NORTHERN INTERNATIONAL REMAIL AND EXPRESS CO. VS. COFFEY & ASSOCIATES, PC (L-1187-14, MORRIS COUNTY AND STATEWIDE) (RECORD IMPOUNDED) ( 2020 )

RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2104-17T4
NORTHERN INTERNATIONAL
REMAIL AND EXPRESS CO.
and STEFAN PUZYK,
Plaintiffs-Respondents/
Cross-Appellants,
v.
COFFEY & ASSOCIATES, PC,
GREGORY J. COFFEY, ESQ.,
and RICHARD J. DEWLAND,
ESQ.,
Defendants,
and
McELROY, DEUTSCH,
MULVANEY & CARPENTER,
LLP, and GEORGE PARSELLS,
III, ESQ.,
Defendants-Appellants/
Cross-Respondents.
Argued February 11, 2020 – Decided June 10, 2020
Before Judges Hoffman, Currier and Firko.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-1187-14.
Jared James Limbach argued the cause for
appellants/cross-respondents (Donnelly Minter & Kelly
LLC, attorneys; Patrick J. Galligan, of counsel; Jared
James Limbach, on the briefs).
Bruce D. Nimensky argued the cause for
respondents/cross-appellants (Gray Law Group, LLC,
attorneys; Bruce D. Nimensky, on the brief).
PER CURIAM
This legal malpractice action arises out of underlying environmental
litigation concerning a commercial property. Defendants Coffey & Associates,
Gregory J. Coffey (Coffey) and Richard J. Dewland (collectively the Coffey
defendants) represented plaintiff, Northern International Remail and Express
Company (Northern), in the environmental litigation. When a conflict of
interest arose regarding the representation of Northern, Coffey asked appellant
George Parsells, III, a partner at McElroy, Deutsch, Mulvaney & Carpenter, LLP
(the McElroy defendants or defendants) to represent Northern. It is Parsells's
representation of Northern during mediation, settlement negotiations and the
execution of the settlement agreement that is at issue in the malpractice
litigation.
A-2104-17T4
2
The plaintiffs here, Northern, and its owner, Stefan Puzyk, settled their
malpractice claims against the Coffey defendants before trial. The allegations
against the McElroy defendants were tried before a jury. The jury also
considered and determined the liability of the Coffey defendants for comparative
negligence purposes.
The jury awarded $100,000 to Northern, attributing sixty-five percent of
liability to the Coffey defendants and thirty-five percent to the McElroy
defendants. The jury also awarded $100,000 damages to Puzyk, splitting the
liability equally between the Coffey and McElroy defendants. The trial court
awarded plaintiffs $66,452.96 in attorney's fees and costs.
The McElroy defendants challenge multiple orders issued by the trial
court before, during and after the trial. Plaintiffs cross-appeal the counsel fee
award. After a careful review of the respective contentions, in light of the record
and applicable principles of law, we affirm all of the disputed orders with the
exception of the judgment in favor of Puzyk. We vacate the judgment for Puzyk
and remand for the dismissal of Puzyk's individual claim against the McElroy
defendants. As we affirm the counsel fee award, we dismiss the cross-appeal.
A-2104-17T4
3
I.
We provide some facts from the underlying litigation for context. We
derive the facts from our opinion issued in the appeal from the environmental
action. N. Int'l Remail & Express Co. v. Robbins, No. A-4652-08 (App. Div.
Aug. 18, 2010).
Northern purchased the commercial property in 1991 from Lester
Robbins, and his business, Milltown Court Associates. Id., slip op. at 2. In
1998, Puzyk discovered the property was contaminated. Id. at 8-9. An
environmental investigation concluded the contamination might be attributable
to Baron-Blakeslee, Inc. (Baron), a division of Purex Industries, Inc. (Purex),
the predecessor-owner to Robbins. Id. at 3. Honeywell is the corporate
successor-in-interest to Baron. Ibid.
Northern, through Puzyk, entered into a Memorandum of Agreement
(MOA) with the New Jersey Department of Environmental Protection (DEP) in
which it agreed to conduct a cleanup of the property with DEP oversight.
However, Northern never remediated the property.
In July 2003, after filing for bankruptcy, Northern entered into a contract
of sale with Satec, Inc., which initially agreed to purchase the property for
$975,000. However, after Satec obtained its own environmental studies that
A-2104-17T4
4
revealed more extensive groundwater and soil contamination, Puzyk reduced the
purchase price. The cleanup cost was estimated at $438,000.1 In December
2003, the bankruptcy court authorized the sale of the property to Satec for
$400,000. Satec agreed to remediate the property.
In 2005, Northern and Satec sued Robbins, Milltown Court Associates,
Purex, and Honeywell under the New Jersey Spill Compensation and Control
Act (Spill Act), N.J.S.A. 58:10-23.11 to -23.24, and common law, to recover the
$438,000 credit Northern extended to Satec for clean-up costs. The complaint
alleged, among other things, that Baron discharged hazardous substances into
the soil and/or groundwater, and that Purex and Honeywell, as corporate
successors to Baron, were liable for the discharge under the Spill Act.2 It further
alleged that Robbins and Milltown Court Associates, as previous owners of the
property, were also liable. The Coffey defendants filed the complaint and
represented both plaintiffs.
1
There were additional credits tendered to Satec which are not at issue in this
appeal.
2
Though named as a defendant, Purex did not participate in the underlying
litigation, "presumably because Honeywell was acting as Baron's successor -in-
interest." N. Int'l Remail & Express Co., slip op. at 3 n.2.
A-2104-17T4
5
During the course of the litigation, in April 2009, the court granted
Robbins's motion for summary judgment on the Spill Act claim because the
evidence did not demonstrate a discharge had occurred during Robbins's
ownership of the property. N. Int'l Remail & Express Co., slip op. at 2-3. The
common law claims against all parties were dismissed because the six-year
statute of limitations had expired before the complaint was filed. Id. at 2. We
affirmed. Id. at 17.
Prior to the dismissal of Robbins, in February 2008, Northern and Satec
agreed to mediate their Spill Act claims against Honeywell. The settlement
negotiations with Honeywell began in February 2008 and continued into January
2009, when a settlement was reached, and a subsequent agreement signed.
During a session in March 2008, the mediator, retired Superior Court
Judge Mark Epstein, identified a conflict of interest stemming from Coffey's
dual representation of Northern and Satec. This related to the discussions that
arose during mediation regarding the Coffey defendants' fee. Coffey stated the
retainer agreement with Northern executed in November 2004 included a thirty
percent contingent fee. There was no retainer agreement with Satec.
Coffey was instructed by the mediator to procure additional counsel to
represent the two entities. As a result, Coffey enlisted Parsells to represent
A-2104-17T4
6
Northern, and Patrick Spina entered into the settlement discussions on behalf of
Satec.
II.
As stated, the legal malpractice action arises out of Parsells's
representation of Northern during the settlement negotiations with Honeywell.
Plaintiffs essentially claim Parsells should have procured a more favorable
settlement for Northern in the environmental litigation. We derive the following
facts from the summary judgment record and trial testimony.
According to Puzyk, he retained the Coffey defendants to recover from
Honeywell the $438,000 credited to Satec from the purchase price of the
property. Puzyk testified he was aware that, early in the litigation, Coffey sent
a demand letter to Honeywell seeking $1.25 million dollars in damages. Coffey
told him that "1.25 million dollars was what was recoverable."
Puzyk recalled Coffey advising him during a mediation session at Judge
Epstein's office that it was a conflict for Coffey to represent both Northern and
Satec, and that he was going to get another lawyer for Northern. That lawyer
was Parsells. According to Puzyk, Coffey said he would pay Parsells $10,000
for Parsells's representation of Northern.
A-2104-17T4
7
Puzyk maintained that he first met Parsells at a mediation session at
Epstein's office in late November or early December 2008, "when the
negotiations were drawing to a conclusion . . . ." He stated this was six to eight
weeks before the settlement agreement was executed and after many mediation
sessions with Judge Epstein. Coffey told him that Parsells would participate in
the mediation and represent him and Northern for purposes of finalizing the
settlement agreement.
Puzyk recalled that, before the mediation session began, Coffey explained
his litigation strategy to Parsells, and Coffey and Parsells repeatedly told him
that "it was important to settle with Honeywell to get Honeywell out of the case
in order to successfully pursue the other defendants in the case." Parsells also
told him that it was in Puzyk's best interest to settle with Honeywell "because
the real money in this case was to come from suing the remaining defendants ."
After this discussion, the three men went into a conference room where Epstein
and counsel for the other parties were present. Coffey introduced Parsells as the
attorney representing both Puzyk and Northern.
Puzyk also recalled his dissatisfaction when Coffey told him during
mediation that one of the proposed settlement terms was that Honeywell would
pay Coffey $150,000. He stated that Parsells was not involved in that
A-2104-17T4
8
conversation. He also testified that Coffey told him at some point that
Honeywell wanted to manage the cleanup as opposed to making a large cash
contribution.
Puzyk testified that he met with Parsells a second time, at Parsells's office
in December 2008, to review the terms of the settlement agreement. Coffey was
also present during the meeting. Coffey and Parsells discussed the settlement
terms with him, and Parsells again "repeatedly advised" him that it was in his
best interests to settle with Honeywell and get them "out of the picture" so that
he could "successfully proceed against the remaining defendants."
According to Puzyk, Parsells went over the agreement with him during
this meeting. Puzyk recalled he "was really not happy with it" because under its
terms, Coffey received $150,000, Satec received $25,000, while Northern only
received $75,000. Additionally, Puzyk remained responsible for the cleanup
under the MOA with DEP. Puzyk told Coffey and Parsells that he did not want
to sign the agreement. Despite his reservations, Parsells "urged [him] to settle"
and "take the agreement" because they "had to take Honeywell out of the
picture" as Honeywell had "deep pockets" and "could tie [him] up in court for
years." Parsells emphasized that "the real money" would come from Robbins,
the remaining defendant. Puzyk stated that Coffey also advised him to sign the
A-2104-17T4
9
agreement. Puzyk testified he "absolutely" relied upon Parsells's advice because
he was a partner at a major law firm and "[h]is word carried a lot of weight ."
During his deposition, Puzyk produced three emails sent in December
2008 to Parsells pertaining to settlement negotiations between plaintiffs and
Honeywell. A December 8, 2008 email from Honeywell's attorney included an
attachment of a draft settlement agreement.3
Puzyk stated he heeded the advice of Coffey and Parsells and signed the
settlement agreement in January 2009. The fifteen-page settlement agreement
between Northern, Satec and Honeywell included the following terms relevant
to this appeal:
• Honeywell agreed to pay Northern $75,000, with
the consent of Satec;
• Honeywell agreed to pay Satec $25,000;
• Honeywell agreed to pay the Coffey defendants
$150,000 "for all attorney[']s fees, costs, expert
fees, and litigation and mediation expenses
incurred by Satec, Northern and Puzyk.";
• Honeywell agreed to manage the cleanup of the
property. However, Northern and Puzyk
3
During discovery in the malpractice action, plaintiffs' counsel obtained the
emails from Honeywell's attorney. The Coffey and McElroy defendants
certified they were not in possession of any documents from the underlying
environmental litigation.
A-2104-17T4
10
remained responsible for the cleanup under the
1999 MOA with DEP;
• The parties agreed that the initial $2 million
dollars of approved costs of remediation would
be allocated between Honeywell and Satec, with
Honeywell responsible for 75% and Satec
responsible for 25% (up to an aggregate cap of
$500,000).[4] If the total approved costs exceeded
$2 million dollars, Honeywell was responsible
for the additional costs; and
• Northern agreed to indemnify Honeywell from
any obligations for damages, indemnification, or
contribution brought by Milltown Court
Associates, and from any future claims for
contribution and/or indemnity "by others
concerning the presence or alleged presence of
contamination on, at, under or about the
Property."
Although Puzyk was not a named plaintiff in the environmental lawsuit,
he was listed as a party on the settlement agreement and signed it both as an
individual, and on behalf of Northern. Under Section 8.1, in exchange for the
$75,000 payment to Northern, Puzyk was jointly and severally liable with
Northern to Satec in the event of a breach of the agreement and further agreed
to forfeit the $75,000 to Satec if a breach occurred. Northern and Puzyk also
4
As detailed in the agreement, and explained by Spina during trial, Satec did
not have to pay the $500,000 "out of its pocket." Instead, it agreed to a mortgage
on the property up to $500,000.
A-2104-17T4
11
agreed to "release and discharge Satec from any and all claims, causes of action,
charges, expenses, escrows or any other cost, of any nature and to any extent,
relating, in any manner, to the Property or Satec Real Estate Holding, LLC's
purchase of the Property from Northern in December 2003."
Although Robbins had filed its motion for summary judgment in
December 2008, Puzyk stated neither Coffey nor Parsells apprised him of the
application during the settlement negotiations with Honeywell and before he
signed the settlement agreement. In addition, Coffey never disclosed any
potential settlement figures or settlement demands, including an August 2008
settlement offer of $250,000 from Honeywell. He testified he did not see
Honeywell's August 2008 offer sheet until after the filing of the malpractice
lawsuit.
During trial, Puzyk acknowledged that Honeywell expended more than $2
million dollars to clean up the property. He conceded he was not asked to
contribute to those remediation costs.
Puzyk also testified that Coffey violated the settlement agreement by
distributing only $62,000, not $75,000 to Northern, and using the balance to pay
Judge Epstein's fees even though the agreement provided that the mediator was
to be paid out of Coffey's $150,000 share. Coffey's attorney trust account
A-2104-17T4
12
records confirmed that he distributed $13,000 from Northern's $75,000
settlement share to Judge Epstein for his fee.
Parsells's version of events substantially diverged from that presented by
Puzyk. Parsells stated he and Coffey had been friends for approximately twenty
years. He recalled Coffey calling him on March 25, 2008, telling him that his
clients, Northern and Satec, were in mediation before Judge Epstein in an
environmental lawsuit against Honeywell. Coffey said he needed help because
Judge Epstein was concerned about a potential conflict of interest due to
Coffey's dual representation of Northern and Satec, and Coffey's contingent fee
agreement with Northern. Coffey asked Parsells if he would meet with Puzyk
the following day and attend the next mediation session.
Parsells met with Coffey and Puzyk in Parsells's office on March 26, 2008,
for approximately one hour. As Coffey and Puzyk discussed their negotiation
strategy, Parsells stated he "just listened" to them. He learned that the cost to
clean up the property was approximately $2 million dollars, and he remembered
Puzyk saying that "he needed money . . . ."
The following day, March 27, 2008, Parsells attended a mediation session
where the parties occupied numerous conference rooms. He testified that he sat
in a conference room by himself, and that Coffey, Puzyk, and Epstein would
A-2104-17T4
13
enter the room "from time to time." At one point, Epstein raised a concern about
Puzyk's potential liability for the $2 million dollar cleanup cost. Parsells
recalled Puzyk saying that he "wanted more money." He testified that the only
conversation he had with Puzyk was "small talk" and not anything "substantive
about the case." He did not think that the parties reached a settlement that day.
Although Parsells denied any discussion of a potential conflict of interest,
he did recall a conversation about Coffey's contingent fee, which could
potentially be one-third of $2 million dollars. Coffey, Puzyk, and Epstein were
present during that conversation. Parsells also stated "there were proposals" as
to the amount of Coffey's fee, but the issue was not settled that day. Parsells
testified he did not know if the conflict of interest issue was resolved during the
mediation session.
Once the session concluded, Parsells told Coffey and Puzyk his "services
hadn't been utilized" and that, as a favor, he would not charge them for his time.
He wished them luck in the case and stated he "wasn't going to have any other
involvement in it." Puzyk thanked him for attending the mediation and for not
charging him a fee.
According to Parsells, he never heard from Puzyk again and he had no
substantive discussions with Coffey about the case. He denied meeting with
A-2104-17T4
14
Coffey and Puzyk when Puzyk signed the settlement agreement and denied ever
seeing the agreement or giving Puzyk any advice about it. Parsells
acknowledged there were emails sent to his email address in December 2008,
but he did not recall receiving any emails about the litigation and did not know
why he was copied on them. Parsells stated his law firm searched for the emails
but could not find them. He denied personally deleting any emails related to the
litigation.
During the trial, Coffey testified regarding his representation of Northern
and Satec in the underlying environmental litigation. He stated that mediation
with Honeywell began in January or February 2008 and continued into 2009
when a settlement was reached. The funds were disbursed in July 2009.
At the first mediation session, Coffey's demand for settlement to
Honeywell exceeded $1 million dollars. He stated Puzyk did not want
Honeywell to do the remediation and was not interested in having any part of
the settlement be in kind. He recalled, after being shown an offer letter from
Honeywell dated February 19, 2008, that Honeywell offered Satec $50,000,
along with sixty-five percent of the remediation costs after the first mediation
session. He testified that he discussed this and all other offers and demands with
Puzyk.
A-2104-17T4
15
This initial settlement discussion prompted Judge Epstein to request
Northern and Satec obtain separate counsel for the March 27, 2008 mediation
session. Therefore, Coffey reached out to Parsells to represent Northern at the
session.
Coffey said he first met with Puzyk and Parsells at Parsells's office on
March 26, 2008. However, he recalled going to Parsells' office after Parsells
and Puzyk had an initial discussion. In addition, Coffey's recollection of the
March 27, 2008 mediation session differed substantially from the recall of Puzyk
and Parsells.
Coffey stated Parsells and Puzyk were together in a conference room
during the mediation, while he sat alone for most of the session in a different
room. He said that "[a] framework of a settlement was worked out" at this
session and that Honeywell "maxed out its cash contribution offer at $250,000,"
and agreed to pay 80% of the cleanup costs. Coffey testified Puzyk was aware
after the March 27, 2008 mediation session that Northern would receive $75,000
in the proposed settlement. The proposal included a $150,000 counsel fee for
the Coffey defendants.
In discussing the various counsels' roles during the March 27, 2008
mediation session, Coffey stated:
A-2104-17T4
16
I continued to represent Satec and Northern on issues
which were not of a nature that created a conflict. Satec
was represented by Mr. Spina with respect to the terms
of the site response that became a complicated
undertaking. Mr. Parsells simply negotiated the
number and then when we walked out of the mediation
session where the amount, which I think was $75,000
or $100,000 was agreed to, Mr. Parsells really had no
further role.
Over a month later, on May 14, 2008, Coffey emailed a preliminary term
sheet to Honeywell, including a $250,000 cash payment. Honeywell countered
on June 4, 2008, offering $250,000, but seeking a cap on its responsibility for
cleanup costs at $1.2 million dollars. Coffey stated thereafter there were
significant negotiations between Satec and Honeywell regarding the terms of the
cleanup and how it would be funded.
On August 7, 2008, Honeywell sent an additional counteroffer to Coffey
in which it proposed, among other things, to "[p]rovide Northern with $250,000
(in two installments) in full and complete satisfaction for any past costs or future
claims," with $100,000 to be paid upon execution of the agreement and releases,
and $150,000 to be paid no later than January 7, 2009. Honeywell would be
responsible for up to $2 million dollars of cleanup costs and would control the
remediation process. The preliminary term sheet did not include any payment
for attorney's fees to Coffey or any distribution to Satec out of the $250,000.
A-2104-17T4
17
This did not resolve the matter, however, as Honeywell and Satec still had
not agreed upon the terms of the cleanup. Therefore, according to Coffey, he
met with Spina and Judge Epstein at a restaurant in November 2008, and a
mediation session took place at the Union County Courthouse in December
2008. Coffey thought Parsells attended the December mediation session.
Thereafter, Honeywell circulated numerous versions of a draft settlement
agreement in which the cash component of the settlement remained at $250,000
with the Coffey defendants receiving $150,000 for counsel fees. Coffey
explained that it took a long time to finalize the details of the settlement, and
there were at least six draft versions of the agreement. Coffey knew Puzyk was
very anxious to get the deal done and Coffey stated he kept Puzyk apprised of
the settlement process. He claimed that Spina requested the $25,000 Satec
received in the settlement for his counsel fees in negotiating the deal.
Coffey testified that when Puzyk finally signed the agreement in February
2009, it reflected what Puzyk had agreed to at the March 27, 2008 mediation
session, and that neither he nor Parsells forced Puzyk to sign it . Coffey said
Parsells was not present when Puzyk signed the agreement.
On March 5, 2009, Coffey sent a letter to the court advising that Northern,
Satec, and Honeywell had fully resolved their differences. At the time, Robbins'
A-2104-17T4
18
motion for summary judgment was still pending. Coffey admitted that during
the litigation he told Puzyk there was the potential to recover the $438,000 credit
from Robbins because he was an earlier owner of the property. However, he
stated he had simultaneously advised Puzyk that Honeywell would not
reimburse the $438,000 as part of its settlement. Since Northern had not spent
the $438,000 to remediate its property, Honeywell contended it was not liable
for those monies under the Spill Act.
During cross-examination, Coffey conceded the May, June, and August
2008 settlement term sheets did not include Northern's receipt of $75,000 or
reference Coffey's $150,000 legal fee. This questioned his earlier testimony that
those figures were agreed to at the March 27, 2008 mediation session.
When questioned by the court as to the reason for Parsells's involvement,
Coffey testified that Judge Epstein required separate counsel for Northern and
Satec because Honeywell was proposing that some of the settlement be in kind.
He stated that during the March 27, 2008 mediation session, Judge Epstein spoke
with him alone regarding settlement of the Coffey defendants' counsel fee.
Judge Epstein also testified at the trial. He recalled serving as a mediator
in the environmental lawsuit. His records reflected mediation sessions took
place on February 11, February 21, March 27, July 16, 2008 and April 20, 2009
A-2104-17T4
19
at his office in New Brunswick. He noted he also attended a settlement
conference outside of New Brunswick on November 26, 2008, at which Coffey
and Spina were present, and a mediation session on December 4, 2008 at the
Union County Courthouse.
Although Judge Epstein's billing notation concerning the third mediation
session on March 27, 2008 stated that Coffey "and all plaintiffs with separate
counsel" attended, he could not recall whether Parsells was present. He did
remember meeting Parsells once during the course of the mediation, but he could
not recall any specific interaction with Parsells during the mediation sessions.
Judge Epstein did not send Parsells a bill for his mediation services.
Spina testified that he has represented Satec since 2000 and was involved
with the company's purchase of the property from Northern. Pertinent to the
underlying lawsuit, Spina testified that Satec was unaware that it was a named
plaintiff in the environmental matter until Judge Epstein called him, forwarded
a copy of the pleadings, and invited him to attend a mediation session. Spina
stated he subsequently attended a mediation session at which Parsells was
present, but he could not remember the date. Spina explained that during
negotiations, "Satec objected to Mr. Puzyk and Northern getting anything" but
felt that Coffey was entitled to a fee.
A-2104-17T4
20
III.
A.
In conjunction with the filing of the complaint, plaintiffs presented an
affidavit of merit (AOM) from Steven Angstreich, Esq. The AOM set forth
Angstreich's professional background and his conclusion that Parsells's conduct
in connection with the Honeywell settlement agreement fell below the
appropriate standard of care for New Jersey attorneys. Angstreich reviewed the
complaint and the settlement agreement prior to rendering his opinion.
The McElroy defendants objected to the sufficiency of Angstreich's AOM.
They contended Angstreich impermissibly based his opinion on an assumption
that the allegations in the complaint were true, as opposed to reviewing the facts
independently. Following a Ferreira5 conference, the court granted plaintiffs
thirty days to submit a revised AOM.
Plaintiffs thereafter presented a revised AOM within the designated
timeframe. Angstreich certified he had reviewed a certification from Puzyk
"swearing to the truth of the allegations contained in paragraphs 38 -53 of the
[c]omplaint." Angstreich's conclusions in the revised AOM mirrored those
stated in the first AOM.
5
Ferreira v. Rancocas Orthopedic Assocs., 178 N.J. 144 (2003).
A-2104-17T4
21
B.
Several months later, before discovery was completed, the McElroy
defendants moved for summary judgment or, in the alternative, to dismiss the
complaint on the grounds that Angstreich's first AOM was deficient. On April
21, 2015, the court denied the motion for summary judgment, stating that
discovery was ongoing and there were multiple disputed issues of material fact.
The court further found that Angstreich's first AOM was timely and sufficient,
and noted the second AOM was "even more clearly sufficient." Defendants'
motion for reconsideration was denied.
C.
The McElroy defendants filed a second motion for summary judgment,
which was denied on January 26, 2017. In its statement of reasons, the court
identified "genuine issues of material fact" as to whether the McElroy
defendants breached the duty owed to plaintiffs and proximately caused
plaintiffs' damages.
A-2104-17T4
22
D.
On February 3, 2017, the court denied the McElroy defendants' motion to
bar certain portions of Angstreich's testimony, advising a Rule 104 hearing6
would be held prior to the expert's testimony at trial.
IV.
Prior to opening statements on July 19, 2017, the court conducted the Rule
104 hearing. The McElroy defendants contended certain aspects of Angstreich's
opinion regarding damages were net opinions. Specifically, defendants argued
Angstreich could not testify about the $438,000 credit given to Satec at the time
of the sale of the property because Northern did not incur any costs in
remediating the property. Under the Spill Act, the $438,0000 was not
recoverable from Honeywell because Northern did not do any cleanup.
In addition, defendants asserted Angstreich could not testify about the
Coffey defendants' fee because it also could not be recovered from Parsells in
this malpractice litigation. They contended the fee could only be disgorged from
Coffey.
6
See N.J.R.E. 104(a) (explaining that the admissibility of evidence is to be
determined by the judge out of the presence of the jury).
A-2104-17T4
23
In denying the motion, the court stated it was unable to rule without
hearing testimony from the various witnesses, in order to have some context to
defendants' arguments. The court instructed defendants they could renew their
motion at the end of the trial.
A.
Before the jury, Angstreich was qualified as an expert in the field of legal
malpractice. He is an attorney with experience in environmental law and Spill
Act litigation.
In addressing the attorney-client relationship between Parsells and
Northern, Angstreich opined that the relationship began after the mediator raised
a conflict issue, and Parsells agreed to represent Northern. He agreed that
Parsells's role was limited to the settlement negotiations. However, he disagreed
with Parsells's position that his relationship with Northern ended at the
conclusion of the March 27, 2008 mediation session because Parsells was copied
on the settlement-related emails from Honeywell in December 2008. The expert
found it irrelevant that Parsells was not paid a fee, because a relationship begins
upon the agreement to represent a client.
In addressing the standard of care required of an attorney in the context of
settlement negotiations, Angstreich testified that the attorney must become
A-2104-17T4
24
familiar with all of the underlying facts and circumstances of the case in order
to assess whether a settlement is reasonable. Since Parsells did not familiarize
himself with the case, he could not give Puzyk all of the facts needed to make
an informed decision on behalf of Northern. Parsells needed to know what was
happening in the environmental litigation, the parties' status, the relative
liabilities of Robbins and Honeywell, and the facts surrounding the $438,000
credit for which Northern sought reimbursement. In his opinion, Northern was
entitled to recoup the $438,000 under the Spill Act as a remediation cost .
In addition, Angstreich opined that Parsells should have educated himself
about the prior settlement offers from Honeywell and Robbins's pending motion
for summary judgment so he could properly advise Puzyk. The summary
judgment motion was particularly significant because Robbins contended the
statute of limitations expired before Coffey filed the complaint, therefore
requiring the dismissal of Northern's common law claims. Angstreich opined
Puzyk should have been informed about the probable outcome of the motion ,
and the likelihood that Northern might not recover any damages from Robbins.
This information was necessary in deciding whether to accept the settlement
offer from Honeywell.
A-2104-17T4
25
Angstreich explained that Parsells should have also discussed with Puzyk
the proposed $25,000 payment to Satec, because "Satec wasn't out of pocket any
money" and "wound up getting the property cleaned up . . . ." Likewise, Parsells
should have counselled Puzyk on the proposed $150,000 fee to Coffey.
Angstreich opined that Parsells had a duty to assess the reasonableness of the
fee because it was double what it should have been.
In sum, Angstreich opined that Parsells should have explained all of the
ramifications of settlement to Puzyk to enable him to make an informed
decision, as opposed to only advising him to take the settlement. He further
opined that the settlement was not in Northern's best interest, and instead
favored Satec and Honeywell. He explained that Northern "derived no benefit
[from the settlement] . . . because if Honeywell stopped cleaning up the
property[,] Northern was still responsible and so was Mr. Puzyk."
Angstreich further opined that Parsells's deficient advice to Puzyk
concerning the settlement agreement was a proximate cause of Northern's
damages, which included the excessive fee to Coffey and the failure to recoup
the $438,000 credit. The expert explained that, while Coffey initially put
Northern "in a bad position" due to his mishandling of the litigation, Parsells
could have said "this is a bad settlement and here are the reasons why" and
A-2104-17T4
26
stopped Coffey from collecting a fee well in excess of what was agreed upon in
the contingent fee arrangement.7
Although Angstreich opined that Parsells had a duty to ask for the return
of the $438,000 credit during the settlement negotiations, he conceded during
cross-examination that there was no evidence to indicate that Honeywell or any
other party was willing to give Northern $438,000. Also, there was no evidence
to indicate that Honeywell was willing to settle with Northern for more than
$250,000.
B.
The McElroy defendants presented Arnold Lakind, Esq. as an expert in
the field of legal malpractice related to litigation and environmental law. It was
his opinion that Parsells and the McElroy defendants did not breach any duty
owed to Northern during the settlement negotiations.
Lakind stated that Parsells's representation of Northern was "very limited"
and spanned just three days in March 2008, because Parsells stopped
representing Northern after the mediation session on March 27, 2008 . He also
pointed to the lack of a retainer agreement, which "suggested . . . there was no
7
Angstreich also opined that Coffey breached the standard of care he owed to
Northern, and that breach was a proximate cause of plaintiffs' damages.
A-2104-17T4
27
long-term representation," and the fact that Parsells was not paid for his services.
In addition, the expert noted that the majority of emails sent after March 2008
were not sent to Parsells.
Lakind reasoned that since the settlement was reached in January 2009,
not in March 2008, and "[t]here was no inquiry made of [Parsells] during the
course of that mediation," Parsells could not have breached any duty owed to
Northern during the course of his limited representation. In his opinion, nothing
happened at the mediation session that could have proximately caused plaintiffs
to incur damages related to the settlement.
Lakind conceded during cross-examination there was a conflict regarding
Coffey's fee. However, he maintained since Coffey collected the excessive fee,
it was he, not Parsells, who proximately caused plaintiffs' damages. Therefore,
plaintiffs' recourse was to recover the excess fee from Coffey.
Even assuming Parsells's representation continued and he breached his
duty to advise Northern concerning the settlement, Lakind concluded Northern
was not harmed by Parsells's actions. The expert described the settlement as "a
very good settlement" for Northern because it could not have recovered any
money damages under the Spill Act, and its common law claims were not viable
due to the expiration of the statute of limitations.
A-2104-17T4
28
Lakind did not find the MOA obligation significant because plaintiffs
could have moved to enforce the settlement agreement if Honeywell failed to
complete the cleanup. He thought it was "a tremendous advantage" to Northern
to have Honeywell responsible for the remediation because of Honeywell's level
of expertise and familiarity with the process. He found no indication in the
record to support a theory that either Satec or Honeywell would have settled the
case any differently than they did, or that a "better deal" could have been
achieved for Northern.
V.
Following the completion of the presentation of evidence, the McElroy
defendants moved for an involuntary dismissal under Rule 4:37-2(b), and for
judgment pursuant to Rule 4:40-1. Defendants argued there was no evidence
that Northern could have obtained a different settlement. Therefore, plaintiffs
failed to establish any negligence on defendants' part that was a proximate cause
of any damages. The court denied the Rule 4:37-2(b) motion, and reserved
decision on the motion for judgment until after the jury verdict .
During closing arguments, plaintiffs' counsel explained to the jury that his
clients sought two elements of damages. Plaintiffs contended they should have
received an additional $100,000 from the $250,000 Honeywell settlement
A-2104-17T4
29
monies. The $100,000 was calculated as the $25,000 allocated to Satec and the
excess $75,000 Coffey took as a fee. Plaintiffs asserted Coffey was only entitled
to a $75,000 fee, not the $150,000 he received. In addition, plaintiffs sought the
$438,000 credit from the purchase price of the property. Therefore, they asked
for $538,000 in damages. Counsel did not specify whether that amount should
all be awarded to Northern or whether Puzyk individually was also entitled to
damages.
In its instructions to the jury, the court stated:
Instructions regarding multiple plaintiffs. By
now you've noticed there are two plaintiffs. Northern
International Express Company and Stefan Puzyk.
When I told you earlier that the plaintiffs have the
burden of proving the liability of Mr. Parsells, that
means that Northern and Puzyk must separately prove
that Mr. Parsells is liable to each of them. Thus[,] it is
possible that you may find Mr. Parsells liable to only
one of the plaintiffs, or neither of them, or to both of
them. The same can be said for Mr. Coffey.
The court also included the following in its charge on damages:
Plaintiffs have the burden of establishing by the
preponderance of evidence each item of damages that
they claim. A plaintiff must also prove that the
damages were the natural and probable consequences
of the attorney defendants['] actions. Damages may not
be based on conjecture or speculation.
Plaintiffs are claiming that the[] legal
malpractice of either one or both of the attorney
A-2104-17T4
30
defendants resulted in damages to either or both of
them.
During deliberations, the jury submitted the following question: "Can we
consider Northern and S. Puzyk as one [and] the same? If no, please advise how
to differentiate." If there was a discussion between the court and counsel as to
how to respond to this question, it was not done on the record.
In responding to the question, the court told the jurors:
I'm going to read the instructions regarding
multiple plaintiffs again and then I'll try to explain.
By now you should've noticed that there are two
plaintiffs in this case. Northern International and
Stefan Puzyk. When I told you earlier that the plaintiffs
had the burden of proving the liability of Mr. Parsells
that means that Northern and Mr. Puzyk must
separately prove that Mr. Parsells is liable to each of
them. Thus, it is possible that you may find Mr.
Parsells liable to only one of the plaintiffs, or neither,
or both. The same can be said for Mr. Coffey.
Can we consider Northern and Mr. Puzyk as one
[and] the same? The answer is they are separate
plaintiffs. So, that you will have to follow my verdict
sheet and will have to make a finding as to each one of
them as to each defendant. Okay. Hopefully, that
makes it clearer.
Can these parties suffer the same damages? That
is for you to decide. You are to decide who or what the
damages were as to each plaintiff if you do find that the
damages have been shown.
A-2104-17T4
31
[Y]ou can't compound it. In other words, . . . you
can't find that both -- how do we say it? You can't
compound the damages because you know what the
damages requested are, but you must determine what
percentage of those damages go to each plaintiff or --
I'm sorry. What . . . percentage each defendant is
responsible for if you do find damages. But you can
and you must find, obviously, that there[] . . . was a
duty, and that there was proximate cause, and that the
damages have been shown by a preponderance of the
evidence.
Later that day, the jury returned its verdict, finding both the McElroy and
Coffey defendants negligent, and their negligence was a proximate cause of
damages to both plaintiffs. The jury awarded Northern $100,000, attributing
sixty-five percent of liability to the Coffey defendants, and thirty-five to the
McElroy defendants. It also awarded $100,000 to Puzyk, individually, finding
the McElroy and Coffey defendants each responsible for fifty percent of the
damages.
On August 1, 2017, the court denied defendants' Rule 4:40-1 motion for
judgment, finding that "reasonable minds could differ as to whether the
[d]efendants were negligent, and whether their actions/inactions constituted
malpractice."
Plaintiffs' counsel filed a certification in support of an application for
attorney's fees and costs pursuant to Rule 4:49-2. The certification references
A-2104-17T4
32
two retainer agreements. The first agreement was executed on March 17, 2014,
when counsel was a sole practitioner. The second supplemental agreement was
executed on February 20, 2015, after counsel began practicing at a firm.
Under the agreements, plaintiffs paid a $12,000 retainer fee. Both
agreements set counsel's contingent fee at thirty-three and one-third percent of
the first $500,000 recovered, and set an hourly rate of $350. In addition, the
agreements capped the legal fees billed on an hourly basis at $35,000, or 100
hours.
The first agreement stated: "In no event shall the legal fees billed to You
on an hourly basis, pending the [lawsuit], exceed $35,000.00. The hourly billing
shall cease once the sum of the total billable hours equals $35,000.00 ." The
second agreement stated: "Provided You pay the first $35,000.00 of billable
hours for which you are invoiced The Firm will not seek to cease representing
You during the litigation of this matter through the conclusion of the trial or
settlement of this matter."
Counsel sought $87,998 in attorney's fees for over 400 hours billed
between March 2014 and July 25, 2017. Some of the hours were billed at a
reduced rate. While he was a sole practitioner between March 2014 and January
2015, he did not use an electronic computerized timesheet system, and therefore,
A-2104-17T4
33
he did not submit any itemized billing records for that period. He did submit
itemized billing records for the hours worked between February 19, 2015, and
July 25, 2017, at the law firm, along with documentation pertaining to costs
totaling $19,452.96, including expert fees, costs of depositions and the
mediator's fee.
By order dated November 13, 2017, the court granted plaintiffs' motion
for attorney fees and costs in part, awarding $47,000 in attorney fees and
$19,452.96 in costs, for a total award of $66,452.96. The court found the
retainer agreements were clear, and that counsel and plaintiffs had capped the
legal fees at $35,000, aside from the contingent fee. The court explained that
an adversary cannot be responsible for billing hours that are not billed to one's
client. In addition, had the damages verdict been a larger award, counsel would
have netted a greater fee under the contingency fee provision. However, the
contingent fee here would have been less than the $35,000 capped fee amount.
Therefore, the court awarded counsel $47,000 – $35,000 plus the $12,000
retainer.
The court denied the McElroy defendants' Rule 4:40-2(b) motion for
judgment notwithstanding the verdict (JNOV), remittitur, or a new trial on
November 16, 2017, finding that reasonable minds could differ on the outcome
A-2104-17T4
34
and the damage awards were supported by the evidence. On December 13, 2017,
the court entered a final judgment against the McElroy defendants for
$151,452.96.
VI.
On appeal, the McElroy defendants challenge the following orders: (1) the
April 21, 2015 order denying their motion to dismiss the complaint for failure
to serve an adequate AOM; (2) the January 26, 2017 order denying their second
motion for summary judgment; (3) the February 3, 2017 order denying their
motion to bar Angstreich's expert testimony as a net opinion; (4) the August 1,
2017 order denying their motion for judgment at trial; (5) the November 13,
2017 order awarding attorney's fees; (6) the November 16, 2017 order denying
their motions for JNOV, a new trial, and/or remittitur; and (7) the December 13,
2017 final judgment. Plaintiffs cross-appeal the award of attorney's fees.
A.
The McElroy defendants contend the court erred when it denied their
motion to dismiss the complaint for "plaintiffs' failure to serve a timely and
adequate affidavit of merit." They assert the first AOM was legally deficient
because it "lacked a factual foundation," and the second AOM was untimely as
it was filed beyond the 120-day statutory deadline. We review a trial court's
A-2104-17T4
35
decision to deny a motion to dismiss the complaint de novo. Dimitrakopoulos
v. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108
(2019) (citation omitted).
"The Affidavit of Merit statute was intended to flush out insubstantial and
meritless claims that have created a burden on innocent litigants and detracted
from the many legitimate claims that require the resources of our civil justice
system." Ferreira, 178 N.J. at 154. It "was not intended to encourage
gamesmanship or a slavish adherence to form over substance." Ibid.; see Buck
v. Henry, 207 N.J. 377, 383 (2011) (explaining that the AOM statute's purpose
"is to weed out frivolous complaints, not to create hidden pitfalls for meritorious
ones.").
Angstreich's initial AOM stated the following:
Based upon my review and analysis of the
[c]omplaint and [s]ettlement [a]greement concerning
the actions of attorney George H. Parsells, III, I have
concluded that there is a reasonable probability that the
care, skill and knowledge exercised and/or exhibited by
him fell outside the customary standards and practices
of New Jersey lawyers; that he failed to exercise the
required skill, knowledge, ability and judgment
required of him under the circumstances, and that he
failed to provide sufficient information upon which
Puzyk and Northern could make an informed decision
as to whether to agree to the terms of the settlement.
Further, it is my opinion that the firm of McElroy,
[Deutsch,] Mulvaney & Carpenter, LLP failed to
A-2104-17T4
36
provide proper supervision and/or is responsible for the
conduct of one of its members.
It is my opinion within a reasonable degree of
certainty that there is a sufficient basis to pursue the
instant claims against Mr. Parsells and the law firm of
McElroy, [Deutsch,] Mulvaney & Carpenter, LLP. It is
also my opinion, within a reasonable degree of certainty
that Parsells'[s] conduct fell below the appropriate
standards of care.
After a Ferreira conference, Angstreich submitted a second AOM. The
conclusions were identical to those stated in the first affidavit. In addition, the
expert referenced his review of a certification from Puzyk "swearing to the truth
of the allegations contained in paragraphs 38-53 of the [c]omplaint." The second
AOM was provided within the timeframe set by the court.
Here, Angstreich provided the attestation required by N.J.S.A. 2A:53A-
27, named Parsells specifically, and briefly described how his actions fell
outside acceptable professional standards. Plaintiffs filed the first AOM
simultaneously with the complaint, well within the statutory deadline.
The McElroy defendants' contention that Angstreich should have
reviewed additional records to substantiate the AOM is without merit. No
discovery had yet occurred, and defendants do not specify what records should
have been reviewed. Plaintiffs did not execute a retainer agreement with the
McElroy defendants and Parsells did not have any billing records. We are
A-2104-17T4
37
satisfied that Angstreich's AOM based on the sworn facts certified to by Puzyk
in the complaint and his review of the settlement agreement complied with the
statutory requirements under N.J.S.A. 2A:53A-27.
B.
Likewise, we are unpersuaded by the McElroy defendants' contention that
the court erred in denying their motion to bar Angstreich's testimony on
proximate cause and damages as a net opinion. Defendants assert the opinion
was not supported by the evidence, and the $438,000 credit to Satec was not
recoverable under the Spill Act.
A trial court's decision to admit or exclude expert testimony in a civil case
is reviewed under "a pure abuse of discretion standard . . . ." In re Accutane
Litig., 234 N.J. 340, 391-92 (2018) (citing Townsend v. Pierre, 221 N.J. 36, 52-
53 (2015)). "Accordingly, the trial court's decision here should not be disturbed
on appeal unless the decision was 'made without a rational explication,
inexplicably departed from established practices, or rested on an impermissible
basis.'" Estate of Kotsovska v. Liebman, 221 N.J. 568, 588 (2015) (quoting
Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).
"N.J.R.E. 703 addresses the foundation for expert testimony." Townsend,
221 N.J. at 53. Under that rule, an expert opinion must be grounded in "facts or
A-2104-17T4
38
data derived from (1) the expert's personal observations, or (2) evidence
admitted at the trial, or (3) data relied upon by the expert which is not necessarily
admissible in evidence but which is the type of data normally relied upon by
experts." Ibid. (quoting Polzo v. Cty. of Essex, 196 N.J. 569, 583 (2008)).
"The net opinion rule is a 'corollary of [Rule 703] . . . which forbids the
admission into evidence of an expert's conclusions that are not supported by
factual evidence or other data.'" Id. at 53-54 (alterations in original) (quoting
Polzo, 196 N.J. at 583). In other words, the expert must "'give the why and
wherefore' that supports the opinion, 'rather than a mere conclusion.'" Id. at 54
(quoting Borough of Saddle River v. 66 E. Allendale, LLC, 216 N.J. 115, 144
(2013)).
"Evidential support for an expert opinion is not limited to treatises or any
type of documentary support, but may include what the witness has learned from
personal experience." Rosenberg v. Tavorath, 352 N.J. Super. 385, 403 (App.
Div. 2002) (citation omitted); see, e.g., State v. Townsend, 186 N.J. 473, 495
(2006) (holding that an expert's "education, training, and most importantly, her
experience, provided a sound foundation for her opinion" which was "not a net
opinion"); but see Carbis Sales, Inc. v. Eisenberg, 397 N.J. Super. 64, 79 (App.
Div. 2007) (citations omitted) ("In the context of legal malpractice, an expert
A-2104-17T4
39
must base his or her opinion on standards accepted by the legal community and
not merely on the expert's personally held views.").
We discern no abuse of discretion in the court's decision allowing
Angstreich's testimony. The expert opined that Parsells was negligent in failing
to request the monies during the mediation and settlement negotiations. And
that his failure to properly represent plaintiffs was a proximate cause of their not
recovering the $438,000 credit. The opinion was supported by the evidence and
predicated upon Angstreich's experience handling legal malpractice and
environmental law cases for more than thirty years.
During the Rule 104 hearing, Angstreich testified that he had successfully
recovered similar monies in other matters, "so long as the credit that's given off
the purchase price is directly attributed to what has been determined to be the
cost to clean up" the property. Angstreich further opined that even if the credit
was not recoverable under the Spill Act, Parsells should have attempted to
recoup it during settlement negotiations so that Satec did not receive a windfall.
We are satisfied Angstreich sufficiently supported his opinions.
C.
We next address the McElroy defendants' contention of error in the trial
court's denial of their second motion for summary judgment. They assert
A-2104-17T4
40
summary judgment was warranted because the material facts were undisputed,
and plaintiffs failed to demonstrate the necessary element of proximate cause
under either the "'suit within a suit' approach" or the "'expert' [testimony]
approach" in a legal malpractice case.
In reviewing a summary judgment order, we are bound by the same
standard as the trial court under Rule 4:46-2(c). State v. Perini Corp., 221 N.J.
412, 425 (2015) (citations omitted). Summary judgment is required if "the
pleadings, depositions, answers to interrogatories and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact challenged and that the moving party is entitled to a judgment or
order as a matter of law." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520,
528-29 (1995).
A court determines whether genuine issues of material fact exist by
"consider[ing] whether the competent evidential materials presented, when
viewed in the light most favorable to the non-moving party, are sufficient to
permit a rational factfinder to resolve the alleged disputed issue in favor of the
non-moving party." Id. at 540. "The slightest doubt as to an issue of material
fact must be reserved for the factfinder, and precludes a grant of judgment as a
matter of law." Akhtar v. JDN Props. at Florham Park, LLC, 439 N.J. Super.
A-2104-17T4
41
391, 399 (App. Div. 2015) (citation omitted). "Any issues of credibility must
be left to the finder of fact." Ibid. (citation omitted).
An action for legal malpractice has "three essential elements: '(1) the
existence of an attorney-client relationship creating a duty of care by the
defendant attorney, (2) the breach of that duty by the defendant, and (3)
proximate causation of the damages claimed by the plaintiff.'" Jerista v. Murray,
185 N.J. 175, 190-91 (2005) (quoting McGrogan v. Till, 167 N.J. 414, 425
(2001)).8
"Like most professionals, lawyers owe a duty to their clients to provide
their services with reasonable knowledge, skill, and diligence." Ziegelheim v.
Apollo, 128 N.J. 250, 260 (1992) (citing St. Pius X House of Retreats v. Diocese
of Camden, 88 N.J. 571, 588 (1982)). "[L]awyers' duties in specific cases vary
with the circumstances presented." Ibid. That said, "[t]he lawyer must take 'any
steps necessary in the proper handling of the case.'" Id. at 260-61 (quoting
Passanante v. Yormark, 138 N.J. Super. 233, 239 (App. Div. 1975)). "Those
steps will include, among other things, a careful investigation of the facts of the
matter, the formulation of a legal strategy, the filing of appropriate papers, and
8
Parsells does not dispute the existence of an attorney-client relationship
between he and Northern. He does dispute there was any attorney-client
relationship between he and Puzyk individually.
A-2104-17T4
42
the maintenance of communication with the client." Id. at 261 (citing
Passanante, 138 N.J. Super. at 238-39).
"In accepting a case, the lawyer agrees to pursue the goals of the client to
the extent the law permits, even when the lawyer believes that the client's desires
are unwise or ill[-]considered." Ibid. (citing Lieberman v. Emp'rs Ins. of
Wausau, 84 N.J. 325, 340 (1980)). "At the same time, because the client's
desires may be influenced in large measure by the advice the lawyer provides,
the lawyer is obligated to give the client reasonable advice." Ibid.
"Accordingly, the lawyer is obligated to keep the client informed of the status
of the matter for which the lawyer has been retained, and is required to advise
the client on the various legal and strategic issues that arise." Ibid. (citations
omitted).
"What constitutes a reasonable degree of care is not to be considered in a
vacuum but with reference to the type of service the attorney undertakes to
perform." St. Pius X House of Retreats, 88 N.J. at 588. Concerning the handling
of settlements in particular, our Supreme Court has held:
[W]e recognize that litigants rely heavily on the
professional advice of counsel when they decide
whether to accept or reject offers of settlement, and we
insist that the lawyers of our state advise clients with
respect to settlements with the same skill, knowledge,
and diligence with which they pursue all other legal
A-2104-17T4
43
tasks. Attorneys are supposed to know the likelihood
of success for the types of cases they handle and they
are supposed to know the range of possible awards in
those cases.
[Ziegelheim, 128 N.J. at 263.]
"[D]eviation from accepted standards of professional care will result in
liability for negligence." Ibid. "[W]e see no reason to apply a more lenient rule
to lawyers who negotiate settlements." Ibid. Moreover, "[t]he fact that a party
received a settlement that was 'fair and equitable' does not mean necessarily that
the party's attorney was competent or that the party would not have received a
more favorable settlement had the party's incompetent attorney been
competent." Id. at 265.
However, "plaintiffs must allege particular facts in support of their claims
of attorney incompetence and may not litigate complaints containing mere
generalized assertions of malpractice." Id. at 267. "[A]ttorneys cannot be held
liable simply because they are not successful in persuading an opposing party to
accept certain terms." Ibid. "The law demands that attorneys handle their cases
with knowledge, skill, and diligence, but it does not demand that they be perfect
or infallible, and it does not demand that they always secure optimum outcomes
for their clients." Ibid.
A-2104-17T4
44
Primarily at issue in this case is whether the McElroy defendants
proximately caused plaintiffs' damages, and the quantum of those damages.
"The test of proximate cause is satisfied where the negligent conduct is a
substantial contributing factor in causing the loss." 2175 Lemoine Ave. Corp.
v. Finco, Inc., 272 N.J. Super. 478, 487 (App. Div. 1994) (citations omitted).
Under this test, "there can be any number of intervening causes between the
initial wrongful act and the final injurious consequences and [it] does not require
an unsevered connecting link between the negligent conduct and the ultimate
harm." Conklin v. Hannoch Weisman, 145 N.J. 395, 420 (1996). "The test is
thus suited for legal malpractice cases," such as this one, "in which inadequate
or inaccurate legal advice is alleged to be a concurrent cause of harm." Ibid. In
such cases, "[t]he negligent attorney . . . often does not 'create' the risk of
intervening harm . . . but rather fails to take the steps that competent counsel
should take to protect a client from the risks that ultimately produce the injury."
Id. at 418 (citation omitted).
"[D]amages should be generally limited to recompensing the injured party
for his economic loss," that is, "the amount that the client would have received
but for his attorney's negligence." Gautam v. De Luca, 215 N.J. Super. 388,
397, 399 (App. Div. 1987) (citing Lieberman, 84 N.J. at 342); see Nappe v.
A-2104-17T4
45
Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 48 (1984) ("Compensatory
damages are designed to compensate a plaintiff for an actual injury or loss.").
"Actual damages are those that are real and substantial as opposed to
speculative." Grunwald v. Bronkesh, 131 N.J. 483, 495 (1993). The plaintiff
must "show what injuries were suffered as a proximate consequence of the
attorney's breach of duty" and "[t]hat burden must be sustained by a
preponderance of the competent, credible evidence" as opposed to "conjecture,
surmise or suspicion." 2175 Lemoine Ave., 272 N.J. Super. at 487-88 (citations
omitted).
In a written statement of reasons, the court concluded that, viewing the
facts in the light most favorable to plaintiffs, there were genuine issues of
material fact as to whether the McElroy defendants breached the duty owed to
plaintiffs, and whether any breach was the proximate cause of any damages, as
well as the extent of plaintiffs' claimed damages. The court noted Puzyk's
certification, in which he maintained that neither Coffey nor Parsells told him
about Honeywell's August 2008 offer, that he would not have agreed to the later
settlement had he known about the offer, and that neither Coffey nor Parsells
sought to recoup the $438,000 credit given by Northern to Satec upon the sale
of the property. It also considered the August 2008 preliminary term sheet in
A-2104-17T4
46
which Honeywell offered to pay Northern $250,000 without allocating any
monies to Coffey or Satec, and the contingency fee agreement between plaintiffs
and Coffey providing for a fee of thirty percent of any recovery plaintiffs
received. In addition, the court cited Angstreich's report and its opinions
regarding the McElroy's defendants' duty to plaintiffs and their breach of that
duty. Angstreich also found, as discussed above, that Parsells's negligence was
a proximate cause of plaintiffs' damages.
In denying summary judgment, the court stated
a rational jury could find that had [d]efendants not
committed the alleged malpractice and [p]laintiffs
knew that their entire recovery would be limited to the
amount they received from the Honeywell settlement,
[p]laintiffs would not have agreed to Coffey receiving
a $150,000 legal fee or Satec receiving $25,000 in
addition to keeping the credit it received from
Northern.
The McElroy defendants contend its summary judgment motion "was
based on the wholly undisputed facts surrounding Northern's ownership,
transfer, and legal rights with respect to the . . . property." (emphasis omitted).
However, this limited characterization ignores the disputed material facts
relevant to plaintiffs' legal malpractice claim against the McElroy defendants,
including those pertaining to the extent and duration of Parsells's representation
A-2104-17T4
47
of Northern and Puzyk in mediation and the settlement negotiations with
Honeywell.
For instance, Puzyk contended, among other things, that he first met
Parsells in November or December 2008, and that Parsells pressured him to
accept unfavorable settlement terms in January 2009 during a meeting at
Parsells's office. Parsells, on the other hand, claimed his role in the underlying
litigation was extremely limited, and he never gave Puzyk any legal advice and
did not see or speak to him after the March 27, 2008 mediation session. These,
and numerous other conflicting versions of events, presented a credibility issue
that "must be left to the finder of fact." Akhtar, 439 N.J. Super. at 399 (citation
omitted). "The question of which version is more plausible or believable . . . is
not susceptible to summary disposition." Winstock v. Galasso, 430 N.J. Super.
391, 404 (App. Div. 2013) (citing Brill, 142 N.J. at 543).
Because material facts were in dispute, the trial court properly denied the
McElroy defendants' second motion for summary judgment. There also was
conflicting evidence on the issues of proximate cause and damages.
D.
We turn to the McElroy defendants' motions for judgment, JNOV,
remittitur, and a new trial, all premised on the grounds that the evidence was
A-2104-17T4
48
insufficient to be considered by a jury and to support the jury's verdict. They
assert that: (1) there was no evidence to show that the other parties to the
settlement would have been willing to pay Northern more than they actually did;
(2) Puzyk's damages award cannot stand because he was not a party to the
underlying litigation, lacked an attorney-client relationship with the McElroy
defendants, and the award constituted a double recovery; and (3) disgorgement
of Coffey's legal fees from the McElroy defendants should not have been
permitted as a matter of law.
When reviewing decisions on Rule 4:40-1 motions for judgment and Rule
4:40-2(b) motions for JNOV, we apply the same standard that governs the trial
courts. "[I]f, accepting as true all the evidence which supports the position of
the party defending against the motion[s] and according him the benefit of all
inferences which can reasonably and legitimately be deduced therefrom,
reasonable minds could differ, the motion[s] must be denied[.]" Smith v.
Millville Rescue Squad, 225 N.J. 373, 397 (2016) (fourth alteration in original)
(citation omitted).
In considering a damages verdict, we are mindful that "[a] jury's verdict,
including an award of damages, is cloaked with a 'presumption of correctness.'"
Cuevas v. Wentworth Grp., 226 N.J. 480, 501 (2016) (quoting Baxter v.
A-2104-17T4
49
Fairmont Food Co., 74 N.J. 588, 598 (1977)). A new trial is only granted "if,
having given due regard to the opportunity of the jury to pass upon the
credibility of the witnesses, it clearly and convincingly appears that there was a
miscarriage of justice under the law." R. 4:49-1(a). We "will not reverse a trial
court's determination of a motion for a new trial 'unless it clearly appears that
there was a miscarriage of justice under the law.'" Delvecchio v. Twp. of
Bridgewater, 224 N.J. 559, 572 (2016) (quoting R. 2:10-1). Courts have the
power to decide whether a jury's "grossly excessive award is a miscarriage of
justice" and "to enter a remittitur reducing the award to the highest amount that
could be sustained by the evidence." Orientale v. Jennings, 239 N.J. 569, 590
(2019) (quoting Cuevas, 226 N.J. at 499).
The McElroy defendants moved for judgment at trial under Rule 4:40-1.
The court reserved its decision and after the verdict, denied the motion, finding
plaintiffs' claims remained a question of fact for the jury to decide. In its written
statement of reasons, the court concluded that "reasonable minds could differ as
to whether the [d]efendants were negligent, and whether their actions/inactions
constituted malpractice."
In its Rule 4:40-2(b) motion, the McElroy defendants argued there was no
support for the jury's award of damages to Puzyk individually. They contended
A-2104-17T4
50
the corporate entity, Northern, instituted suit, alleging Parsells owed it a duty,
and breached that duty, proximately causing Northern damages. They further
asserted Angstriech's opinion supported Northern's claims against Parsells.
The trial judge disagreed. In a ruling encompassing the motions for
JNOV, new trial and remittitur, he stated that the trial testimony and Puzyk's
testimony "provided evidence that a reasonable jury could find that an
attorney/client relationship existed between Puzyk and the defendants." The
judge explained that the jury could have relied upon Angstreich's testimony that
Parsells breached his duty to Northern to conclude that Parsells also breached
his duty of care to Puzyk individually, since Puzyk was the "sole owner" of
Northern.
In addressing the damage award and requested remittitur, the trial judge
found the jury's award of damages was "clearly supported by the evidence,"
noting plaintiffs "asked for substantially more." The motions for a new trial,
JNOV and remittitur were denied.
We are satisfied the court's rulings as to Northern are adequately
supported by the substantial, credible evidence contained in the record. Parsells
was asked, and agreed, to represent Northern when a conflict arose stemming
from Coffey's representation of both Northern and Satec. Puzyk and Parsells
A-2104-17T4
51
presented sharply conflicting versions of events pertaining to the mediation
sessions, the settlement negotiations, and the eventual finalization of the
settlement agreement. Angstreich opined that Northern could have obtained a
more favorable settlement but for the McElroy defendants' breach of duty to it.
Lakind disagreed.
A reasonable jury could conclude from its review of the August 2008
preliminary term sheet that Honeywell was willing to pay Northern at least
$250,000, if not the $438,000 desired, to settle their claims. But, in the end,
Northern only received $75,000 from Honeywell in the settlement, $13,000 of
which was taken by Coffey to pay mediation fees, while Coffey himself received
a direct payment of $150,000 from Honeywell, and Satec received $25,000.
Based upon the trial testimony, a reasonable jury could conclude that Parsells, a
longtime friend of Coffey, pressured Puzyk to settle, failed to look out for
Northern's interests, and that his breach of duty to Northern was "a substantial
factor in causing" Northern's damages. See Conklin, 145 N.J. at 420; see also
2175 Lemoine Ave., 272 N.J. Super. at 487.
Because reasonable minds could differ as to whether Parsells proximately
caused Northern's damages, and also as to the quantum of the damages suffered,
the trial court properly denied the motion for judgment. Similarly, the verdict
A-2104-17T4
52
in Northern's favor is supported by competent evidence and did not constitute a
miscarriage of justice. Therefore, there was no error in the denial of the motions
for JNOV, remittitur, and a new trial as concerns Northern. The damages
awarded to Northern in the amount of $100,000 is not patently excessive or
grossly disproportionate. It was substantially less than the $438,000 sought.
We discern no merit to the McElroy defendants' characterization of the
damages award, at least in part, as an unlawful disgorgement of Coffey's fee
from them. The circumstances here did not just involve Coffey's fee itself, but
plaintiffs contended Parsells's negligence resulted in a misallocation of
settlement funds which resulted in Coffey receiving substantially more than the
contingent fee agreement allowed under the retainer agreement.
Angstreich testified that Parsells should have advised Puzyk and Northern
that the $150,000 fee was excessive, and that Coffey was not entitled to it. Even
Lakind conceded that, assuming Parsells's representation of Northern continued
through finalization of the settlement agreement, he should have addressed the
fee issue.
Based upon the evidence in the record, a reasonable jury could conclude
that, in his role as counsel for Northern, Parsells had a duty to alert Puzyk that
the payment from Honeywell to Coffey far exceeded the agreed-upon amount
A-2104-17T4
53
for attorney fees. A reasonable jury could conclude that Parsells should have
attempted to redirect a portion of Coffey's share to Northern, and that his failure
to act accordingly was "a substantial factor in causing" Northern's damages in
this regard. See Conklin, 145 N.J. at 420; see also 2175 Lemoine Ave., 272 N.J.
Super. at 487. We see no error in the jury's award regarding Northern.
In turning to the McElroy defendants' argument concerning the award to
Puzyk individually, we agree the trial court erred in denying the motions for
judgment and JNOV. Although there was sufficient evidence to demonstrate the
existence of an attorney-client relationship between Puzyk and Parsells, there
was no evidence to support a finding that Parsells proximately caused Puzyk,
individually, to suffer actual damages independent of the damages incurred by
Northern.
"All that is necessary" to establish an attorney-client relationship "is that
the parties relate 'to each other generally as attorney and client.'" Petit-Clair v.
Nelson, 344 N.J. Super. 538, 543 (App. Div. 2001). In Petit-Clair, we rejected
an attorney's contention that he only represented a corporation, and not its
husband and wife owners, finding that the parties "related to each other as
attorney and client." Id. at 543-44. It was the husband and wife, not the
corporation, who relied on the attorney's "guidance and advice." Id. at 544.
A-2104-17T4
54
Here, it is undisputed that Puzyk was the sole owner of Northern, and that
he was the person responsible for accepting or rejecting the settlement on
Northern's behalf. Although Angstreich did not opine whether Parsells had an
attorney-client relationship with Puzyk individually, Puzyk's own testimony
regarding his interactions with Parsells provided sufficient evidence for a
reasonable jury to conclude that they related to one another as attorney and
client.
However, that relationship was not enough for the jury to award Puzyk
damages as an individual. "It is well established that the plaintiff must show a
breach of duty and resulting damage to prevail in a negligence action." Nappe,
97 N.J. at 45 (emphasis in original) (citations omitted). "Ordinarily, the issue
of proximate cause should be determined by the factfinder," except "in the
highly extraordinary case in which reasonable minds could not differ on whether
that issue has been established." Fleuhr v. City of Cape May, 159 N.J. 532, 543
(1999) (citations omitted).
Although Angstreich mentioned during his testimony that Puzyk could
suffer damages because, under the settlement agreement's terms and the MOA
with DEP, he remained personally liable for the remediation of the property if
Honeywell failed to complete it, there was no evidence presented that those
A-2104-17T4
55
circumstances occurred. To the contrary, Puzyk admitted the remediation was
completed by Honeywell. Despite the clean-up costs having exceeded the
estimates, neither Honeywell nor anyone else had sought any money from him
in connection with the remediation. There was no evidence of any breach of the
settlement agreement, or that Puzyk had to indemnify Honeywell or Satec, or
that he had suffered any consequences at all under the MOA with DEP. Puzyk
failed to present evidence he individually sustained any actual monetary loss.
Therefore, the potential damages testified to by Angstreich were speculative and
not recoverable. See Grunwald, 131 N.J. at 495.
Therefore, the trial court erred when it denied the McElroy defendants'
motion for judgment as to Puzyk individually. Since plaintiffs offered no
evidence to show that Parsells proximately caused Puzyk to suffer actual
damages, the jury's award of $100,000 to Puzyk individually constitutes a
miscarriage of justice.
E.
The McElroy defendants contend that the attorney's fee award to plaintiffs
was unreasonably high in comparison to their limited recovery at trial. In a
cross-appeal, plaintiffs contend the court erred when it failed to award them the
full amount of attorney's fees they sought.
A-2104-17T4
56
Attorney fee determinations by trial courts "will be disturbed only on the
rarest of occasions, and then only because of a clear abuse of discretion."
Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (citation
omitted). "[A] negligent attorney is responsible for the reasonable legal
expenses and attorney fees incurred by a former client in prosecuting the legal
malpractice action." Saffer v. Willoughby, 143 N.J. 256, 272 (1996). "Those
are consequential damages that are proximately related to the malpractice."
Ibid.; see Bailey v. Pocaro & Pocaro, 305 N.J. Super. 1, 6 (App. Div. 1997)
(explaining that Saffer "dictates that a plaintiff who is economically injured by
an attorney's legal deficiency should be made whole" and that "'wholeness'
includes the attorney's fees and costs to pursue the malpractice claim.").
Here, the court awarded plaintiffs $47,000 in attorney fees, substantially
less than the $87,998 requested. In making its determination, the court properly
analyzed the factors under RPC 1.5(a), and concluded the requested fee was
"unreasonable and disproportionate to the verdict" and the "modest recovery"
awarded. The court reduced the award to $47,000 pursuant to the $12,000
retainer fee and the $35,000 cap on billable hours under the two retainer
agreements, reasoning that counsel could not bill an adversary for hours not
properly billed to the client.
A-2104-17T4
57
The court's well-reasoned determination does not constitute a clear abuse
of discretion. It was not unreasonable or excessive in light of the amount of the
verdict. Moreover, in reducing the award from $87,998 to $47,000, the court
considered that plaintiffs sought over $500,000 in damages and recovered
substantially less. We discern no abuse of discretion in the attorney's fee award.
In sum, the judgment in favor of Puzyk is vacated and remanded for the
entry of an amended judgment. We affirm the remainder of the appeal and
dismiss the cross-appeal.
Affirmed in part, vacated in part and remanded in accordance with this
opinion. We do not retain jurisdiction.
A-2104-17T4
58