2001 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

10-24-2001

Gillman v. Waters McPherson

Precedential or Non-Precedential:

Docket 00-2111

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Recommended Citation

"Gillman v. Waters McPherson" (2001). 2001 Decisions. Paper 247.

http://digitalcommons.law.villanova.edu/thirdcircuit_2001/247
Filed October 24, 2001 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NO. 00-2111 

RICHARD GILLMAN, 

 Appellant, 

v. 

WATERS, MCPHERSON, MCNEILL, P.C.; 

ESTATE OF JACK ROSEN, THE 

On Appeal from the United States District Court 

for the District of New Jersey 

District Judge: Honorable John C. Lifland 

(D.C. No. 99-00037) 

Argued: May 9, 2001 

Before: BECKER, Chief Judge, MCKEE, Circuit Judge, 

and POLLAK, District Judge* 

(Filed: October 24, 2001) 

 Robert Novack, Esquire (Argued) 

 Edwards & Angell 

 51 John F. Kennedy Parkway 

 Short Hills, New Jersey 07078 

Counsel for Appellant 

_________________________________________________________________ 

* Honorable Louis H. Pollak, United States District Judge for the Eastern 

District of Pennsylvania, sitting by designation. 
 Brian C. Harris, Esquire (Argued) 

 Braff, Harris & Sukoneck 

 570 W. Mt. Pleasant Avenue, 

 P.O. Box 657 

 Livingston, New Jersey 07039 

 Counsel for Appellees 

OPINION OF THE COURT 

POLLAK, District Judge. 

This appeal from a grant of summary judgment presents 

questions arising under New Jersey's "entire controversy 

doctrine" -- a body of law that has given rise to much 

litigation and a substantial body of academic commentary. 

I. 

With a view to clarifying the setting in which the 

questions on appeal are presented, we begin by describing 

the underlying controversy, and the resultant state court 

litigation, which together form the predicate for the case at 

bar. 

Appellant Richard Gillman was for many years a senior 

executive of Bally Manufacturing Corporation ("BMC"), and 

of Bally's Park Place, Inc. ("Park Place"), the casino 

operating arm of BMC. (In this opinion, when Park Place 

and BMC are referred to jointly, or without need to

distinguish one from the other, they are designated"Bally"). 

In 1991 Gillman and Bally entered into Stock Option Award 

Agreements under which Gillman received options to 

purchase 1,000,000 shares of BMC and 300,000 shares of 

Bally Gaming International, Inc., a BMC subsidiary; these 

options, of very considerable potential value, were to be 

exercisable over a period of ten years. In 1992, pursuant to 

a management reorganization, it was determined that

Gillman would leave Bally. To represent him in negotiating 

with Bally an agreement governing the terms of his 

anticipated separation, Gillman retained Waters, 

McPherson, McNeill, P.C. ("Waters, McPherson"), a New 

Jersey law firm that had for some years performed legal 

 2 
services both for Gillman and for Bally (and that continued 

to handle some of Gillman's affairs until 1998). Kenneth D. 

McPherson, Sr. and Jack Rosen were the two Waters, 

McPherson partners who had principal responsibility for 

negotiating and drafting, on Gillman's behalf, the 

agreement pursuant to which he was to leave Bally. 

It was a matter of substantial importance to Gillman that 

the elaborate agreement governing his retirement from Bally 

preserve his entitlement to exercise his stock options for 

the balance of the ten-year period agreed upon by Gillman 

and Bally in 1991 -- i.e., until 2001. On January 8, 1993, 

Gillman executed the Retirement and Separation 

Agreement, and, simultaneously, retired. Gillman, 

according to his later testimony, understood that the 

Retirement and Separation Agreement protected the tenyear entitlement to exercise the stock options. However, 

when, on January 24, 1994, Gillman undertook to exercise 

options for the purchase of 100,000 Bally shares, he was 

informed by Bally that his unexercised options had expired 

on January 8, 1994, the first anniversary of his retirement. 

(Bally's position was that (a) Gillman's Stock Option Award 

Agreements provided that a Bally employee had a ten-year 

purchase window for the exercise of vested options but that 

a retired employee's purchase window was only one year, 

and (b) the Retirement and Separation Agreement"vested" 

Gillman's option rights as of the date of his retirement and 

provided that exercise of those vested rights was to be "in 

accordance with the applicable provisions" of the Stock 

Option Award Agreements -- hence, one year.) 

In March of 1994 -- two months after Bally refused to 

honor Gillman's stock options -- Gillman filed suit against 

Bally in the New Jersey Superior Court to enforce his 

claimed stock option rights. Gillman was represented by 

Frederic K. Becker, a partner in the New Jersey firm of 

Wilentz, Goldman, Spitzer, P.C.; McPherson and Rosen 

advised Becker, and Rosen supplied an affidavit supporting 

Gillman's claims. On July 18, 1994, while Gillman's suit 

was pending in the Superior Court, Becker wrote Gillman a 

letter recapitulating a June 30 conference: 

 3 
 PERSONAL & CONFIDENTIAL 

 July 18, 1994 

 Mr. Richard Gillman 

 c/o Waters, McPherson, McNeill 

 300 Lighting Way 

 Secaucus, NJ 07096 

 Re: Gillman v. Bally Manufacturing Corporation, et al. 

 Dear Dick: 

 This will confirm the matters discussed and agreed 

 upon when Roger Kaplan and I met with you on June 

 30, 1994, with respect to certain issues raised by the 

 above-referenced litigation. 

 As you had previously discussed with Kenneth D. 

 McPherson, Sr., the fact that you have been required to 

 institute suit against Bally Manufacturing Corporation 

 and Bally's Park Place, Inc. raises certain issues 

 regarding claims that you may have against the firms 

 of Waters, McPherson, McNeill and Shereff, Friedman, 

 Hoffman & Goodman for professional malpractice in 

 connection with representing your interests relevant to 

 your Retirement and Separation Agreement, and the 

 exercise of your options, which are the subject of the 

 above-referenced litigation: (a) in the negotiation of 

 your Retirement and Separation Agreement (specifically 

 in connection with Section 2(d) of that Agreement, as it 

 relates to the "Retirement" paragraphs of the Option 

 Agreements); and (b) in connection with advising you 

 as to the potential effect of Section 2(d) of the 

 Retirement and Separation Agreement, insofar as that 

 section might, when read with the relevant provisions 

 of the Option Agreements, cause your options to 

 terminate within one year. 

 A recent decision in New Jersey suggests that any 

 such claims for professional malpractice are presently 

 ripe and assertable by you by reason of the fact that 

 you have already incurred an injury and damages 

 arising from the need to pursue litigation against Bally 

 Manufacturing and Bally's Park Place, causing the 

 expenditure of sums for attorneys' fees and litigation 

 4 
 costs, and that you need not wait to assert such claims 

 until after the conclusion of the litigation with Bally 

 Manufacturing and Bally's Park Place. 

 Moreover, given that such claims would likely be 

 presently assertable, the New Jersey courts have a 

 requirement under what is called the "entire

 controversy doctrine," that all claims against all parties 

 relating to the same controversy or subject matter 

 should be asserted in a single litigation or, if not 

 asserted, be forever barred and precluded in the future. 

 As a result, if these potential claims for professional 

 malpractice are not now asserted in the present 

 litigation with Bally Manufacturing and Bally's Park 

 Place, such claims would, in all likelihood, be barred 

 and precluded from being asserted by you in the 

 future. If such claims were to be asserted in the 

 pending litigation, the Court might (or might not) 

 decide to separate these claims from the claims against 

 Bally Manufacturing and Bally's Park Place, but we 

 would expect that Bally would argue against the 

 severance of such claims and would argue that the 

 attorney-client privilege was waived by you by suing 

 your own attorneys, thereby possibly opening up for 

 discovery your confidential or attorney-client 

 communications with these law firms. 

 You told us that you had a similar conversation with 

 Kenneth D. McPherson, Sr., and had given the subject 

 a considerable amount of reflection and consideration 

 in the past. You also told us that you were of the view 

 that you did not want to pursue a claim against these 

 law firms, notwithstanding the fact that the failure to 

 assert the claims now would likely make it impossible 

 to assert the claims at a later date. 

 As a result of your determination not to assert any 

 claims against either Waters, McPherson, McNeill or 

 Shereff, Friedman, Hoffman & Goodman, we will not, 

 as we advised you, take any action to protect or 

 preserve your interests in asserting any claims against 

 either of these firms. 

 5 
 Please call me if you have any questions or if you 

 want to discuss further any issues addressed by this 

 letter. 

 Sincerely, 

 FREDERIC K. BECKER 

 FKB:ald 

It appears that the June 30 conference and the July 18 

letter were responsive to the February 16, 1994 decision of 

the Appellate Division of the Superior Court in Circle 

Chevrolet Co. v. Giordano, Halleran & Ciesla, 274 N.J. 

Super. 405 (App. Div. 1994), holding that attorney 

malpractice claims were one of the categories of claims 

embraced by the entire controversy doctrine, with the result 

that non-inclusion in an underlying action of claims of 

attorney malpractice that, putatively, gave rise to the 

necessity of the underlying action, might result in

preclusion of such claims. Notwithstanding Becker's July 

18 letter, Gillman did not alter the position he appears to 

have taken in the June 30 conference -- namely, that he 

would not authorize enlarging the scope of the Bally suit by 

adding malpractice claims against Waters, McPherson. 

On August 23, 1994, Judge Margolis, Presiding Judge of 

the Chancery Division of the Superior Court, granted 

Bally's motion for summary judgment and denied Gillman's 

motions for partial summary judgment. In the concluding 

pages (pages 20-22) of his opinion, Judge Margolis wrote as 

follows: 

 Gillman's retirement from Bally was governed by a 

 Retirement and Separation Agreement that 

 incorporated other agreements by reference. Pursuant 

 to the terms of those agreements, Gillman had one year 

 within which to exercise his options. For whatever 

 reason, Gillman failed to do so. Although Gillman 

 thereby sustained significant monetary losses, he 

 executed a contract that was negotiated at arm's length 

 by competent counsel. 

 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

. . 

 . . . . [G]illman was represented by competent counsel 

 at all relevant times -- he was a sophisticated 

 6 
 businessman upon whose behalf a detailed agreement 

 was negotiated. . . . [I]f Gillman was not aware of the 

 option exercise date, his counsel was, or should have 

 been. 

Gillman appealed. While Gillman's appeal was pending, 

the New Jersey Supreme Court affirmed the Appellate

Division's ruling in Circle Chevrolet that attorney

malpractice claims were subject to the entire controversy 

doctrine. Circle Chevrolet Co. v. Giordano, Halleran & 

Ciesla, 142 N.J. 280, 662 A.2d 509 (1995). On Gillman's 

appeal, Kenneth McPherson, Jr., of Waters, McPherson 

joined Frederic Becker as counsel of record. 

The Appellate Division affirmed Judge Margolis's grant of 

summary judgment. "The trial court properly enforced the 

express, bargained-for terms of his Option Agreement and 

Retirement and Separation Agreement, and refused to grant 

plaintiff equitable relief from the consequences of his and 

his counsel's neglect." Gillman v. Bally Mg. Corp., 286 N.J. 

Super. 523, 531, 670 A.2d 19 (N.J. App. Div. 1996).

The decision of the Appellate Division was handed down 

on January 4, 1996. 

On January 20, 1996, Jack Rosen died. 

On March 20, 1996 the New Jersey Supreme Court 

denied certification. 144 N.J. 174, 675 A.2d 1122 (1996). 

II. 

As Gillman's unsuccessful litigation against Bally made 

its way through the courts of New Jersey between 1994 and 

1996, it was paralleled by the Circle Chevrolet litigation in 

which the Appellate Division in 1994 announced, and the 

New Jersey Supreme Court in 1995 confirmed, that New 

Jersey's entire controversy doctrine embraced attorney 

malpractice claims. The entire controversy doctrine has not 

been a favorite of the New Jersey bar, and its extension to 

attorney malpractice claims was not widely acclaimed. 

". . . [T]he failure to exclude legal malpractice claims from 

the Entire Controversy doctrine . . . harms attorneys, 

clients, and the legal system itself. The sooner our Supreme 

Court reconsiders its opinion in this matter, the better off 

 7 
we will all be." Albert L. Cohn and Terri Smith, Practice and 

Malpractice after Circle Chevrolet: Some Practical 

Considerations of the Entire Controversy Doctrine , 28 

Rutgers L. J. 79, 84-85 (1996). Academic criticism of Circle 

Chevrolet tended to be more restrained. As Professor 

Hazard put it, "Why, in the name of any conception of 

justice and good order, should a client engaged in a 

complicated, expensive and protracted controversy with an 

opposing party be required to enlarge and complicate that 

litigation, perhaps with fatal effects on its merits, by 

extending the attack to his own lawyer in the middle of the 

proceeding?" Geoffrey C. Hazard, Jr., Before and Behind the 

"Entire Controversy" Doctrine, 28 Rutgers L. J. 7, 24 (1996). 

In 1997 the New Jersey Supreme Court did "reconsider 

its opinion." The court's new ruling was announced in Olds 

v. Donnelly, 150 N.J. 424, 696 A. 2d 633 (1997). The court 

stated that (1) "[w]e are aware of the criticism of Circle 

Chevrolet's expansion of the entire controversy doctrine to 

attorney-malpractice actions," 696 A. 2d at 641, (2) 

"[c]andor compels that we acknowledge that the application 

of the entire controversy doctrine to legal-malpractice 

claims has not fulfilled our expectations," ibid., and (3) "[i]n 

sum, we conclude that the entire controversy doctrine no 

longer compels the assertion of a legal-malpractice claim in 

an underlying action that gives rise to the claim." Id. at 

643. 

In January of 1999, Gillman (formerly a citizen of New 

Jersey, but now a citizen of Florida) filed the instant 

diversity action in the United States District Court for the 

District of New Jersey. The named defendants were Waters, 

McPherson and the Estate of Jack Rosen (the Waters,

McPherson partner who, together with Kenneth McPherson, 

Sr., had represented Gillman in negotiating and drafting 

the Separation Agreement). The suit -- initiated a year-anda-half after Circle Chevrolet was overruled by Olds -- 

alleged malpractice. 

The defendants moved for summary judgment. Gillman 

filed a cross-motion for partial summary judgment. The 

District Court granted defendants' motion. In its 

Memorandum and Order the District Court first addressed 

the question "whether the Court should apply the short- 

 8 
lived legal malpractice claim preclusion rule articulated by 

the New Jersey Superior Court, Appellate Division, in early 

1994, adopted by the New Jersey Supreme Court in Circle 

Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280 

(1995), and overruled two years later in Olds v. Donnelly, 

150 N.J. 424 (1997)." Memorandum and Order, p. 8. The 

District Court's analysis was as follows: 

 In abrogating Circle Chevrolet, the Olds court 

 contemplated the extent of retroactive effect it should 

 give to its decision and specifically held that the 

 decision should be given "limited or `pipeline' 

 retroactivity" rather than full retroactive effect. See 

 [150 N.J.] at 449. The court explained that its decision 

 should apply to cases in the litigation "pipeline," that 

 is, "all pending cases, whether on appeal or in the trial 

 courts." Id. . . 

 Gillman argues that because this malpractice action 

 was filed after the Olds ruling, it is governed by Olds 

 and not by Circle Chevrolet, and thus the ECD [entire 

 controversy doctrine] would not bar his legal 

 malpractice claim for failure to have joined it in the 

 prior state court action. Gillman's legal theory would 

 grant full retroactive effect to the Olds decision such 

 that all attorney malpractice claims that had accrued 

 under Circle Chevrolet and that were not yet time- 

 barred would be resurrected. This interpretation would 

 render meaningless the plain words of the New Jersey 

 Supreme Court's decision regarding retroactivity. In 

 holding that legal malpractice claims were no longer 

 subject to the ECD, the court plainly stated that the 

 Olds decision would be accorded only limited

 retroactive effect such that cases already in the 

 litigation pipeline -- cases "on appeal or in the trial 

 courts" -- would receive the benefit of the new rule. 

 Necessarily, cases that were not yet pending in the trial 

 courts or on appeal, thus not in the pipeline, would not 

 receive the benefit of the Olds abrogation of Circle 

 Chevrolet. Claims that accrued under Circle Chevrolet 

 and that were not in the pipeline at the time of the 

 Olds decision on July 16, 1997 are clearly subject to 

 the Circle Chevrolet rule, not the Olds rule. 

 9 
 Gillman's legal malpractice claim accrued long before 

 the Olds decision. At the latest, Gillman knew that he 

 had a potential malpractice claim against Waters, 

 McPherson when he received the July 18, 1994 letter 

 from Becker explaining the claim-preclusive effect that 

 the ECD could have on any potential legal malpractice 

 claim Gillman might want to assert against Waters, 

 McPherson. 

Memorandum and Order, pp. 10-11 (footnote omitted).

Toward the close of its Memorandum and Order, the 

District Court stated an alternate ground for its grant of 

summary judgment: 

 Furthermore, the Court does not view Gillman as an 

 unsuspecting victim of the ECD's claim-preclusive 

 impact. He was fully informed by his attorney during 

 the pendency of his state court action that he must 

 assert any potential legal malpractice claim against 

 Waters, McPherson at that time and he did not. Quite 

 the contrary, he assured his attorneys that he would 

 not assert a malpractice claim against them in the 

 pending state court action. Thereby, Gillman

 voluntarily surrendered a known right. Accordingly, 

 even in the absence of the Circle Chevrolet ruling 

 Gillman's claim could be barred under the doctrine of 

 waiver. 

III. 

A. 

In approaching the question whether the District Court's 

grant of summary judgment was warranted, we first 

consider the District Court's assessment of the limited 

retroactive effect of Olds. The District Court, it will be 

recalled, observed that "Gillman's legal theory would grant 

full retroactive effect to the Olds decision such that all 

attorney malpractice claims that had accrued under Circle 

Chevrolet and that were not yet time-barred would be 

resurrected," and stated that "[t]his interpretation would 

render meaningless the plain words of the New Jersey 

Supreme Court's decision regarding retroactivity," since 

 10 
"the court plainly stated that the Olds decision would be 

accorded only limited retroactive effect such that cases 

already in the litigation pipeline -- `cases on appeal or in 

the trial courts' -- would receive the benefit of the new 

rule." 

This meant, so the District Court reasoned, that cases 

"that were not in the pipeline at the time of the Olds 

decision on July 16, 1997 are clearly subject to the Circle 

Chevrolet rule, not the Olds rule." And, since Gillman's suit, 

although arising out of events that transpired during the 

Circle Chevrolet era, was not initiated until 1999, and hence 

was not pending on July 16, 1997, it was, under the

District Court's analysis of the Olds court's pronouncement 

with respect to the limited retroactive impact of its decision, 

barred by Circle Chevrolet. 

To assess the correctness of the District Court's analysis, 

we set forth in full the Olds court's discussion of

retroactivity: 

 The parties have not briefed or argued the issue 

 whether the within decision should apply retroactively 

 or prospectively. In fairness to other litigants and the 

 judicial system, however, we conclude that our decision 

 should apply not only to the present case, but to all 

 pending cases, whether on appeal or in the trial courts. 

 Ordinarily, judicial decisions apply retroactively. 

 Crespo v. Stapf, 128 N.J. 351, 367, 608 A.2d 241 

 (1992). Policy considerations may justify giving a 

 decision limited retroactive effect. Id. The first 

 consideration is whether litigants reasonably have 

 relied on settled law in ordering their affairs. Id. at 368. 

 Another consideration is whether retroactive

 application will advance the purposes of the rule 

 announced in the decision. Id. at 370. "The final 

 consideration is whether retroactive application would 

 produce inequitable results and adversely affect the 

 administration of justice." Id. at 371. 

 Here, those considerations point toward limited or 

 "pipeline" retroactivity of our decision. First, we decided 

 Circle Chevrolet only two years ago, a factor that affects 

 the extent to which litigants reasonably have relied on 

 11 
 the application of the entire controversy doctrine to 

 legal-malpractice claims. Second, the general purpose 

 of the legal-malpractice exception is to preserve the 

 attorney-client relationship. Limited retroactivity will 

 adequately protect existing relationships. Giving the 

 benefit of our decision to litigants with pending cases 

 serves the interests of justice by permitting resolution 

 of their claims on the merits. Complete retroactivity, 

 however, potentially would expose the judicial system 

 to the undue burden of resolving numerous concluded 

 matters. 

696 A.2d at 646. 

In applying the Olds rule of "limited or`pipeline' 

retroactivity" to Gillman's suit, the District Court ruled that 

Gillman's suit was not yet in the "pipeline" when Olds was 

decided and hence was barred. We agree with the District 

Court that Gillman's suit, not filed until 1999, was not in 

the pipeline on July 16, 1997, when Olds was decided. But 

we do not agree that the Olds court, in clothing its ruling 

with "limited or `pipeline' retroactivity," meant by the use of 

that phrase to exclude from the coverage of Olds a suit filed 

subsequent to July 16, 1997 (provided, of course, that the 

suit was filed within the applicable six-year statute of 

limitations, as Gillman's was). We think that in determining 

that its new rule was to have " `pipeline' retroactivity," the 

court in Olds signified that it was selecting from available 

options the rule of limited retroactivity which the court had 

described and applied just a year before, in State of New 

Jersey v. Knight, 678 A. 2d 642 (1996). In Knight the court 

explained that to "give [a] new rule `pipeline retroactivity,' " 

is to "render[ ] it applicable in all future cases, the case in 

which the rule is announced, and any cases still on direct 

appeal." Id. at 651. "[P]ipeline retroactivity" was contrasted 

by the Knight court with "complete retroactive effect" which 

involves "applying [the new rule] to all cases, including 

those in which final judgments have been entered and all 

other avenues of appeal have been exhausted." Ibid.

Viewing Gillman's malpractice suit through the prism of 

"pipeline retroactivity" as deployed in Knight and in Olds, it 

falls within the category of what Knight termed "future 

cases." 678 A. 2d at 651. Thus, we think that, if the New 

 12 
Jersey Supreme Court were today to have occasion to

address a suit like Gillman's malpractice suit against 

Waters, McPherson and the Rosen Estate -- a suit which 

was not in fact filed until after Olds was decided, but a suit 

which could have been filed during the brief hegemony of 

Circle Chevrolet and which would then have properly been 

found by the lower courts of New Jersey to be noncognizable -- the New Jersey Supreme Court would rule 

that such a suit was governed by Olds. 

In predicting how the New Jersey Supreme Court would 

rule, we do not confine ourselves to a textual 

deconstruction of the term "pipeline retroactivity." We are 

also guided by the three-factor inquiry on which that court 

has long relied in determining the scope of retroactive 

application of a new rule. See, e.g., Fischer v. Canario, 143 

N.J. 235, 244-245, 670 A.2d 516, 521 (1996). As the court 

explained in Fischer a year before Olds was decided, "the 

competing considerations in each case are weighed by 

examining the following three factors: (1) the purpose of the 

new rule and whether it would be advanced by retroactive 

application; (2) the reliance placed on the old rule by the 

parties and the community; and (3) the effect that 

retroactive application would have on the administration of 

justice." Ibid., citing Rutherford Educ. Ass'n. v. Rutherford 

Bd. of Educ., 99 N.J. 8, 22, 489 A.2d 1148 (1985), and 

State v. Burstein, 85 N.J. 394, 406, 427 A.2d 525 (1981). 

First, we consider the purpose of the Olds rule and

inquire whether that purpose would be effectuated by 

applying it to Gillman's situation. Three purposes may be 

said to support the Olds rule: to preserve the sanctity of the 

attorney-client relationship, to foster judicial efficiency, and 

to increase fairness. All three are well served by extending 

the Olds rule to Gillman's situation: (1) The Olds rule is 

protective of the attorney-client relationship in that it 

permits a client to avoid what Circle Chevrolet appeared to 

mandate: undermining a current attorney-client 

relationship by joining the lawyer as a malpractice

defendant in underlying litigation. (2) The Olds rule 

promotes judicial efficiency by obviating the necessity of 

enlarging and complicating the underlying litigation 

through the addition of a malpractice claim before the 

 13 
plaintiff can ascertain whether the result in the underlying 

litigation renders the malpractice claim unnecessary. (3) 

The rule relieves a client of the Hobson's Choice, imposed 

by Circle Chevrolet, of, on the one hand, surrendering the 

attorney-client privilege by adding a claim for malpractice 

in the underlying litigation, or on the other hand,

surrendering the right to pursue a malpractice claim in the 

future. 

Second, we consider the extent to which the parties and 

the larger community may have relied on the rule the Olds 

court jettisoned. As the Olds court concluded, the Circle 

Chevrolet rule was of such short duration -- only two years 

-- as to encourage little reliance. Moreover, criticism and 

calls for the overruling of Circle Chevrolet were so 

immediate and so vehement that any reliance thereon could 

only have been tentative. 

Third, we consider the impact of retroactive application of 

the new rule on the administration of justice. We think that 

bringing within the ambit of Olds those cases, like the case 

at bar, in which the cause of action had accrued, but no 

claim had been filed, when Olds was decided, would not be 

detrimental to the administration of justice because it 

would not involve the reopening of cases that had been fully 

adjudicated. Furthermore, the Olds rule promotes the 

resolution of attorney malpractice claims on the merits, 

rather than on the basis of the arcane procedural 

jurisprudence spawned by Circle Chevrolet. 

In sum, we conclude that the "pipeline retroactivity" 

called for by the Olds court requires the application of Olds 

to Gillman's claim. 

B. 

We turn now to the District Court's alternate ground for 

granting summary judgment: Gillman, so the District Court 

put it, "assured his attorneys that he would not assert a 

malpractice claim against them in the pending state court 

action. Thereby, Gillman voluntarily surrendered a known 

right. Accordingly, even in the absence of the Circle 

Chevrolet ruling, Gillman's claim could be barred under the 

doctrine of waiver." 

 14 
Some of the evidence before the District Court lent

support to a finding that Gillman knowingly and 

intelligently disavowed any thought of suing Waters, 

McPherson. But other evidence cut in a different direction. 

In his sworn declaration submitted in opposition to

defendants' summary judgment motion, Gillman described 

the difficult choice he confronted when Becker told him 

about the potential impact of the entire controversy 

doctrine. "Faced with the dilemma, I accepted the 

assurances I received from McPherson and Rosen that my 

position in the Bally Litigation would prevail, and that the 

Court would conclude that I had ten years to exercise my 

options. It appeared to be against my best interests to add 

Waters, McPherson to the Bally Litigation (thereby waiving 

my attorney-client privilege) especially since none of my 

attorneys suggested that I even had a claim against Waters, 

McPherson. To this day, McPherson has denied that his 

firm was negligent [citing deposition testimony of Kenneth 

McPherson, Sr.]." Gillman Declaration, paragraph 31. 

Further, according to Gillman, "I never waived or 

relinquished my rights to file a claim against Waters, 

McPherson. Nor did I ever inform Mr. Becker or anyone at 

Waters, McPherson that I had waived or relinquished any 

claims that I had against the firm. During those years, I 

merely accepted the assurances that McPherson and Rosen 

repeatedly gave me that I would prevail in the Bally 

Litigation and mindful of the advice Mr. Becker gave me 

that joining Waters, McPherson would create serious

tactical problems, determined not to join Waters, 

McPherson as a defendant in the Bally Litigation which 

would have required me to sever my attorney-client 

relationship with the firm." 

With the record in this posture, a grant of summary

judgment on the issue of waiver was inappropriate."Waiver, 

under New Jersey law, involves the intentional 

relinquishment of a known right, and thus it must be 

shown that the party charged with waiver knew of his or 

her legal rights and deliberately intended to relinquish 

them . . . Questions of waiver, therefore, are usually 

questions of intent, which are factual determinations that 

should not be made on a motion for summary judgment." 

Shebar v. Sanyo Business Systems Corp., 544 A.2d 377, 

 15 
384 (N.J. 1988); accord, Garden State Buildings, L.P., v. 

First Fidelity Bank, N.A., 702 A.2d 1315, 1325 (N.J. Super. 

1997).1 

Conclusion 

For the foregoing reasons the judgment of the District 

Court is reversed and the case remanded for further

proceedings consistent with this opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

1. It may be added that the complexity of establishing "that the party 

charged with waiver knew of his or her legal rights and deliberately 

intended to relinquish them" is significantly compounded in a setting, 

such as that presented in the case at bar, in which the legal principles 

that constitute the framework within which a choice is to be made, while 

seemingly valid at the time of the choice, are subsequently undercut by 

later case law. 

 16