PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

No. 10-4633

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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.

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Argued June 21, 2012

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Certified Question of State Law

Issued to the Supreme Court of New Jersey August 17, 2012
2

Submitted January 18, 2013

After Supreme Court of New Jersey Declines Certification

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Before: AMBRO, VANASKIE 

and ALDISERT, Circuit Judges

(Opinion filed: May 14, 2014)

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)

Dechert LLP

90 State House Square

Hartford, CT 06103

Matthew J. Delude, Esquire

Primmer, Piper, Eggleston & Cramer

900 Elm Street, 16th Floor

Manchester, NH 03101

Collin O. Udell, Esquire

Jackson Lewis

90 State House Square, 8th Floor

Hartford, CT 06103
3

David P. Stich, Esquire

Solomon Blum Heymann & Stich

40 Wall Street, 35th Floor

New York, NY 10005

Counsel for Appellant

Michael J. Canning, Esquire (Argued)

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 PC

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
4

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., Esquire

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OPINION OF THE COURT

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AMBRO, Circuit Judge

New Jersey’s Affidavit of Merit Statute (the “AOM 

Statute” or simply “Statute”), N.J. Stat. Ann. § 2A:53A 26-

29, requires certain claims against professionals to include an 

affidavit from an independent professional attesting to the 

claims’ merit. We decide whether the AOM Statute covers 

Nuveen Municipal Trust’s action seeking money damages for

fraud, negligent misrepresentation, and malpractice, allegedly 

committed by two professional firms. Though typically we 

conceive such statutes as applying only to malpractice claims 

rooted in negligence resulting from harm to a known 

property, New Jersey courts go further, making our answer 

yes. 

I. Background

This case stems from a loan transaction between 

Appellant Nuveen Municipal Trust (“Nuveen”), on behalf of 
5

its Nuveen High Yield Municipal Bond Fund, and Bayonne 

Medical Center (“Bayonne”). On October 11, 2006, Nuveen 

purchased a $10 million Bond Anticipation Note (“BAN”) 

from Bayonne. In connection with the transaction, Bayonne 

provided Nuveen with an audit report authored by Bayonne’s 

accounting firm, WithumSmith+Brown, P.C. (“Withum”),

and an opinion letter authored by Bayonne’s counsel, 

Lindabury, McCormick, Estabrook & Cooper P.C. 

(“Lindabury”). Soon after the transaction, Bayonne filed a 

Chapter 11 bankruptcy petition. Nuveen contends that the 

audit report and opinion letter concealed aspects of 

Bayonne’s financial condition and, had it known about these 

financial issues, it would not have purchased the BAN. 

Nuveen filed this action against Withum and 

Lindabury (collectively, “Appellees”). It asserts negligent 

misrepresentation and fraud as to Withum and negligent 

misrepresentation and malpractice as to Lindabury; the 

remedy it seeks throughout is money damages. The District 

Court dismissed the action with prejudice based on Nuveen’s 

failure to file an affidavit of merit complying with the AOM 

Statute.

After initially remanding the case to the District Court 

on a jurisdictional issue, we issued an opinion in August 2012

– Nuveen Mun. Trust ex rel. Nuveen High Yield Mun. Bond 

Fund v. Withumsmith Brown, P.C., 692 F.3d 283 (3d Cir. 

2012). In it we held, inter alia, that the District Court was 

correct in not affording Nuveen certain procedural protections 

with respect to the AOM Statute. Additionally, we stated that 

“[i]f the AOM Statute applies to the action, we believe that 

Nuveen’s noncompliance with it calls for the action’s 

dismissal.” Id. at 288. We questioned, however, whether the 

action was subject to the Statute and thus reserved deciding 

whether the District Court was correct to dismiss the action 

with prejudice. Instead, we certified the following two 
6

questions of law regarding the Statute to the New Jersey 

Supreme Court. 

o Whether the nature of the injury alleged in this 

case, i.e., the loss of money expended to 

purchase the BAN from Bayonne, falls within 

the AOM [Statute’s] coverage of “any action 

for damages for personal injuries, wrongful 

death or property damage.” Specifically, is 

Nuveen seeking recovery in this action for 

“property damage” as that term is used in N.J. 

Stat. Ann. § 2A:53A-27?

o Whether an action alleging an intentional tort, 

such as common law fraud or aiding and 

abetting common law fraud, which relates to 

alleged professional malpractice or negligence 

but does not require proof of malpractice or 

negligence, is subject to N.J. Stat. Ann. 

§ 2A:53A-27?

Judge Aldisert dissented in part from our decision, contending

that no certification was necessary, as the New Jersey 

Supreme Court has been adequately clear on the points in 

question. In his view, Nuveen’s action was subject to the 

AOM Statute and, consequently, had been correctly 

dismissed. 

In 2013, the New Jersey Supreme Court denied our 

petition for certification. Shortly thereafter, Appellees filed a 

supplemental brief addressing additional New Jersey state law 

and renewing their argument that an AOM was required in 

this case and that we should affirm the District Court’s 

dismissal of the complaint. 
7

In this follow-up opinion we address what we did not 

in our August 2012 opinion – essentially, whether the AOM 

Statute applies to Nuveen’s action. In light of the New Jersey 

Supreme Court’s denial of our petition for certification, we 

decide the question based on our best understanding of how 

the New Jersey Supreme Court would rule. See Sheridan v. 

NGK Metals Corp., 609 F.3d 239, 253-54 (3d Cir. 2010) (A 

federal court sitting in diversity is “bound to follow state law 

as announced by the highest state court”; if the state’s highest 

court has not decided the question, we “must predict the 

position the court would take on [the] issue” and should look 

to decisions by intermediate appellate state courts) (internal 

quotation marks and citations omitted). We conclude that 

because Nuveen’s action (1) can be characterized as one 

seeking recovery for property damage and (2) requires proof 

of Appellees’ deviation from professional standards of care, 

the AOM Statute applies and the action was properly 

dismissed under New Jersey law. 

II. Discussion

The AOM Statute provides that an affidavit of merit is 

required in actions seeking “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. The 

“overall purpose of the statute is to require plaintiffs in 

malpractice cases to make a threshold showing that their 

claim is meritorious, in order that meritless lawsuits readily 

could be identified at an early stage of litigation.” Couri v. 

Gardner, 801 A.2d 1134, 1137 (N.J. 2002) (internal quotation 

marks and citation omitted). Couri, the seminal New Jersey 

case on the AOM Statute, sets out the following framework 

for analyzing whether the Statute applies to a particular claim:
8

(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 

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 (alteration in original) (quoting N.J. Stat. Ann. 

§ 2A:53A-27). The parties do not dispute that the complaint 

satisfies element (3). We only consider, therefore, whether 

Nuveen’s allegations satisfy elements (1) and (2).

Nature of Injury

Element (1) requires us to address whether the money 

damages sought by Nuveen in connection with its loan 

transaction with Bayonne qualify as a claim for “property 

damage” required by the Statute. Nuveen, relying on Couri,

contends that it seeks only compensatory damages and related 

costs and, as such, is not asserting a claim for “property 

damage.” See id. at 1138. The plaintiff there filed a 

complaint against his psychiatrist for breach of contract and 

breach of fiduciary duty resulting from the psychiatrist’s 

distribution of a preliminary report to the estranged wife of 

the plaintiff without his knowledge or consent. Id. at 1136. 

The plaintiff initially requested “compensatory and punitive 

damages” but later narrowed his request to the $12,000 he 

had already paid the psychiatrist for the report and associated 

costs. Id. at 1138. The latter moved to dismiss, arguing that 

the claim was for malpractice and that the plaintiff had not 
9

filed the requisite affidavit of merit. The Court rejected this 

argument, holding that because the damages sought were not 

“damages for personal injuries, wrongful death or property 

damage,” plaintiff’s claim did not satisfy the first element of 

the Statute and no affidavit of merit was required. Id. 

Unlike the plaintiff in Couri, Nuveen is not seeking to 

recoup money it has already paid to Appellees. In fact, it has 

never directly dealt with Appellees. Instead, it seeks

unspecified money damages stemming from its loan 

transaction with non-party Bayonne. 

Contrary to Nuveen’s contentions, case law from 

lower New Jersey courts comports with Couri and supports 

the conclusion that the monetary recovery sought by Nuveen 

is of the type that triggers the AOM Statute. Cornblatt v. 

Barow, 696 A.2d 65 (N.J. Super. Ct. App. Div. 1997), rev’d 

on other grounds by 708 A.2d 218 (N.J. 1998), for example, 

squarely addressed the issue of whether a “claim that [a 

party’s] alleged malpractice resulted in money damages was 

contemplated by the Legislature as a claim for ‘property 

damage’ under the [AOM] statute.” Id. at 68. There the 

Court held that

[m]alpractice or negligence committed by 

architects, engineers, or attorneys may very well 

result in damage to real and personal property. 

Personal property embraces everything that 

may be tangible or intangible such as a chose in 

action. The right or claim to money 

damages . . . is a property right . . . beyond 

question. Accordingly, we conclude that a 

claim against an attorney for alleged 

malpractice is a claim for property damage 

within the legislative intent and plain meaning 

of the statute. 
10

Id. (internal quotation marks and citation omitted). 

Similarly, in Nagim v. N.J. Transit, 848 A.2d 61 (N.J. 

Super. Ct. Law. Div. 2003), the plaintiff sued for property 

damage against New Jersey Transit (“Transit”), which in turn

filed a third-party complaint for contractual indemnification 

against an engineering services company (“Urbitran”) whose 

project design allegedly caused the underlying damage to the 

plaintiff’s property. The Court dismissed New Jersey 

Transit’s complaint against Urbitran for failure to file an 

affidavit of merit, noting that “jurisprudence under the [AOM 

Statute] has conclusively recognized that the ‘property 

damage’ language of the statute includes a claim for money 

damages,” and holding that Transit’s claim against Urbitran 

implicated “both intangible and tangible property rights.” Id.

at 70. It specifically distinguished the case from Couri on the 

ground that “[t]here, the plaintiff’s initial claim for 

compensatory and punitive damages was narrowed and 

limited solely to . . . compensatory damage . . . . That injury 

thus became a finite sum of money already paid by the 

plaintiff to the defendant and for which recompense was 

sought.” Id. at 70-71. In Nagim, by contrast, Transit sought 

to assert a cause of action against a third-party, Urbitran, “not 

for any monies already paid by Transit to Urbitran for 

services provided . . . [but] for the actual defense and/or the 

yet unspecified defense costs associated with plaintiff’s 

claims against Transit.” Id. at 71. This, the Court held, was a 

claim for property damage within the meaning of the AOM 

Statute. Id. Like the relevant party in Nagim and unlike the 

plaintiff in Couri, Nuveen is not seeking to recover a sum 

certain already paid to Appellees, but rather asks for damages 

relating to its transaction with Bayonne. See SRC Constr.

Corp. of Monroe v. Atlantic City Hous. Auth., No. 10-3461, 

2011 WL 1375680, at *3-4 (D.N.J. Apr. 12, 2011) 

(considering both Couri and Nagim and concluding that 

plaintiff’s claims were for “property damage” under the AOM 
11

Statute, as they “[did] not seek to recoup a finite sum already 

paid to [defendants]” but rather sought unspecified monetary 

damages). 

If any doubt remains that negligence or malpractice 

actions for unspecified money damages meet the property 

damage requirement of the AOM Statute, the New Jersey 

Supreme Court has, post-Couri, stated generally that “[t]he 

[S]tatute applies to all actions for damages based on 

professional malpractice.” Paragon Contractors, Inc. v. 

Peachtree Condo. Ass’n, 997 A.2d 982, 985 (2010). 

Although Paragon’s ultimate holding turned on the time 

limits for filing an affidavit of merit and so did not directly or 

extensively address the applicability of the AOM Statute, the 

Court’s broad statement that the AOM Statute applies to all 

actions for damages based on professional malpractice has 

not been questioned by any other New Jersey court decision. 

Thus we conclude that Nuveen has brought an action for 

property damage under the AOM Statute. 

Cause of Action

Nuveen asserts claims of fraud, aiding and abetting 

fraud, and negligent misrepresentation against Withum, along 

with claims of malpractice and negligent misrepresentation 

against Lindabury. Nuveen concedes that the AOM Statute 

applies to its negligence and malpractice claims against both 

Appellees. It argues, however, that its claims for common 

law fraud, and aiding and abetting common law fraud, against 

Withum are intentional tort claims to which the AOM Statute 

does not apply. 

The problem for Nuveen is that in New Jersey an 

action need not be styled as one for malpractice or negligence 
12

for the AOM Statute to apply. Rather, in Couri

1

the New 

Jersey Supreme Court explained that

[i]t 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.

801 A.2d at 1141. Applying this standard to the case before 

it, the Couri Court held that no AOM was required.

Plaintiff is not claiming that defendant erred in 

respect of the conclusions that he drew 

concerning psychiatric/medical matters or that 

defendant acted improperly from a 

psychiatric/medical standpoint . . . . Instead, the 

crux of plaintiff’s complaint is that defendant 

acted improperly as an expert witness by 

 

1

Though the New Jersey Supreme Court in Couri

acknowledged it could conclude its opinion on the first 

element of the statute – the “nature of the injury” – alone, it 

continued to analyze the second element of the statute – the 

“cause of action” – in order to resolve conflicts and provide 

future guidance to lower courts. 801 A.2d at 1138. 
13

disseminating the report to others without the 

knowledge or consent of plaintiff. Although 

defendant’s unauthorized dissemination of the 

report also might implicate a deviation from 

prevailing professional standards of practice, 

proof of that deviation is not essential to the 

establishment of plaintiff’s right to recover 

based on breach of contract.

Id. at 1142. 

To determine whether an affidavit of merit was 

required in our case, we examine the evidence needed to 

prove the fraud allegations in Nuveen’s complaint. Those 

claims against Withum are premised on the theory that it

made material misrepresentations and omissions of past and 

present facts in its audit report. For example, Nuveen alleges 

that Withum in its audit report, inter alia, allowed Bayonne to 

count a conditional or unenforceable pledge as revenue, failed 

to ensure that Bayonne had adequately reserved for 

uncollectible accounts receivable, and failed to evaluate 

adequately Bayonne’s ability to continue as a going concern. 

These misrepresentations and omissions are alleged to be a 

direct consequence of Withum completing its audit 

examination and report of Bayonne in a manner that violated 

Generally Accepted Auditing Standards (“GAAS”) and 

Generally Accepted Auditing Principles (“GAAP”). The 

complaint does not allege that Withum made any material 

misrepresentations other than those resulting from the failure 

to comply with GAAS and GAAP. 

Though Nuveen’s allegations of fraud against Withum 

are styled as intentional torts, rather than negligence or 

malpractice claims, they nonetheless require proof that 
14

Withum deviated from professional standards of care. And 

New Jersey Courts, following what they perceive to be the 

path set out by the State Supreme Court in Couri, stretch 

“malpractice or negligence” to include even those instances. 

See, e.g., Alpert, Goldberg, Butler, Norton & Weiss, P.C., v. 

Quinn, 983 A.2d 604, 621-22 (N.J. Super. Ct. App. Div. 

2009) (requiring affidavit of merit in breach-of-contract claim 

against attorney because pleadings alleged that “the quality of 

work product was not sufficient,” and that the attorney “failed 

to do a complete and competent job”; those allegations 

required “proof of a deviation from the professional standard 

of care applicable to attorneys”); Charles A. Manganaro 

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

Auth., 781 A.2d 1116, 1119 (N.J. Super. Ct. App. Div. 2001) 

(affidavit of merit required in breach-of-contract claim 

against engineer when “the essential factual allegations . . . 

[were] that [the engineer] failed to properly prepare the plans 

and specifications”; this is an “allegation[] of professional 

malpractice – that [he] failed to act with that degree of care, 

knowledge, and skill ordinarily possessed and exercised in 

similar situations by the average member of the profession 

practicing in the field” (internal quotation marks and citation 

omitted)). 

Though this is counterintuitive (one may argue 

illogical), it is the suit we must follow; while intentional torts 

are by definition not negligent, the focus is deviation from a 

professional standard devoid of any claim label. Hence the 

fraud claims against Withum require an affidavit of merit. 
15

III. Conclusion

Based on our understanding of the New Jersey courts’ 

view of the AOM Statute’s applicability, we conclude that the 

money damages sought by Nuveen are considered a claim for 

“property damage” and that the underlying factual allegations 

of Nuveen’s fraud claims against Withum require proof of a 

deviation from the professional standard of care. 

Accordingly, the District Court correctly held that the AOM 

Statute applies and that Nuveen’s noncompliance with the 

Statute warranted dismissal of its case.

For these reasons, we affirm.