RENE ABREU v. RICHARD MACKIEWICZ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2828-09T3

RENE ABREU,

Plaintiff-Appellant/

Cross-Respondent,

v.

RICHARD MACKIEWICZ and

MACKIEWICZ & ASSOCIATES, LLC,

Defendants-Respondents/

Cross-Appellants.

__________________________________

December 5, 2012

 

Argued December 21, 2011 - Decided

 

Before Judges Axelrad, Sapp-Peterson and Ostrer.

 

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2696-08.

 

Gerald Krovatin argued the cause for appellant/cross-respondent(Krovatin Klingeman LLC, attorneys; Mr. Krovatin and Helen A. Nau, on the briefs).

 

Douglas E. Motzenbecker argued the cause for respondents/cross-appellants (Gordon & Rees LLP, attorneys; Mr. Motzenbecker, of counsel and on the briefs; Robert McGuire and Aaron H. Gould, on the briefs).

PER CURIAM

Plaintiff appeals from a no cause judgment after a jury trial in his legal malpractice action against defendants, Richard Mackiewicz and his law firm. Plaintiff argues the trial court erred in deciding, before it submitted the case to the jury, that plaintiff was only a former client or non-client, and not a current client of defendants. Plaintiff also argues the court erred in its jury instructions regarding the duty of care that an attorney owes to a former client or non-client. We affirm.

I.

We will discuss the pertinent facts in greater detail when we address the legal issues, but we begin with an overview of the case. Plaintiff's claim of legal malpractice arises out of defendant's1 role in a December 31, 2005 transaction involving plaintiff and Ted Worthington. Plaintiff and Worthington had developed real estate together through various ventures in Hudson County.

The 2005 transaction amended a 2002 agreement. In the initial agreement, LMA Apartment Associates, LLC, ("LMA Apartment"), in which plaintiff had an interest, purchased the interests of Worthington and his sister Judy Basso in three limited liability companies ("LLCs"), each of which owned real estate in Hudson County. The contracting parties were represented by counsel other than defendant. Plaintiff already owned interests in the three LLCs. LMA Apartment, whose managing member was plaintiff's sister, agreed to pay $2.8 million to Worthington and Basso, pursuant to a schedule of payments extending until May 2007. As security, plaintiff agreed to purchase life insurance to secure amounts due and owing under the agreement. LMA Apartment and plaintiff agreed to pledge collateral consisting of all of LMA Apartment's and plaintiff's membership interests in 85 Madison House, LLC ("85 Madison"), one of the three LLCs.

LMA Apartment repeatedly missed scheduled payments due under the 2002 agreement to Worthington and Basso, who declared defaults and threatened to accelerate all payments due. An escrow agent also testified that plaintiff never provided the security required under the 2002 agreement. Plaintiff had also been found guilty by a federal jury in August 2004 of mail fraud, mail fraud conspiracy, check kiting conspiracy, structuring currency transactions, and conspiracy to do so; he had been sentenced on June 28, 2005 to an aggregate term of eighty-seven months; and he was to begin serving his sentence on January 2, 2006.

The December 31, 2005 transaction amended the 2002 agreement in various ways that plaintiff claims disadvantaged him. In place of the pledge of interests in 85 Madison, plaintiff executed a conditional sale of all his interests in another real estate-related LLC, Gateway 2001, LLC ("Gateway 2001").2 Upon a default, regardless of the amount remaining due, Worthington would be entitled to plaintiff's Gateway 2001 interests. The 2005 agreement also shortened the payment schedule in the 2002 agreement, requiring payments in February 2006, and a final payment in September 2006, instead of May 2007.

Defendant asserted the 2005 agreement was not one-sided. He argued it allowed plaintiff and LMA Apartment to cure its then-existing default, which had already entitled Worthington and Basso to accelerate payment and declare all amounts due and owing. He also contended the conditional sale was utilized as an alternative to a mortgage of plaintiff's interests in Gateway 2001, which would have required consent of the other LLC members under the LLC's operating agreement. Defendant testified that plaintiff did not want to delay the transaction to seek that consent.

The 2005 agreement also granted plaintiff an option to buy from Worthington an additional 12.5 percent interest in Gateway 2001. Worthington was negotiating to buy out the twenty-five percent interest of another member, LNA Holding, LLC ("LNA Holding")3 who opposed selling to plaintiff. Worthington agreed to sell to plaintiff at cost, fifty percent of the additional interest in Gateway 2001 that Worthington intended to purchase.

In his third-party complaint against defendant, plaintiff alleged defendant served as his attorney in the negotiation and drafting of the 2005 agreement, and defendant failed to protect his interests adequately. In the alternative, plaintiff asserted defendant breached fiduciary duties he owed to plaintiff.

In response, defendant asserted that he represented Worthington in the 2005 transaction, and he disclosed that representation to plaintiff, who consented to it in writing in the 2005 agreement. Defendant conceded he had in the past represented plaintiff personally and business entities in which plaintiff had interests, but asserted he ceased representing plaintiff in 2001. He claimed he did not breach any duties owed to plaintiff as a former client or non-client.

Plaintiff raised his legal negligence claims against defendant in a third-party complaint, after Worthington sued plaintiff for breach of the 2005 agreement, among other claims. Worthington alleged plaintiff had missed a scheduled payment. He sought a declaration that plaintiff was divested of his interests in Gateway 2001.4 In plaintiff's third-party complaint, he alleged defendant had a conflict of interest; misrepresented terms of the 2005 agreement; exerted undue pressure on him; and failed to protect his interests. Plaintiff also alleged defendant engaged in negligent misrepresentation, legal fraud, and breach of fiduciary duty.

Worthington and plaintiff settled their claims with a proviso preserving plaintiff's claim against defendant. Judge Bernadette DeCastro granted partial summary judgment dismissing plaintiff's claim of duress. The remaining claims in plaintiff's third-party complaint were then tried before a jury, Judge Barry P. Sarkisian presiding.

Judge Sarkisian instructed the jury that plaintiff did not have a current attorney-client relationship with defendant and therefore, RPC 1.7 did not apply to define defendant's duty of care. The court consequently instructed the jury to disregard the part of plaintiff's expert's testimony in which the expert opined that RPC 1.7 was evidence of defendant's duty of care owed to plaintiff. However, the court instructed that defendant had a duty to plaintiff as a former client. Consequently, the court explained a finding that defendant violated RPC 1.9, pertaining to duties to former clients, could be considered evidence of malpractice. The court also instructed the jury that defendant owed a duty to plaintiff as a non-client, which arises "when the attorney knew or should have reasonably known that [plaintiff] would rely on the attorney's skills or services."5

The jury found plaintiff had failed to prove defendant breached his duty of care in connection with the 2005 agreement. Although the jury found there was a fiduciary relationship between plaintiff and defendant, the jury found plaintiff failed to prove a breach of that duty. The jury also rejected the negligent misrepresentation and legal fraud claims. The court thereafter denied a motion for a new trial under Rule 4:49-1.

Plaintiff raises the following points for our consideration:

POINT I: THE TRIAL COURT ERRED IN INSTRUCTING THE JURY AS A MATTER OF LAW THAT ABREU AND MACKIEWICZ DID NOT HAVE AN ATTORNEY CLIENT RELATIONSHIP IN DECEMBER 2005.

 

POINT II: THE TRIAL COURT ERRONEOUSLY CHARGED THE JURY BY EQUATING RPC 1.9 WITH THE DUTY OF CARE THAT DEFENDANT OWED TO HIS FORMER CLIENT PLAINTIFF.

 

POINT III: THE TRIAL COURT ERRED IN FAILING TO INSTRUCT THE JURY THAT MACKIEWICZ OWED A DUTY OF LOYALTY BOTH TO PLAINTIFF AS A FORMER CLIENT AND WORTHINGTON AS A CURRENT CLIENT.

 

POINT IV: THE TRIAL COURT ERRONEOUSLY INSTRUCTED THE JURY NOT TO CONSIDER THE EVIDENCE OFFERED BY ABREU CONSIDERING HIS RELEVANT STATE OF MIND.6

 

II.

We begin by addressing plaintiff's claim that the court erred in determining, and so instructing the jury, that as a matter of law, plaintiff was not defendant's current client when the 2005 agreement was negotiated and drafted. Judge Sarkisian held that there were insufficient facts from which a jury could reasonably conclude that there was a current attorney-client relationship.

There's no reasonable inference that a [j]ury could draw, based upon the evidence that I've heard, that he [defendant] was acting as [plaintiff's] attorney with respect to the 2005 transaction.

 

. . . .

 

There's the waiver, there's the acknowledgment and a confirmation they had the opportunity to get other attorneys. There's the acknowledgement in the record, . . . Abreu's own testimony, that he tried to get other attorneys to represent him. There's the testimony, clearly, during these operative periods that he had representation of other attorneys.

 

We know that Mackiewicz was not involved in the original underlying agreement in 2002. He directed parties to get separate [c]ounsel. . . . Ultimately he was represented by during the defaults after the original 2002 agreement, wasn't represented by Mr. Mackiewicz, he was represented, I recall, [by] Scarinci and Hollenbeck.

 

He had . . . representation as late as December 2005 . . . in major transactions with Mr. Mayerovic. [T]here is nothing where a [j]ury could reasonably infer that Mr. Mackiewicz was acting, or could Mr. Abreu construe and feel, that [defendant] was acting as his attorney.

 

The existence of an attorney-client relationship is an essential element of a cause of action for legal malpractice. Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996) (stating elements are "(1) existence of attorney-client relationship creating a duty of care upon the attorney; (2) the breach of that duty; and (3) proximate causation") (quotation and citation omitted).

When there is conflicting evidence about those elements essential to an attorney-client relationship, the existence of the relationship is an issue of fact. See Froom v. Perel, 377 N.J. Super. 298, 311-12 (App. Div.) (holding existence of attorney-client relationship could not be determined as a matter of law due to conflicting evidence), certif. denied, 185 N.J. 267 (2005). On the other hand, "[w]here the predicate facts are not in dispute, the existence of an attorney-client relationship presents an issue of law for the court[.]" Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice, 35.15 at 1250 (2009). See also Estate of Spencer v. Gavin, 400 N.J. Super. 220 (App. Div. 2008) (vacating trial court decision and finding, based on factual record, that the defendant had attorney-client relationship with the plaintiff).

If the evidence could not sustain a judgment in a plaintiff's favor, even after granting plaintiff all reasonable inferences, then a judgment at the close of the evidence is appropriate. See R. 4:40-1; Dolson v. Anastasia, 55 N.J. 2, 5 (1969). In reviewing a trial court's decision, we apply the same standard the trial court does. Frugis v. Bracigliano, 177 N.J. 250, 269 (2003). "As in a summary judgment motion, we must determine 'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Ibid. (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536 (1995)).

Applying that standard, we concur in Judge Sarkisian's determination that plaintiff had failed to present facts sufficient to sustain a jury finding of a current attorney-client relationship. First, the 2005 agreement itself clearly stated defendant was serving as Worthington's attorney, not plaintiff's. Second, evidence of the surrounding circumstances and the parties' past interactions did not suffice to create a genuine issue regarding the existence of the relationship.

An attorney-client relationship arises when:

(1) a person manifests to a lawyer the person's intent that the lawyer provide legal services for the person; and either

 

(a) the lawyer manifests to the person consent to do so; or

(b) the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services[.]

[Herbert v. Haytaian, 292 N.J. Super. 426, 437 (App. Div. 1996) (quoting Restatement of the Law Governing Lawyers (Proposed Final Draft No. 1) 26 (1996).]7

"'[R]epresentation is inherently an aware, consensual relationship' . . . founded upon the lawyer affirmatively accepting a professional responsibility." In re Palmieri, 76 N.J. 51, 58 (1978) (citation omitted).

Parties typically establish the relationship by express agreement. See Kevin H. Michels, New Jersey Attorney Ethics, 13:2-1 at 252 (2012). The relationship can also be implied by the parties' conduct. See Palmieri, supra, 76 N.J. at 58-59 (recognizing that attorney's "acceptance need not necessarily be articulated, in writing or speech but may, under certain circumstances, be inferred from the conduct of the parties"); Herbert, supra, 292 N.J. Super. at 436 (stating that express contract not essential and relationship is created when the "prospective client requests the lawyer to undertake the representation, the lawyer agrees to do so and preliminary conversations are held between the attorney and client regarding the case").

In this case, the 2005 agreement expressed defendant's "lack of consent" to represent plaintiff. A provision addressed not only a potential conflict of interest, but also defendant's role as Worthington's attorney. It stated defendant represented Worthington and Basso; plaintiff consented to that representation; and plaintiff was advised to retain separate counsel.

The Parties,8 Abreu and the Operating Entities9 acknowledge that Richard W. Mackiewicz, Jr. and Mackiewicz & Associates, L.L.C. (the "Attorney"), has in the past represented Worthington, Basso, Abreu and the Operating Entities in different transactions and therefore has a conflict of interest. The Attorney further advised the Parties, Abreu and the Operating Entities that the conflict of interest did not in the Attorney's judgment affect the ability to represent Worthington and Basso. By signing this agreement, the Parties, Abreu and the Operating Entities each affirm and ratify that they have been advised that the Attorney has a conflict of interest, that in the judgment of the Attorney this conflict of interest does not affect the Attorney's ability to represent Worthington and Basso, and the Parties, Abreu and Operating Entities each consent to the Attorney representing Worthington and Basso in this transaction. Purchaser, Abreu and the Operating Entities have been advised to seek legal counsel of their own choosing.

[(Emphasis added).]

Other provisions of the 2005 agreement reflected defendant's role as attorney to Worthington and Basso, and not plaintiff. The agreement required that notices for Worthington and Basso be sent to defendant, while notices for plaintiff be sent to Robert Mayerovic, an attorney who, according to evidence at trial, had recently represented plaintiff in another significant real estate transaction in December 2005. As defendant indisputably drafted the agreement, a "no contra preferentum" clause also confirmed defendant's role as Worthington's and Basso's attorney. It stated, "This Agreement shall not be construed more strictly against Worthington and Basso merely by virtue of the fact that the same has been prepared by them or their counsel. . . ." (emphasis added). Even plaintiff's malpractice expert at trial conceded defendant represented Worthington and Basso, and plaintiff was defendant's former client, notwithstanding plaintiff's allegation he believed defendant also represented him.

Plaintiff argues that notwithstanding the terms of the 2005 agreement, he presented sufficient evidence at trial of his subjective understanding and his prior dealings and relationship with defendant, to create a genuine issue regarding the existence of a current attorney-client relationship on December 31, 2005. However, many undisputed facts undermine plaintiff's claim of a current attorney-client relationship.

Plaintiff admitted that he attempted to secure his own counsel to represent him in the December 31, 2005 transaction. Although he was unsuccessful, he proceeded with the transaction, negotiating changes to the proposed draft. Plaintiff admitted he did not pay defendant for any services rendered on December 31, 2005; Worthington did. Nor did plaintiff present evidence that he, or any entity in which he had an interest, paid defendant a fee for services rendered since 2002. See Palmieri, supra, 76 N.J. at 59 (stating that although the absence of bills for services are not determinative, "they do serve to blunt the assertion of a lawyer-client relationship"). Although a plaintiff-related entity had made three payments to defendant totaling $14,000 between July 2005 and December 2005, those payments were for amounts long overdue for past services pursuant to an agreement reached between plaintiff and defendant in April 2005.

Sanford Weiss, who had a major stake in Gateway One, through 100 Marshall, see supra note 2, testified defendant had not worked on behalf of Gateway 2001 since 2002. Although defendant conceded, and Weiss confirmed defendant represented Marshall Harrison Street after the December 2005 transaction that entity was two levels removed from Gateway 2001, in which plaintiff personally was a member. A lawyer representing a corporation or other business entity is not automatically deemed to represent its officers or subsidiaries. See Restatement (Third) of the Law Governing Lawyers 96 comment b (2000) ("By representing the organization, a lawyer does not thereby also form a client-lawyer relationship with all or any individuals . . . who direct its operations or who have an ownership or other beneficial interest in it, such as its shareholders."); RPC 1.13 ("A lawyer employed or retained to represent an organization represents the organization as distinct from its directors, officers, employees, members, shareholders or other constituents."); McCarthy v. John T. Henderson, Inc., 246 N.J. Super. 225, 231 (App. Div. 1991) (holding past representation of closely held corporation did not implicate representation of one of its two shareholders).

Plaintiff failed to present evidence from which a jury could conclude that defendant knew or reasonably should have known that his representation of Marshall Harrison Street implicated an attorney-client relationship with plaintiff. Cf. Restatement (Third) of the Law Governing Lawyers 14 comment f (2000) (discussing circumstances under which a person associated with an organizational client may be deemed represented by the organization's attorney); Petit-Clair v. Nelson, 344 N.J. Super. 538, 543 (App. Div. 2001) (holding applicable RPC 1.8 and rejecting attorney's argument he represented only closely-held corporation, and not its husband and wife owners, in obtaining their mortgage of their residence as security for corporation's fee, where it was "undisputed that defendants [husband and wife] and plaintiff [attorney] related to each other as attorney and client").

It was undisputed that defendant had provided legal services to plaintiff's business entities, including drafting operating agreements and serving as custodian of business records, beginning in the mid-1990s. Plaintiff also alleged he considered defendant to have served since 1996 as general counsel to the various LLCs and business entities in which he had an interest. However, he could not identify a single matter defendant had handled between June 2001 and December 2005. Although defendant also represented plaintiff personally in the refinancing of his office space, plaintiff did not say when that occurred, let alone assert it occurred after June 2001. Pursuant to the authorities we have already referenced, even if defendant continued to represent a business entity in which plaintiff was a member, that did not mean defendant was attorney for plaintiff personally. Nor was it significant that plaintiff visited defendant in his office in mid-December, leading up to the December 31, 2005 session.

June 2001 marked a significant change in defendant's relationship with plaintiff. According to defendant, at that time plaintiff confided in him that he had been kiting checks activities apparently related to plaintiff's later indictment and conviction. Although plaintiff disputed defendant's assertion that he confessed to check-kiting, plaintiff did not dispute that defendant hired his own attorney, who then acted as an intermediary for communications with plaintiff and plaintiff's criminal defense attorney. The relationship apparently soured to the point that plaintiff's criminal defense attorney had to serve a subpoena on defendant to secure files, and threatened to file an ethics grievance against him because of his resistance. Plaintiff acknowledged defendant "distanced himself" from plaintiff during the investigation leading up to his indictment.

Defendant also testified he ceased active involvement in Gateway One legal matters after a major restructuring involving new investors. Prior to June 2001, Gateway One's membership included plaintiff, Worthington, LNA Holding, and a fourth investor, Manny Marin. Upon restructuring, the four members became equal twenty-five percent members of Gateway 2001, whose interest in Gateway One was reduced to 59.5 percent. 100 Marshall acquired a 39.5 percent interest in Gateway One. The new member brought an infusion of equity for the project and, as defendant explained, those providing the fresh equity preferred to use counsel of their own choosing. When plaintiff and Worthington both consulted defendant about a dispute in the fall of 2002 involving their business ventures, defendant advised both to retain separate counsel to negotiate the 2002 agreement.

Plaintiff misplaces reliance on our decision in Froom, in arguing the trial court erred in deciding there was no current attorney-client relationship. In Froom, supra, we held the trial court erred in finding, as a matter of law, that an attorney-client relationship did exist. 377 N.J. Super. at 311-12. We held that genuine issues of fact made the issue not susceptible to the court's decision. Id. at 310. In Froom, the attorney sent a retainer agreement to plaintiff and another real estate development company, to confirm its representation of their interests in their purchase of real estate. The other developer signed, but plaintiff did not, ostensibly because its alleged arrangement was that the other developer would be responsible for the fees. The attorney thereafter included plaintiff in communications regarding the transaction.

Simply put, the evidence regarding the relationship between the malpractice defendant and the plaintiff in Froom was more balanced than the one-sided evidence before us. Froom did not involve an explicit provision, as we have here, acknowledging that the attorney represented one party, and the other party was advised to retain separate counsel. Nor was there an apparent conflict between the Froom plaintiff and its fellow developer from the outset of the representation. By contrast, plaintiff and Worthington were obviously on opposite sides of their deal Worthington had previously declared plaintiff in default tending to make it unreasonable for plaintiff to view defendant as his attorney, as well as Worthington's. See Restatement (Third) of the Law Governing Lawyers 14 comment f (2000) ("Where appropriate, due consideration should be given to the unreasonableness of a claimed expectation of entering into a co-client status when a significant and readily apparent conflict of interest exists between the organization or other client and the associated person or entity claimed to be a co-client.").

In sum, we discern no error in Judge Sarkisian's determination, as a matter of law, that plaintiff was not defendant's current client during the December 31, 2005 transaction. Consequently, Judge Sarkisian did not err in so instructing the jury.

III.

We turn next to plaintiff's argument that even if he were not defendant's current client, the court erred in its instructions regarding the duty defendant owed plaintiff as a former client or non-client. In particular, plaintiff argues the court erred in instructing the jury that RPC 1.7 did not apply, and that RPC 1.9 alone encompassed defendant's duty to plaintiff as a former client. Plaintiff contends that regardless of compliance with that rule, defendant owed him a duty of loyalty and fiduciary duty as both a former client and a non-client not to harm his interests, which was equal to the duty of loyalty defendant owed his current client. Although we agree that an attorney's duties to a former client are not necessarily limited to those defined in RPC 1.9, we perceive no harmful error in the court's instructions.

Our scope of review of the trial court's jury instructions is well-settled. The charge must correctly state the applicable law and instruct the jury how to apply the law to the facts. Finderne Mgmt. Co. v. Barrett, 402 N.J. Super. 546, 576 (App. Div. 2008), certif. denied, 199 N.J. 542 (2009). "In construing a jury charge, a reviewing court must consider the charge as a whole to determine whether the charge was correct." Toto v. Ensuar, 196 N.J. 134, 144 (2008). "A party is not entitled to have a jury charged in words of his own choosing. If the charge adequately covers the matter requested, there is no error." Mohr v. B.F. Goodrich Rubber Co., 147 N.J. Super. 279, 283 (App. Div.), certif. denied, 74 N.J. 281 (1977). "[A]n appellate court will not disturb a jury's verdict based on a trial court's instructional error 'where the charge, considered as a whole, adequately conveys the law and is unlikely to confuse or mislead the jury, even though part of the charge, standing alone, might be incorrect.'" Wade v. Kessler Inst., 172 N.J.327, 341 (2002) (quoting Fischer v. Canario, 143 N.J.235, 254 (1996)). The ultimate question is whether the erroneous charge was "clearly capable of producing an unjust result." R. 2:10-2.

The court determined plaintiff was not defendant's current client. It advised the jury that RPC 1.7 was not relevant, and RPC 1.9 defined defendant's duty to plaintiff as a former client. The court instructed:

Now . . . there were two RPC's . . . 1.7 and 1.9. Right? Okay.

And he cited both of them, Mr. Drasco did [plaintiff's expert], and R[PC] 1.7 governs general rules of conflict of interest in representing what I'll call a current client. Okay?

And RPC 1.9 is the rule which governs duties of lawyers to former clients in avoiding conflicts of interest.

I have determined, and you've agreed that you'll take my findings for purposes of deciding this case, that Mr. Abreu was not a "current client" of Mr. Mackiewicz at the time of the execution of the December 31st, 2005 agreement.

 

And, therefore, the first RPC that was cited by Mr. Drasco does not apply. Okay? So, you should not consider any of Mr. Drasco's testimony as to how he opined an opinion that said he did violate that rule. Okay?

 

However, the court has determined that Mr. Mackiewicz had a duty to Mr. Abreu as a former client. And that's governed by [RPC] 1.9(a).

The court concluded that RPC 1.7 pertains only to conflicts in representing an attorney's current client. The court acknowledged that RPC 1.7 also directs an attorney to avoid a conflict between the duty to a current client and the "responsibilities to . . . a former client, or a third person" or the attorney's own personal interests. RPC 1.7(a) states:

Except as provided in paragraph (b) [regarding informed consent], a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

 

. . . .

 

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person or by a personal interest of the lawyer.

 

[(Emphasis added).]

 

See also Restatement (Third) of the Law Governing Lawyers 121 (2000) ("A conflict of interest is involved if there is a substantial risk that the lawyer's representation of the client would be materially and adversely affected by the lawyer's own interests or by the lawyer's duties to another current client, a former client, or a third person."). RPC1.7(b)(1) permits representation if "each affected client gives informed consent, confirmed in writing, after full disclosure and consultation[.]" RPC 1.7(b)(1).

The court opined that RPC 1.7's reference to conflicts between an attorney's duties to a current client, and the responsibilities to a former client, was designed to protect only the interests of the current client.

A [con]current conflict of interest exists if . . . [t]here is a specific risk that a representation of one or more clients will be materially limited by the lawyer's responsibility to another client, a former client, or a third person, or by a personal interest of the lawyer.[]

 

Again, the client who has to be protected there, . . . who has the potential conflict is the so called current client, if you will. And that's Mr. Worthington. So and that question is whether his representation of Mr. Worthington would be materially limited by a lawyer's responsibilities of another client, i.e. Abreu.

 

So, it's something to be asserted by Mr. Worthington. That was [defendant's expert's] analysis. It's a legal analysis, but I agree with that analysis. And it leads me to my conclusion that 1.7 has no application in this case.

 

[(Emphasis added).]

After informing the jury that RPC 1.7 did not apply, but RPC 1.9 did, the court recited RPC 1.9(a), which states: "A lawyer who has represented a client in a matter shall not thereafter represent another client in the same or a substantially related matter in which that client's interests are materially adverse to the interests of the former client unless the former client gives informed consent confirmed in writing." The court instructed, "Now . . . that's the duty that Mr. Mackiewicz had. Whether he breached that duty involves an assessment of the facts which you have to decide." The court proceeded to define a "same or a substantially related matter" and to explain what constituted "informed consent."

The court then proceeded to address defendant's duty to plaintiff as a non-client.

[T]he court has also determined that Mr. Mackiewicz had a duty to Mr. Abreu as . . . what I'll call a non-client as well. . . .

 

And . . . there is such a duty when the attorney knew or should have reasonably known that Mr. Abreu would rely on the attorney's skills or services.

 

Now, whether he breached that duty again is the factual question for you to determine. And I can also tell you as well, with respect to that, that Mr. Mackiewicz on December 31st, 2005 had a duty of loyalty, and diligent representation to his client.

 

And on that day, that client was Mr. Worthington.

 

The court addressed defendant's obligations to plaintiff, if the jury found there existed a fiduciary relationship.

The essence of a fiduciary relationship is that one party places trust and confidence in another who is in a dominant or superior position.

 

The attorney/client privilege embodies the concept that the client's trust in his fiduciary, the attorney.

 

Inherent in the attorney/client relationship is the fiduciary duty to render full and fair disclosure of all material facts to the client.

 

However, as you know in this case, the court found that there was not an attorney/client relationship between Mr. Mackiewicz and Mr. Abreu with respect to the December 2005 agreement.

 

However, again, this duty can extend, the fiduciary duty can extend to persons [who] are not current clients of an attorney such as former clients, because even in the absence of a strict attorney/client relationship, and even when the parties are not in the position of attorney and client, a member of the bar owes a fiduciary duty to those who he knows or should know depend on him for professional advice.

 

The court did not identify specifically what defendant was required to do, to comply with that duty if it existed, except to the extent the court instructed the jury that defendant was obliged not to "act[] dishonestly, or in bad faith."

The court referred to the duty to disclose, stating that the alleged misrepresentation "primarily relates to [plaintiff's] contention that the plaintiff was not made aware by Mr. Mackiewicz that he would forfeit his interest in Gateway [2001] if he defaulted in his payments required under the amended agreement of December 2005." However, the court generally referred to defendant's obligations not to make affirmative representations that were false.

After a side-bar, the court supplemented its charge, drawing from Petrillo v. Bachenberg, 139 N.J. 472, 483-84 (1995):

The [c]ourt has determined that Mr. Mackiewicz had a duty to Mr. Abreu as a person who was not his client at the time of the December 31st, 2005 agreement. . . . A lawyer . . . owes a duty to use care to a non client when, and to the extent, that the lawyer, or with lawyer[']s acquiescence, that lawyer's client invites the non client to rely on the lawyer's opinion or provision of other legal services the non client so relies. And the non client is not, under the applicable law, too remote from the lawyer to be entitled to protection.

 

. . . .

 

So, the issue is, having identified that duty that he had to Mr. Abreu, the question that still remains for you under question number 1, along with the all the other instruction[s] I gave you . . . with legal malpractice, and issues regarding . . . being a former client, is whether he breached that duty.

 

And to determine that, you've got to look at the facts and decide what was said, or what was not said on the day in question[.]

 

We part company with the court's view that RPC 1.7 protects only the interests of the current client in a concurrent conflict involving responsibilities to a former client. The court's narrow reading of RPC 1.7 presumes that only the new client's interests are at risk. However, a "concurrent conflict" as defined by the rule presents the equal possibility that the attorney would disserve the former client's interests. The rule prohibits an attorney from having a "concurrent conflict," as defined, because either the interests of the current client, or the former client, could be compromised. Notwithstanding our disagreement with the trial court regarding its reading of RPC 1.7, the court's instruction was sufficient, because under the facts of this case, defendant did not owe plaintiff any "responsibilities . . . to a former client" under RPC 1.7, in addition to those described in RPC 1.9 and elsewhere in the court's charge.

There is persuasive authority that the command in RPC 1.7(a) to avoid concurrent conflicts between duties to current clients and responsibilities to former clients, is intended simply to incorporate the duties under RPC 1.9.

The 2004 amendments added responsibilities to former clients to the list of interests that may materially limit a lawyer's representation of a current client. This constitutes a significant change in the law, apparently blurring the distinction between RPC's 1.7 and 1.9. Neither the Pollock Commission nor the Supreme Court commented on this modification. The ABA comments, however, suggest that the addition was intended to incorporate an RPC 1.9 analysis. See ABA Model Rules of Professional Conduct Rule 1.7 comment (2000) ("lawyer's duties of loyalty and independence may be materially limited by responsibilities to former clients under Rule 1.9").

 

[N.J. Attorney Ethics, supra, 19:3-1.]

 

See also Bevan v. Fix, 42 P.3d 1013 (Wy. 2002) (stating that RPC 1.6, dealing with confidentiality of information, and RPC 1.9 "accurately reflect the parameters of the fiduciary duties owed to former clients"). The court adequately addressed the duties established in RPC 1.9.10

In its discussion of plaintiff's misrepresentation claims, the court also adequately addressed the duty of an attorney not to provide misleading information on which a non-client would rely. See Petrillo, supra, 139 N.J. at 479 (addressing the balance between "the attorney's duty to represent clients vigorously with the duty not to provide misleading information on which third parties foreseeably will rely") (citations omitted). Petrillo involved a claim by a non-client purchaser of real estate against the attorney who delivered misleading test results about the property to the seller. "[A]ttorneys may owe a duty of care to non-clients when the attorneys know, or should know, that non-clients will rely on the attorneys' representations and the non-clients are not too remote from the attorneys to be entitled to protection." Petrillo, supra, 139 N.J. at 483-84. See also Davin, LLC v. Daham, 329 N.J. Super. 54, 75-76 (App. Div. 2000) (stating lessor's attorney violated duty to non-client-lessee where attorney included a covenant of quiet enjoyment and did not share his knowledge of pending foreclosure action); Atlantic Paradise Assoc., Inc. v. Perskie, Nehmad & Zeltner, 284 N.J. Super. 678, 686 (App. Div. 1995) (attorney liable to non-client for misrepresentations in public offering for proposed condominium), certif. denied, 143 N.J. 518 (1996).

Upon terminating representation, "a lawyer must . . . take no unfair advantage of a former client by abusing knowledge or trust acquired by means of the representation." Restatement (Third) of the Law Governing Lawyers 33(2)(d) (2000). The Restatement contemplates that a lawyer's duty to a former client involves not simply avoiding the use of confidential information which is covered by the reference to "knowledge" but also by more broadly avoiding the abuse of the former client's "trust." In connection with that duty not to abuse the former client's knowledge and trust, the Restatement refers to sections governing financial transactions between the attorney and former client, use of confidential information, and securing consent to conflicts based upon adequate disclosure of facts. Id. at 33(2). The first two forms of breach were not alleged here, and the court addressed informed consent in its charge. Ibid.

We reject plaintiff's argument that defendant's duty of loyalty to him was equivalent to the duty of loyalty owed to his current client, Worthington. Were that so, an attorney could not accept a new client in a matter adverse to a former client which our cases contemplate. See, e.g., City of Atlantic City v. Trupos, 201 N.J. 447 (2010) (holding attorney may currently represent property owners in tax appeals adverse to municipality, attorney's former client, because current tax appeals not substantially related to law firm's defense of prior tax appeals); see also Legal Malpractice, supra, 18:1 ("With present clients, the main concern is a breach of loyalty and independent judgment; whereas, the principal concern regarding a former client is a breach of confidentiality.").

The Restatement recognizes that so long as the new client's matter is not the same or substantially related to the one involving the former client, the attorney should be free to take on the new client's case. "[B]ecause much law practice is transactional, clients often retain lawyers for service only on specific cases or issues. A rule that would transform each engagement into a lifetime commitment would make lawyers reluctant to take new, relatively modest matters." Restatement (Third) of the Law Governing Lawyers, 132 comment b (2000). See also Restatement (Third) of the Law Governing Lawyers 50, comment c ("After a client-lawyer relationship ends . . . a lawyer's duties to the former client drastically decrease[.]").

Lastly, we briefly address plaintiff's argument that the court erred in distributing a copy of RPC 1.9 to the jury. A court may, in its discretion, provide a copy of all or part of its charge to the jury. R. 1:8-8(a); see also State v. O'Brien, 200 N.J. 520, 540 (2009) ("[t]o ensure that verdicts are the result of each juror's equal understanding of the facts and the law as it applies to those facts, judges are granted leave to consider whether or not issuing written instructions would be helpful or harmful in a particular case"). We discern no abuse of discretion, or likely prejudice. The distribution of the rule was designed to avoid confusion, and was not likely to lead to overemphasis on the rule. The court cautioned the jury not to place additional weight on the rule just because it was distributed; and directed the jury to consider all the evidence. See Pressler & Verniero, Current N.J. Court Rules, comment 1.1 on R. 1:8-8 (2013) (stating court should exercise caution to prevent a jury from taking an excerpt out of context or placing undue emphasis on it when only part of the charge is submitted to the jury). We presume the jury followed the court's instructions. McRae v. St. Michael's Med. Ctr., 349 N.J. Super. 583, 599 (App. Div. 2002).

We have considered plaintiff's remaining arguments and conclude they lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 For convenience, we will hereafter use "defendant" to refer to both Mackiewicz and his firm, unless the context makes clear that we refer only to Mackiewicz personally.

2 Gateway 2001 held a 59.5 percent interest in another entity, Gateway One, LLC, which in turn owned Marshall Harrison Street Apartments, LLC, ("Marshall Harrison"), which in turn owned a substantial real estate development in Hoboken. The other major owner of Gateway One was 100 Marshall Associates, LLC ("100 Marshall"), which controlled 39.5 percent, and was controlled by Sanford Weiss. Gateway 2001 and 100 Marshall each owned fifty percent of Gateway Special, Inc., which held a one percent interest in Gateway One and was its managing member.

3 LNA Holding should not be confused with LMA Apartment. The former's membership was unassociated with plaintiff.

4 Worthington also sued Gateway 2001. At that point, Worthington controlled fifty percent, and plaintiff controlled twenty-five percent. Worthington alleged plaintiff, as managing member of Gateway 2001, breached fiduciary duties owed to the entity and sought an accounting. Gateway 2001 was initially named as a third-party plaintiff in the third-party malpractice complaint, but was ultimately dismissed from the action upon the parties' joint application.

5 The court's apparent finding that defendant knew or reasonably should have known plaintiff would rely on him appears inconsistent with the jury instruction on the breach of fiduciary duty claim, in which the court apparently directed the jury to decide that question. In its instruction on whether a fiduciary relationship existed, the court stated, "[E]ven when the parties are not in the position of attorney and client, a member of the bar owes a fiduciary duty to those who he knows or should know depend on him for professional advice." The court instructed the jury it could consider the parties' previous relationship and experience, and before a fiduciary duty arises, "there must be some act, some word, some . . . manifestation that the reliance on the attorney is in his professional capacity."

6 Defendant cross-appealed asserting the trial court should have dismissed plaintiff's action under the "settle-and-sue" and avoidable consequences doctrines; the court should have dismissed plaintiff's punitive damages claim before jury deliberations; and the court erred in refusing to charge comparative fault. Given our disposition of plaintiff's appeal, we shall not address the points on defendant's cross-appeal.

7 The language quoted from the proposed final draft subsequently was adopted in Restatement (Third) of the Law Governing Lawyers 14 (2000).

8 The "Parties" were defined as Worthington, Basso and LMA Apartment.

9 The "Operating Entities" were defined as 85 Madison and the other two Hudson County LLCs that were the subject of LMA Apartment's purchase from Worthington and Basso.

10 The court did not recite RPC 1.9(c), which generally prohibits an attorney from using information from a former representation to the former client's disadvantage, or to reveal confidential information, as plaintiff did not allege a breach of that provision. Cf. State v. Loyal, 164 N.J. 418, 440 (2000) (applying former "appearance of impropriety" standard, finding conflict between duties to current client, a criminal defendant, and former client, as witness, where attorney "may have obtained confidential information during his prior representation of [former client] that he could now use to impeach her credibility on cross-examination").