ANTHONY SALVEMINI 53 55 KINGSWOOD ROAD LLC 68 MADISON STREET LLC v. STEPHEN SPECTOR ESQ SPECTOR DIMIN

ResetAA Font size: Print

Superior Court of New Jersey, Appellate Division.

ANTHONY SALVEMINI, 53–55 KINGSWOOD ROAD, LLC and 68 MADISON STREET, LLC, Plaintiffs–Respondents, v. STEPHEN R. SPECTOR, ESQ. and SPECTOR & DIMIN, P.A., Defendants–Appellants.

DOCKET NO. A–3579–11T2

-- December 13, 2013

Before Judges Yannotti, Ashrafi and Leone. Michelle Joy Munsat argued the cause for appellants. Mark A. Clemente argued the cause for respondents (Clemente Mueller, P.A., attorneys;  Mr. Clemente, on the brief).

Defendants Stephen R. Spector (Spector) and the Spector & Dimin law firm appeal from a judgment entered in favor of plaintiffs Anthony Salvemini (Anthony), 53–55 Kingswood Road, LLC and 68 Madison Street, LLC, in the amount of $226,321.07.   For the reasons that follow, we reverse and remand for entry of judgment dismissing plaintiffs' complaint with prejudice.

I.

A. The Property Transfers and Related Transactions.

In 1997, Corrado Salvemini (Corrado) divorced his wife, and a partner at Spector & Dimin represented him in the divorce proceedings.   The divorce was hotly contested and Corrado's daughter Elizabeth sided with her mother, while Corrado's sons Anthony and Ignatius (Nat) sided with him.   Shortly after commencement of the divorce proceedings, Anthony and Nat took over management of Corrado's personal and business affairs.

Several years later, Corrado began a serious relationship with Maria Zimmerman (Maria).   In June 2000, he informed his sons that he was considering marrying her.   Corrado instructed his sons to find a lawyer who could prepare a prenuptial agreement.   He wanted to protect his assets if the anticipated marriage to Maria failed.   Corrado's assets included his home, located at 53–55 Kingswood Road in Weehawken, and a building with four rental units, located at 68 Madison Street in Hoboken.

In May 2003, Corrado, Anthony and Nat agreed to a plan proposed by Spector.   The plan called for the creation of two limited liability corporations (LLCs).  Anthony and Nat would be the only members of the LLCs, and they would have equal ownership interests in both entities.   One of the LLCs would purchase Corrado's Weehawken residence, and the other LLC would purchase the building in Hoboken.   The LLCs would issue notes and mortgages to Corrado for the properties acquired, and make interest payments on the notes.

In addition, Corrado would retain a life estate in his residence.   He would lease the house from the LLC that purchased it, and pay a monthly rent of $5,000.   The LLCs also would be obligated to pay the taxes, property insurance and maintenance costs for the properties.   Upon Corrado's death, the principal due on the notes and the mortgages would be cancelled.   During his lifetime, Corrado could not sell or transfer his interest in the notes and mortgages.   After discussing the transactions with Corrado and his sons, Spector drafted the final versions of the documents required to effectuate the plan.

The closing took place on June 20, 2003.   Corrado, Anthony, Nat and Spector were present.   After Spector explained the documents, Corrado asked if he could receive additional payments should he require them.   Corrado was informed that Anthony and Nat both had to agree to any change;  however, they did not discuss amending or changing the agreements at that time.   Anthony and Nat assured Corrado that he could have additional payments and they would “work it out.”   Corrado executed the documents.

Corrado transferred the Weehawken property to 53–55 Kingwood Road, LLC, and received a 30–year note in the amount of $825,000, with an annual interest rate of 4.75%. The note required payment of interest only, in the amount of $3267.60 per month.   In addition, Corrado transferred the Hoboken property to 68 Madison Street, LLC, and received a 30–year note in the amount of $951,500, with an annual interest rate of 4.75%. The note required payment of interest only in the amount of $3766.35 each month.

After the transactions were consummated, Anthony and Nat took over control and management of the Weehawken and Hoboken properties.   In July 2004, Corrado and Maria signed the premarital agreement.   They were married in 2005.   It appears that at that time there was no family discord, and Elizabeth was in the process of reconciling with Corrado and her siblings.

Thereafter, Corrado complained about the amount of monies he was receiving from the LLCs and asked for an accounting.   Nat thought Corrado should receive whatever he wanted, including the additional monies he was demanding.   Anthony was not opposed to making additional payments, but he was concerned that the LLCs would not have sufficient funds to meet the operating expenses of the properties.

Corrado also wanted the transactional documents changed so that Elizabeth would be a one-third owner of the LLCs. Corrado insisted that he had an absolute right to change the documents, and he demanded that Anthony and Nat accede to his request.   Nat supported Corrado's demand but Anthony refused to make any changes in the documents which would allow his sister to share ownership in the LLCs. The family members tried but could not resolve the dispute.

B. The Underlying Litigation.

In September 2007, Corrado filed a complaint in the Chancery Division, General Equity Part, against Anthony, Nat and the two LLCs. He alleged that Anthony and Nat, with Spector's assistance, had fraudulently structured the documents for the transactions, fraudulently induced Corrado into executing the documents, and unduly influenced his decision to enter into the agreements.

Corrado sought rescission or reformation of the property transfers, imposition of a constructive trust on the properties held by the LLCs, an accounting for the rents and management of the properties, and appointment of a receiver.   Prior to trial, Nat informed the court that he did not oppose Corrado's demand for relief.   Anthony assumed responsibility for defendants for the defense of himself and the LLCs in the litigation.

Following a trial, the Chancery Division judge issued a written opinion, in which he concluded that Corrado's complaint should be dismissed with prejudice.   The judge found that the transactions were not the product of undue influence or fraud.   The judge wrote that

From 2000 through 2003 it is clear that Corrado was a domineering, outspoken, crafty and intelligent business man.   Corrado was a self-made millionaire, who as a real estate developer/builder had taken part in well over [seventy-five] real estate closings.   His children, as well as his lawyers and tax advisors, described him as the type of person who was not easily swayed, a person in total control of his faculties who could not be persuaded to do anything he did not want to do.   Given these undisputed facts regarding Corrado's character, personality, and intelligence, the claim that he was deceived by Anthony is not sustainable.

The judge found that Corrado's goal was to protect his assets and his sons' interest in those assets, in the event his marriage to Maria failed.   The judge stated that Corrado had reviewed all of the transactional documents and understood them.   The judge found that Corrado had willingly and voluntarily signed the documents.

The judge pointed out that the only concern that Corrado raised at the closing was that he would not have enough money to pay his expenses.   The judge stated that, after Corrado was told that changes could be made to the documents, he expressed no further objections to the plan.   The judge concluded that Anthony had demonstrated by clear and convincing evidence that the transactions were not the product of deception.

The judge additionally determined that Corrado had sought out and received advice regarding the transactions from highly competent professionals, including lawyers and accountants.   The judge wrote that “[e]very professional retained by Corrado acknowledged [his] professional and ethical responsibility to insure that [Corrado] was competent, well informed and free from undue influence.”   The judge noted that the lawyers who testified stated “that although the sons were very much involved in the process, Corrado was also involved and ultimately had the final say on all important matters.”

C. Plaintiffs' Complaint and Defendants'Pre–Trial Motions.

In April 2009, Anthony and the LLCs filed this action against Spector and his law firm.   Plaintiffs alleged that Spector was negligent in rendering legal service to plaintiffs regarding the transactions.   They also asserted claims of breach of contract and breach of fiduciary duty.

In October 2010, defendants filed a motion for summary judgment.   Defendants argued that Spector's representation of Corrado, Anthony and Nat was not a nonwaivable conflict of interest under Baldasarre v. Butler, 132 N.J. 278 (1993), as claimed by plaintiffs.   They further argued that Spector's representation of all of the parties to the transactions was not an impermissible conflict of interest, and the evidence was not sufficient to establish the breach of fiduciary duty claim.   They additionally argued that plaintiffs did not suffer any damages proximately caused by defendants.   The judge denied the motion.

In May 2011, defendants filed another motion for summary judgment on the issue of proximate cause.   In response to this motion, plaintiffs argued that their attorneys' fees and costs in the underlying action, without more, constituted compensable damages.   The judge denied defendants' motion.

Thereafter, defendants filed three motions in limine to bar plaintiffs' expert witness, Robert W. McAndrew (McAndrew), from testifying at trial.   Defendants argued that McAndrew's report constituted an impermissible “net opinion” and did not support plaintiffs' damage claim.   The motions were denied.

D. The Trial.

The matter was tried before a jury in January 2012.1  At the

time, Corrado was confined to a nursing home and could not testify.   Anthony testified concerning the transactions and Spector's involvement therein.   Anthony stated that Spector prepared the transactional documents and explained them at the closing.   He said that Corrado asked whether he could have additional payments if they were needed.   Anthony and Nat agreed.   He said, “assuming there's rental capital available in the building, yes, ․ we'll do it.”

Anthony additionally testified that Spector never advised him that he thought there was a conflict of interest in representing the buyers and the seller in the transactions.   Anthony said he and the LLCs had incurred $300,000 in attorneys' fees and costs to defend the action that Corrado brought to have the property transfers rescinded.

Spector testified that he represented the parties to the transactions.   However, he did not view the transactions as involving “buyers” and “sellers” of the property in the ordinary sense of those terms.   He thought his role was to provide advice concerning estate planning in anticipation of Corrado's second marriage, and the real estate transactions were only a part of that plan.   Spector said he did not seek a written waiver of a conflict of interest because he did not perceive that there was such a conflict.

McAndrew testified that the transactions were “complex, commercial real estate transaction[s],” and Spector's representation of the buyers and seller in those transactions constituted an unwaivable conflict of interest under Baldasarre.   McAndrew also said that Spector breached his fiduciary duty to plaintiffs by failing to advise the parties of the potential conflict of interest, once Corrado raised the issue regarding changing the documents so he could obtain additional payments.

In addition, McAndrew said that Spector's conduct was a substantial factor in causing plaintiffs to sustain damages in the form of the legal fees and costs incurred in the underlying litigation.   McAndrew stated that, if Spector had referred plaintiffs to separate counsel, Corrado would have either been precluded from filing his lawsuit or the lawsuit would have been dismissed in its early stages.

After plaintiffs rested, defendants moved for a directed verdict, arguing that plaintiffs had not proven proximate cause or damages.   The judge denied the motion, indicating that defendants were again arguing that McAndrew's testimony was a “net opinion.”   The judge said he had refused to bar McAndrew from testifying and it was up the jury to determine whether to accept the predicate facts which supported his opinions.

Robert A. Knee (Knee) testified as an expert witness for defendants.   Knee stated that he viewed the transactions as an estate planning matter, rather than complex, commercial real estate transactions.   Knee acknowledged that the transactions included the sale of real estate, but he said this was only a means of effectuating Corrado's estate plan.   According to Knee, Corrado made a gift of properties to his sons, while reserving to himself a stream of income.

Knee stated that Spector had no obligation to instruct the parties to obtain individual representation because no conflicts of interest were apparent in his meeting with the parties or at the closing.   He said it was common for a family unit to be represented by a single attorney, so long as the individuals' interests do not appear to be divergent.   Knee said Spector had fulfilled his fiduciary duties to his clients.

In addition, Knee stated that Spector's conduct was not the proximate cause of any damages sustained by plaintiffs.   He said that, after the agreements were executed, Corrado reconciled with Elizabeth.   According to Knee, this was the impetus for the underlying litigation, and the litigation would have ensued regardless of any advice Spector should have provided at closing.

Nat testified for defendants.   Among other things, he stated that Corrado had raised the issue of additional payments at the closing.   Nat told Corrado that “you have the right” to the additional monies and “we'll work it out.”   According to Nat, Anthony concurred.   Nat said that Spector reinforced his comment.   Spector told Corrado that Anthony and Nat were his sons and “you'll work it out.”

Philip C. Chronakis (Chronakis) also testified for the defense as an expert witness.   Among other things, Chronakis testified that Anthony's refusal to include Elizabeth as an owner of the LLCs was the cause of the underlying litigation, not any act or omission on Spector's part.

After the attorneys gave their final arguments, the judge charged the jury.   Concerning the legal malpractice claim, the judge stated that the jury had to determine, based on the expert testimony, the standard of care required in this case.

The judge noted that RPC 1.7, which pertains to conflicts of interest, provides that a lawyer cannot represent a client if the representation will be directly adverse to another client, unless the lawyer reasonably believes the representation will not adversely affect his or her relationship with another client, and each client consents after full disclosure.

The judge also noted that in Baldasarre, the Supreme Court held that an attorney may not represent a vendor and purchaser in a complex commercial transaction, even if both give their informed consent.   The judge instructed the jury that it could consider RPC 1.7 and Baldasarre in determining the standard of care and any deviation from that standard.

In addition, the judge instructed the jury on the breach-of-fiduciary duty claim.   The judge stated that lawyers are fiduciaries who owe their clients a duty of “utmost loyalty.”   As such, lawyers are required to provide a full and fair disclosure of all material facts when representing a client.   Thus, lawyers owe their clients a duty of good faith and fair dealing.   The judge said that, in his dealings with his clients, a lawyer must act with “full integrity and fidelity.”

The judge additionally stated that an attorney also owes his client a duty to avoid impermissible conflicts of interest.   The attorney also must act with a degree of skill and competence that comports with reasonable professional standards.   The judge told the jury it must determine whether defendants breached their fiduciary duties to their clients.

In addition, the judge instructed the jury on damages.   The judge stated that defendants are liable for any damages proximately caused by defendants' malpractice or breach of fiduciary duty.   The judge explained that proximate cause “means that [defendants'] malpractice or breach was a substantial factor in bringing about the harm alleged by the plaintiffs.”

The judge pointed out that plaintiffs were seeking reimbursement of the attorneys' fees and costs incurred in defending Corrado's lawsuit.   The judge said that if defendants were negligent or breached a fiduciary duty owed to plaintiffs, plaintiffs are entitled to all damages proximately caused by defendants' wrongful acts or omissions, including attorneys' fees and costs incurred to defend a lawsuit.

The judge instructed the jury that it must determine the legal services required to defend the lawsuit.   The jury also had to determine whether the fees and costs sought were reasonable, based on the expert testimony presented in the case.

The jury found that plaintiffs had proven that Spector deviated from accepted standards of legal practice in his representation of them in the transactions, and the deviation was a substantial factor in bringing about the harm to plaintiffs.   The jury additionally found that plaintiffs had proven that Spector breached a fiduciary duty owed to plaintiffs, and the breach was a substantial factor in bringing about the harm to plaintiffs.   The jury awarded plaintiffs $100,000.

On January 30, 2012, defendants filed a motion for a new trial.   The judge entered an order of judgment on February 8, 2012, in the amount of $226,321.07, which included the $100,000 awarded by the jury, $15,022.10 in additional attorneys' fees and costs pursuant to Saffer v. Willoughby, 143 N.J. 256 (1996), costs in the amount of $101,025, and prejudgment interest in the amount of $10,273.97.   On February 28, 2012, the court denied defendants' motion for a new trial.   This appeal followed.

II.

Defendants argue that the trial court erred by denying their first motion for summary judgment and holding that Baldasarre could apply to this matter.

In Baldasarre, the plaintiffs inherited 40.55 acres of undeveloped land from their father and retained William B. Butler (Butler) to act as attorney for their father's estate and for them as co-executrices.  Supra, 132 N.J. at 281–82.   The will directed that the property be sold, and the plaintiffs received various offers to purchase the land.  Id. at 282.

The plaintiffs rejected the offers and met with Butler.  Ibid. They agreed that Butler would assist them in finding a buyer.  Ibid. The plaintiffs told Butler the price they wanted.  Ibid. They said there would be no purchase money mortgage, and the sale only would be subject to preliminary major subdivision approval.  Ibid.

Butler discussed the property with Paul DiFrancesco (DiFrancesco), who was one of his clients.  Ibid. DiFrancesco expressed an interest in purchasing the property on the plaintiffs' terms but added two conditions.  Ibid. He wanted the right to assign the contract and waive the subdivision contingency.   Ibid. DiFrancesco asked Butler to represent him in the purchase and subdivision process.  Ibid.

Butler advised DiFrancesco of the potential conflict of interest and said he could not represent him unless the plaintiffs consented and executed a written waiver agreement.  Ibid. DiFrancesco signed a letter waiving the conflict.   Id. at 283.   Butler also met with the plaintiffs.  Ibid. He disclosed his relationship with DiFrancesco and informed the plaintiffs he could not represent him if they objected.  Ibid. They also signed a letter waiving the conflict.  Id. at 283–84.

The contract ultimately agreed upon required DiFrancesco to obtain preliminary major subdivision approval within six months, but allowed for a ninety-day extension if he sought approval expeditiously.  Id. at 284.   The contract also allowed DiFrancesco to assign the contract, but did not require DiFrancesco to inform the sellers of the assignment.  Ibid.

Thereafter, DiFrancesco entered into a contract to sell the property to a construction company.  Ibid. Butler represented DiFrancesco in that transaction.  Ibid. The contract was contingent upon DiFrancesco obtaining title and preliminary subdivision approval within eighteen months.  Id. at 285.

DiFrancesco had difficulty obtaining subdivision approval.  Ibid. He asked the plaintiffs to extend the time in which such approval could be obtained, in exchange for release to the plaintiffs of the deposit monies.  Ibid. Butler conveyed this request to the plaintiffs but he did not inform them of Difrancesco's contract to sell the property to the construction company, once he obtained title.  Id. a 285–86.

When the plaintiff's learned of that agreement, they filed an action against Butler, his law firm and DiFrancesco, alleging fraud.  Id. at 286.   The plaintiffs sought rescission of their contract with DiFrancesco and damages.   Ibid. DiFrancesco filed a counterclaim, charging the plaintiffs with tortious interference with prospective economic advantage.  Ibid. He sought specific performance of his agreement with the plaintiffs and damages.   Ibid.

In its opinion, the Supreme Court addressed the plaintiffs' fraud claim against DiFrancesco as well as his tortious interference claim against the plaintiffs.  Id. at 288–95.   The Court noted, among other things, that the plaintiffs claimed that Butler had acted fraudulently in failing to disclose DiFrancesco's agreement with the construction company and alleged that DiFrancesco was liable to the plaintiffs for the fraud perpetrated by his attorney.  Id. at 289.

After resolving those issues, the Court added the following:

This case graphically demonstrates the conflicts that arise when an attorney, even with both clients' consent, undertakes the representation of the buyer and the seller in a complex commercial real estate transaction.   The disastrous consequences of Butler's dual representation convinces us that a new bright-line rule prohibiting dual representation is necessary in commercial real estate transactions where large sums of money are at stake, where contracts contain complex contingencies, or where options are numerous.   The potential for conflict in that type of complex real estate transaction is too great to permit even consensual dual representation of buyer and seller.   Therefore, we hold that an attorney may not represent both the buyer and the seller in a complex commercial real estate transaction even if both give their informed consent.

[Id. at 295–96.]

Defendants argue that the transactions involved in this case do not represent complex commercial real estate transactions of the sort described in Baldasarre.   We agree.   As defendants acknowledge, the transactions in this matter included the transfer of real estate, in which Corrado was the seller and the LLCs were the purchasers.   The Weehawken property was transferred in exchange for a note in the amount of $825,000, and the Hoboken property transferred for a note in the amount of $951,500.   Thus, the property transfers involved large sums of money.

However, the transfers were not a commercial transaction in the traditional sense.   The transfers were part of Corrado's estate plan.   They were structured so that the properties would be transferred to his sons and remain their property upon his death.   No broker was involved in the sale of the properties, and there were no negotiations over the price or terms of the sale.

Moreover, while the plan required the creation of the LLCs, there was no sales contract setting forth contingencies for the closing of title.   In addition, Corrado's plan did not contain any options.   Thus, the transfers involved here were not complex commercial real estate transactions of the sort described in Baldasarre.   Therefore, the trial court erred by concluding that Spector's representation of all the parties to the transactions could contravene the bright-line rule established by Baldasarre.

Defendants additionally argue that Spector did not deviate from accepted standards of legal practice by representing all of the parties in the transactions.   They contend that, when the agreements were prepared and executed, there were no apparent conflicts of interest which required separate counsel.

RPC 1.7(a) provides that an attorney may not represent a client if the representation constitutes “a concurrent conflict of interest.”   Such a conflict exists if

(1) the representation of one client will be directly adverse to another client;  or

(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.

Furthermore, a lawyer can represent a client, notwithstanding a concurrent conflict of interest, if “each affected client” provides informed consent that is confirmed in writing, and so long as other conditions are met.  RPC 1.7(b).

Here, Spector's representation of the parties to the transactions did not involve “a concurrent conflict of interest.”   As the record presented on summary judgment indicates, when the plan was developed, Corrado and his sons agreed as to the terms upon which the properties would be transferred.   At the closing, Corrado raised the issue of whether the documents could be changed so that he could obtain additional payments, should he require them.   As we have explained, Anthony and Nat agreed that the changes could be made to the documents and they would “work it out.”

Although the agreements required Anthony and Nat to agree to any such changes, Corrado's statements at the closing and his sons' responses to those statements did not reveal a concurrent conflict of interest that precluded Spector's concurrent representation.   A conflict of interest between Corrado and Anthony arose later, after Corrado reconciled with Elizabeth and he tried to make her a part owner of the LLCs, but there was no conflict at the closing.

Our conclusion is supported by Lovett v. Estate of Lovett, 250 N.J.Super.   79 (Ch. Div.1991).   In that case, the decedent had been a successful businessman who owned various properties.  Id. at 84.   When he married his second wife, who also had been previously married, the decedent and his spouse executed a prenuptial agreement.  Ibid.

Several years later, the decedent decided to make a new will, cancel the prenuptial agreement and grant a power of attorney in favor of his wife so he could conduct his business and financial affairs through her.  Id. at 85.   The decedent retained an attorney to prepare the documents.  Ibid. Counsel explained the documents to the decedent and he executed them.

Later, the wife assumed greater control of the decedent's businesses and made arrangements for the sale of three properties that the decedent and his company had owned.  Ibid. Thereafter, the wife died.  Id. at 86.   The decedent was declared incompetent and later passed away.  Id. at 84;  86.

The decedent's surviving children filed a complaint alleging undue influence, breach of fiduciary duty and conversion.  Id. at 86.   They sought to have the sales set aside and damages awarded.  Ibid. In addition, the plaintiffs asserted a claim against the decedent's attorney for legal malpractice, and sought the return of the fees and commissions paid to him and his firm.   Ibid.

Among other things, the plaintiffs claimed that the attorney had a conflict of interest, because the attorney saw himself as representing the decedent and his wife and the dual representation was improper.  Id. at 91.   The plaintiffs alleged that, at the very least, the attorney should have advised the decedent of the conflict.  Ibid.

The Chancery Division rejected the claim.  Id. at 91–92.   The judge stated:

Although there is no question that a lawyer cannot represent two clients with adverse interests, at least without a fully informed waiver, given Lovett's stated intent, it was never made clear how their interests were adverse or how the absence of this step hurt [the decedent] or his estate.   The fact that [the decedent] wished to change his will did not require [the attorney] to recommend separate counsel, at least not under the circumstances here.

[Ibid.]

Here, the record shows that Corrado fully understood the agreements he was executing.   He understood that both sons would have to agree to any changes in the documents, and they assured him that they would make the changes necessary to provide him with additional payments should he require them.   Thus, at the time the transactions closed, Corrado, Anthony and Nat did not have any adverse interests which required Spector to advise them to retain separate counsel or obtain waivers for the joint representation of Corrado and his sons.

We therefore conclude that the trial court erred by holding that Baldasarre could apply to the transactions.   We also conclude that, when the documents were prepared and the transactions closed, Corrado and the other parties to the transactions did not have a concurrent conflict of interest.

Accordingly, we conclude that the trial court erred by denying defendants' motion for summary judgment on the malpractice claim.

III.

Defendants additionally argue that the trial court erred by denying their motions for summary judgment on the breach-of- fiduciary-duty claim.

Although New Jersey law imposes duties of fairness, good faith, and fidelity upon all fiduciaries, “ ‘an attorney is held to an even higher degree of responsibility in these matters than is required of all others.’ ”  Estate of Spencer v. Gavin, 400 N.J.Super. 220, 242 (App.Div.) (quoting In re Honig, 10 N.J. 74, 78 (1952)), certif. denied, 196 N.J. 346 (2008).

In addition to the duty of loyalty, an attorney's fiduciary role requires he attend to and look out for the client's best interests.  Ibid. “The attorney also must communicate to the client information that the client needs to know.”  Id. at 243 (citing Stoeckel v. Twp. of Knowlton, 387 N.J.Super. 1, 14 (App.Div.), certif. denied, 188 N.J. 489 (2006)).

The record shows that Spector provided all of the parties with the information they needed with regard to the transactions.   Moreover, there was no apparent conflict of interest between the parties at the closing, and Spector was not required to advise them to seek independent counsel.   Thus, the evidence established that Spector did not breach any fiduciary duty owed to plaintiffs.

Our decision in Stoeckel does not compel a contrary result.   In that case, the court determined that an attorney must inform his client of the clear risks associated with the client's intended course of action.  Stoeckel, supra, 387 N.J.Super. at 16.   Here, Corrado fully understood the risks associated with his plan.   Spector did not breach his fiduciary duty to Corrado by failing to advise him of risks of which he was well aware.

We therefore conclude that trial court erred by denying summary judgment to defendants on this claim.

IV.

In addition, defendants contend that, even if Spector deviated from accepted standards of legal practice and breached his fiduciary duties to plaintiff, plaintiffs failed to establish that any such deviation or breach was a proximate cause of their claimed damages.

In a legal malpractice action, the plaintiff must establish proximate cause by showing that the claimed negligent conduct was a “substantial contributing factor” in causing the plaintiff's damages.  Lamb v. Barbour, 188 N.J.Super. 6, 12 (App.Div.1982) (citing State v. Jersey Central Power & Light Co., 69 N.J. 102, 110 (1976)), certif. denied, 93 N.J. 297 (1983).   To meet its burden of proof, the plaintiff cannot rely upon evidence based solely on “conjecture, surmise or suspicion.”  Ibid. (citing Long v. Landy, 35 N.J. 44, 54 (1961)).

As we noted previously, McAndrew opined that Spector deviated from the accepted standard of legal practice by representing all of the parties to the transactions.   He testified that, once Corrado expressed a concern about whether the documents could be “revised” at some future date, Spector should have stopped the closing and advised the parties to seek independent counsel.

McAndrew said that Spector's conduct was a proximate cause of plaintiffs' damages because it was a substantial factor in bringing about Corrado's underlying lawsuit.   McAndrew explained that, if Spector had stopped the closing and required the parties to obtain independent counsel, Corrado would have been precluded from bringing the underlying action or that case would have been dismissed at an early stage in the litigation.

Defendants contend that the trial court should have barred McAndrew's testimony on proximate cause because it represented an impermissible net opinion.   See Pomerantz Paper Corp. v. New Community Corp., 207 N.J. 344, 371–72 (2011).   An expert's bare conclusions, unsupported by factual evidence, are inadmissible pursuant to the “net opinion” rule.  Id. at 372 (citing Polzo v. Cnty. of Essex, 196 N.J. 569, 583 (2008)).

“The rule requires an expert ‘to give the why and wherefore’ of his or her opinion, rather than a mere conclusion.”  Rosenberg v. Tavorath, 352 N.J.Super. 385, 401 (App.Div.2002) (quoting Jimenez v. GNOC, Corp., 286 N.J.Super. 533, 540 (App.Div.), certif. denied, 145 N.J. 374 (1996)).   We agree with defendants that McAndrew's views on proximate cause were an impermissible net opinion and he should have been precluded from presenting that opinion at trial.

McAndrew's opinion on proximate cause was based primarily on the speculative assumption that:  if Corrado had retained another attorney, the attorney might have suggested that Corrado not sign the documents until they were revised to give him some right to compel his sons to provide him with additional payments;  Corrado would have accepted the advice;  the revised deal would have been consummated;  Corrado would not have brought suit to invalidate the transactions;  and the suit would have been dismissed early in the proceedings.

However, there was no evidence indicating that Corrado would have accepted such advice.   As the record indicates, Corrado did not believe any changes in the documents were required.   Corrado could have chosen to proceed on that basis, even if he had independent counsel and counsel advised him to take a different course.

If Corrado had retained independent counsel, that would not have precluded him from filing the lawsuit, although it might have made it more difficult for him to prevail.   The court ultimately found that Corrado had been adequately advised by counsel and other professionals concerning the agreements.

In addition, there is nothing in the record to support McAndrew's assertion that the complaint would have been dismissed earlier if Corrado had his own attorney for the transaction.   Indeed, as the decision in the underlying action makes clear, Corrado's claims raised genuine issues of material fact as to whether Corrado reasonably relied on his sons' representations when he executed the agreements.   McAndrew failed to explain the legal or factual basis for his assertion that the case would have been dismissed sometime prior to trial.

Accordingly, we conclude that the court erred by denying defendants' motions to bar McAndrew's opinion on proximate cause.   Because plaintiffs had no other competent evidence to support their damage claims, defendants' motion for a directed verdict at trial should have been granted.

In view of our decision, we need not address defendants' contention that the legal fees claimed are not lawfully compensable damages.

Reversed and remanded for entry of judgment dismissing plaintiffs' complaint with prejudice.

FOOTNOTES

1.  FN1. It appears that plaintiffs elected not to pursue their breach of contract claim at trial.   It was not mentioned in the opening statements.

PER CURIAM

FindLaw Career Center


      Post a Job  |  View More Jobs

    View More