2011 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-25-2011

Amboy Bancorp v. Bank Advisory Grp Inc

Precedential or Non-Precedential: Non-Precedential

Docket No. 10-1638

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 10-1638 and 10-1870

_____________

AMBOY BANCORPORATION,

A New Jersey Corporation

v.

THE BANK ADVISORY GROUP, INC., a Texas Corporation; 

JENKENS & GILCHRIST, a Professional Coporation

Amboy Bancorporation,

Appellant in No. 10-1638

The Bank Advisory Group, Inc.,

Appellant in No. 10-1870

_____________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil No. 2-02-cv-05410)

District Judge: Hon. Dennis M. Cavanaugh

_____________

Argued March 7, 2011

Before: SCIRICA, AMBRO and VANASKIE, Circuit Judges

(Filed April 25, 2011)

____________

Dennis T. Kearney, Esq. (Argued)

Day Pitney LLP

One Jefferson Road

Parsippany, NJ 07054

Counsel for Appellant/Cross-Appellee Amboy Bancorporation
2

Mitchell B. Seidman, Esq. (Argued)

Seidman & Pincus, LLC

777 Terrace Ave. 

Fifth Floor

Hasbrouck Heights, NJ 07604

Counsel for Appellee/Cross-Appellant The Bank Advisory Group, Inc.

Edward B. Deutsch, Esq. (Argued)

James G. Gardner, Esq.

McElroy, Deutsch, Mulvaney & Carpenter, LLP

1300 Mount Kemble Ave.

P.O. Box 2075

Morristown, NJ 07962

Counsel for Appellee Jenkens & Gilchrist

_____________

OPINION

_____________

VANASKIE, Circuit Judge.

At issue on this appeal is whether misrepresentations in a proxy statement 

attributable to a law firm (Appellee Jenkens & Gilchrist (“Jenkens”)) and a consultant 

(Appellee The Bank Advisory Group, Inc. (“BAG”)) can be regarded as a proximate 

cause of the damages incurred by their client, Appellant Amboy Bancorporation

(“Amboy”), as a result of a successful minority shareholder action in which it was 

determined that Amboy‟s minority shareholders received substantially less than fair value 

for their shares in a cash-out corporate reorganization. The District Court interpreted the

opinion of the Appellate Division of the New Jersey Superior Court in the minority 

shareholder action, Casey v. Brennan, 780 A.2d 553 (N.J. Super. Ct. App. Div. 2001), as 

holding that the misleading proxy statement was not material to the determination that 

minority shareholders were entitled to an award of damages measured by the difference 
3

between the price offered for their shares and the actual fair value of those shares. Based 

upon this interpretation, the District Court concluded that the misleading proxy statement 

could not have been a proximate cause of the damages Amboy incurred in the minority 

shareholder action. Contrary to the District Court‟s interpretation, we find that the 

existence of misrepresentations in the proxy statement was regarded by the New Jersey 

state court as a material factor in its liability determination. Accordingly, we will vacate, 

in part, the District Court‟s judgment in favor of Amboy and remand for further 

proceedings.

I.

As we write only for the parties, who are familiar with the facts and procedural 

history of this case, we relate only the information essential to our analysis.

In 1997, Amboy retained Jenkens and BAG to assist Amboy with its 

reorganization into a Subchapter S corporation under the Internal Revenue Code. To 

qualify for Subchapter S status, Amboy had to reduce the number of its shareholders 

from 420 to no more than 75. See 26 U.S.C. § 1361(b)(1)(A) (1996). To that end,

Amboy‟s board of directors, who were also majority shareholders of Amboy, planned a

cash-out merger of the minority shareholders. Amboy retained Jenkens to advise it in 

connection with the merger plan and retained BAG to render an opinion as to the “fair 

market value” of Amboy‟s common stock. BAG determined that the “cash fair market 

value” of Amboy stock was $69.50 per share. BAG‟s valuation included marketability 

and minority discounts. Amboy‟s board of directors voted to pursue a Subchapter S 

election and, relying on BAG‟s valuation, approved an offer price of $73 per share.
4

Jenkens prepared the proxy statement issued in connection with the merger. The 

proxy statement explained that if the merger plan is approved, shareholders who own

15,000 shares of Amboy or who purchase Amboy shares to increase their holdings to 

15,000 shares would continue to be shareholders. All other shareholders, except for those 

who “perfect their dissenters‟ rights” in accordance with the provisions of the New Jersey 

Business Corporation Act, would receive $73 per share. (J.A. 418.) The proxy statement

further provided that shareholders who receive cash for their shares pursuant to the 

merger would have no right to dissent from the merger. Additionally, the proxy 

statement related the board‟s belief that the $73 per share price “represents a fair value.” 

(J.A. 407.) The proxy statement referenced BAG‟s fairness opinion, which concluded 

that the $73 per share price was “fair, from a financial standpoint,” to the shareholders. 

(J.A. 408-10, 493.)

The directors who had initiated the transaction controlled sufficient shares to 

guarantee the merger‟s approval, and on November 19, 1997, the merger was approved 

by the affirmative vote of more than the required two-thirds majority of the votes cast. 

The merger was completed on December 2, 1997, and the shareholders received their 

checks on or about January 7, 1998. All shareholders except six accepted the $73 per 

share consideration. 

Three separate actions were subsequently initiated against Amboy and its board of 

directors in New Jersey state court alleging that the defendants failed to offer the selling 

shareholders a price that represented the fair value for their shares. The actions were 

consolidated for trial in the Superior Court of New Jersey, Chancery Division, Union 
5

County, under the caption Casey v. Brennan. A class was certified consisting of all 

persons owning less than 15,000 shares of Amboy on November 19, 1997, whose shares 

were cashed out under the approved merger plan. Although Jenkens initially represented 

Amboy in the action, because the shareholders‟ allegations concerning inadequate proxy 

statement disclosures necessarily implicated Jenkens as the preparer of the proxy 

statement, it withdrew as counsel to avoid a conflict of interest. 

The trial judge rendered an oral opinion in April 1999. He found that the proxy 

statement “contained . . . misleading statements of material facts and failed to disclose all 

material facts . . . regarding the true fair value and future prospects of Amboy and the true 

fair value of Amboy‟s common stock.” (J.A. 603-04.) In finding the proxy statement 

materially deficient, the trial judge particularly relied on the fact that the proxy statement 

failed to disclose that the $73 per share offer price was derived first with the application 

of a 25% minority discount and then a 15% marketability discount. The trial judge,

however, refused to impose liability on the individual directors because he found that 

they relied in good faith on BAG and Jenkens in arriving at the $73 share price.

Concluding that the fair value was $90 per share, the trial court entered judgment 

in favor of all plaintiffs, with the exception of the shareholders who voted against the 

plan but then surrendered their shares in exchange for the offer price.1 According to the

trial court, those shareholders who voted against the plan were fully informed as to all 

 

1 Approximately 207,000 shares were held by Amboy shareholders voting against 

the plan but accepting the $73 offer price.
6

material facts relating to the merger and, thus, acquiesced in the merger by accepting the

merger consideration.

On appeal, the Superior Court of New Jersey, Appellate Division, affirmed the 

trial court‟s finding that the proxy statement was materially misleading and inaccurate. 

The Appellate Division, however, reversed the trial court‟s ruling that shareholders who 

voted against the plan but then cashed in their shares were estopped from recovery. 

Accordingly, all shareholders were found to be entitled to recovery. The Appellate 

Division also reversed the trial court‟s determination of fair value and remanded the 

matter.

Ultimately, following a second remand, the Appellate Division affirmed the trial 

court‟s determination that the fair value of Amboy stock was $114 per share. As a result 

of this finding, Amboy was required to pay approximately $33 million to its minority 

shareholders.

In 2002, Amboy initiated this action in the Superior Court of New Jersey, Law 

Division, against Jenkens and BAG asserting claims for professional negligence, breach 

of fiduciary duty, and breach of contract. Jenkens removed the case to the United States 

District Court for the District of New Jersey. 

As to the professional negligence claim, Amboy in part alleges that Jenkens and 

BAG failed to ascertain and advise Amboy that “fair value,” not “fair market value,” was 

the proper valuation standard in New Jersey. On the premise that it would not and could 

not have proceeded with the merger at $114 per share, Amboy alleges damages based on 

the New Jersey judgment requiring it to pay the shareholders the difference between the 
7

$73 merger price and the $114 adjudicated fair value price. Amboy also seeks attorney

and expert fees incurred in defending the shareholder action, as well the fees incurred in 

prosecuting this suit.

In 2005, Jenkens moved for summary judgment with respect to Amboy‟s claim of 

damages resulting from the New Jersey court‟s fair value determination. Jenkens argued 

that Amboy could not establish that Jenkens‟s alleged negligence was the proximate 

cause of such damages because Amboy was legally obligated to pay its shareholders fair 

value for their shares regardless of the accuracy of the proxy statement. The District 

Court denied Jenkens‟s motion for summary judgment, concluding that material issues of 

fact existed as to whether Jenkens breached a duty to Amboy and whether the breach was 

a substantial factor in Amboy‟s damages.

In 2007, BAG filed a Chapter 7 bankruptcy petition in the United States 

Bankruptcy Court for the Western District of Texas. Amboy filed a motion to dismiss the 

Chapter 7 case. The Bankruptcy Court denied Amboy‟s motion, but modified the 

automatic stay of 11 U.S.C. § 362(a) to permit the District Court to determine whether 

complete relief could be accorded to Amboy and Jenkens if BAG were either severed or 

dismissed from the action. Amboy then filed a letter application in the District Court 

seeking “an order determining that complete relief cannot be accorded as to the 

remaining parties . . . without BAG remaining a party in this action.” (J.A. 746-47.) On 

September 12, 2007, the District Court granted Amboy‟s application.

In 2008, Jenkens made a number of motions, including, as relevant here, a

renewed motion for partial summary judgment on the issue of damages and a motion for 
8

partial summary judgment on the breach of fiduciary duty and breach of contract claims. 

In an order entered on August 13, 2008, the District Court granted both motions.

On January 23, 2009, following the denial of Amboy‟s motion for reconsideration

of the August 13, 2008 Order, BAG filed a motion for summary judgment. In support, 

BAG argued in part that the law of the case doctrine precluded review of issues resolved 

by the District Court in its partial summary judgment rulings in favor of Jenkens. The 

District Court denied BAG‟s motion on the ground that the March 5, 2008 Final Pretrial 

Order listed all pending and contemplated motions, that BAG failed to inform the District 

Court that it contemplated filing any motions, that the case was scheduled to be tried in 

the coming month, and that BAG had failed to participate in the action in any meaningful 

way prior to moving for summary judgment.

On February 9, 2009, the District Court conducted a status conference to address

whether any viable claims remained against Jenkens in the wake of the August 13, 2008 

Order granting its motions for partial summary judgment. On August 18, 2009, 

following briefing on the issue, and a second status conference on August 5, 2009, the 

District Court concluded that “its Order and Opinion of August 13, 2008, granting 

[Jenkens‟s] motions for partial summary judgment have disposed of all claims raised by 

[Amboy] against [Jenkens], and that [Amboy] has no viable claim remaining against 

[Jenkens].” (J.A. 5.) Accordingly, the District Court entered judgment dismissing all 

claims against Jenkens with prejudice. On February 24, 2010, the District Court entered 

a Consent Order that made the August 13, 2008 Order and Opinion equally applicable to 

BAG and dismissed all of Amboy‟s claims against BAG.
9

Amboy appeals from the District Court‟s August 18, 2009 Order granting 

judgment in favor of Jenkens, the August 13, 2008 Order granting Jenkens‟s motions for 

partial summary judgment, as well as the November 25, 2008 Order denying Amboy‟s 

motion for reconsideration of the August 13, 2008 Order. BAG cross-appeals from the 

September 12, 2007 Order determining that BAG should remain a party to the action, and 

from the January 30, 2009 Order denying its motion for summary judgment.

II.

The District Court had jurisdiction pursuant to 28 U.S.C § 1332, and we have 

jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over the District 

Court‟s partial summary judgment rulings. Packard v. Pittsburgh Transp. Co., 418 F.3d 

246, 250 (3d Cir. 2005). We will review the District Court‟s determination that BAG 

should remain a party to the action for clear error as to the underlying findings of fact and 

exercise plenary review over the District Court‟s conclusions of law. See Huber v. 

Taylor, 532 F.3d 237, 247 (3d Cir. 2008). Finally, we will review for abuse of discretion

the District Court‟s decision to deny BAG‟s motion for summary judgment essentially on 

the ground that it was untimely. See In re Fine Paper Antitrust Litig., 685 F.2d 810, 817 

(3d Cir. 1982); see also Bailey v. United Airlines, 279 F.3d 194, 202-03 (3d Cir. 2002).

III.

In granting Jenkens‟s motion for partial summary judgment with respect to 

Amboy‟s damages claim, the District Court determined that Jenkens‟s role in preparing 

the proxy statement could not have been a proximate cause of Amboy‟s damages because

the Appellate Division in Casey v. Brennan, 780 A.2d 553 (N.J. Super. Ct. App. Div. 
10

2001), held that Amboy had an independent duty to compensate all of its shareholders at 

fair value. Thus, under the District Court‟s reading of Casey, the misleading proxy 

statement was not a material factor in finding Amboy liable. Because we disagree with 

the District Court‟s reading, we will vacate the grant of partial summary judgment.

Under the New Jersey Business Corporation Act, a shareholder of a New Jersey 

corporation who objects to the offer price has the right to dissent from the plan of merger 

and, following the plan‟s approval, to make a written demand for the payment of the “fair 

value” of his shares. N.J.S.A. 14A:11-1(1)(a) & 14A:11-2(3). Shareholders who receive 

cash in exchange for their shares, however, have no statutory right to dissent. Id.

14A:11-1(1)(a)(i)(B)(x). The New Jersey trial court had concluded that dissenting 

shareholders who accepted the Amboy offer price were estopped from challenging its 

fairness. The Appellate Division, however, determined that those shareholders still had 

the right to claim the fair value of their shares. 780 A.2d at 567-69.

The parties dispute the basis for the Appellate Division‟s holding. Amboy

contends that the Appellate Division held that it was the misleading proxy statement that 

entitled Amboy shareholders to claim fair value. Jenkens and BAG, on the other hand,

contend that the Appellate Division held that all Amboy shareholders were entitled to 

claim fair value because shareholders are always entitled to fair value, regardless of the 

completeness and accuracy of a proxy statement‟s disclosures. The District Court agreed 

with the interpretation advanced by Jenkens and BAG. Although we acknowledge that 
11

certain broad language in Casey could be read to support the District Court‟s conclusion,2

a careful review of Casey and the precedents on which it relied makes clear that the 

misleading proxy statement was indeed material to the Appellate Division‟s decision.

Our disagreement with the District Court‟s reading of a less than pellucid 

Appellate Division opinion is based upon the following statement:

In our view, the dissemination of an inaccurate or 

misleading proxy statement in conjunction with a cash-out 

merger that sets forth an inadequate cash-out price is 

sufficient to allow non-statutory dissenters to challenge the 

merger, or claim fair compensation for their shares, unless 

otherwise precluded by some other statute, doctrine, rule or 

law.

Id. at 568 (emphasis added). “In conjunction with” plainly signifies that the misleading 

proxy statement must be considered in combination with an inadequate cash-out price. 

See Webster‟s Third New International Dictionary 480 (1993). Thus, the misleading 

proxy statement is essentially the key that opens the courthouse door to non-statutory 

dissenters who seek to recover fair value. 

Buttressing this reading of Casey is the Appellate Division‟s treatment of the 

Delaware Supreme Court‟s decision in Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 

1983). In Weinberger, the Delaware Supreme Court established that controlling 

shareholders standing on both sides of a transaction have the burden of proving the 

transaction‟s “entire fairness.” 457 A.2d at 710. The Casey court explained that under 

 

2 Appellees in particular emphasize the following language from Casey: “[E]ven 

those shareholders who do not qualify as statutory dissenters still have the right to claim 

fair compensation for their shares in the context of a cash-out merger, as an incident of 

the fiduciary duty of the majority to treat the minority fairly.” 780 A.2d at 567.
12

Weinberger, even though the ultimate burden of proof is on the majority shareholders to 

show by a preponderance of the evidence that the transaction is fair, the initial burden of 

proof is on the “plaintiff attacking the merger to demonstrate some basis for invoking the 

fairness obligation.” 780 A.2d at 568 (quoting Weinberger, 457 A.2d at 703) (internal 

quotation mark omitted). We have previously noted that “[this] rule makes practical 

sense,” as “[a] party challenging a transaction ought not to be able to invoke the remedial 

powers of the court without making any showing that the transaction was unfair.” Landy 

v. Amsterdam, 815 F.2d 925, 930 (3d Cir. 1987) (emphasis in original).

Quoting Weinberger, the Appellate Division in Casey observed that “„[t]he 

concept of fairness has two basic aspects: fair dealing and fair price,‟” and that “[f]air 

dealing necessarily includes the „obvious duty of candor.‟” Casey, 780 A.2d at 568 

(quoting Weinberger, 457 A.2d at 711). The Appellate Division, again citing 

Weinberger, further observed that “„where corporate action has been approved by an 

informed vote‟ of the minority shareholders,” the plaintiffs shoulder the burden of 

proving that the transaction was not fair to the minority. Id. at 569 (emphasis in original)

(quoting Weinberger, 457 A.2d at 703).

The Appellate Division affirmed the trial court‟s finding that the proxy statement 

was misleading. Id. If the accuracy or completeness of the proxy statement were

immaterial to the Appellate Division‟s ultimate determination, there would have been no 

need for the appellate court to address the trial court‟s finding on that issue. In our view, 

it is for this reason that all the shareholders were permitted to claim fair value for their 

shares. Stated otherwise, but for the misrepresentations in the proxy statement, 
13

shareholders who accepted the tender price would not have been entitled to recover. It 

necessarily follows that the misleading proxy statement could be a proximate cause of the 

alleged harm.

Because the District Court interpreted Casey to hold that all shareholders are 

always entitled to claim fair value, without regard to whether the directors had breached 

their fiduciary duty to the minority shareholders in disseminating a misleading proxy 

statement, the District Court determined that Amboy could not establish that any breach 

of the professional duty of care on Jenkens‟s part was a proximate cause of Amboy 

having to pay the shareholders the difference between the $73 per share offer price and 

the $114 per share judicially-determined fair value price. As we read Casey to have held 

that Amboy shareholders were entitled to claim the fair value of their shares because of 

the misleading proxy statement, we conclude that if Amboy could establish that Jenkens 

breached a professional duty of care that resulted in the dissemination of a misleading

proxy statement, Amboy could also establish that such a breach was the proximate cause 

of Amboy‟s damages.

Significantly, the Appellate Division in Casey indicated that, in the absence of the 

misleading proxy statement, those shareholders who voted in favor of the merger, as well 

as those who voted against the merger but then accepted the merger consideration, would 

have been barred from recovery on a theory of estoppel or acquiescence. See id. at 573-

75. Consequently, even if we read Casey to hold that all shareholders have a cause of 

action to claim fair value, irrespective of a breach of fiduciary duty, we would 

nonetheless be compelled to vacate the grant of partial summary judgment. 
14

The trial judge held that shareholders who collectively owned approximately 

207,000 shares and who voted against the merger but then accepted the $73 per share 

offer price were estopped from recovery. The Appellate Division disagreed. It

acknowledged the Delaware Supreme Court‟s holding in Bershad v. Curtiss-Wright 

Corp., 535 A.2d 840 (Del. 1987), that “when an informed minority shareholder either 

votes in favor of the merger, or . . . accepts the benefits of the transaction, he or she 

cannot thereafter attack its fairness.” Id. at 848. The court, however, found Bershad

inapposite because the proxy statement was misleading and inaccurate. It accordingly 

concluded that the minority shareholders were not informed and that “neither Bershad nor

the doctrine of estoppel compels a conclusion that the shareholders were not entitled to 

recover.” Casey, 780 A.2d at 574. It is clear that, in the absence of the misleading proxy 

statement, the Appellate Division, under Bershad, would have affirmed the trial judge‟s 

determination that these shareholders were precluded from recovery, and that Amboy 

would therefore be able to establish damages with respect to the 207,000 shares for which 

it had to pay fair value.

Furthermore, we think that in the absence of the misleading proxy statement, the 

Casey court, also under Bershad, would have considered those minority shareholders 

who voted in favor of the merger, accounting for approximately 400,000 shares, as also 

having acquiesced in the merger. Jenkens‟s argument that Bershad has been undermined 

by subsequent Delaware case law is unpersuasive. Indeed, the Delaware Supreme Court 

case, Kahn v. Lynch Communication Systems, Inc., 638 A.2d 1110 (Del. 1994), which has 

been recognized as having “implicitly overruled the holding in Bershad,” Gesoff v. IIC 
15

Indus. Inc., 902 A.2d 1130, 1143 n.89 (Del. Ch. 2006), was decided well before the 

Appellate Division‟s decision in Casey.

We will therefore vacate the orders granting partial summary judgment on the 

issue of damages and final judgment in favor of Jenkens and remand to the District Court 

for further proceedings. Furthermore, in light of our holding, we will vacate the denial of 

Jenkens‟s in limine motions that were denied as moot in light of the grant of partial 

summary judgment and vacate that portion of the February 24, 2010 Consent Order 

dismissing the professional negligence claim against BAG.3

IV.

The District Court granted partial summary judgment in favor of Jenkens 

dismissing Amboy‟s claims for breach of contract and breach of fiduciary duty on the 

ground that Amboy failed to allege “a specific contractual or fiduciary duty separate and 

distinct from the duty of care owed by an attorney to a client under the negligence 

standard.” (J.A. 15.) We agree and will affirm the order granting partial summary 

judgment on those claims.

Amboy argues that “Jenkens breached an explicit term in its retainer agreement 

with Amboy.” (Appellant‟s Br. at 52.) According to Amboy, because Jenkens agreed to

“prepare the Proxy Statement in connection with the merger” (J.A. 208-09), Jenkens 

“breached its contract with Amboy by failing to adequately and properly prepare the 

 

3 On remand, the District Court should address Amboy‟s additional damages 

claims, which include claims for the fees incurred in connection with the Subchapter S 

conversion, defending the shareholder litigation, and prosecuting the instant litigation.
16

Proxy Statement” (J.A. 65). As Jenkens obviously prepared the proxy statement, we are 

unable to understand how the “explicit term” to “prepare the Proxy Statement in 

connection with the merger” was breached. Thus, contrary to its assertions, Amboy has 

not alleged the breach of an express contractual promise and, as the District Court 

recognized, has only recast its professional negligence claim in the guise of a breach of 

contract claim. Accordingly, the breach of contract claim was properly dismissed. Cf.

Levinson v. D’Alfonso & Stein, 727 A.2d 87, 89 (N.J. Super. Ct. App. Div. 1999) (finding

that plaintiff had alleged a “classic contract claim” against attorneys where retainer 

agreement between plaintiff and attorneys provided that a settlement in plaintiff‟s

personal injury action would require plaintiff‟s authorization and where plaintiff alleged 

that attorneys settled the action without his authorization).

Amboy‟s breach of fiduciary duty claim was also properly dismissed as redundant 

to the professional negligence claim. The breach of fiduciary duty count alleged that 

“Jenkens . . . failed to carry out its obligations because a New Jersey trial court and the 

appellate court concluded that the Proxy Statement was materially misleading” and that 

“[d]espite a direct request by BAG for guidance, Jenkens failed to instruct BAG as to the 

legally required standard of value in New Jersey.” (J.A. 66.) We agree with the District 

Court that these allegations fail to articulate the breach of any duty “separate and distinct” 

from the duty of care. Moreover, we decline to entertain Amboy‟s argument, made in 

opposition to Jenkens‟s motion for partial summary judgment, that Jenkens breached its 

fiduciary duty to Amboy by “misrepresent[ing] the extent of its knowledge with respect 

to Subchapter S conversions generally, and New Jersey law specifically.” (Appellant‟s 
17

Br. at 54.) See Shanahan v. City of Chicago, 82 F.3d 776, 781 (7th Cir. 1996) (“A

plaintiff may not amend his complaint through arguments in his brief in opposition to a 

motion for summary judgment.”).

We will accordingly affirm the order granting partial summary judgment in favor 

of Jenkens on the breach of fiduciary duty and breach of contract claims.

V.

BAG argues that the District Court erred in determining that it should remain a 

party to the action. As discussed above, following BAG‟s bankruptcy filing, the 

Bankruptcy Court modified the automatic stay of 11 U.S.C. § 362(a) to permit the 

District Court to determine whether complete relief could be accorded to Amboy and 

Jenkens if BAG were either severed or dismissed from the action. Amboy, noting that 

the Bankruptcy Court‟s Order tracked the language of Federal Rule of Civil Procedure 

19(a), argued that BAG was a “necessary” party under Rule 19(a) on the ground that 

complete relief could not be accorded to Amboy and Jenkens in BAG‟s absence. 

Fed. R. Civ. P. 19(a). Amboy thus sought “an order determining that complete relief 

cannot be accorded as to the remaining parties . . . without BAG remaining a party in this 

action.” (J.A. 746-47.) 

On September 12, 2007, the District Court granted what it referred to as Amboy‟s 

“Rule 19 Application,” concluding that “BAG should remain a party and the lawsuit 

should proceed with BAG as a party.” (J.A. 783.) To the extent a compulsory joinder 

analysis may be applied to determine whether a party who is already joined in an action 

should remain a party to the action, it would seem that Rule 19(a), addressing “persons to 
18

be joined if feasible,” would logically apply. Fed. R. Civ. P. 19(a) (2006). At the time of 

the District Court‟s ruling, Rule 19(a)(1), in relevant part, provided: “A person who is 

subject to service of process and whose joinder will not deprive the court of jurisdiction 

over the subject matter of the action shall be joined as a party in the action if . . . in the 

person‟s absence complete relief cannot be accorded among those already parties . . . .”4 

Id. Consequently, “[u]nder Rule 19(a)(1), the Court must consider whether – in the

absence of an un-joined party – complete relief can be granted to the persons already 

parties to the lawsuit.” Huber, 532 F.3d at 248.

In support of its contention that it is not a “necessary” party, BAG cites General 

Refractories Co. v. First State Insurance Co., 500 F.3d 306 (3d Cir. 2007), where we held 

that certain absent insurers who were not named as defendants in an insured‟s suit 

seeking coverage were not “necessary” parties under Rule 19(a)(1) where the court, 

because of the insurers‟ joint and several liability under Pennsylvania law, could grant 

complete relief to the insured from any insurer that was a party to the action. Id. at 314. 

In light of New Jersey law, we are unable to conclude that complete relief would 

necessarily be accorded to Amboy in BAG‟s absence. New Jersey‟s Comparative 

Negligence Act imposes joint and several liability only on tortfeasors who are “60% or 

more responsible for the total damages.” N.J.S.A. 2A:15-5.3(a). Thus, a tortfeasor who 

 

4

The 2007 amendment to Rule 19 did not substantively change the former Rule 

19(a)(1). That rule, now codified in Rule 19(a)(1)(A), provides: “A person who is 

subject to service of process and whose joinder will not deprive the court of subjectmatter jurisdiction must be joined as a party if . . . in that person‟s absence, the court 

cannot accord complete relief among existing parties . . . .” Fed. R. Civ. P. 19(a)(1)(A). 

The Advisory Committee‟s note on the amendment explains that the revisions to the rule 

were “intended to be stylistic only.” Id. advisory committee‟s note.
19

is found to be “less than 60% responsible for the total damages” is only responsible for 

the “damages directly attributable” to that tortfeasor. Id. 2A:15-5.3(c). We are 

consequently unable to see how it could be argued that complete relief would necessarily 

be accorded to Amboy in BAG‟s absence in light of the possibility that Jenkens could be 

found to be less than 60% responsible for Amboy‟s total damages. We will therefore 

affirm the District Court‟s order determining that BAG should remain a party to the 

action on the ground that complete relief may not be accorded to Amboy and Jenkens in 

BAG‟s absence.

VI.

BAG further argues that the District Court abused its discretion in denying its 

motion for summary judgment. The District Court denied the motion as essentially 

untimely, finding that the Final Pretrial Order listed all pending and contemplated 

motions, that BAG failed to inform the District Court that it contemplated filing any 

motions, that the case was scheduled to be tried in the coming month, and that BAG had 

failed to participate in the action in any meaningful way prior to moving for summary 

judgment. “We will not interfere with a trial court‟s control of its docket except upon the

clearest showing that the procedures have resulted in actual and substantial prejudice to 

the complaining litigant.” In re Fine Paper, 685 F.2d at 817 (citation and internal 

quotation marks omitted). BAG has not shown how it was substantially prejudiced by 

the District Court‟s denial of its motion for summary judgment. We therefore find no 

abuse of discretion, and will affirm the District Court‟s order.

VII.
20

In sum, we will vacate the portion of the District Court‟s August 13, 2008 Order 

granting partial summary judgment in favor of Jenkens with respect to Amboy‟s claim of 

damages, and, accordingly, vacate the denial of Jenkens‟s in limine motions that were 

denied as moot in light of the grant of partial summary judgment, vacate the District 

Court‟s August 18, 2009 judgment in favor of Jenkens, and vacate the February 24, 2010 

Consent Order to the extent it dismissed the professional negligence claim as to BAG. 

We will further affirm the August 13, 2008 Order granting partial summary judgment in 

favor of Jenkens on the claims for breach of fiduciary duty and breach of contract and 

affirm the February 24, 2010 Consent Order to the extent it dismissed those claims as to 

BAG. We will also affirm the District Court‟s September 12, 2007 Order determining 

that BAG should remain a party to the action and affirm the District Court‟s January 30, 

2009 Order denying BAG‟s motion for summary judgment. The case will be remanded 

for further proceedings on Amboy‟s professional negligence claims against Jenkens and 

BAG.