Gillman v. Waters McPherson ( 2001 )

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
10-24-2001
Gillman v. Waters McPherson
Precedential or Non-Precedential:
Docket 00-2111
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"Gillman v. Waters McPherson" (2001). 2001 Decisions. Paper 247.
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Filed October 24, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 00-2111
RICHARD GILLMAN,
Appellant,
v.
WATERS, MCPHERSON, MCNEILL, P.C.;
ESTATE OF JACK ROSEN, THE
On Appeal from the United States District Court
for the District of New Jersey
District Judge: Honorable John C. Lifland
(D.C. No. 99-00037)
Argued: May 9, 2001
Before: BECKER, Chief Judge, MCKEE, Circuit Judge,
and POLLAK, District Judge*
(Filed: October 24, 2001)
Robert Novack, Esquire (Argued)
Edwards & Angell
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Counsel for Appellant
_________________________________________________________________
* Honorable Louis H. Pollak, United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.
Brian C. Harris, Esquire (Argued)
Braff, Harris & Sukoneck
570 W. Mt. Pleasant Avenue,
P.O. Box 657
Livingston, New Jersey 07039
Counsel for Appellees
OPINION OF THE COURT
POLLAK, District Judge.
This appeal from a grant of summary judgment presents
questions arising under New Jersey's "entire controversy
doctrine" -- a body of law that has given rise to much
litigation and a substantial body of academic commentary.
I.
With a view to clarifying the setting in which the
questions on appeal are presented, we begin by describing
the underlying controversy, and the resultant state court
litigation, which together form the predicate for the case at
bar.
Appellant Richard Gillman was for many years a senior
executive of Bally Manufacturing Corporation ("BMC"), and
of Bally's Park Place, Inc. ("Park Place"), the casino
operating arm of BMC. (In this opinion, when Park Place
and BMC are referred to jointly, or without need to
distinguish one from the other, they are designated"Bally").
In 1991 Gillman and Bally entered into Stock Option Award
Agreements under which Gillman received options to
purchase 1,000,000 shares of BMC and 300,000 shares of
Bally Gaming International, Inc., a BMC subsidiary; these
options, of very considerable potential value, were to be
exercisable over a period of ten years. In 1992, pursuant to
a management reorganization, it was determined that
Gillman would leave Bally. To represent him in negotiating
with Bally an agreement governing the terms of his
anticipated separation, Gillman retained Waters,
McPherson, McNeill, P.C. ("Waters, McPherson"), a New
Jersey law firm that had for some years performed legal
2
services both for Gillman and for Bally (and that continued
to handle some of Gillman's affairs until 1998). Kenneth D.
McPherson, Sr. and Jack Rosen were the two Waters,
McPherson partners who had principal responsibility for
negotiating and drafting, on Gillman's behalf, the
agreement pursuant to which he was to leave Bally.
It was a matter of substantial importance to Gillman that
the elaborate agreement governing his retirement from Bally
preserve his entitlement to exercise his stock options for
the balance of the ten-year period agreed upon by Gillman
and Bally in 1991 -- i.e., until 2001. On January 8, 1993,
Gillman executed the Retirement and Separation
Agreement, and, simultaneously, retired. Gillman,
according to his later testimony, understood that the
Retirement and Separation Agreement protected the ten-
year entitlement to exercise the stock options. However,
when, on January 24, 1994, Gillman undertook to exercise
options for the purchase of 100,000 Bally shares, he was
informed by Bally that his unexercised options had expired
on January 8, 1994, the first anniversary of his retirement.
(Bally's position was that (a) Gillman's Stock Option Award
Agreements provided that a Bally employee had a ten-year
purchase window for the exercise of vested options but that
a retired employee's purchase window was only one year,
and (b) the Retirement and Separation Agreement"vested"
Gillman's option rights as of the date of his retirement and
provided that exercise of those vested rights was to be "in
accordance with the applicable provisions" of the Stock
Option Award Agreements -- hence, one year.)
In March of 1994 -- two months after Bally refused to
honor Gillman's stock options -- Gillman filed suit against
Bally in the New Jersey Superior Court to enforce his
claimed stock option rights. Gillman was represented by
Frederic K. Becker, a partner in the New Jersey firm of
Wilentz, Goldman, Spitzer, P.C.; McPherson and Rosen
advised Becker, and Rosen supplied an affidavit supporting
Gillman's claims. On July 18, 1994, while Gillman's suit
was pending in the Superior Court, Becker wrote Gillman a
letter recapitulating a June 30 conference:
3
PERSONAL & CONFIDENTIAL
July 18, 1994
Mr. Richard Gillman
c/o Waters, McPherson, McNeill
300 Lighting Way
Secaucus, NJ 07096
Re: Gillman v. Bally Manufacturing Corporation, et al.
Dear Dick:
This will confirm the matters discussed and agreed
upon when Roger Kaplan and I met with you on June
30, 1994, with respect to certain issues raised by the
above-referenced litigation.
As you had previously discussed with Kenneth D.
McPherson, Sr., the fact that you have been required to
institute suit against Bally Manufacturing Corporation
and Bally's Park Place, Inc. raises certain issues
regarding claims that you may have against the firms
of Waters, McPherson, McNeill and Shereff, Friedman,
Hoffman & Goodman for professional malpractice in
connection with representing your interests relevant to
your Retirement and Separation Agreement, and the
exercise of your options, which are the subject of the
above-referenced litigation: (a) in the negotiation of
your Retirement and Separation Agreement (specifically
in connection with Section 2(d) of that Agreement, as it
relates to the "Retirement" paragraphs of the Option
Agreements); and (b) in connection with advising you
as to the potential effect of Section 2(d) of the
Retirement and Separation Agreement, insofar as that
section might, when read with the relevant provisions
of the Option Agreements, cause your options to
terminate within one year.
A recent decision in New Jersey suggests that any
such claims for professional malpractice are presently
ripe and assertable by you by reason of the fact that
you have already incurred an injury and damages
arising from the need to pursue litigation against Bally
Manufacturing and Bally's Park Place, causing the
expenditure of sums for attorneys' fees and litigation
4
costs, and that you need not wait to assert such claims
until after the conclusion of the litigation with Bally
Manufacturing and Bally's Park Place.
Moreover, given that such claims would likely be
presently assertable, the New Jersey courts have a
requirement under what is called the "entire
controversy doctrine," that all claims against all parties
relating to the same controversy or subject matter
should be asserted in a single litigation or, if not
asserted, be forever barred and precluded in the future.
As a result, if these potential claims for professional
malpractice are not now asserted in the present
litigation with Bally Manufacturing and Bally's Park
Place, such claims would, in all likelihood, be barred
and precluded from being asserted by you in the
future. If such claims were to be asserted in the
pending litigation, the Court might (or might not)
decide to separate these claims from the claims against
Bally Manufacturing and Bally's Park Place, but we
would expect that Bally would argue against the
severance of such claims and would argue that the
attorney-client privilege was waived by you by suing
your own attorneys, thereby possibly opening up for
discovery your confidential or attorney-client
communications with these law firms.
You told us that you had a similar conversation with
Kenneth D. McPherson, Sr., and had given the subject
a considerable amount of reflection and consideration
in the past. You also told us that you were of the view
that you did not want to pursue a claim against these
law firms, notwithstanding the fact that the failure to
assert the claims now would likely make it impossible
to assert the claims at a later date.
As a result of your determination not to assert any
claims against either Waters, McPherson, McNeill or
Shereff, Friedman, Hoffman & Goodman, we will not,
as we advised you, take any action to protect or
preserve your interests in asserting any claims against
either of these firms.
5
Please call me if you have any questions or if you
want to discuss further any issues addressed by this
letter.
Sincerely,
FREDERIC K. BECKER
FKB:ald
It appears that the June 30 conference and the July 18
letter were responsive to the February 16, 1994 decision of
the Appellate Division of the Superior Court in Circle
Chevrolet Co. v. Giordano, Halleran & Ciesla, 274 N.J.
Super. 405 (App. Div. 1994), holding that attorney
malpractice claims were one of the categories of claims
embraced by the entire controversy doctrine, with the result
that non-inclusion in an underlying action of claims of
attorney malpractice that, putatively, gave rise to the
necessity of the underlying action, might result in
preclusion of such claims. Notwithstanding Becker's July
18 letter, Gillman did not alter the position he appears to
have taken in the June 30 conference -- namely, that he
would not authorize enlarging the scope of the Bally suit by
adding malpractice claims against Waters, McPherson.
On August 23, 1994, Judge Margolis, Presiding Judge of
the Chancery Division of the Superior Court, granted
Bally's motion for summary judgment and denied Gillman's
motions for partial summary judgment. In the concluding
pages (pages 20-22) of his opinion, Judge Margolis wrote as
follows:
Gillman's retirement from Bally was governed by a
Retirement and Separation Agreement that
incorporated other agreements by reference. Pursuant
to the terms of those agreements, Gillman had one year
within which to exercise his options. For whatever
reason, Gillman failed to do so. Although Gillman
thereby sustained significant monetary losses, he
executed a contract that was negotiated at arm's length
by competent counsel.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .
. . . . [G]illman was represented by competent counsel
at all relevant times -- he was a sophisticated
6
businessman upon whose behalf a detailed agreement
was negotiated. . . . [I]f Gillman was not aware of the
option exercise date, his counsel was, or should have
been.
Gillman appealed. While Gillman's appeal was pending,
the New Jersey Supreme Court affirmed the Appellate
Division's ruling in Circle Chevrolet that attorney
malpractice claims were subject to the entire controversy
doctrine. Circle Chevrolet Co. v. Giordano, Halleran &
Ciesla, 142 N.J. 280, 662 A.2d 509 (1995). On Gillman's
appeal, Kenneth McPherson, Jr., of Waters, McPherson
joined Frederic Becker as counsel of record.
The Appellate Division affirmed Judge Margolis's grant of
summary judgment. "The trial court properly enforced the
express, bargained-for terms of his Option Agreement and
Retirement and Separation Agreement, and refused to grant
plaintiff equitable relief from the consequences of his and
his counsel's neglect." Gillman v. Bally Mg. Corp., 286 N.J.
Super. 523, 531, 670 A.2d 19 (N.J. App. Div. 1996).
The decision of the Appellate Division was handed down
on January 4, 1996.
On January 20, 1996, Jack Rosen died.
On March 20, 1996 the New Jersey Supreme Court
denied certification. 144 N.J. 174, 675 A.2d 1122 (1996).
II.
As Gillman's unsuccessful litigation against Bally made
its way through the courts of New Jersey between 1994 and
1996, it was paralleled by the Circle Chevrolet litigation in
which the Appellate Division in 1994 announced, and the
New Jersey Supreme Court in 1995 confirmed, that New
Jersey's entire controversy doctrine embraced attorney
malpractice claims. The entire controversy doctrine has not
been a favorite of the New Jersey bar, and its extension to
attorney malpractice claims was not widely acclaimed.
". . . [T]he failure to exclude legal malpractice claims from
the Entire Controversy doctrine . . . harms attorneys,
clients, and the legal system itself. The sooner our Supreme
Court reconsiders its opinion in this matter, the better off
7
we will all be." Albert L. Cohn and Terri Smith, Practice and
Malpractice after Circle Chevrolet: Some Practical
Considerations of the Entire Controversy Doctrine , 28
Rutgers L. J. 79, 84-85 (1996). Academic criticism of Circle
Chevrolet tended to be more restrained. As Professor
Hazard put it, "Why, in the name of any conception of
justice and good order, should a client engaged in a
complicated, expensive and protracted controversy with an
opposing party be required to enlarge and complicate that
litigation, perhaps with fatal effects on its merits, by
extending the attack to his own lawyer in the middle of the
proceeding?" Geoffrey C. Hazard, Jr., Before and Behind the
"Entire Controversy" Doctrine, 28 Rutgers L. J. 7, 24 (1996).
In 1997 the New Jersey Supreme Court did "reconsider
its opinion." The court's new ruling was announced in Olds
v. Donnelly, 150 N.J. 424, 696 A. 2d 633 (1997). The court
stated that (1) "[w]e are aware of the criticism of Circle
Chevrolet's expansion of the entire controversy doctrine to
attorney-malpractice actions," 696 A. 2d at 641, (2)
"[c]andor compels that we acknowledge that the application
of the entire controversy doctrine to legal-malpractice
claims has not fulfilled our expectations," ibid., and (3) "[i]n
sum, we conclude that the entire controversy doctrine no
longer compels the assertion of a legal-malpractice claim in
an underlying action that gives rise to the claim." Id. at
643.
In January of 1999, Gillman (formerly a citizen of New
Jersey, but now a citizen of Florida) filed the instant
diversity action in the United States District Court for the
District of New Jersey. The named defendants were Waters,
McPherson and the Estate of Jack Rosen (the Waters,
McPherson partner who, together with Kenneth McPherson,
Sr., had represented Gillman in negotiating and drafting
the Separation Agreement). The suit -- initiated a year-and-
a-half after Circle Chevrolet was overruled by Olds --
alleged malpractice.
The defendants moved for summary judgment. Gillman
filed a cross-motion for partial summary judgment. The
District Court granted defendants' motion. In its
Memorandum and Order the District Court first addressed
the question "whether the Court should apply the short-
8
lived legal malpractice claim preclusion rule articulated by
the New Jersey Superior Court, Appellate Division, in early
1994, adopted by the New Jersey Supreme Court in Circle
Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280(1995), and overruled two years later in Olds v. Donnelly,
150 N.J. 424 (1997)." Memorandum and Order, p. 8. The
District Court's analysis was as follows:
In abrogating Circle Chevrolet, the Olds court
contemplated the extent of retroactive effect it should
give to its decision and specifically held that the
decision should be given "limited or `pipeline'
retroactivity" rather than full retroactive effect. See
[150 N.J.] at 449. The court explained that its decision
should apply to cases in the litigation "pipeline," that
is, "all pending cases, whether on appeal or in the trial
courts." Id. . .
Gillman argues that because this malpractice action
was filed after the Olds ruling, it is governed by Olds
and not by Circle Chevrolet, and thus the ECD [entire
controversy doctrine] would not bar his legal
malpractice claim for failure to have joined it in the
prior state court action. Gillman's legal theory would
grant full retroactive effect to the Olds decision such
that all attorney malpractice claims that had accrued
under Circle Chevrolet and that were not yet time-
barred would be resurrected. This interpretation would
render meaningless the plain words of the New Jersey
Supreme Court's decision regarding retroactivity. In
holding that legal malpractice claims were no longer
subject to the ECD, the court plainly stated that the
Olds decision would be accorded only limited
retroactive effect such that cases already in the
litigation pipeline -- cases "on appeal or in the trial
courts" -- would receive the benefit of the new rule.
Necessarily, cases that were not yet pending in the trial
courts or on appeal, thus not in the pipeline, would not
receive the benefit of the Olds abrogation of Circle
Chevrolet. Claims that accrued under Circle Chevrolet
and that were not in the pipeline at the time of the
Olds decision on July 16, 1997 are clearly subject to
the Circle Chevrolet rule, not the Olds rule.
9
Gillman's legal malpractice claim accrued long before
the Olds decision. At the latest, Gillman knew that he
had a potential malpractice claim against Waters,
McPherson when he received the July 18, 1994 letter
from Becker explaining the claim-preclusive effect that
the ECD could have on any potential legal malpractice
claim Gillman might want to assert against Waters,
McPherson.
Memorandum and Order, pp. 10-11 (footnote omitted).
Toward the close of its Memorandum and Order, the
District Court stated an alternate ground for its grant of
summary judgment:
Furthermore, the Court does not view Gillman as an
unsuspecting victim of the ECD's claim-preclusive
impact. He was fully informed by his attorney during
the pendency of his state court action that he must
assert any potential legal malpractice claim against
Waters, McPherson at that time and he did not. Quite
the contrary, he assured his attorneys that he would
not assert a malpractice claim against them in the
pending state court action. Thereby, Gillman
voluntarily surrendered a known right. Accordingly,
even in the absence of the Circle Chevrolet ruling
Gillman's claim could be barred under the doctrine of
waiver.
III.
A.
In approaching the question whether the District Court's
grant of summary judgment was warranted, we first
consider the District Court's assessment of the limited
retroactive effect of Olds. The District Court, it will be
recalled, observed that "Gillman's legal theory would grant
full retroactive effect to the Olds decision such that all
attorney malpractice claims that had accrued under Circle
Chevrolet and that were not yet time-barred would be
resurrected," and stated that "[t]his interpretation would
render meaningless the plain words of the New Jersey
Supreme Court's decision regarding retroactivity," since
10
"the court plainly stated that the Olds decision would be
accorded only limited retroactive effect such that cases
already in the litigation pipeline -- `cases on appeal or in
the trial courts' -- would receive the benefit of the new
rule."
This meant, so the District Court reasoned, that cases
"that were not in the pipeline at the time of the Olds
decision on July 16, 1997 are clearly subject to the Circle
Chevrolet rule, not the Olds rule." And, since Gillman's suit,
although arising out of events that transpired during the
Circle Chevrolet era, was not initiated until 1999, and hence
was not pending on July 16, 1997, it was, under the
District Court's analysis of the Olds court's pronouncement
with respect to the limited retroactive impact of its decision,
barred by Circle Chevrolet.
To assess the correctness of the District Court's analysis,
we set forth in full the Olds court's discussion of
retroactivity:
The parties have not briefed or argued the issue
whether the within decision should apply retroactively
or prospectively. In fairness to other litigants and the
judicial system, however, we conclude that our decision
should apply not only to the present case, but to all
pending cases, whether on appeal or in the trial courts.
Ordinarily, judicial decisions apply retroactively.
Crespo v. Stapf, 128 N.J. 351, 367, 608 A.2d 241(1992). Policy considerations may justify giving a
decision limited retroactive effect. Id. The first
consideration is whether litigants reasonably have
relied on settled law in ordering their affairs. Id. at 368.
Another consideration is whether retroactive
application will advance the purposes of the rule
announced in the decision. Id. at 370. "The final
consideration is whether retroactive application would
produce inequitable results and adversely affect the
administration of justice." Id. at 371.
Here, those considerations point toward limited or
"pipeline" retroactivity of our decision. First, we decided
Circle Chevrolet only two years ago, a factor that affects
the extent to which litigants reasonably have relied on
11
the application of the entire controversy doctrine to
legal-malpractice claims. Second, the general purpose
of the legal-malpractice exception is to preserve the
attorney-client relationship. Limited retroactivity will
adequately protect existing relationships. Giving the
benefit of our decision to litigants with pending cases
serves the interests of justice by permitting resolution
of their claims on the merits. Complete retroactivity,
however, potentially would expose the judicial system
to the undue burden of resolving numerous concluded
matters.
696 A.2d at 646.
In applying the Olds rule of "limited or`pipeline'
retroactivity" to Gillman's suit, the District Court ruled that
Gillman's suit was not yet in the "pipeline" when Olds was
decided and hence was barred. We agree with the District
Court that Gillman's suit, not filed until 1999, was not in
the pipeline on July 16, 1997, when Olds was decided. But
we do not agree that the Olds court, in clothing its ruling
with "limited or `pipeline' retroactivity," meant by the use of
that phrase to exclude from the coverage of Olds a suit filed
subsequent to July 16, 1997 (provided, of course, that the
suit was filed within the applicable six-year statute of
limitations, as Gillman's was). We think that in determining
that its new rule was to have " `pipeline' retroactivity," the
court in Olds signified that it was selecting from available
options the rule of limited retroactivity which the court had
described and applied just a year before, in State of New
Jersey v. Knight, 678 A. 2d 642 (1996). In Knight the court
explained that to "give [a] new rule `pipeline retroactivity,' "
is to "render[ ] it applicable in all future cases, the case in
which the rule is announced, and any cases still on direct
appeal." Id. at 651. "[P]ipeline retroactivity" was contrasted
by the Knight court with "complete retroactive effect" which
involves "applying [the new rule] to all cases, including
those in which final judgments have been entered and all
other avenues of appeal have been exhausted." Ibid.Viewing Gillman's malpractice suit through the prism of
"pipeline retroactivity" as deployed in Knight and in Olds, it
falls within the category of what Knight termed "future
cases." 678 A. 2d at 651. Thus, we think that, if the New
12
Jersey Supreme Court were today to have occasion to
address a suit like Gillman's malpractice suit against
Waters, McPherson and the Rosen Estate -- a suit which
was not in fact filed until after Olds was decided, but a suit
which could have been filed during the brief hegemony of
Circle Chevrolet and which would then have properly been
found by the lower courts of New Jersey to be non-
cognizable -- the New Jersey Supreme Court would rule
that such a suit was governed by Olds.
In predicting how the New Jersey Supreme Court would
rule, we do not confine ourselves to a textual
deconstruction of the term "pipeline retroactivity." We are
also guided by the three-factor inquiry on which that court
has long relied in determining the scope of retroactive
application of a new rule. See, e.g., Fischer v. Canario, 143
N.J. 235, 244-245, 670 A.2d 516, 521 (1996). As the court
explained in Fischer a year before Olds was decided, "the
competing considerations in each case are weighed by
examining the following three factors: (1) the purpose of the
new rule and whether it would be advanced by retroactive
application; (2) the reliance placed on the old rule by the
parties and the community; and (3) the effect that
retroactive application would have on the administration of
justice." Ibid., citing Rutherford Educ. Ass'n. v. Rutherford
Bd. of Educ., 99 N.J. 8, 22, 489 A.2d 1148 (1985), and
State v. Burstein, 85 N.J. 394, 406, 427 A.2d 525 (1981).
First, we consider the purpose of the Olds rule and
inquire whether that purpose would be effectuated by
applying it to Gillman's situation. Three purposes may be
said to support the Olds rule: to preserve the sanctity of the
attorney-client relationship, to foster judicial efficiency, and
to increase fairness. All three are well served by extending
the Olds rule to Gillman's situation: (1) The Olds rule is
protective of the attorney-client relationship in that it
permits a client to avoid what Circle Chevrolet appeared to
mandate: undermining a current attorney-client
relationship by joining the lawyer as a malpractice
defendant in underlying litigation. (2) The Olds rule
promotes judicial efficiency by obviating the necessity of
enlarging and complicating the underlying litigation
through the addition of a malpractice claim before the
13
plaintiff can ascertain whether the result in the underlying
litigation renders the malpractice claim unnecessary. (3)
The rule relieves a client of the Hobson's Choice, imposed
by Circle Chevrolet, of, on the one hand, surrendering the
attorney-client privilege by adding a claim for malpractice
in the underlying litigation, or on the other hand,
surrendering the right to pursue a malpractice claim in the
future.
Second, we consider the extent to which the parties and
the larger community may have relied on the rule the Olds
court jettisoned. As the Olds court concluded, the Circle
Chevrolet rule was of such short duration -- only two years
-- as to encourage little reliance. Moreover, criticism and
calls for the overruling of Circle Chevrolet were so
immediate and so vehement that any reliance thereon could
only have been tentative.
Third, we consider the impact of retroactive application of
the new rule on the administration of justice. We think that
bringing within the ambit of Olds those cases, like the case
at bar, in which the cause of action had accrued, but no
claim had been filed, when Olds was decided, would not be
detrimental to the administration of justice because it
would not involve the reopening of cases that had been fully
adjudicated. Furthermore, the Olds rule promotes the
resolution of attorney malpractice claims on the merits,
rather than on the basis of the arcane procedural
jurisprudence spawned by Circle Chevrolet.
In sum, we conclude that the "pipeline retroactivity"
called for by the Olds court requires the application of Olds
to Gillman's claim.
B.
We turn now to the District Court's alternate ground for
granting summary judgment: Gillman, so the District Court
put it, "assured his attorneys that he would not assert a
malpractice claim against them in the pending state court
action. Thereby, Gillman voluntarily surrendered a known
right. Accordingly, even in the absence of the Circle
Chevrolet ruling, Gillman's claim could be barred under the
doctrine of waiver."
14
Some of the evidence before the District Court lent
support to a finding that Gillman knowingly and
intelligently disavowed any thought of suing Waters,
McPherson. But other evidence cut in a different direction.
In his sworn declaration submitted in opposition to
defendants' summary judgment motion, Gillman described
the difficult choice he confronted when Becker told him
about the potential impact of the entire controversy
doctrine. "Faced with the dilemma, I accepted the
assurances I received from McPherson and Rosen that my
position in the Bally Litigation would prevail, and that the
Court would conclude that I had ten years to exercise my
options. It appeared to be against my best interests to add
Waters, McPherson to the Bally Litigation (thereby waiving
my attorney-client privilege) especially since none of my
attorneys suggested that I even had a claim against Waters,
McPherson. To this day, McPherson has denied that his
firm was negligent [citing deposition testimony of Kenneth
McPherson, Sr.]." Gillman Declaration, paragraph 31.
Further, according to Gillman, "I never waived or
relinquished my rights to file a claim against Waters,
McPherson. Nor did I ever inform Mr. Becker or anyone at
Waters, McPherson that I had waived or relinquished any
claims that I had against the firm. During those years, I
merely accepted the assurances that McPherson and Rosen
repeatedly gave me that I would prevail in the Bally
Litigation and mindful of the advice Mr. Becker gave me
that joining Waters, McPherson would create serious
tactical problems, determined not to join Waters,
McPherson as a defendant in the Bally Litigation which
would have required me to sever my attorney-client
relationship with the firm."
With the record in this posture, a grant of summary
judgment on the issue of waiver was inappropriate."Waiver,
under New Jersey law, involves the intentional
relinquishment of a known right, and thus it must be
shown that the party charged with waiver knew of his or
her legal rights and deliberately intended to relinquish
them . . . Questions of waiver, therefore, are usually
questions of intent, which are factual determinations that
should not be made on a motion for summary judgment."
Shebar v. Sanyo Business Systems Corp., 544 A.2d 377,
15
384 (N.J. 1988); accord, Garden State Buildings, L.P., v.
First Fidelity Bank, N.A., 702 A.2d 1315, 1325 (N.J. Super.
1997).1
Conclusion
For the foregoing reasons the judgment of the District
Court is reversed and the case remanded for further
proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
1. It may be added that the complexity of establishing "that the party
charged with waiver knew of his or her legal rights and deliberately
intended to relinquish them" is significantly compounded in a setting,
such as that presented in the case at bar, in which the legal principles
that constitute the framework within which a choice is to be made, while
seemingly valid at the time of the choice, are subsequently undercut by
later case law.
16