Title: Virginia B.Puder, Esq. v. Kathleen Buechel

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). Dr. Buechel moved to enforce the settlement agreement. The trial court ordered that a plenary hearing be conducted to determine whether the parties had reached a binding agreement, and, if so, whether the agreement was enforceable. In March 1997, while the hearing was still pending, Puder sued Mrs. Buechel for unpaid legal fees and costs associated with her divorce representation. Mrs. Buechel filed an answer and counterclaim, alleging that Puder committed legal malpractice by negotiating an inadequate settlement based on insufficient income and asset information. In addition, Mrs. Buechel alleged that Puder failed to obtain her consent before accepting the settlement on her behalf. In June 1998, the trial court held a plenary hearing to determine whether the parties had reached a binding settlement agreement, and, if so, whether the agreement was enforceable. After six days of testimony, Braun informed the court that Mrs. Buechel had agreed to settle the divorce. The new settlement was substantially similar to the disputed settlement, with the principal difference being that the new settlement provided Mrs. Buechel with an additional $100,000 IRA distribution and $8,000 more per year in alimony with all alimony payments now taxable to Dr. Buechel. On June 30, Mrs. Buechel testified before the trial court that the agreement was acceptable to her and that she entered into it voluntarily. Mrs. Buechel also testified that she was only agreeing to the settlement because she believed that the trial court would find the first settlement enforceable and because it was her understanding that the second settlement would not affect the status of her malpractice claim against Puder. The trial court ruled that Mrs. Buechel knowingly and voluntarily entered into the second settlement agreement with Dr. Buechel and granted a judgment of divorce to Mrs. Buechel. The trial judge did not comment on Mrs. Beuchel s testimony in respect of the effect of the second settlement agreement on the malpractice claim. In January 2001, before a different judge, Puder moved for summary judgment on the legal malpractice counterclaim, arguing that Mrs. Buechel waived her right to sue Puder by entering into the second settlement before the validity of the first settlement was determined. The court agreed and granted the motion on that ground and on judicial estoppel principles. The court based its decision on the certification filed in support of Mrs. Buechel s motion to stay the malpractice claim, which stated that the claim would be rendered moot if Mrs. Buechel prevailed in the matrimonial action. Mrs. Buechel s motion for reconsideration was denied. In a published opinion, the Appellate Division reversed and remanded, holding that the trial court erred in dismissing Mrs. Buechel s malpractice counterclaim. The Appellate Division concluded that clients clearly have a right to bring legal malpractice actions stemming from divorce litigation even where settlement has been reached. In addition, the Appellate Division rejected the trial court s application of the judicial estoppel doctrine. We initially denied Puder s Petition for Certification, but granted certification upon reconsideration. The Court also granted amicus curiae status to the New Jersey Bar Association. HELD: Mrs. Buechel is bound by her testimony before the trial court concerning the acceptability and fairness of the divorce settlement agreement. Those representations demonstrate that Mrs. Buechel resolved her divorce in a manner that was satisfactory to her, precluding her from bringing a malpractice claim against Puder. 1. Our courts have actively encouraged litigants to settle their disputes. Advancing that public policy is imperative in the family courts where matrimonial proceedings have increasingly overwhelmed the docket. Mrs. Buechel s responses to the trial court s inquiries as to her acceptance of the second agreement demonstrate that she bargained for, and received, what she believed was an equitable distribution of the marital estate. Thus, any alleged deficiency resulting from the first settlement was ameliorated by the second settlement that she deemed to be fair and equitable. It would contravene principles of fairness and our policy in favor of encouraging conclusive settlements in matrimonial cases to allow Mrs. Buechel to now pursue her attorney for greater monetary gain. She is bound by her calculated decision to resolve the dissolution of her marriage by accepting her former spouse s settlement offer, a settlement she approved in open court. (Pp. 13-15) 2. The Appellate Division agreed that Mrs. Buechel s professed understanding that the trial court would bind her to the first settlement justified her acceptance of the second settlement and her continued pursuit of the malpractice claim against Puder. Despite her self-serving assertions to the contrary, Mrs. Buechel has failed to present sufficient evidence that the trial court intended to bind her to the first settlement. Conclusory and self-serving assertions by one of the parties are insufficient to overcome a summary judgment motion. Neither the Court nor any of our lower courts are bound by what essentially amounts to a private agreement between Mrs. Buechel s matrimonial counsel and her malpractice counsel. Upon consideration of all of the circumstances of this appeal including Mrs. Buechel s sworn representation to the trial court that the settlement was acceptable and fair, the public policy in favor of conclusive settlements, and the passage of almost nine years since Puder negotiated the first settlement we conclude that Mrs. Buechel is precluded from pursuing this malpractice action. The trial judge, however, should have informed Mrs. Buechel that her reservation would not necessarily preserve her ability to bring future related claims. (Pp. 15-19) 3. Contrary to the Appellate Division s reasoning, our conclusion here does not conflict with Ziegelheim v. Apollo, 128 N.J. 250 (1992). Our holding in Ziegelheim is inapplicable to this appeal because there are profound distinctions, both factual and legal, between the two cases. Here, unlike in Ziegelheim, Mrs. Buechel s claim against Puder was not her only remedy to the alleged malpractice. Mrs. Puder made a calculated decision to accept the second settlement one negotiated by a lawyer other than Puder before the trial court could decide whether the first agreement was enforceable. The burden of Mrs. Buechel s failed legal strategy rests with her, not Puder, in particular since she entered into the second settlement admittedly aware of the discovery deficiencies leading up to the settlement. Ziegelheim s reasoning discourages malpractice litigation when a court finds that a plaintiff, although well aware that the attorney was negligent, nevertheless testifies under oath that the settlement was both acceptable and fair. (Pp. 19-23) 4. Upon consideration of all of the circumstances of this appeal including the public policy that favors conclusive settlements, and the extensive delay in this matter we hold that Mrs. Buechel cannot sue Puder for malpractice. Given that Mrs. Buechel s litigation against Puder has lasted almost as long as her marriage to Dr. Buechel, it is time for closure, if not repose. After evaluating the potential unfairness to both parties if the malpractice action were allowed to continue, we find that the scales of equity weigh heavily against Mrs. Buechel s claim. (Pp. 23-24) The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the trial court for reinstatement of summary judgment in favor of Puder. JUSTICE WALLACE filed a separate CONCURRING opinion stating that although Mrs. Buechel has a cause of action for legal malpractice against Puder, her complaint was properly dismissed because she essentially satisfied the damages portion of her cause of action when she accepted the second settlement as a fair and equitable distribution of the marital assets. JUSTICE LONG filed a separate DISSENTING opinion, in which JUSTICE ALBIN joins, stating that to hold Mrs. Buechel to the settlement while denying her right against Puder at this late stage is not an outcome she would consider just. CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA and RIVERA-SOTO join in JUSTICE ZAZZALI s opinion. JUSTICE WALLACE filed a separate concurring opinion. JUSTICE LONG filed a separate dissenting opinion, in which JUSTICE ALBIN joins. Plaintiff-Appellant, v. KATHLEEN BUECHEL, Defendant-Respondent. Argued November 29, 2004 Decided June 7, 2005 On certification to the Superior Court, Appellate Division, whose opinion is reported at 362 N.J. Super. 479 (2003). Joseph P. Castiglia argued the cause for appellant (Mr. Castiglia and Pashman Stein, attorneys; Mr. Castiglia and Michael S. Stein, on the briefs). David Feinsilver argued the cause for respondent (The Feinsilver Law Group, attorneys; Mr. Feinsilver and H. Jonathan Rubinstein, on the briefs). Christopher J. Carey argued the cause for amicus curiae, New Jersey State Bar Association (Edwin J. McCreedy, President, attorney; Mr. Carey and Mr. McCreedy, of counsel; Mr. Carey and Theodore H. Hilke, on the brief). JUSTICE ZAZZALI delivered the opinion of the Court. In this matter, a matrimonial attorney sued a former client to recover unpaid legal fees arising from her representation of the client in a divorce action. The client responded by filing a malpractice counterclaim against the attorney for negotiating an allegedly inadequate divorce settlement and for failing to obtain informed consent before accepting the settlement on the client s behalf. With the assistance of new counsel, the client then negotiated a second divorce settlement that she deemed acceptable and a fair compromise of the issues. Subsequently, the matrimonial attorney moved for summary judgment on the malpractice counterclaim, arguing that by entering into the second settlement, the client waived her right to sue for malpractice arising from the first settlement. The Law Division granted the motion, but the Appellate Division reversed. We hold that the client is bound by her representation to the trial court that the settlement was acceptable and fair. Accordingly, we reverse the Appellate Division and remand for reinstatement of summary judgment in favor of the attorney. KATHLEEN BUECHEL: Yes. THE COURT: . . . . I don t want you to think that you re being forced or pressured into accept[ing] an agreement. You ve been through an emotional experience, and I want to make sure that this agreement is acceptable to you. Is it acceptable to you? KATHLEEN BUECHEL: Yes, it is. THE COURT: And you ve discussed it thoroughly with Mr. Braun? KATHLEEN BUECHEL: I have. THE COURT: . . . . You realize that I was getting close to deciding whether or not there was an enforceable agreement . . . . I have not yet decided whether or not that agreement was to be enforced. But that trial was to continue today. It can still continue tomorrow. And I will then decide whether or not there was an agreement to be enforced and if so, whether I consider that agreement to be fair. That can continue. Do you understand? KATHLEEN BUECHEL: I understand. THE COURT: Okay. I don t want you to think now that you re being forced to enter into a settlement that you haven t discussed with your attorney, a settlement that you re not satisfied with. You re telling me that you have discussed it with your attorney and that you think it s a fair compromise of the issues. Is that accurate? KATHLEEN BUECHEL: Yes. THE COURT: You probably feel you re not getting as much as you want. I m sure your husband feels he s paying more than he should. And if that s true it s probably a test of a fair compromise. But I have to be satisfied that you are accepting it voluntarily. So I ask you one more time: Are you accepting this compromise voluntarily? KATHLEEN BUECHEL: Yes. THE COURT: All right. [(Emphasis added.)] Mrs. Buechel s attorney then questioned her regarding the agreement: MR. BRAUN: And picking up on what [the judge] asked you: Do you feel that your frame of mind right now and for the last hour or so is such where you can make a decision as to whether or not to enter into this agreement? And if you decide to enter into it you understand you ll be bound by it? . . . KATHLEEN BUECHEL: I understand that. MR. BRAUN: And - and Miss Buechel, everybody who goes through what you ve been through is very upset. Do you feel that - right now as you re called upon to make the decision you re in the frame of mind where you can make an intelligent, knowledgeable free decision with respect to the terms of this agreement? KATHLEEN BUECHEL: Yes. MR. BRAUN: [The judge] indicated to you that he would continue with the trial, make a decision. We were ready for your testimony today. We can continue it tomorrow. You re aware of that. KATHLEEN BUECHEL: Yes, I m aware of that. MR. BRAUN: And if you do enter into an agreement you waive your right to that trial and have [the judge] make the decisions. KATHLEEN BUECHEL: Correct. I know that. Upon further questioning by her attorney, however, Mrs. Buechel testified that she was only agreeing to the settlement because she believed that the trial court would find the first settlement enforceable and because it was her understanding that the second settlement would not affect the status of her malpractice claim against Puder: MR. BRAUN: . . . [O]ne of the things that concerns us, you and I . . . is the fact that [the judge] may bond you to this purported agreement that Miss Puder represented she was entering into on your behalf. KATHLEEN BUECHEL: Yes. MR. BRAUN: And the exposure of the Court finding that may, in fact, take place is one of the motivating if not the motivating factor to you entering into this agreement. KATHLEEN BUECHEL: Yes, it is. MR. BRAUN: And although under this agreement you don t feel you re getting everything you re entitled to - equitable distribution, lifetime alimony, you re entering into this agreement as a compromise fully aware of the exposure that if [the judge] finds that the quote/unquote Puder agreement s enforceable you would be getting less than what you re agreeing to today. KATHLEEN BUECHEL: That s true. MR. BRAUN: And I ve explained to you that I spoke to your attorney, Pat Collins, in the malpractice case and with - against Puder - and with the proviso I ll just place on the record, it s your understanding that entering into this agreement will not prejudice you in that case. Correct? KATHLEEN BUECHEL: It s my correct understanding. . . . . MR. BRAUN: So that your understanding is by entering into the agreement you are not - you are still preserving any and all claims you have against Miss Puder in connection with her representation of you in this matrimonial action. KATHLEEN BUECHEL: Yes. Following this exchange, the trial court ruled that Mrs. Buechel knowingly and voluntarily entered into the second settlement agreement with Dr. Buechel. The judge therefore approved the agreement and granted a judgment of divorce to Mrs. Buechel. In January 2001, before a different judge, Puder moved for summary judgment on the legal malpractice counterclaim, arguing that Mrs. Buechel waived her right to sue Puder by entering into the second settlement before the validity of the first settlement was determined. The court agreed and granted the motion on that ground. The court also held that Mrs. Buechel s continued prosecution of her legal malpractice claim against Puder would violate principles of judicial estoppel. The court based its decision on the certification filed in support of Mrs. Buechel s motion to stay the malpractice claim, which stated that the claim would be rendered moot if Mrs. Buechel prevailed in the matrimonial action. The court concluded that Mrs. Buechel had so prevailed. After the court denied Mrs. Buechel s motion for reconsideration, Mrs. Buechel appealed. In a published opinion, the Appellate Division reversed and remanded, holding that the trial court erred in dismissing Mrs. Buechel s malpractice counterclaim. Puder v. Buechel, 362 N.J. Super. 479, 484 (2003). First, the panel concluded that our holding in Ziegelheim v. Apollo, 128 N.J. 250 (1992), plainly allows a former client to bring a legal malpractice action against an attorney for professional negligence in divorce litigation where a settlement ensued. Id. at 485. Second, the panel held that the trial court s use of the judicial estoppel doctrine was erroneous because the conditions justifying application of this extraordinary remedy were not present. Id. at 494. We initially denied Puder s Petition for Certification. 179 N.J. 309 (2004). However, on reconsideration, we granted certification. 180 N.J. 147 (2004). We also granted amicus curiae status to the New Jersey State Bar Association (NJSBA). VIRGINIA B. PUDER, ESQ., Plaintiff-Appellant, v. KATHLEEN BUECHEL, Defendant-Respondent. JUSTICE WALLACE, JR., concurring I concur. It is my view that Mrs. Buechel has a cause of action for legal malpractice against Puder, but that her complaint was properly dismissed because she essentially satisfied the damages portion of her cause of action when she accepted the second settlement as a fair and equitable distribution of the marital assets. In Ziegelheim, the plaintiff ultimately filed her malpractice action against the defendant, her previous attorney, after her motion to reopen the divorce decree and set aside the settlement agreement was denied. Supra, 128 N.J. at 257-58. The defendant moved for summary judgment. Id. at 258. The plaintiff testified at deposition that the defendant had told her that if the case were tried she would not receive more than twenty percent of the marital assets causing her to agree to the settlement. Id. at 258-59. The trial court granted the defendant s motion, concluding that the plaintiff understood the terms of settlement, believed they were fair, and freely entered into the agreement. Id. at 259. The Appellate Division reversed in part and ordered a trial on whether defendant was negligent because he convinced [plaintiff] to accept an agreement that a reasonably prudent attorney would have advised against accepting. Id. at 260. We agreed, but also permitted plaintiff to proceed on other counts of her complaint including the failure to make proper investigation, the negligent failure to discover concealed assets, id. at 265, the negligent delay in finalizing the settlement and the failure to correctly memorialize the settlement, id. at 266, and the negligent failure to present the offer in writing so plaintiff could review the terms and assess the fairness of the agreement. Id. at 266-67. We explained that in reaching our decision, we do not open the door to malpractice suits by any and every dissatisfied party to a settlement. Many such claims could be averted if settlements were explained as a matter of record in open court in proceedings reflecting the understanding and assent of the parties. Further, plaintiffs must allege particular facts in support of their claims of attorney incompetence and may not litigate complaints containing mere generalized assertions of malpractice. We are mindful that attorneys cannot be held liable simply because they are not successful in persuading an opposing party to accept certain terms. Similarly, we acknowledge that attorneys who pursue reasonable strategies in handling their cases and who render reasonable advice to their clients cannot be held liable for the failure of their strategies or for any unprofitable outcomes that result because their clients took their advice. 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. [Id. at 267.] The dissent also accepted the right of a settling party to sue his or her lawyer, but concluded that because the plaintiff failed to submit an expert s report on the defendant s motion for summary judgment, the trial court correctly granted judgment in favor of the defendant. Id. at 268-69. There are clear differences between Ziegelheim and the present case. The plaintiff in Ziegelheim was unsuccessful in her effort to open the judgment and the settlement agreement. Thus, the plaintiff s only remedy to obtain what she believed was a fair share of the marital assets was to institute a malpractice claim and prove the negligence of her attorney. If plaintiff were ultimately successful in that action, she would have recovered at least the difference between the settlement share defendant obtained and the fair share a competent attorney would have recovered. In the present case, like the plaintiff in Ziegelheim, Mrs. Buechel believed that plaintiff, her first attorney, was negligent in representing her in the initial settlement. However, unlike the plaintiff in Ziegelheim, before the trial court ruled on her motion to vacate the settlement, Mrs. Buechel agreed to a second settlement that she believed was fair and equitable. On the occasion of the second settlement, the terms were clearly explained to Mrs. Buechel. Thus, unlike the plaintiff in Ziegelheim, Mrs. Buechel was able to recover the difference between the amount she would have received in the settlement Puder obtained for her and the settlement terms her second attorney negotiated for her. Consequently, Mrs. Buechel received all that she was due. Any asserted negligence by Puder did not result in any damages to Mrs. Buechel. In short, Mrs. Buechel failed to demonstrate that she suffered a loss as a result of Puder s asserted negligence. The determining factor here is not her ultimate attainment of a fair and equitable settlement, but the fact that in reaching the second settlement, Mrs. Buechel recovered all of her damages allegedly suffered from Puder s alleged deficient representation of her in the first settlement. The result here mirrors the outcome that one would anticipate if the trial court had granted Mrs. Buechel s motion to open the judgment, and thereafter, settlement ensued or a trial concluded on more favorable terms than the original settlement to Mrs. Buechel. In that event, Puder s alleged deficiencies would have run their course because Mrs. Buechel would have received a full recovery. I recognize that in some other case not before us a person in Mrs. Buechel s shoes may be able to prove damages beyond what he or she might receive in a settlement. For example, if such a hypothetical person were to incur substantial fees and costs that would otherwise not have been incurred and were not recovered as part of the settlement, then that would constitute damages recoverable against the deficient attorney. That is not the case here because Mrs. Buechel recovered her attorney s fees as part of the second settlement. I concur in the result. Plaintiff-Appellant, v. KATHLEEN BUECHEL, Defendant-Respondent. JUSTICE LONG, J.,, dissenting. I would affirm the judgment of the Appellate Division substantially for the reasons expressed in Judge Kestin s thorough and thoughtful opinion. Like the Appellate Division I would hold that, in the unique circumstances presented, the settlement of the matrimonial case was not an impediment to Mrs. Buechel s malpractice action against Ms. Puder. I agree with the Court that, as a matter of policy, a party in Mrs. Buechel s position should in the future be required to pursue an enforcement motion to disposition. I am simply not willing to apply that policy to this case in which it will effectuate an unfair outcome. Here, Mrs. Buechel stated unequivocally on the record that she was settling on the condition that the agreement would not prejudice her in pursing the malpractice case against Puder. The very experienced trial judge must have thought that the reservation she expressed would be honored, otherwise he would have advised her that she had no right to any future action against Puder and that her settlement was final for all purposes. If that had occurred, Mrs. Buechel would likely have rethought her position and may have opted for a different course. To hold her to the settlement while denying her right against Puder at this late stage is simply not an outcome that I consider just. Therefore I dissent. Justice Albin joins in the opinion. VIRGINIA B. PUDER, ESQ., Plaintiff-Appellant, v. KATHLEEN BUECHEL, Defendant-Respondent. DECIDED June 7, 2005 Chief Justice Poritz PRESIDING OPINION BY Justice Zazzali CONCURRING OPINION BY Justice Wallace DISSENTING OPINION BY Justice Long