2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-16-2012

Nuveen Mun Trust v. Withumsmith Brown PC

Precedential or Non-Precedential: Precedential

Docket No. 10-4633

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

No. 10-4633

_______________

NUVEEN MUNICIPAL TRUST, on behalf of its series 

Nuveen High Yield Municipal Bond Fund, 

a Massachusetts Business Trust,

Appellant

v.

WITHUMSMITH BROWN, P.C., A New Jersey Professional 

Corporation; LINDABURY, MCCORMICK, ESTABROOK 

& COOPER P.C., 

a New Jersey Professional Corporation

_______________

On Appeal from the United States District Court

For the District of New Jersey

(D.C. Civil Action No. 3-08-cv-05994)

District Judge: Honorable Garrett E. Brown, Jr.

_______________

Argued June 21, 2012

_______________
2

Before: AMBRO, VANASKIE 

and ALDISERT, Circuit Judges

(Opinion filed: August 16, 2012)

Alexander Bilus, Esquire

Robert C. Heim, Esquire (Argued)

Brielle M. Rey, Esquire

Wayne Pollock, Esquire

Dechert LLP

2929 Arch Street 

18th Floor, Circa Centre

Philadelphia, PA 19104

G. Eric Brunstad, Jr., Esquire (Argued)

Matthew J. Delude, Esquire

Collin O. Udell, Esquire

Dechert LLP

90 State House Square

Hartford, CT 06103

David P. Stich, Esquire

Solomon Blum Heymann & Stich

40 Wall Street, 35th Floor

New York, NY 10005

Professor Stephen B. Burbank

3400 Chestnut Street

Philadelphia, PA 19104

Counsel for Appellant

Michael J. Canning, Esquire (Argued)
3

Catherine J. Bick, Esquire

Donald F. Campbell, Jr., Esquire (Argued)

Jaclyn B. Kass, Esquire

Giordano, Halleran & Cielsa

125 Half Mile Road, Suite 300

Red Bank, NJ 07701

Counsel for Appellee

WithumSmith+Brown, P.C.

William A. Cambria, Esquire

Louis A. Modugno, Esquire (Argued)

James J. DiGiulio, Esquire

William F. O’Connor, Jr., Esquire

McElroy, Deutsch, Mulvaney & Carpenter, LLP

1300 Mt. Kemble Avenue

P.O. Box 2075

Morristown, NJ 07962-2075

Counsel for Appellee

Lindabury, McCormick, Estabrook & Cooper, P.C.

Christian D. Wright, Esquire

Benjamin Z. Grossberg, Esquire

Young Conaway Stargatt & Taylor, LLP

1000 North King Street, 17th Floor

Rodney Square

Wilmington, DE 19801

Amicus Counsel for

Professor Geoffrey C. Hazard, Jr.
4

_______________

OPINION OF THE COURT

_______________

AMBRO, 

This case is on appeal to us for the second time. It 

arises from a loan transaction between Appellant Nuveen 

Municipal Trust (“Nuveen”), on behalf of its “Nuveen High 

Yield Municipal Bond Fund,” and Bayonne Medical Center 

(“Bayonne”). In connection with the transaction, Bayonne 

provided Nuveen with an audit report authored by Bayonne’s

accounting firm, Appellee WithumSmith+Brown, P.C. 

(“Withum”), and an opinion letter authored by Bayonne’s

counsel, Appellee Lindabury, McCormick, Estabrook & 

Cooper P.C. (“Lindabury”). Soon after the transaction, 

Bayonne filed a petition for relief under Chapter 11 of the 

Bankruptcy Code, 11 U.S.C. §§ 101 et seq. Nuveen contends 

that the audit report and opinion letter concealed problem

aspects of Bayonne’s financial condition, and had it known 

about these financial issues, it would not have entered into the 

transaction. 

Circuit Judge

Nuveen filed this action against Withum and 

Lindabury, asserting fraud (as to Withum only), negligent 

misrepresentation, and malpractice (as to Lindabury only), 

and representing that the District Court had diversity 

jurisdiction under 28 U.S.C. § 1332. The Court dismissed the

action with prejudice based on Nuveen’s noncompliance with 

New Jersey’s Affidavit of Merit statute, N.J. Stat. Ann. 

§§ 2A:53A-26 et seq. (the “AOM Statute” or “Statute”), 

which requires the timely filing of an affidavit of merit 

attesting to the viability of claims in certain actions against 

professionals. 
5

On initial appeal to us, Nuveen brought to our 

attention Emerald Investors Trust v. Gaunt Parsippany 

Partners, 492 F.3d 192 (3d Cir. 2007), which held that, for 

purposes of diversity jurisdiction, the citizenship of a trust is 

determined by the citizenship of its beneficial shareholders. 

Because Nuveen may be considered a trust, Emerald called

into question the District Court’s previously asserted basis for 

jurisdiction. We granted Nuveen’s unopposed motion to 

remand the case to allow the District Court to reconsider its 

jurisdiction.

On remand, Withum and Lindabury raised a new basis 

for jurisdiction—that the action was “related to” Bayonne’s 

bankruptcy proceeding, and thus that the District Court had 

jurisdiction under 28 U.S.C. § 1334(b). The Court accepted 

this basis for jurisdiction and re-entered its order dismissing 

the action with prejudice. Both the jurisdictional decision and 

its dismissal of the action are on appeal to us now. Nuveen 

also raises two new choice-of-law arguments on appeal: that 

the AOM Statute is a procedural pleading requirement that 

conflicts with Federal Rule of Civil Procedure 8 such that the 

Statute cannot be applied in federal court, as federal 

procedural rules preempt conflicting state ones; or that certain 

provisions to protect plaintiffs with respect to the Statute are 

substantive state law that must be applied by a federal court 

under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), and its 

progeny. 

We agree that the District Court had “related to” 

jurisdiction under 28 U.S.C. § 1334(b). We further hold that 

the AOM Statute can be applied by a federal court without 

conflicting with Rule 8, and that the protections Nuveen 

identifies are procedural under Erie, thus not requiring a 

federal court to follow them. If the AOM Statute applies to 

the action, we believe that Nuveen’s noncompliance with it

calls for the action’s dismissal, but question whether this 
6

action is subject to the Statute. Because the New Jersey 

Supreme Court has not addressed key issues regarding the 

application of the Statute, we reserve deciding whether the 

District Court was correct to dismiss the action with prejudice

and certify two questions of law regarding the Statute to the 

New Jersey Supreme Court. 

I. Factual and Procedural Background

In the attempt to salvage its action from dismissal 

purely based on its counsel not filing timely affidavits of 

merits, Nuveen’s arguments fall into four broad categories: 

(i) jurisdiction; (ii) the AOM Statute’s application in federal 

court under Erie and its progeny; (iii) the Statute’s application 

to its action as a legal matter; and (iv) whether its 

noncompliance with the Statute can be excused. To decide 

these issues, we detail the history of the loan transaction, 

Bayonne’s bankruptcy proceeding, this action, the Statute, 

and the proceedings in and decisions of the District Court.

A. Loan Transaction and Bayonne’s Bankruptcy

In October 2006, Nuveen, on behalf of one of its bond 

funds, purchased a $10 million Bond Anticipation Note 

(“BAN”) from Bayonne. In connection with the transaction, 

Bayonne provided Nuveen with an audit report prepared by 

Withum regarding Bayonne’s company-prepared 2005 

financial statements. As Bayonne’s counsel in the 

transaction, Lindabury provided Nuveen with an opinion 

letter addressing Bayonne’s ability to repay the BAN. It

included the typical opinion that Bayonne had the power and 

authority to enter into the BAN transaction and that, other 

than one disclosed investigation not relevant here, there were 

no investigations or suits that “could reasonably be expected 

to . . . materially [and] adversely affect the capability of 

[Bayonne] to comply with its obligations under [the BAN], or 

 
7

materially [and] adversely affect the transactions 

contemplated to be consummated on the part of [Bayonne] as 

described in the [BAN].” 

Six months later, in April 2007, Bayonne filed its 

Chapter 11 petition in the Bankruptcy Court for the District of 

New Jersey. In October 2007, the Bank of New York, master 

trustee, filed a proof of claim on behalf of Nuveen and other 

secured creditors totaling $46,673,886.79. Nuveen’s portion 

of the claim was for $10,533,989.84 (including approximately 

$10,000,000 principal on the BAN, $436,136.98 in interest, 

and $97,852.86 for Nuveen’s fees and expenses). 

As a prelude to this action, in May 2008 Nuveen 

requested that Bayonne provide it with documents to 

determine whether it had a cause of action against Bayonne’s 

officers, directors, and “pre-petition professionals” for 

misrepresentations or other conduct that induced Nuveen to 

purchase the BAN. Bayonne did not respond, and Nuveen 

served a subpoena on it and then filed a motion to compel. 

Notably, in the materials accompanying its motion to compel, 

Nuveen represented that any amounts it recovered from such 

actions would reduce its claim against Bayonne’s bankruptcy 

estate. It also specifically identified potential suits against 

Withum and Lindabury.

No doubt partially in response to Nuveen’s (and 

possibly other creditors’) requests for documents, Bayonne 

made a global settlement agreement among it, the Official 

Committee of Unsecured Creditors, and certain secured 

creditors that included Nuveen (the “Settlement Agreement”). 

Approved by the Bankruptcy Court in September 2008, the 

Settlement Agreement provided that it would be implemented 

by a plan of liquidation. In the event the confirmed plan did 

not conform to the Settlement Agreement, or Bayonne’s 

bankruptcy case was converted or dismissed, the Agreement
8

would control and survive.1

The Settlement Agreement granted the secured 

creditors a general unsecured claim in the amount of 

$46,673,886.79 (the dollar amount asserted in the master 

trustee’s proof of claim), which would be reduced “dollar for 

dollar” for sums received by the secured creditors through 

certain distributions defined in the Agreement. Thus it

effectively fixed Nuveen’s claim against Bayonne’s estate as 

a secured claim in an amount to be determined based on funds 

in Bayonne’s estate and an unsecured claim to be paid pro 

rata with other unsecured claims. 

 It further provided that the 

secured creditors would not pursue claims against any of 

Bayonne’s former officers, directors or trustees, but preserved 

the secured creditors’ right to bring claims against any third 

parties (i.e., Withum and Lindabury) retained by, or who had 

rendered services to, Bayonne.

B. 

In accordance with the Settlement Agreement, Nuveen 

filed this action against Withum and Lindabury in December 

2008. As to Withum, Nuveen asserted that Bayonne’s 2005 

financial statements were false and misleading because they 

recorded substantial revenue from a sham charitable pledge 

and showed as assets a substantial amount of uncollectible 

accounts receivable. Nuveen contended that if Withum had 

examined the financial statements consistent with Generally

Accepted Accounting Principles and specific accounting 

standards promulgated by the American Institute for Certified 

District Court Complaint

 1 The Bankruptcy Court approved Bayonne’s plan of 

liquidation (the “Plan”) in April 2009, approximately four 

months after Nuveen filed this action. The Plan incorporates 

the Settlement Agreement in full. 
9

Public Accountants, it would not have issued its audit report 

because, once the sham revenue and uncollectible receivables 

were considered, it would have known that Bayonne either 

was insolvent or soon would become insolvent. Based on 

these allegations, Nuveen asserted three claims against 

Withum: (i) common law fraud; (ii) aiding and abetting 

common law fraud; and (iii) negligent misrepresentation. 

As to Lindabury, Nuveen asserted that Lindabury’s

opinion letter was misleading because it failed to disclose a 

certain repayment obligation Bayonne owed under Medicare. 

Based on this allegation, Nuveen asserted against Lindabury

(i) negligent misrepresentation and (ii) malpractice in 

preparing the opinion.2

Nuveen sought compensatory damages, prejudgment 

interest, costs, punitive damages, and other relief. It stated 

that its compensatory damages were then unknown, but 

believed them to be $9.5 million less any amounts recovered 

in Bayonne’s bankruptcy proceeding plus attorney’s fees 

incurred in the bankruptcy proceeding.

 2 The opinion letter stated that Lindabury relied on certificates 

of Bayonne’s officers that it assumed were true and correct in 

all respects, and that it undertook no independent 

investigation to determine the existence or absence of any 

factual matters. The certificates, dated the loan closing date, 

were from Robert H. Evans, Bayonne’s President and Chief 

Executive Officer, and Paul Mohrle, Bayonne’s Acting Chief 

Financial Officer. As such, absent fraud (and there are no 

allegations to that effect as to Lindabury or to its pre-closing 

knowledge contrary to its opinion), there is doubt that Nuveen 

has viable causes of action against Lindabury based on the 

opinion letter. 
10

In preparing its complaint, Nuveen communicated with

two experts. First, in April 2008 it discussed Withum’s audit 

report with Gordon Yale, a Certified Public Accountant. 

Based on his affidavit later filed with the District Court, Yale 

concluded that there was a “reasonable probability” that 

Withum’s work that is the subject of the complaint fell 

outside of applicable professional standards. The affidavit 

also verifies that in April 2008 Yale submitted to Nuveen’s 

counsel a 16-page report addressing the matters alleged 

against Withum in the complaint. 

Second, in November 2008 Nuveen called Robert 

Doty, a bond and securities lawyer. Nuveen’s counsel 

described the allegations against Lindabury in the complaint 

to Doty during a phone conversation. Based on that 

information, as verified in his affidavit subsequently 

submitted to the District Court, Doty stated that he believed 

there was a “reasonable probability” Lindabury’s opinion fell 

outside applicable professional standards.

C. 

The New Jersey legislature enacted the AOM Statute

“as part of a tort reform package ‘designed to strike a fair 

balance between preserving a person’s right to sue and 

controlling nuisance suits.’” Natale v. Camden Cnty. Corr. 

Facility, 318 F.3d 575, 579 (3d Cir. 2003) (quoting Palanque 

v. Lambert-Woolley, 774 A.2d 501, 505 (N.J. 2001)). It 

requires that a plaintiff filing “any action for damages for 

personal injuries, wrongful death or property damage 

resulting from an alleged act of malpractice or negligence by 

a licensed professional” provide each defendant with “an 

affidavit of an appropriate licensed person [stating] that there 

exists a reasonable probability that the care, skill or 

knowledge exercised or exhibited in the treatment, practice or 

work that is the subject of the complaint, fell outside 

AOM Statute
11

acceptable professional or occupational standards or 

treatment practices.” N.J. Stat. Ann. § 2A:53A-27. This 

affidavit must be provided within 60 days after the defendant 

files its answer. Id. For good cause shown, the Statute 

provides for one extension period of an additional 60 days 

contiguous to the initial 60-day period. Id.

The penalty for not following the AOM Statute is 

severe. Absent a showing of one of four limited exceptions,3

Aware of this harsh consequence, the New Jersey 

Supreme Court instituted two safeguards to aid plaintiffs in 

complying with the AOM Statute. First, it directed that New 

Jersey’s Civil Case Information Sheet be amended to contain 

the question, “IS THIS A PROFESSIONAL 

MALPRACTICE CASE?,” and boxes to check “YES” or 

the failure to file the affidavit “shall be deemed a failure to 

state a cause of action.” Id. § 2A:53A-29. Thus, unless the 

plaintiff can show one of the four exceptions, if an affidavit 

of merit is not filed within the 60- or extended 120-day 

period, the complaint will be dismissed with prejudice. 

 3 They are: (i) a statutory exception regarding lack of 

information; (ii) a “common knowledge” exception; (iii) 

substantial compliance with the affidavit of merit 

requirement; or (iv) “extraordinary circumstances” that 

warrant equitable relief. See N.J. Stat. Ann. § 2A:53A-28 

(detailing the statutory exception); Ferreira v. Rancocas 

Orthopedic Assocs., 836 A.2d 779, 782–83 (N.J. 2003) 

(detailing the “extraordinary circumstances” exception); 

Hubbard v. Reed, 774 A.2d 495, 501 (N.J. 2001) (establishing 

the “common knowledge” exception); Cornblatt v. Barow, 

708 A.2d 401, 411–12 (N.J. 1996) (establishing that the 

substantial compliance doctrine applies to the affidavit 

requirement). 
12

“NO.” Underneath the question is the following sentence: 

“IF YOU HAVE CHECKED ‘YES,’ SEE N.J.S.A. 2A:53A27 AND APPLICABLE CASE LAW REGARDING YOUR 

OBLIGATION TO FILE AN AFFIDAVIT OF MERIT.” See 

Burns v. Belafsky, 766 A.2d 1095, 1101 (N.J. 1999). 

Second, the New Jersey Supreme Court required that

an accelerated case management conference be held within 90

days of the service of the answer in all malpractice actions. 

See Ferreira v. Rancocas Orthopedic Assocs., 836 A.2d 779, 

785 (N.J. 2003). At this conference, if the plaintiff has not 

filed an affidavit, the trial court is to remind it of the 

requirement. Id.

D. 

Along with its complaint, Nuveen filed the standard 

Civil Cover Sheet used in the federal court. Unlike New 

Jersey’s Civil Case Information Sheet, the Civil Cover Sheet

here did not contain the question, box, or any notice regarding 

the AOM Statute.

Proceedings in the District Court

In January 2009, Withum and Lindabury filed answers 

to the complaint. (Their answers contained third-party 

complaints against Bayonne’s officers, which they later 

consented to the dismissal of without prejudice.) On June 4, 

2009, 142 days after they filed their answers, Withum and 

Lindabury filed separate motions to dismiss with prejudice

the actions against them based on Nuveen’s failure to serve a 

timely affidavit of merit.4

 4 Specifically, Lindabury’s motion was styled as a motion for 

summary judgment, though it acknowledged that the motion

was functionally equivalent to a motion to dismiss. Withum’s 

motion was a motion to dismiss. The District Court regarded 

 Nuveen provided the two expert 
13

affidavits discussed above the day after the motions to 

dismiss were filed. 

Between the filings of the answers and the motions to 

dismiss, Withum, Lindabury, and Nuveen formally 

conferenced twice. In April 2009, they held a telephone 

conference under Federal Rule of Civil Procedure 26(f). 

Nuveen’s counsel subsequently circulated a draft report on 

the Rule 26(f) conference. In May 2009, Magistrate Judge 

Douglas E. Arpert held a scheduling conference. At no time 

did Withum or Lindabury mention the AOM Statute. 

Contrary to the practice of New Jersey state courts, the 

District Court did not hold a status conference within 90 days 

of the filing of the answers nor remind Nuveen of the 

affidavit requirement. 

Nuveen also filed a response to the motions to dismiss

in which it raised four arguments that its action should be 

allowed to proceed. First, it asserted that the AOM Statute 

did not apply to any of its claims because they were for 

economic damages, which are not “property damages” 

subject to the Statute. Alternatively, it contended that the 

Statute did not apply to its non-negligence and nonmalpractice claims—specifically its fraud claims against 

Withum. Third, assuming the Statute applied, Nuveen argued 

that its noncompliance should be excused because it 

substantially complied with the Statute. Alternatively, and 

finally, it argued that extraordinary circumstances required 

dismissal of the action without prejudice. Nuveen also stated 

that it sought to recover the amount it had paid for the BAN, 

plus related costs and interest, less any amounts it recovered 

prior to the end of the action, including any disbursements 

from Bayonne’s bankruptcy estate. 

 

them both as motions to dismiss, and proceeded to analyze 

them under Federal Rule of Civil Procedure 12(b)(6).
14

E. 

The District Court rejected each of Nuveen’s 

arguments regarding the AOM Statute. In holding that the

monetary recovery sought by Nuveen was subject to the

Statute, it cited two New Jersey intermediate state court 

decisions—Cornblatt v. Barow, 696 A.2d 65, 68 (N.J. Super. 

Ct. App. Div. 1997), rev’d on other grounds, 708 A.2d 401 

(N.J. 1998), and Nagim v. New Jersey Transit, 848 A.2d 61, 

70 (N.J. Super. Ct. Law Div. 2003)—for their statements that 

a claim against an attorney for alleged malpractice is a claim 

for “property damages” and that these damages include 

claims for monetary damages. 

District Court Decisions

In considering the fraud claims against Withum, the 

District Court cited Couri v. Gardner, 801 A.2d 1134, 1141

(N.J. 2002), for its statement that the nature of the legal 

inquiry should guide the assessment of whether the Statute 

applies to a claim. Because the complaint contained 

numerous references to accounting standards, the Court 

concluded that the Statute applied to all of the causes of 

action against Withum. Finally, it noted that Nuveen’s failure 

to file an affidavit of merit was caused solely by attorney 

inadvertence, which was not a reasonable explanation to 

excuse Nuveen’s noncompliance with the Statute or to find 

the existence of extraordinary circumstances.

On remand regarding jurisdiction, the District Court 

agreed with Withum’s and Lindabury’s argument that the 

action was related to Bayonne’s bankruptcy proceeding 

because its outcome conceivably could affect the distribution 

of the estate’s assets. It noted that though the Settlement 

Agreement fixed Nuveen’s claim in the bankruptcy 

proceeding, it did not fix its recovery. Because Nuveen 

simultaneously was seeking the same damages—unpaid 

principal and interest on the BAN—from Bayonne’s estate as 
15

well as Withum and Lindabury, if Nuveen recovered from 

Withum and Lindabury first, its claim against Bayonne’s 

estate would need to be reduced, thereby increasing the 

amount of assets available for distribution to other creditors. 

(In short, Nuveen could not recover twice for the same loss.) 

The District Court thus held that it had jurisdiction under 28 

U.S.C. § 1334(b). 

II. Jurisdiction and Standard of Review

Whether the District Court had jurisdiction is an issue 

on appeal. We have jurisdiction under 28 U.S.C. § 1291 over 

its final decisions that it had jurisdiction under 28 U.S.C. 

§ 1334(b), and to dismiss this action. 

Whether subject matter jurisdiction exists is a question 

of law requiring de novo review. W.R. Grace & Co. v. 

Chakarian (In re W.R. Grace & Co.), 591 F.3d 164, 170 n.7 

(3d Cir. 2009). Our review of a motion to dismiss is plenary. 

Natale v. Camden Cnty. Corr. Facility, 318 F.3d 575, 579 (3d 

Cir. 2003). We “accept as true all well-pled factual 

allegations in the complaint and all reasonable inferences that 

can be drawn from them, and we affirm the order of dismissal 

only if the pleading does not plausibly suggest an entitlement 

to relief.” Fellner v. Tri-Union Seafoods, L.L.C., 539 F.3d 

237, 242 (3d Cir. 2008). Similarly, we review de novo the 

District Court’s determinations regarding New Jersey state 

law. Snyder v. Pascack Valley Hosp., 303 F.3d 271, 273 (3d 

Cir. 2002).

III. Subject Matter Jurisdiction

A. 

Nuveen argues that the District Court inappropriately 

relieved Withum and Lindabury of their burden of proving 

Burden of Proof
16

that the Court had jurisdiction. As such, because Nuveen’s

arguments cast doubt on jurisdiction, the Court should have 

construed this doubt in favor of Nuveen and held that it 

lacked jurisdiction. 

Nuveen is correct that the party asserting a federal 

court’s jurisdiction bears the burden of proving that 

jurisdiction exists. See, e.g., Hertz Corp. v. Friend, 130 S. Ct.

1181, 1194 (2010) (“The burden of persuasion for 

establishing diversity jurisdiction, of course, remains on the 

party asserting it.”). Federal courts are presumed not to have 

jurisdiction without affirmative evidence of this fact. See 

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 

(2006). However, a district court “is free to weigh the 

evidence and satisfy itself as to the existence of its power to 

hear the case.” Mortensen v. First Fed. Sav. & Loan Ass’n, 

549 F.2d 884, 891 (3d Cir. 1977). Indeed, a district court has 

an independent obligation to determine whether subject 

matter jurisdiction exists, even if its jurisdiction is not 

challenged. See Arbaugh v. Y & H Corp., 546 U.S. 500, 514

(2006).

Though the District Court did not state explicitly that 

Withum and Lindabury bore the burden of establishing 

jurisdiction, its decision confirms that it required them to 

prove jurisdiction and that it considered the evidence 

presented regarding jurisdiction. For example, the Court

stated that it was “persuaded” that, at the time Nuveen filed 

the complaint in December 2008, it was conceivable that the 

outcome of this action would have an effect on Bayonne’s

bankruptcy proceeding. Thus, it proceeded correctly in 

considering its jurisdiction. 
17

B. 

1. 

Subject Matter Jurisdiction under 28 U.S.C. § 1334(b) 

Section 1334(b) provides that “district courts . . . have 

original but not exclusive jurisdiction of all civil proceedings 

arising under title 11, or arising in or related to cases under 

title 11.” 28 U.S.C. § 1334(b) (emphasis added). In Pacor, 

Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984), overruled in 

part by Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 

134–35 (1995), we established that a proceeding is “related 

to” a Chapter 11 proceeding if the “outcome of [the] 

proceeding could conceivably have any effect on the estate 

being administered in bankruptcy.” Id. at 994 (emphasis 

added).

Principles of “Related To” Jurisdiction

The key inquiry no doubt is conceivability. 

“Certainty, or even likelihood [of effect on the estate being 

administered in bankruptcy,] is not a requirement.” Copelin 

v. Spirco, Inc., 182 F.3d 174, 179 (3d Cir. 1999) (quoting 

Halper v. Halper, 164 F.3d 830, 837 (3d Cir. 1999))

(alteration in original). An action thus generally is “related 

to” a bankruptcy proceeding “if the outcome could alter the 

debtor’s rights, liabilities, options, or freedom of action 

(either positively or negatively) and which in any way 

impacts upon the handling and administration of the bankrupt 

estate.” Pacor, 743 F.2d at 994. 

The Supreme Court endorsed Pacor’s conceivability 

standard with the caveats that “related to” jurisdiction “cannot 

be limitless,” and that the critical component of the Pacor test

is that “bankruptcy courts have no jurisdiction over 

proceedings that have no effect on the estate of the debtor.” 

Celotex Corp. v. Edwards, 514 U.S. 300, 308 & n.6 (1995). 

In addition, “related to” jurisdiction does not exist if another 

action would need to be filed before the current action could 
18

affect a bankruptcy proceeding. See W.R. Grace, 591 F.3d at 

172; In re Fed.-Mogul Global, Inc., 300 F.3d 368, 382 (3d 

Cir. 2002).

Conceivability is determined at the time a lawsuit is 

filed. See Grupo Dataflux v. Atlas Global Grp., L.P., 541 

U.S. 567, 570–71 (2004) (“It has long been the case that ‘the 

jurisdiction of the Court depends upon the state of things at 

the time of the action brought.’” (quoting Mollan v. Torrance, 

22 U.S. (9 Wheat.) 537, 539 (1824))). Although we once 

declined to apply the time of filing rule in a federal question 

case, New Rock Asset Partners, L.P. v. Preferred Entity 

Advancements, Inc., 101 F.3d 1492 (3d Cir. 1996), 

subsequent Supreme Court decisions demonstrate the 

continuing vitality of the rule. See Grupo Dataflux, 541 U.S. 

at 582 (“We decline to endorse a new exception to a time-offiling rule that has a pedigree of almost two centuries. 

Uncertainty regarding the question of jurisdiction is 

particularly undesirable, and collateral litigation on the point 

particularly wasteful.”); Dole Food Co. v. Patrickson, 538 

U.S. 468, 478 (2003) (“[J]urisdiction of the Court depends 

upon the state of things at the time of the action brought.”

(quoting Keene Corp. v. United States, 508 U.S. 200, 207 

(1993))). Indeed, the strength and longevity of this rule has 

led courts to hold that confirmation of a bankruptcy plan does 

not divest a district court of related-to jurisdiction over preconfirmation claims. See, e.g., Newby v. Enron Corp. (In re 

Enron Corp. Sec.), 535 F.3d 325, 336 (5th Cir. 2008); 

ConocoPhillips Co. v. SemGroup, L.P. (In re SemCrude, 

L.P.), 428 B.R. 82, 96–98 (Bankr. D. Del. 2010). 

There is one twist to the otherwise straightforward 

application of Pacor’s conceivability standard. If an action is 

brought after the confirmation of a plan in a related 

bankruptcy proceeding, the post-confirmation context of the 

dispute alters the “related to” inquiry. Because a bankruptcy 
19

court’s jurisdiction wanes after the confirmation of a case, 

“retention of bankruptcy jurisdiction may be problematic. . . . 

At the most literal level, it is impossible for the bankrupt 

debtor’s estate to be affected by a post-confirmation dispute 

because the debtor’s estate ceases to exist once confirmation 

has occurred.” Binder v. Price Waterhouse & Co., LLP (In re 

Resorts Int’l, Inc.), 372 F.3d 154, 164–65 (3d Cir. 2004). 

Nonetheless, “courts do not usually apply Pacor’s ‘effect on 

the bankruptcy estate’ test so literally as to entirely bar postconfirmation bankruptcy jurisdiction.” Id. at 165. Instead, 

they apply varying standards that focus on whether the action 

could conceivably affect the implementation of the confirmed 

plan. See id. at 166; U.S. Tr. v. Gryphon at the Stone 

Mansion, Inc., 166 F.3d 552, 556 (3d Cir. 1999) (applying 

Pacor to hold that a post-confirmation action for fees was 

related to the bankruptcy proceeding “because it directly 

relates to the debtor’s liabilities—in fact it creates a 

liability—and could impact the handling and administration 

of the estate”). 

2. 

Nuveen’s primary argument is that its recovery from 

Bayonne’s estate was fixed by the Settlement Agreement, 

which was approved by the Bankruptcy Court prior to its 

filing of the action. Under Nuveen’s theory, if it recovers 

from Withum and Lindabury in this action, its claim against 

Bayonne’s estate can be assigned to them. Bayonne’s estate 

thus would not be affected. Likewise, if Nuveen recovers 

from the estate first, that recovery would offset its recovery in 

this action, decreasing Nuveen’s recovery from Withum and 

Lindabury and not affecting Bayonne’s estate. 

Application to Nuveen’s Action

Nuveen dusts off the rarely cited Ivanhoe Bldg. & 

Loan Assn. v. Orr, 295 U.S. 243 (1935), which was decided 

under the Bankruptcy Act (the immediate predecessor to the 
20

Bankruptcy Code), for the proposition that a creditor may 

recover from non-debtor parties without reducing the value of 

its claim against a bankruptcy estate. Because Nuveen stakes 

its argument on Ivanhoe, some background is required. The

debtor there executed a bond to a creditor; the bond was 

secured by a mortgage on real estate. The creditor purchased

the real estate at a foreclosure sale. Though it then had the 

collateral in partial payment for its debt, the creditor

nonetheless filed a claim for the full amount (principal and 

interest) of the debtor’s obligation under the bond. The 

Supreme Court held that the claim was valid even though the 

creditor held property that partially satisfied the claim. 

However, the Court expressly clarified that the creditor “may 

not collect and retain dividends which with the sum realized 

from the foreclosure will more than make up that amount.” 

Id. at 246. It subsequently explained this ruling as settling 

that “in bankruptcy proceedings . . . a creditor secured by the 

property of others need not deduct the value of that collateral 

or its proceeds in proving his debt.” Reconstruction Fin. 

Corp. v. Denver & Rio Grande W. R.R. Co., 328 U.S. 495, 

529 (1946). 

Ivanhoe thus provides that a creditor may file a proof 

of claim for the total amount it is owed by a debtor even if it 

has recovered or may recover all or a portion of that amount 

from a non-debtor. It does not hold that the actual amount the 

creditor collects from the estate evades reduction by recovery 

from third parties. Rather, it states the exact opposite: a 

creditor cannot collect more, in total, than the amount it is 

owed. Indeed, this distinction was present in case law prior to 

the Supreme Court’s holding in Ivanhoe. See, e.g., Bd. of 

Comm’rs v. Hurley, 169 F. 92, 97 (8th Cir. 1909) (“[T]he 

holder of a claim, upon which several parties are personally 

liable, may prove his claim against the estates of those who 

become bankrupt and may at the same time pursue the others 

at law, and, notwithstanding partial payments after the 
21

bankruptcy by other [parties] or their estates, he may recover 

dividends from each estate in bankruptcy upon the full 

amount of his claim at the time the petition in bankruptcy was 

filed therein until from all sources he has received full 

payment of his claim, but no longer.” (emphasis added)). The 

distinction also has been associated with Ivanhoe in 

subsequent decisions. See, e.g., Feder v. John Engelhorn & 

Sons, 202 F.2d 411, 412 (2d Cir. 1953) (citing Ivanhoe for the 

holding that “the creditor . . . may prove his claim in full in 

the bankruptcy proceeding, although of course he may not 

retain dividends [from the estate] which, when combined with 

the amount realized on the security, exceed his claim”); In re 

Sacred Heart Hosp., 182 B.R. 413, 417 (Bankr. E.D. Pa. 

1995) (citing Ivanhoe and Reconstruction Finance and noting 

that “a creditor can seek to prove its entire claim in the 

bankrupt’s case notwithstanding the existence of third party 

collateral or guarantees of payment so long as the claimant 

does not seek to recover more than one full payment of its 

claim from whatever source”); see also Nat’l Energy & Gas 

Transmission, Inc. v. Liberty Elec. Power, LLC (In re Nat’l 

Energy & Gas Transmission, Inc.), 492 F.3d 297, 301 (4th 

Cir. 2007) (“In Ivanhoe, the Supreme Court held that a 

creditor need not deduct from his claim in bankruptcy an 

amount received from a non-debtor third party in partial 

satisfaction of an obligation.” (emphasis added)).

Ivanhoe is not codified explicitly in the Bankruptcy 

Code. What we have are § 502,

5

 5 In pertinent part, § 502 provides that “[a] claim or interest, 

proof of which is filed under section 501 of this title, is 

deemed allowed, unless a party in interest, including a 

creditor of a general partner in a partnership that is a debtor in 

a case under chapter 7 of this title, objects.” 11 U.S.C. 

§ 502(a). 

which deals with the 
22

allowance of claims, and § 506(a),6

Nuveen cannot rely on Ivanhoe and the Settlement 

Agreement to establish that the amount it will collect from

which concerns in part 

what constitutes a secured claim. Of importance is that

§§ 502 and 506(a) do not change the outcome that a creditor 

cannot collect more in total than it is owed. For example, 

consistent with Ivanhoe and § 506(a), the Court in In re 

F.W.D.C., Inc., 158 B.R. 523, 528 (Bankr. S.D. Fla. 1993), 

allowed a creditor to prove the total indebtedness against a 

guarantor-debtor without deducting the amount of collateral 

received from a third party. But it emphasized that the 

creditor may not be able to collect the total indebtedness from 

the debtor, providing this instructive example: “[I]f a creditor 

received collateral of a third party worth $8 million securing 

the third party’s indebtedness of $10 million and the 

guarantor of this $10 million indebtedness were in 

bankruptcy, such creditor would be allowed to prove a claim 

of $10 million but would not be allowed to realize more than

$2 million.” Id. 

 6 In pertinent part, § 506(a) reads: 

An allowed claim of a creditor secured by a lien 

on property in which the estate has an interest, 

or that is subject to setoff under section 553 of 

this title, is a secured claim to the extent of the 

value of such creditor’s interest in the estate’s 

interest in such property, or to the extent of the 

amount subject to setoff, as the case may be, 

and is an unsecured claim to the extent that the 

value of such creditor’s interest or the amount 

so subject to setoff is less than the amount of 

such allowed claim.

11 U.S.C. § 506(a)(1).
23

Bayonne’s estate is fixed regardless of its recovery in this 

action.

7

If, at the time of [the] suit . . ., [the] bankruptcy 

estate had already been administered by the 

trustee—i.e., if all property of the estate were 

collected, liquidated, and the proceeds 

distributed to creditors—then presumably [the 

plaintiff’s] potential damage recovery against 

 Yet its argument raises the issue of the timing of its 

recovery in this action and from Bayonne’s estate. If a 

creditor’s recovery from a non-debtor definitely will not 

affect the amount of its payment from a bankruptcy estate, the

third-party action is not “related to” the bankruptcy 

proceeding. As the Fifth Circuit Court explained, this is true, 

for example, where a plan has been confirmed and the 

bankruptcy estate has been administered. 

 7 Nuveen also argues that the Settlement Agreement must be 

read to fix the amount it will collect from Bayonne’s estate 

because the Agreement distinguishes between claims arising 

within the bankruptcy proceeding (“internal” claims) and 

claims arising from sources collateral to the bankruptcy 

proceeding, such as this action (“external” claims). For 

internal claims, the Agreement defines the manner in which 

any recovery will offset a creditor’s claim. Because the 

Agreement does not include similar express provisions 

regarding offsetting for external claims, Nuveen argues that to 

read it to allow offset of external claims inappropriately adds 

a term to the Agreement. However, the Agreement merely 

fixes Nuveen’s claim against Bayonne’s estate. Ivanhoe

teaches that granting a creditor a claim against the estate does 

not mean that the creditor necessarily is entitled to collect 

from the estate that amount if that collection will allow it to 

receive more than it is owed. Ivanhoe, 295 U.S. at 246. 
24

the [non-debtor] defendants would have been 

limited to the amount of the outstanding 

judgment (that part of the judgment not paid 

through bankruptcy), and no effect on the estate 

would have been possible.

Randall & Blake, Inc. v. Evans (In re Canion), 196 F.3d 579, 

586 n.27 (5th Cir. 1999). 

Similarly, if the amount of a creditor’s recovery from a nondebtor depends on its recovery from a bankruptcy estate such 

that the asserted losses against the non-debtor only can be 

calculated when the creditor’s recovery from the bankruptcy 

estate is certain, there is no “related to” jurisdiction. See, e.g.,

In re J&J Towne Pharmacy, Inc., No. 09-17560, 2000 WL 

568355 (Bankr. E.D. Pa. May 5, 2000) (concluding that there 

was no “related to” jurisdiction over a malpractice action that 

could be adjudicated only after the bankruptcy estate had 

been administered because the amount of the losses sought in 

the action depended on the actual recoveries of secured and 

unsecured creditors in the bankruptcy proceeding). 

In contrast, courts have held that “related to” 

jurisdiction does exist where a creditor’s recovery from a 

non-debtor conceivably could alter the amount of the 

creditor’s recovery from a bankruptcy estate. For example, in 

advancing an argument similar to Nuveen’s in Canion, the 

creditor argued that were it successful in prosecuting its 

action against a non-debtor, its claims against the debtor’s 

estate would not be reduced or extinguished because the nondebtor would stand in its shoes as a judgment creditor of the 

debtor based on legal subrogation (thus the debtor’s estate 

would owe the same amount regardless). The Fifth Circuit 

rejected this argument, noting that there was no guarantee that 

the non-debtor would be allowed to step into the creditor’s 

shoes. 
25

Assuming that [the creditor] should successfully 

collect from the defendants the judgment it 

holds against [the debtor], and assuming that . . 

. legal subrogation [would not be allowed], the 

total amounts due on claims against [the]

bankruptcy estate would be decreased. This 

decrease would inure to the benefit [of] all other 

unsecured creditors, each of whom would then 

share in the disbursement that would otherwise 

have been paid to [the creditor]. 

Canion, 196 F.3d at 586. See also Owens-Ill., Inc. v. Rapid 

Am. Corp (In re Celotex Corp.), 124 F.3d 619, 626–27 (4th 

Cir. 1997) (finding “related to” jurisdiction where a creditor’s 

claim against a non-debtor would reduce its claim in 

bankruptcy); Kaonohi Ohana, Ltd. v. Sutherland (In re 

Sutherland), 873 F.2d 1302, 1306–07 (9th Cir. 1989) (finding

“related to” jurisdiction over a third-party action because the 

specific performance remedy sought in the third-party action 

would reduce the amount of damages in the related breach-ofcontract claim against a bankruptcy estate); Nat’l Union Fire 

Ins. Co. of Pittsburgh, PA v. Titan Energy, Inc. (In re Titan 

Energy, Inc.), 837 F.2d 325, 329–30 (8th Cir. 1988) (holding 

that a coverage dispute between the debtor’s insurance 

company and a creditor was “related to” the bankruptcy 

because a finding of coverage would reduce the claims 

against the estate); Wood v. Wood (In re Wood), 825 F.2d 90, 

94 (5th Cir. 1987) (“Although we acknowledge the possibility 

that this suit may ultimately have no effect on the bankruptcy, 

we cannot conclude, on the facts before us, that it will have 

no conceivable effect.”) (emphasis in original).

At the time Nuveen filed its complaint against Withum 

and Lindabury, the same loss it sought to recover in that

action (primarily the unpaid principal and interest on the 

BAN) was included in the proof of claim filed by the master 
26

trustee against Bayonne’s estate. The loss also was included

in the provisions of the Settlement Agreement whereby 

Nuveen’s portion of the proof of claim was resolved as an

unsecured claim against Bayonne’s estate (which would be 

reduced dollar for dollar by other recoveries from the estate). 

Nonetheless, Nuveen now argues that it is not seeking 

to recover for the same grievance in this action as the harm 

encompassed by the proof of claim. See Appellant’s Br. 35 

(“Nuveen’s bankruptcy claim and its claims against [Withum 

and Lindabury] are not ‘for the same grievance’ . . . .”). This 

argument contradicts its statements throughout Bayonne’s 

bankruptcy proceeding acknowledging that this action and its 

claim against Bayonne’s estate relate to the same harm. In 

seeking documents related to Bayonne’s pre-petition 

professionals, Nuveen stated that any recovery from claims 

brought against those professionals would decrease its claim 

against Bayonne’s estate. See Application in Support of 

Motion for Nuveen High Yield Municipal Bond Fund to 

Compel the Production of Documents from the Debtor, In re 

Bayonne Medical Center, Case No. 07-15195 (Bankr. D. N.J. 

2007), ECF No. 1503 at 2, 8. In this action, it asserts 

damages of $9.5 million, less any amounts recovered in 

Bayonne’s bankruptcy proceeding. Moreover, before us 

Nuveen acknowledges that if it recovers in this action first, 

there will have to be an “accounting” in the bankruptcy to 

prevent double recovery by it. Appellant’s Br. 36 n.10. 

The bottom line is that if Nuveen prevails in this 

action, it will not be permitted to recover more in total from 

Withum, Lindabury, and Bayonne’s estate than will make it 

whole as to its losses on the BAN. Though Nuveen asserts 

that its claim against Bayonne’s estate should be assigned to 

Withum and Lindabury, there is no guarantee that if they 

moved to have the claim assigned to them, the assignment 

would be allowed. Indeed, it is most likely that someone 
27

would object to the assignment on the basis that it would be 

inequitable for a bad acting party to be assigned all or a 

portion of the claim, and that the money instead should go to 

unpaid creditors who acted in good faith. Thus, at the time 

Nuveen filed its action, Bayonne’s liability to it conceivably 

could have been reduced, having a direct, indeed substantial, 

effect on the pool of assets available for distribution to 

Bayonne’s creditors. The Pacor inquiry thus leads to the 

conclusion that Nuveen’s action is “related to” Bayonne’s 

bankruptcy proceeding. 8

 8 Similarly focusing on Withum and Lindabury, Nuveen 

argues that if it is successful in this action, Bayonne’s estate 

will be affected if Withum and Lindabury file another, 

separate suit against Bayonne’s officers and directors based 

on their potential indemnification claims under Bayonne’s

directors and officers liability insurance policy (the “D&O 

Policy”), which is property of Bayonne’s estate. ACandS, 

Inc. v. Travelers Cas. & Sur. Co., 435 F.3d 252, 260 (3d Cir. 

2006) (“It has long been the rule in this Circuit that insurance 

policies are considered part of the property of a bankruptcy 

estate.”). These indemnification claims include common law 

indemnification claims, which are inchoate—that is, they can 

be asserted only when there is a determination of Withum’s 

and Lindabury’s liability to Nuveen in this action. See Bd. of 

Educ. of Florham Park v. Utica Mut. Ins. Co., 798 A.2d 605, 

610 (N.J. 2002); W.R. Grace, 591 F.3d at 171 (“[A]n inchoate 

claim of common law indemnity is not, in and of itself, 

enough to establish the bankruptcy court’s subject matter 

jurisdiction.”). Because Withum and Lindabury agreed to 

dismiss without prejudice their third-party complaints against 

certain of Bayonne’s officers, they will need to file another 

suit if they want to assert indemnification against them (and, 

 
28

In a final attempt to defeat this conclusion, Nuveen 

argues that we should deviate from the hornbook rule that 

jurisdiction is assessed at the time of the filing of a complaint 

and assess jurisdiction now because significant intervening 

events support looking at post-filing events in reviewing 

“related to” jurisdiction. Chief among these events is that the 

Plan has been confirmed and Bayonne’s bankruptcy 

proceeding is winding down. With this argument, Nuveen in 

 

we presume, Bayonne’s directors). Only after the filing of 

such a suit will Bayonne’s estate be implicated through the 

D&O Policy. Compare Pacor, 743 F.2d at 995 (“The fact 

remains that any judgment received by the plaintiff . . . could 

not itself result in even a contingent claim against [the 

debtor], since [the defendant] would still be obliged to bring 

an entirely separate proceeding to receive indemnification.”), 

and W.R. Grace, 591 F.3d at 173 (“Here, we are presented 

with state court actions that have only the potential to give 

rise to a separate lawsuit seeking indemnification from the 

debtor.”), with Stoe v. Flaherty, 436 F.3d 209, 217–19 (3d 

Cir. 2006) (finding “related to” jurisdiction where there was 

an automatic right to indemnification). 

However, because Nuveen asserted a claim, as established by 

the Settlement Agreement, against Bayonne’s estate, the 

estate already is implicated. Even though Withum and 

Lindabury may bring a third-party action against Bayonne’s 

officers depending on the outcome of this action, and the 

officers in turn may seek indemnification from Bayonne 

(thereby affecting Bayonne’s bankruptcy proceeding through 

another suit), the outcome of this action conceivably will 

resolve a portion of Bayonne’s possible liability. This is 

sufficient to establish “related to” jurisdiction. 
29

effect requests that we apply a post-confirmation gloss on the 

Pacor inquiry discussed above. 

Nuveen offers no case law to support its contention 

that we should adopt a new rule for determining “related to” 

jurisdiction in situations in which a plan is confirmed after the 

filing of the complaint or in which a bankruptcy estate is 

almost fully administered at the time the jurisdictional 

analysis is undertaken. Indeed, had Nuveen initially filed the 

complaint in a New Jersey state court, as it now asserts it 

should have, Withum and Lindabury could have moved to 

transfer the action to the District Court based on “related to” 

jurisdiction immediately. Under this scenario, when the 

Court assessed its jurisdiction, the Plan either would not have 

been confirmed or would have been confirmed only recently. 

There would be few (if any) intervening events to consider, 

and the Court would not question that “related to” jurisdiction 

should be assessed as of the date Nuveen filed the complaint. 

Only because “related to” jurisdiction was raised after 

Nuveen’s reversal of its position regarding diversity 

jurisdiction is Nuveen able to create an argument about 

intervening events. 

Supreme Court precedent is clear that the date of filing 

is the date when subject matter jurisdiction is assessed. See, 

e.g., Grupo Dataflux, 541 U.S. at 582; Dole Food, 538 U.S. at 

478. The unique procedural posture of this action should not 

affect that outcome. Moreover, Bayonne’s bankruptcy 

proceeding, though nearing closure, remains open. And even 

if it is closed, it can be reopened by a motion. See 11 U.S.C. 

§ 350(b) (“A case may be reopened in the court in which such 

case was closed to administer assets, to accord relief to the 

debtor, or for other cause.”); Fed. R. Bank. P. 5010 (“A case 

may be reopened on motion of the debtor or other party in 

interest pursuant to § 350(b) of the Code.”). As subject 

matter jurisdiction should be assessed at the time the 
30

complaint was filed, Pacor’s analysis counsels that Nuveen’s 

action is “related to” Bayonne’s bankruptcy proceeding. We 

thus affirm the District Court’s holding that it has jurisdiction 

under 28 U.S.C. § 1334(b).9

IV. Choice of Law and the AOM Statute

Nuveen raises two choice-of-law arguments regarding 

the application of the AOM Statute and certain protections 

abating its harsh consequences in federal court. First, it cites 

Chamberlain v. Giampapa, 210 F.3d 154, 161 (3d Cir. 2000), 

in which we held that the Statute was “substantive state law 

that must be applied by federal courts sitting in diversity”

because Federal Rules of Civil Procedure 8 and 9 did not 

“collide” with the Statute under Erie R.R. Co. v. Tompkins, 

304 U.S. 64 (1938), and its progeny. Nuveen argues (as 

significantly developed by the amicus curiae brief filed by 

Professor Geoffrey C. Hazard, Jr.) that this holding has been 

overruled impliedly by the combination of the Supreme

Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 

544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), with

Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 

130 S. Ct. 1431 (2010) (plurality opinion). The assertion is

that the pleading standard established by Twombly and Iqbal, 

when considered against the Statute under the Shady Grove

analysis, makes the Statute procedurally in conflict with Rule 

8 such that it no longer can be applied by a federal court. 

On the flip side, Nuveen and amicus also argue that the 

two protections the New Jersey Supreme Court has 

 9 Because the District Court held that it had jurisdiction over 

this action under 28 U.S.C. § 1334(b), it did not address 

whether it also had jurisdiction under 28 U.S.C. § 1332. We 

likewise need not address jurisdiction under § 1332.
31

established to dull the severe consequences of the failure to 

file a timely affidavit of merit—the addition to New Jersey’s 

Civil Case Information Sheet referencing the AOM Statute 

and the accelerated case management conference—are 

substantive requirements of the Statute that must be applied in 

federal court.10

A. 

 

Before considering these two issues, we confront 

Withum’s and Lindabury’s contention that Nuveen failed to 

advance arguments about them before the District Court. 

Nuveen counters that it raised the distinction between federal 

and state law before the Court, specifically citing Burns v. 

Belafsky, 766 A.2d 1095 (N.J. 1999), and Ferreira v. 

Rancocas Orthopedic Assocs., 836 A.2d 779 (N.J. 2003), the 

cases in which the New Jersey Supreme Court established the 

two protections. Though it did not cite Erie or Shady Grove, 

Nuveen asserts that the implications of its argument were 

Waiver

 10 Amicus further argues that the AOM Statute is an 

affirmative defense under Federal Rule of Civil Procedure

8(c), and Withum’s and Lindabury’s failure to assert it as an 

affirmative defense in their responses to the complaint 

constitutes waiver. An amicus cannot expand the scope of an 

appeal with issues not presented by the parties on appeal. See 

N.J. Retail Merchs. Ass’n v. Sidamon-Eristoff, 669 F.3d 374, 

383 n.2 (3d Cir. 2012) (rejecting an attempt by an amicus to 

raise an issue not addressed by the parties); Universal City 

Studios, Inc. v. Corley, 273 F.3d 429, 445 (2d Cir. 2001) 

(“Although an amicus brief can be helpful in elaborating 

issues properly presented by the parties, it is normally not a 

method for injecting new issues into an appeal, at least in 

cases where the parties are competently represented by 

counsel.”). We thus do not address this argument.
32

clear and that its citation of Erie now is a natural extension 

and refinement of its argument below. An argument is not 

waived if it “is inherent in the parties’ positions throughout 

[the] case.” Huber v. Taylor, 469 F.3d 67, 75 (3d Cir. 2006). 

However, the argument must do more than “emanat[e] from 

the ethers of briefs filed in the district court.” Brennan v. 

Norton, 350 F.3d 399, 418 (3d Cir. 2003). The party must 

“present[] the argument with sufficient specificity to alert the 

district court.” Id. (quoting Keenan v. City of Philadelphia, 

983 F.2d 459, 471 (3d Cir. 1993)). 

Before the District Court, Nuveen argued (without 

reference to Erie) that the absence in federal court of (1) a 

New Jersey Civil Case Information Sheet referring to the 

AOM Statute and (2) an accelerated case management 

conference created “extraordinary circumstances” under New 

Jersey law that excused any failure to file a timely AOM, and 

thus required its complaint to be dismissed without prejudice. 

“Extraordinary circumstance” is one of four limited 

exceptions that the Supreme Court of New Jersey has 

recognized to the affidavit requirement under the AOM 

Statute. See Ferreria, 836 A.2d at 783. This is the argument

that Nuveen advanced to the District Court with its citation of 

Burns and Ferreira, and we address it below. See infra Part 

V.B. Before doing so, however, we consider two choice-oflaw issues (see infra Part IV. B-C) that were not presented to 

the District Court and are distinct from Nuveen’s contentions 

regarding the exceptions to the Statute’s requirements. 

Merely citing Burns and Ferreira in its argument regarding 

extraordinary circumstances was not sufficient to alert the 

District Court that it also was raising these choice-of-law 

issues. 

Nonetheless, we have not adopted a consistent rule 

regarding whether choice-of-law issues can be waived. 

Huber, 469 F.3d at 75 n.12. In Parkway Baking Co., Inc. v. 
33

Freihofer Baking Co., 255 F.2d 641, 646 (3d Cir. 1958), and 

United States v. Certain Parcels of Land, 144 F.2d 626, 630

(3d Cir. 1944), we held that choice-of-law questions are not 

waivable. We noted in Certain Parcels that “[t]he 

appropriate law must be applied in each case and upon a 

failure to do so appellate courts should remand the cause to 

the trial court to afford it opportunity to apply the appropriate 

law, even if the question was not raised in the court below.” 

144 F.2d at 630. In Neely v. Club Med Mgmt. Servs., 63 F.3d 

166, 180 n.10 (3d Cir. 1995) (en banc), however, we deemed

the choice-of-law question waived. Neely, however, did not 

overrule Parkway Baking specifically or even address the 

case.

Moreover, we may review waived issues at our 

discretion. See Wright v. Owens Corning, 679 F.3d 101, 105

(3d Cir. 2012). We have exercised our discretion in 

exceptional circumstances, such as when the “public interest

. . . so warrants,” and particularly when issues are not fact 

dependent. Barefoot Architect, Inc. v. Bunge, 632 F.3d 822, 

834–35 (3d Cir. 2011) (quoting Rogers v. Larson, 563 F.2d 

617, 620 n.4 (3d Cir. 1977)); see also Wright, 679 F.3d at 

105. 

Nuveen’s choice-of-law arguments involve issues 

purely of law, and given that they involve choice of law, the 

public interest weighs toward our consideration of them. This 

is an appropriate circumstance for us to do so.

B. 

Our last encounter with choice of law and the AOM 

Statute was in Chamberlain. As noted, under an Erie analysis 

we concluded that the Statute is substantive state law. Erie

provides that a federal court sitting in diversity must apply 

Shady Grove and the AOM Statute as a Pleading 

Requirement
34

substantive state law and federal procedural law.

11

[T]he importance of a state rule is indeed 

relevant, but only in the context of asking 

whether application of the rule would make so 

important a difference to the character or result 

of the litigation that failure to enforce it would 

unfairly discriminate against citizens of the 

forum State, or whether application of the rule 

would have so important an effect upon the 

fortunes of one or both of the litigants that 

 304 U.S. 

at 78. Under Erie, a court assesses the substantive/procedural 

dichotomy with the objective that “the outcome of the 

litigation in the federal court [will] be substantially the same, 

so far as legal rules determine the outcome of a litigation, as it 

would be if tried in a State court.” Guar. Trust Co. of N.Y. v. 

York, 326 U.S. 99, 109 (1945). This “outcome determinative 

test” focuses on the “twin aims” of discouraging forum 

shopping and avoiding “the inequitable administration of the 

laws.” Hanna v. Plumer, 380 U.S. 460, 468 (1965). 

Consideration of the “twin aims” should produce a decision 

favoring application of state law only if one of the aims is 

furthered: 

 11 Where a claim that derives from state law is before a 

federal court based on “related to” jurisdiction, that court also 

must apply state law. See, e.g., Statek Corp. v. Dev. 

Specialists, Inc. (In re Coudert Bros. LLP), 673 F.3d 180, 187 

(2d Cir. 2012) (“28 U.S.C. § 1334(b) vests the district courts 

with original jurisdiction over civil proceedings ‘arising 

under,’ ‘arising in,’ or ‘related to’ cases under the Bankruptcy 

Code. Such jurisdiction extends not only to questions of 

federal law, but also to many state law disputes. Erie made 

clear that state law provides the rules of decision for the 

merits of state law claims in bankruptcy court.”).
35

failure to enforce it would be likely to cause a 

plaintiff to choose the federal court.

Id. at 468 n.9 (emphasis added). 

There are two caveats to the Erie analysis. First, 

notwithstanding that its application should further the “twin 

aims,” if a “strong countervailing federal interest” dictates 

application of a federal rule, the federal rule controls. 

Chamberlain, 210 F.3d at 159. Second, the Erie rule cannot 

void a Federal Rule of Civil Procedure “so long as the federal 

rule is authorized by the Rules Enabling Act and consistent 

with the Constitution.”12

Proceeding under this analysis in Chamberlain, we

found “no direct conflict” between Federal Rules 8 and 9 and 

the AOM Statute:

 Id. Prior to Shady Grove, to 

determine whether a state law voided a Rule, we considered 

whether the Rule “directly collided” with the state law. Id.

(citing Hanna, 380 U.S. at 470–74). Absent a direct conflict,

we followed the Erie dichotomy. Id.

The affidavit of merit statute has no effect on 

what is included in the pleadings of a case or 

the specificity thereof. The required affidavit is 

not a pleading, is not filed until after the 

pleadings are closed, and does not contain a 

statement of the factual basis for the claim. Its 

purpose is not to give notice of the plaintiff’s 

claim, but rather to assure that malpractice 

claims for which there is no expert support will 

be terminated at an early stage in the 

 12 Rule 8 is within the scope of the Rules Enabling Act and 

consistent with the Constitution. See Chamberlain, 210 F.3d 

at 160. 
36

proceedings. This state policy can be 

effectuated without compromising any of the 

policy choices reflected in Federal Rules 8 and 

9. 

Id. at 160. We also addressed the Statute’s provision that 

failure to file an affidavit is “deemed a failure” to state a 

cause of action. N.J. Stat. Ann. § 2A:53A-29. “We read the 

‘deeming’ language to be no more than the New Jersey 

legislature’s way of saying that the consequences of a failure 

to file shall be the same as those of a failure to state a claim.” 

Chamberlain, 210 F.3d at 160–61. Failure to file the required 

affidavit thus does not render pleadings insufficient. Id. at 

160. 

Nuveen and amicus counsel question the continued 

validity of our conclusion that the AOM Statute does not 

“collide” with Rule 8 in light of Twombly, Iqbal, and Shady 

Grove. Twombly and Iqbal established the pleading standard

under Rule 8 that a party must demonstrate the plausibility, as 

opposed to conceivability, of its causes of action in the 

complaint. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 

230–35 (3d Cir. 2008) (discussing Twombly and Iqbal). 

Shady Grove clarified the second caveat to the Erie

analysis. In determining that certification of a class action 

under Rule 23 alleging violations of New York law was 

proper even though New York law prohibited the action from 

proceeding as a class action, a plurality of the Court stated 

that the “collision” inquiry does not depend on “the 

substantive or procedural nature or purpose of the affected 

state law,” but rather “substantive or procedural nature of the 

Federal Rule.” Shady Grove, 130 S. Ct. at 1444; see Knepper 

v. Rite Aid Corp., 675 F.3d 249, 264–65 (3d Cir. 2012) 

(discussing Shady Grove). 
37

However, as we held in Chamberlain, the affidavit of 

merit is not a pleading requirement. It is not part of the 

complaint, nor does it need to be filed with the complaint. 

Rather, the affidavit must be filed within 60, or possibly 120 

days, after the defendant files its answer. See N.J. Stat. Ann.

§ 2A:53A-27. The requirement exists to provide expert 

verification of the merits of the assertions in the complaint so 

that “malpractice claims for which there is no expert support 

will be terminated at an early stage in the proceedings.” 

Chamberlain, 210 F.3d at 160 (emphasis added). Our 

holding in Chamberlain was premised on the temporal 

separation of the filing of the complaint and the affidavit. 

The AOM Statute “has no effect on what is included in the 

pleadings of a case or the specificity thereof.” Id. Rule 8 

does not collide with the Statute, as it is not even implicated 

by the Statute.

Twombly, Iqbal, and Shady Grove do not alter this 

conclusion.13

 13 That the affidavit is not a pleading requirement counsels 

that a defendant seeking to “dismiss” an action based on the 

plaintiff’s failure to file a timely affidavit should file a motion 

for summary judgment under Rule 56, and not a motion to 

dismiss for failure to state a claim under Rule 12(b)(6). 

Though the AOM Statute directs courts to dismiss actions in 

which a timely affidavit has not been filed for “failure to state 

a claim,” because the affidavit is not a pleading requirement, 

this language merely provides that the consequences of not 

filing a timely affidavit are the same as failing to state a 

claim. Chamberlain, 210 F.3d at 610. Indeed, because the 

affidavit is not part of the pleadings, dismissing an action 

based on the lack of an affidavit necessarily seems to involve 

matters outside the pleadings, which would require a court to 

consider a motion to dismiss for failure to state a claim as a 

 See also Liggon-Reading v. Estate of 
38

Sugarmann, 659 F.3d 258, 262–63 (3d Cir. 2011) (concluding 

that Pennsylvania’s similar requirement that a certificate of 

merit be filed in malpractice cases is substantive state law that 

federal courts must apply under Erie). The AOM Statute can 

be applied by a federal court without voiding any Federal 

Rules.14

C. 

Having concluded that an action subject to the AOM 

Statute can be maintained in federal court, we proceed to the 

Erie analysis and consider whether the District Court should 

have afforded Nuveen the two protections the New Jersey 

Supreme Court has established to cut back the severe 

consequences of the failure to file a timely affidavit of 

merit—the addition to New Jersey’s Civil Case Information 

Sheet referencing the Statute and the accelerated case 

management conference (often called the “Ferreira

conference,” see Ferreira, 836 A.2d at 785). Nuveen and the 

amicus characterize these protections as part of a three-step 

process that includes the Statute, the Civil Case Information 

Sheet, and the accelerated conference. According to them, 

though the protections are procedural, their objective is 

substantive and thus they are outcome determinative.

New Jersey Civil Information Cover Sheet and Expedited 

Case Management Conference as Substantive State Law

 

motion for summary judgment, as provided by Rule 12(d). 

See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 

12(b)(6) or 12(c), matters outside the pleadings are presented 

to and not excluded by the court, the motion must be treated 

as one for summary judgment under Rule 56.”).

14 There also is no strong countervailing federal interest that 

precludes application of the AOM Statute. See Chamberlain, 

210 F.3d at 161.
39

Turning to the information sheet first, the use of a 

particular form generally is a procedure of a state court, and 

the information provided to parties by a state court via its 

forms usually will not result in forum shopping. Here, a 

plaintiff either will file in state court and be reminded of the 

affidavit requirement via the Civil Case Information Sheet, or 

will file in federal court and not be reminded of the 

requirement. Moreover, plaintiffs (and their attorneys) are 

required to know the law.15

The same is true for the Ferreira conference. Though 

the New Jersey Supreme Court requires the conference,

Ferreira, 836 A.2d at 785, it has held that its absence will not 

prevent an action from being dismissed based on the failure to 

file a timely affidavit. See Paragon Contrs., Inc. v. Peachtree 

Condo. Ass’n, 997 A.2d 982, 987 (N.J. 2010) (“[O]ur creation 

of a tickler system to remind attorneys and their clients about 

critical filing dates plainly cannot trump the statute. In other 

words, the absence of [the accelerated] conference cannot toll 

the legislatively prescribed time frames.”). The timing of a 

conference that will not affect the outcome of a proceeding is 

 They should not need to be 

reminded of the affidavit requirement on an information 

sheet; thus the lack of a reminder does not result in 

inequitable administration of the AOM Statute. In addition, a

defendant has no incentive to remove a case from state to 

federal court based on the reminder of the affidavit 

requirement on the Civil Case Information Sheet because the 

burden is on the plaintiff to know the requirements for

initiation of an action. At bottom, the requirement that the 

Civil Case Information Sheet reference the Statute in New 

Jersey state actions is not a substantive requirement. 

 15 The problem here is that both firms acting as Nuveen’s 

counsel were not from New Jersey. This underscores the 

need to engage local counsel to avoid state-specific pitfalls. 
40

unlikely to promote forum shopping and will not result in an 

inequitable administration of the Statute. Moreover, a 

defendant has no incentive to remove a case from state to 

federal court solely to prevent the accelerated conference 

from being held because the plaintiff already will have been 

reminded of the affidavit requirement when it filed the Civil 

Case Information Sheet along with its complaint. 

Neither protection furthers the “twin aims” of 

discouraging forum shopping and preventing the inequitable 

administration of state laws. The protections are procedural. 

The District Court thus was not required to provide Nuveen 

with a reminder of the affidavit requirement on the cover

sheet that Nuveen filed along with its complaint or to hold an 

accelerated conference. The Court acted appropriately.

V. The AOM Statute and Dismissal of the Action

Having cleared jurisdictional and choice-of-law 

hurdles, we finally arrive at the core of Nuveen’s appeal—

whether, based on New Jersey state law, it can escape the 

harsh consequences of its counsel’s failure to file timely 

affidavits of merit as required by the AOM Statute. As it did 

before the District Court, Nuveen argues that the Statute does 

not apply to all or a portion of the complaint and that, if it 

does apply, its counsel’s mistake can be excused based on its 

substantial compliance with the Statute or extraordinary 

circumstances. 

To review, the AOM Statute requires a plaintiff in a 

malpractice action against a licensed professional seeking 

“damages for personal injuries, wrongful death or property 

damage” to file an affidavit of merit from an appropriate 

licensed professional within 60 days of the defendant filing its 

answer. N.J. Stat. Ann. § 2A:53A-27. Upon a showing of 

good cause, the court may extend this deadline an additional 
41

60 days. Id. Absent the plaintiff’s showing of one of four 

limited exceptions, if the affidavit of merit is not filed within 

60 (or 120) days, the failure to file requires dismissal of the 

action with prejudice. Id. § 2A:53A-29. The four limited 

exceptions are: (i) a statutory exception regarding lack of 

information; (ii) a “common knowledge” exception; (iii) 

substantial compliance with the affidavit-of-merit 

requirement; or (iv) “extraordinary circumstances” that 

warrant equitable relief. See id. § 2A:53A-28; Ferreira v. 

Rancocas Orthopedic Assocs., 836 A.2d 779, 782–83 (N.J. 

2003); Hubbard v. Reed, 774 A.2d 495 (N.J. 2001); Cornblatt 

v. Barow, 708 A.2d 401, 411–12 (N.J. 1996). 

We go out of turn, and consider first the arguments 

that, if the AOM Statute applies, Nuveen’s failure to file 

timely affidavits should be excused based on either its 

substantial compliance with the Statute or extraordinary 

circumstances. Our answer in each instance is no. We 

conclude with whether the Statute applies to all or but a 

portion of this action, as it is there that we reserve ruling 

pending the certification of two questions to the New Jersey 

Supreme Court.

A. 

The New Jersey Supreme Court has established a fivepart test to determine whether the equitable doctrine of 

substantial compliance excuses noncompliance with the 

AOM Statute: 

Substantial Compliance

(1) the lack of prejudice to the defending party; 

(2) a series of steps taken to comply with the 

statute involved; (3) a general compliance with 

the purpose of the statute; (4) a reasonable 

notice of petitioner’s claim[;] and (5) a 
42

reasonable explanation why there was not a 

strict compliance with the statute.

Galik v. Clara Maass Med. Ctr., 771 A.2d 1141, 1149 (N.J. 

2001) (quoting Bernstein v. Bd. of Trs. of Teachers’ Pension 

& Annuity Fund, 376 A.2d 563, 566 (N.J. Super. Ct. App. 

Div. 1977)). “Satisfying those elements guarantees that the 

underlying purpose of the statute is met and that no prejudice 

is visited on the opposing party.” Id. Though the New Jersey 

Supreme Court has noted that establishing the elements of 

substantial compliance “is a heavy burden,” id. at 1152, it 

also has stated that Cornblatt, in which it established that the 

doctrine applies to the Statute, is not a “narrow authorization 

of substantial compliance in the affidavit of merit setting.” 

Id. at 1150. Overall, the analysis is fact sensitive, “involving 

the assessment of all of the idiosyncratic details of a case to 

determine whether ‘reasonable effectuation of the statute’s 

purpose’ has occurred.” Id. at 1151 (quoting Cornblatt, 708 

A.2d at 401).

1. 

The District Court held that Withum and Lindabury 

suffered prejudice by filing and defending their motions to 

dismiss. Nuveen argues that its noncompliance did not cause 

them prejudice because the complaint was sufficiently 

detailed to provide them with reasonable notice of its claims. 

Thus, it contends, Withum and Lindabury were prepared for 

the suit after receiving the complaint. In addition, Nuveen

asserts that Withum and Lindabury did not incur undue

additional defense costs in filing and litigating the motions to 

dismiss the complaint. See Fink v. Thompson, 772 A.2d 386, 

394 (N.J. 2001) (holding that an affidavit that inadvertedly 

excluded the name of a defendant-professional involved in 

the malpractice action did not prejudice the defendantLack of Prejudice to Withum and Lindabury
43

professional, and noting that “permitting plaintiff’s case to 

proceed would not result in undue additional defense costs”). 

We agree that the incurrence of additional costs to

bring a motion to dismiss based on the failure to file the 

requisite affidavit is not sufficient to cause prejudice to a 

defendant. If the costs of filing and defending the motion to 

dismiss were sufficiently prejudicial to preclude a showing of 

substantial compliance, few plaintiffs could prove substantial 

compliance. Yet courts have found substantial compliance in 

a variety of circumstances. See, e.g., Burns v. Belafsky, 766 

A.2d 1095, 1101 (N.J. 1999) (holding that failure to timely 

file affidavit was not prejudicial because it was “simply too 

early in the litigation for that claim to be credible”); Mayfield 

v. Cmty. Med. Assocs., P.A., 762 A.2d 237, 243 (N.J. Super. 

Ct. App. Div. 2000) (stating that, where the affidavit was 

timely filed but served late, “there has been no showing of 

prejudice to defendants that would outweigh the strong 

preference for adjudication on the merits rather than final 

disposition for procedural reasons”).

Nuveen provided Withum and Lindabury with a 

complaint that was detailed enough to place them on notice of 

the asserted claims without the affidavits. The only apparent 

prejudice they suffered was the cost of filing and defending 

the motions to dismiss. This is not sufficient prejudice to 

preclude a finding of substantial compliance. Nonetheless, 

Nuveen still must demonstrate the other four factors. 

2. “Series of Steps”

Nuveen argues that, in holding that it did not take a 

“series of steps” necessary for substantial compliance, the 

District Court overlooked its actions to verify the merit of its 

complaint. Nuveen highlights that it conducted an 18-monthlong investigation to support its allegations, which allowed it 

 
44

to submit a detailed complaint. During this extensive 

investigation, it consulted two experts who later submitted 

affidavits, one of whom provided it with a 16-page report 

before it filed the complaint. It also notes that it provided 

Withum and Lindabury the affidavits one day after they filed 

their motions to dismiss.

Though Nuveen may have researched its complaint 

and scrambled to correct its mistake regarding the affidavits, 

its failure to take some action to comply with the affidavit

requirement before the AOM Statute’s deadline expired

appears fatal here. A review of New Jersey Supreme Court

cases discussing substantial compliance reveals that the 

“series of steps” element requires some effort by the plaintiff 

to provide the defendant with a statement of a professional 

discussing the merits of the action by the expiration of the 

120-day period. See, e.g., Ferreira, 836 A.2d at 784

(declining to find substantial compliance where “[p]laintiff’s 

counsel did not, within the statutory time frame, take steps to 

forward the affidavit to opposing counsel”); Palanque v. 

Lambert-Woolley, 774 A.2d 501, 506 (N.J. 2001) (“In both 

Galik and Fink, the plaintiffs took a series of steps that 

notified the defendants about the merits of the malpractice 

claims filed against them. Here, no such action was taken. 

Plaintiff obtained an expert report but did not provide the 

report or an affidavit to defendant. The action taken by 

plaintiff falls short of meeting the elements of substantial 

compliance.”); Fink, 772 A.2d at 386 (finding a “series of 

steps” where plaintiff served a timely affidavit that did not 

identify one of the defendant-professionals, but identified 

“unknown” professionals, and also provided a pre-suit expert 

report in which the unidentified defendant-professional was 

mentioned by name); Galik, 771 A.2d at 1151 (finding a 

“series of steps” where “[p]laintiff retained an expert before 

filing suit, forwarded the medical records to the expert, 

obtained both an initial and a supplementary expert report, 
45

and sent both to defendants’ carriers who attempted to settle 

the case on defendants’ behalf”); Burns, 766 A.2d at 1101 

(finding substantial compliance where affidavit was served 

after 60 days, but before 120 days, after the answer, and only 

after defendants filed motions to dismiss); Cornblatt, 708 

A.2d at 411–12 (finding substantial compliance where 

plaintiff served a certification instead of an affidavit). 

These decisions comport with the AOM Statute’s goal 

of weeding out frivolous lawsuits by providing defendants 

with independent opinions of the actions. See Chamberlain, 

210 F.3d at 610. As long as a defendant receives timely (that 

is, within the time allowed by the Statute) an opinion in the 

form of a document or combination of documents authored by 

a non-party discussing the merits of the action as to each 

defendant, the plaintiff will have fulfilled the “series of steps” 

element of substantial compliance. 

Nuveen communicated with two professionals before 

it filed the complaint. One professional provided it with a 

report; the other merely discussed the potential action on the 

telephone. Nuveen did not provide the report to Withum and 

Lindabury, and did not file it with the complaint. It also did 

not obtain the affidavits until more than 120 days after 

Withum and Lindabury filed their answers. The result is that 

it did not timely provide Withum and Lindabury with 

independent verification that the allegations in the complaint 

were sufficient to state causes of action for malpractice. 

Nuveen’s failure to engage in a “series of steps” undermines

its argument that it substantially complied with the Statute.

3. Remaining Factors

In arguing that it generally complied with the purposes 

of the AOM Statute, Nuveen again references the detailed 

complaint and its provision of the affidavits one day after 
46

Withum and Lindabury filed their motions to dismiss. 

However, the purpose of the Statute is to identify frivolous 

malpractice actions by requiring independent verification of 

the validity of claims. Regardless how detailed a complaint 

is, a pleading is self-serving and cannot be substituted for this 

independent verification. In not attempting to provide 

independent verification of the merit of the complaint until 

more than 140 days after Withum and Lindabury filed their 

answers, Nuveen did not comply with the purposes of the 

Statute. 

As to the fourth factor, we agree with the District 

Court that Nuveen’s detailed complaint provided Withum and 

Lindabury with reasonable notice of Nuveen’s claims. 

Reasonable notice refers to whether the defendant can 

understand the basis of the malpractice suit such that it can 

begin defending itself. If a complaint is conclusive or does 

not specify particular professionals, an affidavit will be 

necessary to supplement the complaint for the defendant to be 

on reasonable notice of the asserted claims. See, e.g., Kindig 

v. Gooberman, 149 F. Supp. 2d 159, 166 (D.N.J. 2001) 

(noting that the filing of complaint first notified the 

defendants). But if a complaint is detailed, as here, it should 

provide the defendant with reasonable notice of the claims. 

Finally, Nuveen provides one reason for its lack of 

strict compliance: inadvertence by its counsel. However, 

New Jersey state courts have rejected attorney inadvertence 

alone as a sufficient ground for a party’s failure to comply 

with the AOM Statute. See, e.g., Paragon Contrs., Inc. v. 

Peachtree Condo. Ass’n, 997 A.2d 982, 986 (N.J. 2010)

(“[A]n attorney’s inadvertence in failing to timely file an 

affidavit will generally result in dismissal with prejudice.”). 

Nuveen’s counsel’s failure to exercise sufficient diligence in 

obtaining and serving affidavits is not a reasonable 

explanation for Nuveen’s noncompliance with the Statute. 
47

* * * * *

Though Nuveen filed a detailed complaint that put 

Withum and Lindabury on notice of its claims such that they 

did not incur undue additional expenses in defending the 

action, it failed to provide independent verification of the 

merits of the claims in its complaint. Absent that independent 

verification, under the facts before us we (like the District 

Court) cannot hold that Nuveen substantially complied with 

the Statute. 

B. 

Where a plaintiff cannot establish substantial 

compliance with the AOM Statute, the New Jersey Supreme 

Court has held that dismissal of the plaintiff’s complaint 

should be with prejudice in all but extraordinary 

circumstances. See Ferreira, 836 A.2d at 783. A finding of 

extraordinary circumstances results in a dismissal of the 

complaint without prejudice. See Paragon, 997 A.2d at 986. 

Like substantial compliance, the extraordinary circumstances 

analysis is fact-specific. See Hyman Zamft & Manard, L.L.C. 

v. Cornell, 707 A.2d 1068, 1071 (N.J. Super. Ct. App. Div. 

1998). Nuveen asserts that extraordinary circumstances exist

here because the District Court did not afford it the two 

protections available in New Jersey state court (which were 

the subject of the Erie analysis above), and because Withum 

and Lindabury could have alerted it to its noncompliance with 

the Statute.

Extraordinary Circumstances

We have identified no federal court decision finding 

extraordinary circumstances based even partially on New 

Jersey’s Civil Case Information Sheet. Rather, federal courts

focus on more typical “extraordinary circumstances,” stating 

that “[c]arelessness, lack of circumspection, or lack of 

diligence on the part of counsel are not extraordinary 
48

circumstances which will excuse missing a filing deadline.” 

Cobalt Multifamily Investors I, LLC v. Shapiro, No. 06-6468, 

2012 U.S. Dist. LEXIS 30954, at *51 (S.D.N.Y. Mar. 8, 

2012) (quoting Hyman Zamft & Manard, 707 A.2d at 1071)

(applying the AOM Statute). The notice on the information 

sheet may provide plaintiffs with a useful reminder of the 

Statute, but plaintiffs and their counsel are responsible for 

knowing that an affidavit must accompany a malpractice 

claim under New Jersey law. 

And, ironically, Nuveen chose to file in federal, rather 

than state, court. That choice by Nuveen alone, whereby it 

did not receive notice of the Statute on the federal form it was 

required to file along with its complaint, is not a basis for a 

finding of extraordinary circumstances.

The New Jersey Supreme Court established the 

accelerated “Ferreira conference” in 2003. See Ferreira, 836 

A.2d at 785. In an opinion issued the same day as Ferreira, it 

discussed the conference as if it were mandatory: “Our 

decision in Ferreira requires that an accelerated case 

management conference be held within ninety days of the 

service of an answer in all malpractice actions.” Knorr v. 

Smeal, 836 A.2d 794, 801 (N.J. 2003). After Ferreira and 

Knorr, New Jersey intermediate state courts issued 

conflicting decisions regarding the effect of not holding a 

conference on whether an action should be dismissed with 

prejudice for failure to file a timely affidavit. See Paragon, 

997 A.2d at 987. To clarify, the New Jersey Supreme Court

recently held that the absence of this conference will not 

preclude dismissal. Id. at 987–88. 

In so clarifying, in Paragon it held that the confusion 

among New Jersey state courts “counsels lenience in this 

case.” Id. at 987 (emphasis added). The complaint in that 

case was captioned as a breach-of-contract claim, and the 
49

plaintiff’s counsel filed a certification that a legal assistant in 

its office had been told by the state court that an affidavit 

would need to be filed prior to an unscheduled case 

management conference, and even if the affidavit was not 

filed before the conference, it could be filed later with the

consent of the parties. See Paragon Contractors, Inc. v. 

Peachtree Condominium Ass’n, 968 A.2d 752, 756–57 (N.J. 

Super Ct. App. Div. 2009), rev’d, 997 A.2d at 982. The New 

Jersey Supreme Court emphasized that its finding of 

extraordinary circumstances arose from the confusion 

regarding the Ferreira conference. Paragon, 997 A.2d at 

987.

Here, Nuveen filed the complaint in December 2008, 

after Ferreira was decided, but before Paragon clarified it. 

Nuveen thus plausibly can assert that, at the time it filed the 

complaint, it was unclear whether the Ferreira conference 

was mandatory such that failure to hold it possibly could 

constitute an extraordinary circumstance. However, 

“extraordinary circumstances” requires a fact-specific 

analysis. The “confusion” in Paragon that led to the finding 

of extraordinary circumstances was created in large part by 

the state court and the initial captioning of the case as a 

breach-of-contract claim. Moreover, in Paragon the

plaintiff’s attorney inquired about the affidavit, demonstrating 

that the plaintiff tried to comply with the affidavit 

requirement. In contrast, Nuveen (and its counsel) appear not 

to have attempted to determine if and when an affidavit was 

necessary. Apparently Nuveen’s counsel simply was 

unaware of the requirement. And, continuing with the theme 

already noted, “attorney inadvertence is not a circumstance 

entitling plaintiff to a remedy of dismissal of a complaint 

without prejudice.” Ferreira, 836 A.2d at 784; see also

Palanque, 774 A.2d at 505 (“[A]ttorney inadvertence will not 

support the extraordinary circumstances set forth in 

Cornblatt.”). Lack of the accelerated conference is not a 
50

basis for a finding of extraordinary circumstances in this 

instance. 

Finally, Withum and Lindabury had no duty to notify 

Nuveen of the affidavit requirement. Ferreira establishes that 

the state court must inquire about the status of the affidavit if 

it has not been filed, not that the defendant must notify the 

plaintiff of the requirement. See Ferreira, 836 A.2d at 785 

(“At the conference, the court will address all discovery 

issues, including whether an affidavit of merit has been 

served on defendant. If an affidavit has been served, 

defendant will be required to advise the court whether he has 

any objections to the adequacy of the affidavit.”). In addition, 

though defendants cannot sleep on their rights, Withum and 

Lindabury acted appropriately in waiting approximately three 

weeks after the 120-day period in which Nuveen had to file 

the affidavits expired to file their motions to dismiss. See, 

e.g., Knorr, 836 A.2d at 801 (holding that equitable estoppel

and laches barred the granting of motion to dismiss for failure 

to file a timely affidavit where the defendant waited 14

months to file the motion, during which time the parties 

engaged in extensive discovery); Stoecker v. Echevarria, 975 

A.2d 975, 985 (N.J. Super. Ct. App. Div. 2009) (finding 

reliance on Knorr misplaced when the motion to dismiss for 

failure to file a timely affidavit was filed two and a half 

months after the affidavit was due). Moreover, Withum and 

Lindabury should not be penalized for knowing the law—

including that they should wait until after the expiration of the 

extended 120-day period (even if Nuveen had not requested 

an extension) to preclude an argument regarding substantial 

compliance—and using it to their advantage. 

If Nuveen’s counsel had been diligent, it would not 

have needed a reminder on an information sheet, at a case 

management conference, or from Withum or Lindabury that it

had an obligation to serve affidavits of merit. Under New 
51

Jersey law, attorney inadvertence alone cannot support a 

claim of extraordinary circumstances. See, e.g., Ferreira, 836 

A.2d at 784; Palanque, 774 A.2d at 505. We agree with the 

District Court that no extraordinary circumstances exist here. 

Thus, unless the action is not subject to the AOM Statute, we 

must uphold the District Court’s dismissal of that action with 

prejudice.

C. 

Nuveen argues that the AOM Statute does not apply to 

its entire action because it is not seeking recovery for

“property damage” under the Statute, and alternatively that 

the Statute does not apply to the non-negligence and nonmalpractice claims it asserts against Withum. We consider 

each argument in turn. 

The AOM Statute’s Application to Nuveen’s Action

1. 

In primary support of the argument that it is not 

seeking recovery for “property damage” under the AOM 

Statute, Nuveen cites Couri v. Gardner, 801 A.2d 1134 (N.J. 

2002). In that case, the plaintiff retained a licensed 

psychiatrist as a potential expert witness in connection with 

his divorce proceeding. After the psychiatrist disclosed his 

preliminary findings without the plaintiff’s permission, the 

plaintiff filed a breach-of-contract action alleging that the 

psychiatrist was retained to prepare a report only for the 

plaintiff. The New Jersey Supreme Court analyzed whether 

the action was subject to the AOM Statute based on three 

elements: 

What Damages Are Covered by the AOM Statute?

(1) whether the action is for “damages for 

personal injuries, wrongful death or property 

damage” (nature of injury); (2) whether the 

action is for “malpractice or negligence” (cause 
52

of action); and (3) whether the “care, skill or 

knowledge exercised or exhibited in the 

treatment, practice or work that is the subject of 

the complaint [] fell outside acceptable 

professional or occupational standards or 

treatment practices” (standard of care). 

Id. at 1137. It considered these elements in order. 

Addressing the “nature of injury” element first, it emphasized 

that the Statute “covers actions ‘for damages for personal 

injuries, wrongful death or property damage.’” Id. at 1138 

(quoting N.J. Stat. Ann. § 2A:53A-27). It noted that though 

the plaintiff requested “compensatory and punitive damages” 

in his complaint, “at oral argument plaintiff narrowed his 

request for damages to the $12,000 that he paid to defendant 

for the report and any incidental costs incurred in the 

matrimonial action resulting from the necessity of filing 

motions based on defendant’s dissemination of the report.” 

Id. Because these damages were not “damages for personal 

injuries, wrongful death or property damage,” the Court held 

that the plaintiff’s claim was not subject to the Statute. 

Though it continued on to address the “cause of action” 

element, the Court noted that it could “conclude [the] opinion 

at this juncture.” Id. 

Based on Couri, query whether Nuveen’s action falls 

under the AOM Statute? Couri counsels that the “nature of 

the injury” element of the Statute is to be considered first. 

Nuveen is requesting only money damages arising from 

alleged acts of Withum and Lindabury. However, arguably 

the alleged acts have not caused “personal injuries, wrongful 

death or property damage,” particularly if “property damage” 

refers to damage to physical property. We have found no 

decision from the New Jersey Supreme Court since Couri

directly addressing the extent of the damages encompassed by 
53

“damages for personal injuries, wrongful death or property 

damage.”16

Indeed, the District Court based its holding that the 

action is subject to the AOM Statute on two New Jersey 

intermediate state court decisions—Cornblatt v. Barow, 696 

A.2d 65 (N.J. Super. Ct. App. Div. 1997), and Nagim v. New 

Jersey Transit, 848 A.2d 61 (N.J. Super. Ct. Law Div. 2003). 

Cornblatt was decided before Couri. In Nagim, in holding 

that the asserted claim for defense costs pursuant to an 

indemnification contract was a claim for property damages 

within the meaning of the Statute, the Court distinguished 

Couri on the basis that the damages alleged in that action 

were for monies the plaintiff had paid to the expert under a 

contract, and not for any damages relating to malpractice. It

emphasized that the claim under the indemnification contract 

was limited to defense costs if the defendant was found to be 

without fault, and that the underlying action for which the 

defendant was seeking indemnification regarded professional 

engineering services for the construction of a parking lot. It 

thereby determined that the damages related to claims of 

alleged professional malpractice causing “property damage,” 

 

 16 Though the New Jersey Supreme Court recently stated that 

“[t]he [AOM] statute applies to all actions for damages based 

on professional malpractice,” Paragon, 997 A.2d at 985, in 

making this statement it referenced Charles A. Manganaro 

Consulting Eng'rs, Inc. v. Carneys Point Twp. Sewerage 

Auth., 781 A.2d 1116 (N.J. Super. Ct. App. Div. 2001), which 

was decided before Couri. It also did not analyze whether the 

Statute applied to the action, and only addressed the effect of 

the failure to hold the accelerated case management 

conference. See Paragon, 997 A.2d at 987. Paragon thus 

does not tell us what injuries are encompassed by the term 

“property damage” as used in the Statute. 
54

including damage to tangible property. Nagim, 848 A.2d at 

69–71. Nagim thus involved a claim for money damages 

arising from alleged malpractice causing damage to physical 

property. And its emphasis on the underlying cause of action 

may conflate the “nature of the injury” and “cause of action” 

elements of the Statute. In Couri, the New Jersey Supreme 

Court continued onto the analysis of whether the claims met 

the “cause of action” element only after it held that the 

damages requested did not meet the “nature of the injury” 

covered by the Statute, which it stated could have allowed it 

to end its inquiry. 

In this context, we are in doubt whether the New 

Jersey Supreme Court would hold that the AOM Statute 

applies to actions requesting damages for alleged acts of 

professional malpractice or negligence that do not cause

personal injuries, wrongful death or property damage. We are 

reluctant to speculate about how it would rule if confronted 

with a situation similar to the circumstances here. 

Accordingly, we shall certify to the New Jersey Supreme 

Court a question regarding the scope of the “nature of the 

injuries” element of the Statute, and postpone deciding if 

Nuveen’s action is subject to the Statute.

2. 

Nuveen asserts two intentional tort claims (common 

law fraud and aiding and abetting common law fraud) against 

Withum that are not the “malpractice or negligence” claims 

referenced by the text of the AOM Statute. Couri again is the 

only decision from the New Jersey Supreme Court addressing 

what types of claims are subject to the Statute. After holding 

that the “nature of the injury” asserted was not subject to the 

Statute, it addressed the “cause of action” element. 

What Claims Are Covered by the AOM Statute?
55

It is not the label placed on the action that is 

pivotal but the nature of the legal inquiry. 

Accordingly, when presented with a tort or 

contract claim asserted against a professional 

specified in the statute, rather than focusing on 

whether the claim is denominated as tort or 

contract, attorneys and courts should determine 

if the claim’s underlying factual allegations 

require proof of a deviation from the 

professional standard of care applicable to that 

specific profession. If such proof is required, an 

affidavit of merit is required for that claim, 

unless some exception applies. . . .

[That analysis] will ensure that tort claims 

brought against licensed professionals that 

allege ordinary negligence, but not malpractice, 

will not be subject to the statute. Stated 

differently, by asking whether a claim’s 

underlying factual allegations require proof of 

a deviation from a professional standard of 

care, courts can assure that claims against 

licensed professionals acting in a professional 

capacity that [do not] require proof . . . of a 

deviation from professional standards are not 

encompassed by the statute. 

Couri, 801 A.2d at 1141 (emphases added). Based on these 

guidelines, the New Jersey Supreme Court held that the 

Statute did not apply because the asserted cause of action

required proof that the expert breached the contract by 

distributing his preliminary report without the plaintiff’s 

consent, not that the expert deviated from standards of 

professional conduct in doing so. Id. at 1142 (“Although 

defendant’s unauthorized dissemination of the report also 

might implicate a deviation from prevailing professional 
56

standards of practice, proof of that deviation is not essential to 

the establishment of plaintiff's right to recover based on 

breach of contract.”). 

Though Nuveen’s fraud claims implicate Withum’s 

purported failure to comply with accounting standards, 

Nuveen does not necessarily have to prove that Withum 

deviated from these standards to establish fraud. See Gennari 

v. Weichert Co. Realtors, 691 A.2d 350, 367 (N.J. 1997) 

(“The five elements of common-law fraud are: (1) a material 

misrepresentation of a presently existing or past fact; (2) 

knowledge or belief by the defendant of its falsity; (3) an 

intention that the other person rely on it; (4) reasonable 

reliance thereon by the other person; and (5) resulting 

damages.”). Rather, it has to prove that Withum intended to 

deceive it. As in Couri, though Withum’s actions may 

suggest that it committed malpractice or acted negligently, 

proof of that malpractice or negligence is not necessary to the

fraud claims. Indeed, Nuveen asserts a separate claim for 

negligent misrepresentation against Withum. The two fraud 

claims are distinct causes of action that may not be subject to 

the Statute. See also Balthazar v. Atl. City Med. Ctr., 816 

A.2d 1059, 1067–68 (N.J. Super. Ct. App. Div. 2003) 

(“[C]auses of action alleging intentional torts that rely for 

their success upon proof of a deviation from the professional 

standard of care applicable to the profession are subject to the 

affidavit of merit requirement, regardless of their label.”

(emphasis added)).

Moreover, the AOM Statute requires submission of an 

affidavit of merit as a prerequisite for “any action for 

damages for personal injuries, wrongful death or property 

damage resulting from an alleged act of malpractice or 

negligence by a licensed person in his profession or 

occupation . . . .” N.J. Stat. Ann. § 2A:53A-27 (emphasis 

added). Courts in states with similarly worded statutes 
57

providing for the submission of some form of independent 

verification of professional malpractice or negligence actions 

have arrived at differing conclusions regarding whether their 

statutes apply to actions for fraud. See, e.g., Williams v. 

Boyle, 72 P.3d 392, 399–400 (Colo. App. 2003) (holding that 

claims for fraudulent concealment and fraud were subject to 

Colorado’s “certificate of review” statute, Colo. Rev. Stat.

§ 13-20-602); Labovitz v. Hopkinson, 519 S.E.2d 672, 678

(Ga. 1999) (concluding that, in enacting Georgia’s similar

statute, Ga. Code. Ann. § 9-11-9.1, “the legislative intent was 

to enact a statute which sought to reduce the number of 

frivolous professional malpractice actions by placing a

procedural hurdle before those plaintiffs who sought damages 

for professional negligence. Those claims grounded on a 

professional’s intentional acts which allegedly resulted in 

injury to one with whom the professional had a professional 

relationship are not required to be accompanied by an expert 

affidavit” (emphases in original)). These divergent 

conclusions also cause us to be uncertain how the New Jersey 

Supreme Court would interpret the AOM Statute.

Again we are reluctant to decide how that Court would 

rule in these circumstances. Thus we also will certify to it a 

question regarding whether intentional torts are subject to the 

Statute. 

VI. Conclusion

Nuveen’s action is “related to” Bayonne’s bankruptcy 

proceeding because the outcome of this action conceivably

may affect a portion of the Bayonne estate’s liabilities. As 

such, we affirm the District Court’s holding that it had 

jurisdiction under 28 U.S.C. § 1334(b). Assuming that the 

action is subject to the AOM Statute, because Nuveen’s 

failure to fulfill the affidavit requirement resulted from

inadvertence, we agree with the Court’s holding that 
58

Nuveen’s noncompliance cannot be excused under New 

Jersey law. However, we question whether the Statute 

applies to all or a portion of the claims alleged in the action. 

As the New Jersey Supreme Court can more definitively than 

we assess the “nature of the injury” and “cause of action” 

elements of the Statute, we reserve ruling on whether the 

action must be dismissed in whole or in part, and certify two 

questions addressing these elements to the New Jersey 

Supreme Court.17

 17 We believe that the New Jersey Supreme Court’s answers 

to these two strictly legal issues, though framed by the factual 

circumstances here, will be amenable to many factual 

situations. Their resolution will clarify what constitutes 

“property damage” under the AOM Statute and to what extent 

the Statute applies to causes of action against professionals 

other than for malpractice and negligence, yet related to 

alleged acts of malpractice and negligence. 

 
1

ALDISERT, Circuit Judge, dissenting.

I agree with the Majority’s comprehensive treatment of 

many of the issues before our Court, and I therefore join in all 

parts of its opinion save one: the Majority’s decision in Part 

V.C to make no decision about whether the Affidavit of Merit 

(“AOM”) Statute applies here. The Majority has balked at 

exercising our duty to interpret state law when sitting in 

diversity, and has chosen instead to certify two questions to 

the New Jersey Supreme Court: (1) whether the money 

damages requested by Nuveen in this case are considered 

“property damages” under the AOM Statute; and (2) whether 

an action alleging an intentional tort, such as common law 

fraud or aiding and abetting common law fraud, is subject to 

the same statute.

Four federal judges have ruled on these issues; we 

seem to be divided on the result, two and two: District Judge 

Garret E. Brown Jr. and myself on one side, and my 

colleagues in the Majority on the other. It is thus difficult to 

say that those who now seek certification reflect the view of 

the Third Circuit that the New Jersey Supreme Court has not 

been adequately clear on the points in question. 

We are charged with the responsibility of deciding 

state law issues contained in federal diversity cases, and we 

may not shirk that duty merely because those issues may be 

difficult, unwieldy, or ponderous. As Judge Jones said on our 

Court’s behalf three-quarters of a century ago, when 

considering “the responsibility which Erie R. Co. v. 

Tompkins, 304 U.S. 64 (1938), cast upon federal courts, of 

deciding questions of state law in diversity cases,” we must 

“‘not hesitate[] to decide questions of state law when 
2

necessary for the disposition of a case brought to [us] for 

decision,” even if “the highest court of the state ha[s] not 

answered them, the answers [are] difficult, and the character 

of the answers which the highest state courts might ultimately 

give remain[] uncertain.’” Comm’r of Internal Revenue v. 

Lewis, 141 F.2d 221, 225 (3d Cir. 1944) (quoting Meredith v. 

City of Winter Haven, 320 U.S. 228, 237 (1943)). This is 

especially so “where, as in the present instance, the pertinent 

question of local law is directly involved and is duly raised by 

the pleadings and the material facts as stipulated by the 

parties.” Id.

In my view, certification should be limited to basic 

legal issues of great import, amenable to application in a large 

panoply of factual situations, rather than the fact-bound issues 

presented in this limited certification. See e.g., Arizonans for 

Official English v. Arizona, 520 U.S. 43, 79 (1997) (“Novel, 

unsettled questions of state law, however, not ‘unique 

circumstances,’ are necessary before federal courts may avail 

themselves of state certification procedures.”) (quoting 

Yniguez v. Arizonans for Official English, 69 F.3d 920, 931 

(9th Cir. 1995)). Because I conclude that the New Jersey 

Supreme Court’s view has been expressed sufficiently to 

facilitate our review, I respectfully dissent from the 

certification to the New Jersey Supreme Court. 

I.

The first issue the Majority certifies is whether the 

money damages sought by Nuveen are considered “property 

damages” under N.J. Stat. Ann. § 2A:53A-27, which provides 

that an affidavit of merit is required in actions seeking

“damages for personal injuries, wrongful death or property 
3

damage resulting from an alleged act of malpractice or 

negligence by a licensed person in his profession or 

occupation.” Certification of this issue is unnecessary because 

the New Jersey Supreme Court has already answered the 

question: “The [AOM] statute applies to all actions for 

damages based on professional malpractice.” Paragon 

Contrs., Inc. v. Peachtree Condo. Ass’n, 997 A.2d 982, 985

(N.J. 2010) (emphasis added) (citation omitted).

A federal court sitting in diversity is “bound to follow 

state law as announced by the highest state court.” Sheridan 

v. NGK Metals Corp., 609 F.3d 239, 253 (3rd Cir. 2010) 

(internal quotation marks and citation omitted). Here, the

New Jersey Supreme Court has clearly expressed its view on 

the AOM Statute’s applicability. Even if “the state’s highest 

court has not addressed the precise question presented, [we]

must [still] predict how the state’s highest court would 

resolve the issue,” rather than merely punt the issue to the 

state court because of a perceived lack of clarity. Orson, Inc. 

v. Miramax Film Corp., 79 F.3d 1358, 1373 n.15 (3d Cir. 

1996) (emphasis added). 

The Majority relies on the teachings of Couri v. 

Gardner, 801 A.2d 1134 (N.J. 2002), to explain their doubt as 

to whether the money damages sought here fall within the 

ambit of the AOM Statute. But Couri is factually 

distinguishable from this matter and does not sow seeds of 

doubt regarding the New Jersey Supreme Court’s view of the 

issue currently before us. Unlike the plaintiff in Couri, who 

brought a breach-of-contract action seeking a finite sum of 

money he had already paid to the defendant, see 801 A.2d at 

1141, here, Nuveen seeks the money it paid as part of a 

transaction with a non-party. Nuveen has not paid any money 
4

to Appellees and has not brought a breach-of-contract claim 

against either Appellee. The New Jersey Supreme Court’s 

view is unambiguous: because Nuveen’s “action for damages 

[is] based on professional malpractice,” the AOM statute 

applies. Paragon, 997 A.2d at 985.1

II.

The second issue the Majority certifies is whether an 

action alleging an intentional tort, such as common law fraud 

or aiding and abetting common law fraud, is subject to N.J. 

Stat. Ann. § 2A:53A-27. But, once again, the New Jersey 

Supreme Court has already answered this question: “[W]hen 

 1 Nuveen’s interpretation of “property damages,” moreover, 

would render the AOM Statute’s provisions meaningless with 

respect to attorneys and accountants—the professions of 

Appellees here. For certain professionals, it is rare that 

malpractice would result in personal injuries or death. See

Cornblatt v. Barow, 696 A.2d 65, 68 (N.J. Super. Ct. App. 

Div. 1997), rev’d on other grounds 708 A.2d 401 (N.J. 1998). 

If Nuveen were correct that “property damages” do not 

include money damages, the AOM Statute would hardly ever

apply to attorneys or accountants and would essentially be 

confined to actions for medical malpractice. But both 

accountants and attorneys are professionals defined by the 

Statute as a “licensed person.” N.J. Stat. Ann. § 2A:53A-26. 

New Jersey courts have held that it was not the legislature’s 

intent to exclude these professions. See e.g., Cornblatt, 696 

A.2d at 68 (“[A] claim against an attorney for alleged 

malpractice is a claim for property damage within the 

legislative intent and plain meaning of the statute.”).
5

asserting a claim against a professional covered by the statute, 

whether in contract or in tort, a claimant should determine if 

the underlying factual allegations of the claim require proof 

of a deviation from the professional standard of care for that 

specific profession.” Couri, 801 A.2d at 1141. “If such proof 

is required, an affidavit of merit shall be mandatory for that 

claim, unless either the statutory, N.J. Stat. Ann. § 2A:53A28, or common knowledge exceptions apply.” Id.

The instructions are clear; we must merely apply the

rule to the facts before us—a task that New Jersey state courts 

have had no problem accomplishing. See e.g., Risko v. 

Ciocca, 812 A.2d 1138, 1142-1143 (N.J. Super. Ct. App. Div. 

2003) (applying the teachings of Couri and concluding that 

“no exception is applicable in this case, which essentially 

deals with a claimed deviation in the standard of care, an 

affidavit of merit was required”).

Here, Nuveen contends that intentional 

misrepresentations were made as a result of Withum’s failure 

to abide by the Generally Accepted Accounting Principles 

(“GAAP”) and the Generally Accepted Auditing Standards 

(“GAAS”). Thus, Nuveen’s fraud claims plainly require proof 

that Withum deviated from professional standards of care.

“[C]auses of action alleging intentional torts that rely for their 

success upon proof of deviation from the professional 

standard of care applicable to the profession are subject to the 

AOM requirement, regardless of their label.” Balthazar v. 

Atlantic City Med. Ctr., 816 A.2d 1059, 1067 (N.J. Super. Ct. 

App. Div. 2003) (citing Couri, 801 A.2d 1134). Because the 

New Jersey Supreme Court has sufficiently expressed its 

view on the issue, certification is not warranted.
6

III.

For the foregoing reasons, I respectfully disagree with 

the Majority and would not certify any questions to the New 

Jersey Supreme Court, but instead, would decide the state law 

issues properly before us.