LANE CONSTRUCTION CO., INC. VS. WILLIAM P. MUNDAY, ESQ. (L-0972-17, MORRIS COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-0494-19T3
LANE CONSTRUCTION CO.,
INC.,
Plaintiff-Appellant,
v.
WILLIAM P. MUNDAY, ESQ.,
BRUCE S. ROSEN, ESQ.,
MCCUSKER, ANSELMI, ROSEN
AND CARVELLI, PC, and
LOWENSTEIN SANDLER, PC,
Defendants-Respondents.
____________________________
Argued January 13, 2020 – Decided March 3, 2020
Before Judges Sabatino, Sumners and Natali.
On appeal from an interlocutory order of the Superior
Court of New Jersey, Law Division, Morris County,
Docket No. L-0972-17.
Gregg D. Trautmann argued the cause for appellant
(Trautmann and Associates, LLC, attorneys; Gregg D.
Trautmann, on the brief).
David Morgan Blackwell argued the cause for
respondent William P. Munday, Esq. (Donnelly Minter
& Kelly, LLC, attorneys; David Morgan Blackwell, of
counsel; Jared James Limbach, on the brief).
Daniel Albert Malet argued the cause for respondents
Bruce S. Rosen, Esq. and McCusker, Anselmi, Rosen
& Carvelli, PC (McElroy, Deutsch, Mulvaney &
Carpenter, LLP, attorneys; Christopher James Carey, of
counsel and on the brief; Daniel Albert Malet, on the
brief).
Philip Touitou argued the cause for respondent
Lowenstein Sandler, PC (Ackerman LLP, attorneys;
Philip Touitou, on the brief).
PER CURIAM
In this legal malpractice action, Lane Construction Co., Inc. (Lane)
appeals on leave granted from an August 16, 2019 Law Division order that
compelled it to produce "all documents and communications" with its
superseding counsel relating to an underlying mechanic's lien foreclosure
litigation and its settlement. The order also required the re-deposition of Lane's
principals, President Mark Lane, Vice President of Construction Robert M.
Lane, and Chairman Robert Lane. Having reviewed the record, we affirm in
part and remand in part.
First, as explicitly provided in N.J.S.A. 2A:84A-20(2)(c), the attorney-
client privilege does not extend "to a communication relevant to an issue of
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2
breach of duty by the lawyer to his client, or by the client to his lawyer." The
communications at issue are clearly relevant to the alleged breach of such a duty
by defendants William P. Munday, Esq. (Munday), Bruce S. Rosen, Esq.
(Rosen), McCusker, Anselmi, Rosen and Carvelli, PC (MARC), and Lowenstein
Sandler, PC (Lowenstein) to plaintiff. Second, plaintiff placed the disputed
discovery directly at issue when it sued its predecessor counsel for malpractice.
Third, the documents and related discovery are clearly necessary for defendants
to defend properly against plaintiff's claims that they breached a standard of care
that proximately and fully caused plaintiff's damages.
To ensure that only documents and information related to superseding
counsel's involvement in the underlying foreclosure action and particularly that
matter's settlement are produced, on remand plaintiff shall produce a privilege
log identifying all disputed privileged communications. The trial court should
then conduct an in-camera review of those materials and make specific rulings
consistent with the legal principles detailed in our opinion.
I.
Plaintiff, a general contractor, agreed with The Great Atlantic and Pacific
Tea Company (A&P) to perform construction and renovation work at a
supermarket in New York for a base contract price of $5,738,300. A&P
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allegedly "requested and authorized additional work," resulting in change orders
and cost overruns totaling $1,117,491.27.
After A&P refused to pay plaintiff for these additional costs, plaintiff
retained Munday, then a partner at Lowenstein. Although Munday was not
admitted to the New York bar, he prepared and filed a mechanic's lien1 in that
state encumbering the property where the work was performed reflecting
plaintiff's alleged damages of $1,117,491.27.
After filing the lien, Munday left Lowenstein and became associated with
MARC, where he continued to represent plaintiff. According to plaintiff, Rosen,
a partner at MARC, began assisting Munday with matters relating "to the
litigation aspects of the . . . contract and the maintenance of the subject
mechanic's lien."
On May 20, 2010, Rosen filed an extension of the mechanic's lien. Six
months later, pursuant to an arbitration clause in the contract between plaintiff
and A&P, Rosen also filed an arbitration demand with the American Arbitration
1
Where "[a] contractor . . . performs labor or furnishes materials for the
improvement of real property" based on the consent or request of the owner, the
contractor "shall have a lien for the principal and interest, of the value, or the
agreed price, of such labor, . . . from the time of filing a notice of such lien."
N.Y. Lien Law § 3. Such a lien includes "benefits and wage supplements due
or payable for the benefit of any laborer, or materials upon the real property
improved or to be improved and upon such improvement . . . ." Ibid.
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Association (AAA), after initially filing, then dismissing a New Jersey state
court action against A&P. The following month, A&P filed for Chapter 11
bankruptcy.
Five months later, Rosen filed a mechanic's lien foreclosure complaint in
New York state court against the landowners. That same day, the New York
court entered an order extending plaintiff's mechanic's lien for one year. Rosen,
however, did not extend the mechanic's lien the following year.
After A&P's bankruptcy plan was confirmed, the New York court stayed
the foreclosure proceedings pending the outcome of the arbitration between
plaintiff and A&P. The arbitration concluded with a $308,737.98 award in
plaintiff's favor. The following year, A&P filed a second bankruptcy petition,
pursuant to which defendants failed to timely file a notice of claim. Three days
after its second bankruptcy filing, A&P intervened in the New York foreclosure
action between plaintiff and the landowners and filed a counterclaim against
plaintiff for what is known under New York law as willful exaggeration. 2
2
New York law provides that "[i]n any action or proceeding to enforce a
mechanic's lien upon a private . . . improvement," where a court finds "that a
lienor has willfully exaggerated the amount for which he [or she] claims a lien .
. . [such] lien shall be declared to be void and no recovery shall be had thereon."
Pyramid Champlain Co. v. Brosseau & Co., 699 N.Y.S.2d 516, 520 (App. Div.
1999) (quoting N.Y. Lien Law § 39). Additionally, where such lien has been
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According to Rosen's answer in the malpractice case, on April 12, 2016,
he and Munday appropriately informed plaintiff that they had made an error in
the course of their representation and plaintiff should retain separate counsel
regarding a possible malpractice claim. Specifically, Rosen informed plaintiff
that they failed to extend the notice of pendency which resulted in the expiration
of the mechanic's lien and rendered the arbitration award uncollectable. 3
The following month, in a May 5, 2016 e-mail, Munday advised plaintiff
that its potential exposure to damages under A&P's willful exaggeration claim
was "the difference between the amount stated on the mechanic's lien and that
which the AAA panel determined was owed," totaling $808,753.30, as well as
the costs and attorney's fees incurred by the landowner and A&P. The following
week, on May 11, 2016, plaintiff advised MARC, Munday, and Rosen that it
was terminating their representation.
declared void by a court, the lienor "shall be liable in damages to the owner or
contractor." N.Y. Lien Law § 39(a). To establish willful exaggeration, the party
opposing the lien must "show that the amounts set forth were intentionally and
deliberately exaggerated." Garrison v. All Phase Structure Corp., 821 N.Y.S.2d
898, 899 (App. Div. 2006).
3
Pursuant to New York Lien Law § 17, where a lienor fails to file a notice of
pendency to preserve its mechanic's lien, "the lien expire[s] by operation of law
. . . one year after it was filed." See In re Flintlock Realty & Constr. Corp., 591
N.Y.S.2d 439, 439 (App. Div. 1992).
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On May 14, 2016, the Supreme Court of New York entered a consent order
substituting Levitt LLP (Levitt) as Lane's attorney of record in the foreclosure
action. Also, on May 25, 2016, Gregg D. Trautmann, Esq., of Trautmann &
Associates, LLC (Trautmann) indicated in an e-mail to the Supreme Court of
New York that plaintiff had retained Trautmann as its counsel in the foreclosure
matter as well. Shortly thereafter, plaintiff settled the New York litigation with
A&P by agreeing to pay $90,000 in exchange for A&P's withdrawal of the
willful exaggeration claim.
On May 1, 2017, plaintiff filed a complaint in the Law Division against
Munday, Rosen, and MARC alleging malpractice and seeking compensatory
damages, consequential damages, and declaratory judgment. Specifically,
plaintiff alleged that the Munday, Rosen, and MARC defendants: 1) "wrongfully
held themselves out to be knowledgeable in the field[s] of litigating construction
contract disputes . . . [and] AAA arbitration claims"; 2) misled plaintiff as to the
nature of an interlocutory appeal because they advised that the appeal
"concerned [A&P]'s efforts to avoid submitt[ing] the underlying contract action
to . . . arbitration," when the appeal in fact "concerned [A&P's] argument that
the New York mechanic's lien was filed late"; and 3) failed "to inform the
plaintiff that it faced a 'willful exaggeration' claim in the New York action."
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Plaintiff further alleged that those defendants breached their "duty to properly
represent . . . plaintiff" and "wrongfully held themselves out to be
knowledgeable in the field of mechanic's liens." Plaintiff later amended the
complaint to include Lowenstein as a defendant.
In May 2019, defendants deposed Mark, Robert M., and Robert Lane. At
each deposition, plaintiff's counsel repeatedly objected to questioning regarding
plaintiff's communications with Trautmann and Levitt. By way of example, at
Mark Lane's deposition, plaintiff's counsel instructed him not to answer the
question: "Did lawyers at Levitt . . . recommend that [plaintiff] settle this
claim?" Further, plaintiff's counsel objected to a question at Robert M. Lane's
deposition asking whether he "recall[ed] that . . . Trautmann was asked to assist
in trying to settle the [underlying] case." Plaintiff's counsel also objected at
Robert Lane's deposition to a question posed by defense counsel regarding
whether he recalled having a conversation about A&P's willful exaggeration
claim "with any attorney."
Shortly after the Lane depositions, Levitt responded to a subpoena duces
tecum propounded by Munday. In response, Levitt produced documents that
indicated Trautmann, not Levitt, negotiated the settlement with A&P. These
documents included: 1) the May 25, 2016 letter from Trautmann to the New
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York Supreme Court; 2) a June 2016 e-mail from Trautmann to counsel for A&P
"discussing discovery and inviting [A&P's counsel] to 'revisit' a prior discussion
regarding settlement"; 3) another June 2016 e-mail from Trautmann to Levitt
and plaintiff with regard to settlement discussions; 4) various e-mails indicating
that Trautmann had principals of plaintiff authorize the A&P settlement in
writing; 5) a series of July 2016 e-mails between Trautmann and A&P's counsel
negotiating payment of filing fees; and 6) an August 2016 check from
Trautmann to Levitt, which Munday "believed to represent a portion of the
underlying settlement funds."
After receiving these documents, defendants filed a motion to compel
plaintiff to produce "any paper or electronic documents or communications
[between plaintiff and Trautmann or Levitt] related to the underlying litigation,"
to re-depose the Lanes, and to extend discovery. Plaintiff opposed the motion
and contended that it had provided all responsive and non-privileged discovery.
Further, at the August 16, 2019 oral argument on the motion, plaintiff's
counsel stated that it already informed defendants that settling the underlying
litigation "was a business decision." Plaintiff's counsel also explained that
plaintiff did not pursue the arbitration award because Rosen and Munday
informed them that they "no longer ha[d] a mechanic['s lien] claim because
A-0494-19T3
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[Rosen and Munday] failed to extend [the lien] as required by New York law."
Plaintiff also maintained that questions relating to the identity of plaintiff's
attorneys "and when were they retained" were protected by the attorney-client
privilege.
After hearing oral arguments, the trial court granted defendants' motion in
an oral opinion. The court, relying on In re Kozlov, 79 N.J. 232, 243-44 (1979)
and State v. Mauti, 208 N.J. 519, 538-39 (2012), concluded that the attorney-
client privilege did not preclude discovery of communications between plaintiff
and its successor counsel and accordingly ordered plaintiff, Trautmann, and
Levitt "to produce all documents and communications in their possession related
to the underlying litigation" with the landowner and A&P. It further compelled
the Lanes to re-appear for further questioning at deposition.
The following month, plaintiff filed a motion to quash a subpoena served
by defendants on Karen L. Weiss, Esq., the New York attorney at Levitt who
represented plaintiff in the foreclosure litigation, and it also sought a stay
pending leave to appeal the court's August 16, 2019 interlocutory order. In
response, defendants filed cross-motions seeking to set certain dates for the re-
depositions of the Lanes and the deposition of Weiss, and to extend discovery.
A-0494-19T3
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The same day, plaintiff filed an application for interlocutory review of the trial
court's August 16, 2019 order, which we granted on October 1, 2019.
On October 10, 2019, the trial court denied plaintiff's motions and
defendants' cross-motion to extend discovery but granted defendants' cross-
motions to set dates for the re-depositions of the Lanes and the deposition of
Weiss. With regard to plaintiff's motion for a stay pending appeal, the court
concluded that plaintiff did not demonstrate that it would suffer irreparable harm
because the order compelling discovery only related to "those discovery
materials related to the negotiation process with A&P." Further, the court found
that plaintiff did not have a reasonable likelihood of success on the merits
because discovery of the materials relating to the settlement between plaintiff
and A&P "directly affects the calculation of damages against [defendants]," and
"the parties have not proffered any other method to obtain the information Weiss
may have without a deposition." Finally, the court balanced the hardships of the
parties and found that a stay pending appeal was unnecessary.
We subsequently granted plaintiff's motion to stay the trial court
proceedings to the extent that those proceedings involved "discovery that affects
the privilege issues now pending before this court."
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II.
We "normally defer to a trial court's disposition of discovery matters . . .
unless the court has abused its discretion[,]" or the decision is based on "a
mistaken understanding of the applicable law." Payton v. N.J. Tpk. Auth., 148
N.J. 524, 559 (1997). Because "[a] trial court's interpretation of the law and the
legal consequences that flow from established facts are not entitled to any
special deference[,]" Manalapan Realty v. Manalapan Twp. Comm., 140 N.J.
366, 378 (1995), we review the applicability of the attorney-client privilege de
novo.
The attorney-client privilege, despite it being critically important to
ensure full and frank communications between lawyers and clients, "is neither
absolute nor sacrosanct." Hedden v. Kean Univ., 434 N.J. Super. 1, 11-12 (App.
Div. 2013) (quoting Biunno, Current N.J. Rules of Evidence, cmt. 1 on N.J.R.E.
504(3) (2013)). Indeed, "privileges stand in what [our Supreme Court] ha[s]
declared to be a 'disfavored status' because they have an effect on the truth-
seeking function." Mauti, 208 N.J. at 532 (2012) (quoting Payton, 148 N.J. at
539). Thus, testimonial privileges have been construed narrowly "because they
prevent the trier of fact from hearing relevant evidence and thereby undermine
the search for truth[,] . . . [and] sensibly accommodate privileges to the aim of a
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just result, and accept them to the extent they outweigh the public interest in full
disclosure." Id. at 531-32 (quoting State v. J.G., 201 N.J. 369, 383 (2010)).
To address these competing interests, the Supreme Court detailed a three-
part test that a party seeking to pierce the attorney-client privilege must satisfy:
(1) there [must be] "a legitimate need . . . to reach the evidence sought to be
shielded"; (2) the evidence must be relevant and material to an issue in the case;
and (3) there must be a finding, by a fair preponderance of the evidence, that the
information sought cannot be obtained from a less intrusive source. Kozlov, 79
N.J. at 242-43.
In Mauti, the Supreme Court made clear, however, that the third prong of
the Kozlov test must be construed narrowly:
Kozlov did not propound a broad equitable balancing
test pursuant to which any privilege is subject to
piercing if the adversary 'needs' relevant evidence that
cannot be obtained from another source. Such an
approach would eviscerate the privileges and trench on
the legislative judgments informing them. To the
contrary, in Kozlov, . . . we recognized that only in the
most narrow of circumstances, such as where a
privilege is in conflict with a defendant's right to a
constitutionally guaranteed fair trial, would the need
prong of its test be satisfied.
[Mauti, 208 N.J. at 537-38 (emphasis added).]
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The Mauti Court added that in the context of a statutory privilege, "the
privilege could not be overborne, except where specifically so provided by the
Legislature or where the need arose out of a constitutionally based command . .
. ." Id. at 538. In this regard, the attorney-client privilege does not extend "to a
communication relevant to an issue of breach of duty by the lawyer to his client,
or by the client to his lawyer." N.J.R.E. 504(2) (quoting N.J.S.A. 2A:84A-
20(2)).
Further, "a privilege may be waived 'implicitly' where a party puts a
confidential communication 'in issue' in a litigation." Mauti, 208 N.J. at 532
(quoting Kinsella v. Kinsella, 150 N.J. 276, 300 (1997)). 4 In the context of
attorney malpractice actions, it is well-settled that a client waives the protections
of the attorney-client privilege when he sues his attorney. Connell, Foley &
Geiser, LLP v. Israel Travel Advisory Servs., Inc., 377 N.J. Super. 350, 361-62
(App. Div. 2005); State v. Garron, 177 N.J. 147, 175 (2003).
4
The privilege can also be waived if the defendant "contracted" to do so, or
"made disclosure of any part of the privileged matter or consented to such a
disclosure made by anyone." N.J.R.E. 530 (quoting N.J.S.A. 2A:84A-29). As
noted, Levitt produced certain communications in response to Munday's
subpoena. No party has argued that Levitt's production constituted a partial or
complete waiver of the attorney-client privilege and we, accordingly, do not
address such a waiver claim.
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"In essence, in [such a] circumstance[], the party who places a confidential
communication in issue voluntarily creates the 'need' for disclosure of those
confidences to the adversary." Mauti, 208 N.J. at 532. 5 The Kozlov and the
Kinsella "at issue" line of cases establish the narrow circumstances, apart from
the express exceptions in N.J.S.A. 2A:84A-20, under which the "need" prong
can be satisfied: 1) a party has explicitly or implicitly waived the privilege or
2) where a constitutional right is at stake.
With these legal principles as our guidepost, we affirm (with certain
modifications) the court's August 16, 2019 order on three independent grounds.
First, pursuant to N.J.S.A. 2A:84A-20(2), the attorney-client privilege does not
apply to communications "relevant to an issue of breach of duty by the lawyer
to his client, or by the client to his lawyer." See Mauti, 208 N.J. at 538 (noting
5
The Mauti Court cited a number of cases, including United Jersey Bank v.
Wolosoff, 196 N.J. Super. 553, 564-65 (App. Div. 1984), as examples of an
implicit waiver of the attorney-client privilege. Mauti, 208 N.J. at 532. In
Wolosoff, the plaintiff sought to rescind a settlement agreement asserting that
defendant made material misrepresentations in the course of the settlement
discussions and sought communications between plaintiff and counsel to
challenge its claim that plaintiff relied on defendant's alleged
misrepresentations. 196 N.J. Super. at 559-60. We ordered disclosure of the
privileged communication to prevent plaintiff from inequitably "divulg[ing]
whatever information is favorable to its position and assert the privilege to
preclude disclosure of . . . detrimental facts." Id. at 567.
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that the attorney-client privilege cannot be "overborne, except where
specifically so provided by the Legislature").
Second, by suing Munday, Rosen, MARC, and Lowenstein claiming they
committed legal malpractice, plaintiff implicitly waived the attorney-client
privilege by placing at issue in the malpractice action the legal advice
Trautmann and Levitt as superseding counsel provided to them, as that advice is
directly relevant to the cause of plaintiff's alleged damages (i.e., whether certain
of plaintiff's claimed damages were proximately caused by the actions of
defendants or the alleged negligent settlement of the underlying action by
Trautmann and Levitt), and their request that defendants reimburse them for the
$90,000 settlement paid to A&P. 6 See, e.g., Connell, Foley & Geiser, 377 N.J.
Super. at 361-62.
In this regard, defendants contend in their respective answers and in
discovery responses that the cause of plaintiff's damages was not any negligent
act that they may have committed, but rather the separate, intervening
6
We acknowledge that the court did not expressly rely on N.J.S.A. 2A:84A -
20(2) or the at-issue doctrine when piercing the attorney-client privilege.
Appeals, however, are taken only from written judgments or orders, Konczyk v.
Konczyk, 367 N.J. Super. 512, 514 n.1 (App. Div. 2004), and we may affirm a
trial court's order for reasons different from those expressed by the trial court.
State v. Armour, 446 N.J. Super. 295, 310 (App. Div. 2016).
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negligence of Trautmann and Levitt. Specifically, defendants assert that
Trautmann's and Levitt's effective abandonment of the $308,000 arbitration
award related to the mechanic's lien and concomitant $90,000 payment was
negligent because, contrary to their claims, the arbitration award had value and
defendants did not "willfully exaggerate" the claim under New York law.
According to defendants, a "factfinder . . . may well determine that plaintiff
would have prevailed in the underlying litigation it if had not settled, thereby
extinguishing plaintiff's current malpractice claims and inculpating successor
counsel." Defendants also argue that to the extent plaintiff asserts that Rosen's,
Munday's, and MARC's actions in failing to file a timely notice of pendency
vitiated the arbitration award, those actions also extinguished the willful
exaggeration claim, rendering the advice and decision to pay A&P $90,000
discoverable.
While we do not pass on the merits of these assertions, we see no
principled reason under the facts here to except communications between
successor counsel and a client, particularly when those communications may
relate directly to the cause and quantum of the alleged damages. 7 See Connell,
7
Plaintiff describes defendants' arguments as "sophistry" unsupported by any
expert testimony. We disagree that an expert report was required prior to the
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Foley & Geiser, 377 N.J. Super. at 361-62 ("While there might be instances in
the predecessor-successor suits where implied waiver would be unfair to the
client, we cannot envision any circumstance where that would be so when the
client retains two attorneys to handle the same litigation . . . .").
Third, we agree with the court that production of communications between
Trautmann, Levitt, and plaintiff was warranted upon application of the Kozlov
tripartite test, as modified by the Mauti Court. In this regard, refusing to pierce
the attorney-client privilege in this case would severely handicap defendants'
constitutional right to a fair trial. See Mauti, 208 N.J. at 537-38. Without being
able to inquire at deposition and review documents relating to the reasons why
Trautmann and Levitt decided to resolve the underlying litigation, defendants
would be severely and impermissibly curtailed in establishing its claim that
plaintiff entered into a detrimental settlement agreement due to the alleged
negligence of its successor counsel.
As defendants correctly maintain, because the limited discovery record
supports the conclusion that Trautmann and Levitt each "played an integral role
court compelling the clearly relevant and necessary discovery. We expressly do
not address whether an expert opinion or testimony is required to establish any
of the parties' substantive claims or defenses. Such a determination should be
made by the trial court in the first instance.
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in negotiating the settlement . . . and advising [p]laintiff to pay $90,000 to A&P
despite receiving a favorable $308,737.98 AAA [a]rbitration award,"
information relating to counsels' advice is vital to defendants' position that they
did not commit legal malpractice or, alternatively, that Trautmann and Levitt
were partially liable for plaintiff's alleged damages.
Further, as plaintiff seeks to recover as damages the $90,000 settlement,
defendants have a legitimate need to access communications between plaintiff,
Trautmann, and Levitt to determine the validity of such a claim for
reimbursement. As the trial court correctly reasoned, in order for "this litigation
[to be] fairly tried with all available information, [defendants] have a
[constitutional] right to explore" communications between plaintiff, Trautmann,
and Levitt regarding the underlying settlement. Indeed, as Munday notes on
appeal, plaintiff "simultaneously claim[s] the underlying settlement as damages
and [attempts to] block defendants' every attempt to obtain information
regarding the circumstances surrounding [it]."
As to the second Kozlov prong, as stated in Dontzin v. Myer, 301 N.J.
Super. 501, 508-09 (App. Div. 1997), "it would be a rare confidential
communication that would not satisfy the relevancy test." Kozlov therefore
requires defendants to establish both that the information is both relevant and
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material, a requirement easily met here. As noted, the communications are
directly relevant and material to the issue of which of plaintiff's claimed
damages were proximately caused by defendants' alleged breach.8
With respect to the third Kozlov prong, we find no support in the record
that discovery related to the reasons plaintiff settled the underlying litigation is
available from any other less intrusive source. See Kozlov, 79 N.J. at 243-44
(quoting In re Farber, 78 N.J. 259, 276-77 (1978)). As the court observed, such
information "can't come from anybody except the client or the attorney." From
our review of the excerpts of the Lanes' depositions provided in the record, we
have no reason to disagree with the court's finding.
Indeed, those excerpts contain limited substantive testimony. In its merits
brief before us, plaintiff states that its decision to settle was a "business
decision[] based upon the status of the underlying litigation, the malpractice
errors admittedly committed by the defense attorneys[,] and the exposure to the
plaintiff on the willful exaggeration claim." Defendants should not be forced to
accept such assertions without an ability to challenge those claims or explore
8
While we recognize that neither MARC nor Munday has filed a third-party
action against Trautmann or Levitt, counsel represented that such a claim is
being considered, pending receipt of the disputed discovery. Independent of any
such putative action, as noted, the discovery is relevant as it directly addresses
the proximate cause and damages issues.
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the bases for that "business decision." See Wolosoff, 196 N.J. Super. at 567
(stating that a plaintiff should not be permitted to "divulge whatever information
is favorable to its position and assert the privilege to preclude disclosure of . . .
detrimental facts").
III.
Finally, plaintiff contends the court committed error when it ordered the
Lanes re-deposed. Specifically, plaintiff argues that defendants "have deposed
the plaintiff's principals and were permitted to make full inquiry as to the reasons
as to why the underlying matter was settled." We disagree.
Rule 4:10-1 sets forth the permissible modes of discovery in a civil suit,
including oral deposition testimony, and further provides that "[u]nless the court
orders otherwise under [Rule] 4:10-3, the frequency of use of these methods is
not limited." Rule 4:10-3 in turn provides that "[o]n motion by a party . . . from
whom discovery is sought, the court, for good cause shown . . . may make any
order that justice requires to protect a party . . . from annoyance, embarrassment,
oppression, or undue burden or expense."
Here, the court properly allowed the Lanes to be deposed for a second
time regarding the underlying litigation. As noted, at the initial depositions of
the Lanes, plaintiff's counsel objected to various lines of questioning, effectively
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thwarting any substantive discussion of the reasons for the settlement of the
underlying litigation. By way of example only, plaintiff's counsel precluded
defendants' counsel from inquiring into the following areas: 1) "Did lawyers at
Levitt, LLP recommend that [plaintiff] settle this claim?"; 2) "Prior to the
settlement, had [plaintiff] already retained Mr. Trautmann?"; and 3) "Do you
recall that Mr. Trautmann was asked to assist in trying to settle the [underlying]
case?" Had these lines of inquiry been allowed to go forward, defendants would
likely have been able to discover evidence relevant to their defenses against
plaintiff's legal malpractice claim.
Moreover, plaintiff does not argue that the Lanes, by submitting to a
second deposition limited to the underlying litigation, would suffer "annoyance,
embarrassment, oppression, or undue burden or expense." R. 4:10-3. Absent
good cause preventing a second deposition, which we assume can be completed
expeditiously in light of the court's order limiting the scope of the depositions
to the underlying litigation and related settlement, the court properly permitted
the Lanes to be re-deposed.9
9
We note that in its August 16, 2019 oral decision, the court stated that it was
"not suggesting [defendants] can depose the attorneys at all . . . ." In the court's
October 10, 2019 order, however, it denied plaintiff's motion to quash a
subpoena for the deposition of Weiss. On remand, we leave it to the trial court
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IV.
Our directions on remand are limited to ensuring that plaintiff produce
only those relevant attorney-client communications that relate to Trautmann's
and Levitt's limited involvement in the later stages of the underlying litigation
and settlement. In this regard, it is clear from the trial court's reference to the
"underlying litigation" in its August 16, 2019 order and more specific reference
to the "negotiation process with A&P" in its statement of reasons accompanying
its October 10, 2019 order, that the relevant attorney-client communications at
issue relate to that discrete time period and event. We do not understand those
materials to be extensive. Prior to any production, the court shall conduct a
careful in camera inspection of the aforementioned documents to ensure that no
other privileged communications are disclosed. See Payton, 148 N.J. at 550.
With these safeguards in place, we discern no adverse public policy
consequences, or any "chilling effect" on the willingness of attorneys to serve
as successor counsel, will ensue.
to determine in its discretion whether further depositions of plaintiff's other
successor counsel are appropriate.
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To the extent we have not addressed any of plaintiff's arguments it is
because we concluded they lacked sufficient merit to warrant discussion in a
written opinion. R. 2:11-3(e)(1)(E).
Affirmed as modified.
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