the matter a second time on improved, but similar, terms on the advice of her second attorney with full knowledge of the discovery defects. 183 N.J. at 438-39. The Court stated that this result did not conflict with Ziegelheim because of "profound distinctions, both factual and legal" between the cases. Id. at 442. The Court explained

Here, unlike in Ziegelheim, [the legal malpractice plaintiff's] claim against Puder was not her only remedy to the alleged malpractice. [She] made a calculated decision to accept the second settlement -- one negotiated by a lawyer other than Puder -- before the trial court could decide whether the first agreement was enforceable. As evidenced by its statements on the record, the court could have found that the first settlement was invalid or unenforceable, alleviating the need to sue Puder for malpractice. The burden of [plaintiff's] failed legal strategy rests with her, not Puder. Furthermore, unlike the plaintiff in Ziegelheim, [the plaintiff] entered into the second settlement admittedly aware of the discovery deficiencies leading up to the first settlement.

[Id. at 442-43.]

In closing, the Court emphasized that the Court in Ziegelheim expressly stated that it had no intention of opening "the door to malpractice suits by any and every dissatisfied party to a settlement." Id. at 443 (quoting Ziegelheim, supra, 128 N.J. at 267). Furthermore, the Court noted the reasoning in Ziegelheim discourages subsequent litigation when the parties acknowledge in open court the fairness and reasonableness of the settlement. Ibid.

Recently, the Supreme Court addressed once again the viability of a legal malpractice claim following a settlement. In Guido, the Court distinguished Puder because the client alleged that he entered a detrimental settlement due to negligent advice from his lawyers. ___ N.J. at ___ (slip op. at 22). The Court highlighted the critical difference between Puder and the instant case in the following passage:

When viewed in its proper context -- that Puder represents not a new rule, but an equity-based exception to Ziegelheim's general rule -- the rule of decision applicable here is clear: unless the malpractice plaintiff is to be equitably estopped from prosecuting his or her malpractice claim, the existence of a prior settlement is not a bar to the prosecution of a legal malpractice claim arising from such a settlement. . . .

Here, unlike in Puder, plaintiffs did not represent to the court that they were satisfied with the settlement, or that the settlement was fair and adequate. . . .

[Moreover, i]n this case, . . . the trial court unequivocally found that "there is a genuine issue of material fact as to whether or not the defendants adequately advised plaintiffs of the impact the voting agreement would have on the value of their shares, and whether or not the failure to do so constitutes legal malpractice[,]" . . . In light of that finding, we perceive no principled basis to bar plaintiffs' malpractice claim.

[Id. at 21-23.]

The Court also rejected the argument advanced by the defendant and urged by amicus that the plaintiff was required to repudiate the prior settlement and seek to vacate that settlement before he could initiate his legal malpractice action. Id. at 23-24. Whether a malpractice plaintiff has sought to vacate a prior settlement may be a relevant factor, but the failure to do so cannot be dispositive. Ibid. The Court noted that imposing a condition precedent that a malpractice plaintiff first seek to vacate the settlement is particularly inappropriate when the likelihood of success of such an application is nil. Id. at 24. Writing for the Court, Justice Rivera-Soto further explained this rule as follows:

No doubt, there may be circumstances in which a malpractice plaintiff's failure to mitigate his or her damages by seeking to vacate the settlement that gives rise to the malpractice claim may be relevant. However, because that action logically cannot be a prerequisite for all malpractice claims based on a settlement, it also cannot rise to the level of a condition precedent to a malpractice suit. In that respect, the reasoning that informs the Appellate Divisions' decisions in Hernandez [v. Baugh, 401 N.J. Super. 539 (App. Div. 2008)] and [Prospect Rehabilitation Services, Inc. v.] Squitieri[, 392 N.J. Super. 157 (App. Div.), certif. denied, 192 N.J. 293 (2007)] is most persuasive: the absence of efforts to set aside a settlement does not serve as an automatic bar to a later claim that the settlement was procured through an attorney's malpractice.

[Id. at 24-25.]

We now proceed to apply these principles to the matter before us. We do so in the context of a review of a summary judgment. We apply the same standard as the motion judge. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). A moving party is entitled to summary judgment if there is no genuine issue as to any material fact in the record. R. 4:46-2. In deciding a summary judgment motion, we must apply the standard articulated in Brill v. Guardian Life Ins. Co., 142 N.J. 520 (1995):

[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.

[Id. at 540.]

Although we must assume plaintiff's version of the facts is true and give plaintiff the benefit of all favorable inferences, id. at 536, a court "may pick and choose inferences from the evidence to the extent that 'a miscarriage of justice under the law' is not created." Id. at 536 (quoting R. 4:49-1(a)). To prevail on a summary judgment motion, defendant must show that plaintiff's claim was so deficient as to warrant dismissal of his action. Butkera v. Hudson River Sloop "Clearwater," Inc., 300 N.J. Super. 550, 557 (App. Div. 1997).

Initially, we reject the argument presented by defendant that plaintiff's failure to file a motion to vacate the settlement dooms his legal malpractice action. The Court has clearly held that whether a malpractice plaintiff has sought to vacate a settlement is not a condition precedent to commencement of a malpractice action. Guido, supra, ____ N.J. at ____ (slip op. at 23-24). That course is simply a factor when considering whether there is an equity-based exception to bar prosecution of a malpractice claim by a dissatisfied client. Ibid.

We commence our discussion of the merits with a review of the principles governing legal malpractice actions.

Legal malpractice is a negligence action. "'The elements of a cause of action for legal malpractice are (1) the existence of an attorney-client relationship creating a duty of care by the defendant attorney, (2) the breach of that duty by the defendant, and (3) proximate causation of the damages claimed by the plaintiff.'" Kranz v. Tiger, 390 N.J. Super. 135, 147 (App. Div.) (quoting McGrogan v. Till, 167 N.J. 414, 425 (2001)), certif. denied, 192 N.J. 294 (2007). The question of whether the attorney owes a duty to the client is a question of law to be decided by the court. DeAngelis v. Rose, 320 N.J. Super. 263, 274 (App. Div. 1999).

"Generally speaking, a lawyer is required to exercise that 'degree of reasonable knowledge and skill that lawyers of ordinary ability and skill possess and exercise.'" Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 12 (App. Div. 2001) (quoting St. Pius X House of Retreats, Salvatorian Fathers v. Diocese of Camden, 88 N.J. 571, 588 (1982)). It is incumbent upon the plaintiff to "present expert testimony that establishes the standard of care against which the attorney's actions are to be measured." Ibid.

In most cases, the testimony of an expert is necessary to establish that the conduct of an attorney fell below the standard of care required of the profession. Sommers v. McKinney, 287 N.J. Super. 1, 10-11 (App. Div. 1996); Brizak v. Needle, 239 N.J. Super. 415, 432 (App. Div.), certif. denied, 122 N.J. 164 (1990). Exceptions exist, such as "where the questioned conduct presents . . . an obvious breach of an equally obvious professional norm." Brach, supra, 345 N.J. Super. at 12. For example, in Sommers, supra, we held the defendant attorney was required to inform his client of all settlement offers, 287 N.J. Super. at 12, and that a plaintiff need not produce an expert opinion confirming that obligation. Ibid. In such rare cases, the layman possesses sufficient ordinary knowledge to recognize the attorney's deviation from the standard of care. Id. at 10; Brach, supra, 345 N.J. Super. at 12. However, "a plaintiff's attorney who litigates a legal malpractice claim without the opinion testimony of a legal expert unnecessarily exposes his client to a serious risk of dismissal." Brizak, supra, 239 N.J. Super. at 432.

In addition, when a malpractice plaintiff has entered a settlement, the settling party can pursue a negligence complaint against his attorney, if the attorney advising the settling party did not apply the skill, knowledge, and diligence expected under the circumstances. Ziegelheim, supra, 128 N.J. at 263. The plaintiffs must allege "particular facts in support of their claims of attorney incompetence." Id. at 267.

Plaintiff advances a variety of complaints about the failure of the parties to include a child support sum in the judgment of divorce. These complaints include the failure to reach an agreement on the amount of his wife's income, the failure to attach a child support worksheet to the judgment of divorce, and defendant's failure to advise plaintiff of the ramifications of that omission. Defendant urges that these claims must be supported by expert opinion.

The judgment of divorce was initially entered without a resolution of the parenting-time dispute. The child support figure could not be calculated until resolution of that dispute because it affected the calculation of child support. See Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:5A at 2393-99 (2010). We can take judicial notice that child support, in instances such as this case, may not be calculated until a determination of the custodial and parenting-time relationship.

There is another aspect of this claim, however. Plaintiff asserts that defendant never advised him of the salutary purpose of appending the child support worksheet to the judgment or the ramifications of agreeing to parent of alternative residence status. Once a client asserts that he entered an agreement without the benefit of competent advice, the claim may not fall within the Puder equitable exception. Such a claim, however, must be supported by specific facts and usually an expert opinion. Here, plaintiff has not provided specific facts or an expert opinion to identify defendant's obligations, the manner in which he departed from those obligations, and the consequences to plaintiff. Summary judgment requires more than a statement that plaintiff was not aware of the ramifications of his status as the parent of alternative residence.

Related to the child support calculation claims is a claim that plaintiff did not know of a "secret" account into which his former wife placed child care reimbursements from her employer. The record demonstrates, however, that plaintiff's wife agreed to provide a credit to plaintiff from this reimbursement for any child care costs owed by him to her. Assuming plaintiff did not know that his former wife had established a separate account into which she deposited the reimbursement funds, he does not offer any evidence to establish that any omission by defendant caused him any damage.

Plaintiff also argues that defendant never ascertained that his former wife received a $7000 bonus that should have been available for equitable distribution. This record clearly demonstrates that plaintiff knew that his wife received an annual bonus and that it was usually payable in March of the following year. This is a far cry from Ziegelheim in which the wife entered a matrimonial settlement without the benefit of full and complete disclosure of marital assets because her attorney may not have conducted a diligent investigation. Here, the record reveals that plaintiff was well informed of the parties' assets and all sources of income. Under these circumstances, we affirm disposition of this element of plaintiff's malpractice claim based on the Puder equitable exception.

We are also satisfied that the dissipation claim was properly dismissed, albeit for different reasons than expressed by the motion judge. Plaintiff argues that his wife's refinancing of the marital home shortly before filing the complaint for divorce must be considered dissipation of marital assets with the fees expended chargeable to his former wife in the distribution of the marital estate. This is the type of claim that cannot be supported without an expert opinion.

N.J.S.A. 2A:34-23.1i expressly recognizes dissipation of marital assets as a consideration in fashioning an equitable distribution award. In Kothari v. Kothari, 255 N.J. Super. 500 (App. Div. 1992), the court identified several factors that inform the decision whether a party has dissipated marital assets. We said:

In resolving this issue, courts have considered a variety of factors, concluding, "most commonly," the following:

(1) the proximity of the expenditure to the parties' separating, (2) whether the expenditure was typical of expenditures made by the parties prior to the breakdown of the marriage, (3) whether the expenditure benefited the 'joint' marital enterprise or was for the benefit of one spouse to the exclusion of the other, and (4) the need for, and amount of, the expenditure. [Annotation, Spouse's Dissipation of Marital Assets Prior to the Divorce As A Factor in Divorce Court's Determination of Property Division, 41 A.L.R. 4th 416,] 421 [(1985)].

The question ultimately to be answered by a weighing of these considerations is whether the assets were expended by one spouse with the intent of diminishing the other spouse's share of the marital estate.

[Id. at 507].

Here, as is true for many of plaintiff's claims against his former attorney, plaintiff simply asserts a claim, cites a single fact, and then argues that the court must conclude that single fact establishes the claim as a matter of law. Such an approach is directly contrary to the rule announced in Ziegelheim that the party to a settlement, who asserts a negligence claim against his former attorney, must establish the departure from the standard of care by specific facts. It also ignores the basic principles of any professional negligence claim that the asserted negligence was the proximate cause of damages and must usually be supported by expert opinion.

Here, the mere fact of a refinancing and incurring costs to accomplish that end proximate to the breakdown of the marriage does not establish a dissipation of marital assets claim and the consequent charge to the other spouse in the division of property. This element of plaintiff's negligence claim must be supported by an analysis of the financial consequences to the marital estate of this transaction.

We are also satisfied that the motion judge properly granted summary judgment as to the professional negligence claim as it pertained to the dismissal of the custody and parenting time expert retained by plaintiff's matrimonial attorney one or two days before the adjourned date for resolution of these issues. This claim completely disregards the discussion with Judge Rubin on March 8, 2004, about the need for experts two days hence. Plaintiff was present in court during this discussion. The judge noted the likelihood that he would place more reliance on the report of the guardian ad litem because the dispute between the parties had narrowed from custody to parenting time. Plaintiff expressly acknowledged on the record on March 10, 2004, that any residual issues about parenting time should be submitted to a parenting coordinator. Furthermore, the summary judgment record was utterly bereft of any facts to support an argument that the dismissal of the expert caused a "litigation catastrophe" as discussed in Ziegelheim.

In light of our disposition of plaintiff's appeal, the cross-appeal is moot.

 
We, therefore, affirm the April 13, 2007 order granting defendant's motion for summary judgment.

Appending the worksheet to the judgment of divorce provides ready evidence of the income of the parties at the time of the divorce, which is a critical element of the lifestyle analysis required by Crews v. Crews, 164 N.J. 11, 26-27 (2000), in certain post-judgment applications.

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A-0316-07T1

August 11, 2010