Court Opinion

ID: 4431017
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:50:52.043702+00
Date Added: 2024-06-11T14:51:08.551720
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-1309-17T2

MTK FOOD SERVICES, INC.
d/b/a THE PALACE
RESTAURANT,                            APPROVED FOR PUBLICATION

      Plaintiff-Respondent,                 June 29, 2018

v.                                        APPELLATE DIVISION

SIRIUS AMERICA INSURANCE
COMPANY; NORTH AMERICAN
RISK SERVICES; SPENCER
B. ROBBINS, ESQ.;
ROBBINS & ROBBINS, LLC;
CRAWFORD CLAIMS MANAGEMENT
SERVICES; ALLIED WORLD
ASSURANCE COMPANY (U.S.) INC.
and DARWIN SELECT INSURANCE COMPANY,

      Defendants,

and

ARCHER & GREINER, PC, and
RICHARD GRUNGO, JR., ESQ.,

      Defendants-Appellants,

and

JAVERBAUM WURGAFT HICKS KAHN
WIKSTROM & SININS, PC, and
DAVID WIKSTROM, ESQ.,

     Defendants-Respondents.
___________________________________

          Argued May 30, 2018 – Decided June 29, 2018

          Before Judges Hoffman, Gilson and Mayer.
           On appeal from Superior Court of New Jersey,
           Law Division, Monmouth County, Docket No.
           L-1227-12.

           Ellis I. Medoway argued the cause for
           appellants (Archer & Greiner, PC, attorneys;
           Ellis I. Medoway, on the briefs).

           Wendy M. Crowther argued the cause for
           respondent MTK Food Services, Inc. (Schibell
           & Mennie, LLC, attorneys; Wendy M. Crowther,
           of counsel and on the brief).

           Patrick J. Galligan argued the cause for
           respondents Javerbaum Wurgaft Hicks Kahn
           Wikstrom & Sinins, PC and David Wikstrom,
           Esq.   (Donnelly   Minter   &   Kelly, LLC,
           attorneys; Patrick J. Galligan, of counsel;
           Jared J. Limbach, on the brief).

           David R. Kott argued the cause for amicus
           curiae New Jersey State Bar Association (New
           Jersey State Bar Association, attorneys;
           Robert B. Hille, President, of counsel and
           on the brief; David R. Kott, William T.
           Reilly and Christopher A. Rojao, on the
           brief).

      The opinion of the court was delivered by

HOFFMAN, J.A.D.

      Plaintiff   MTK   Food   Services,    Inc.    alleges   defendants,

attorney   Richard   Grungo,   Jr.   and   his   former   firm,   Archer    &

Greiner, P.C. (Archer),1 committed legal malpractice regarding an

insurance claim for fire damage at plaintiff's restaurant.               The

malpractice claim against appellants required a choice-of-law

1
    We refer to Grungo and Archer collectively as appellants.

                                     2                             A-1309-17T2
analysis because plaintiff sued appellants beyond Pennsylvania's

two-year statute of limitations, but within New Jersey's six-

year    statute         of   limitations.            By   leave    granted,       appellants

challenge         a    May   10,     2017   Law       Division     order    applying       New

Jersey's          six-year      statute       of       limitations         and     therefore

reinstating plaintiff's malpractice claim against them.                              Because

we find Pennsylvania's two-year statute of limitations applies

under       the       circumstances       presented,       we     reverse    and     dismiss

plaintiff's claims against appellants.

                                                 I

       In    December        2002,    a   fire       damaged    plaintiff's       Bethlehem,

Pennsylvania restaurant.                  Plaintiff retained defendant Spencer

Robbins, a New Jersey attorney, to pursue an insurance claim

against      defendant        Sirius      America      Insurance     Company       (Sirius).

Robbins       allegedly       negotiated         a     settlement    with        Sirius   for

$240,000, but neglected to inform plaintiff of the settlement

offer.            Robbins     eventually         asked     Grungo     to     assist       with

litigation in Pennsylvania.                   Grungo is licensed in both New

Jersey and Pennsylvania.               At his deposition, Grungo testified,

              I recall Spencer Robbins calling me, [and]
              asking   me  . . .   to   file  a writ  in
              Pennsylvania as a placeholder in a matter
              that he was involved in and . . . [was]
              close to settling or resolving.

                        . . . .

                                                 3                                  A-1309-17T2
            Under Pennsylvania rules you can file a writ
            in order to toll a statute of limitations,
            as opposed to filing a formal complaint.

    In January 2006, Grungo accommodated Robbins' request and

filed a writ of summons in Pennsylvania on behalf of plaintiff

against Sirius.         According to Grungo, he never had any contact

with plaintiff, explaining "my only point of contact was Spencer

Robbins."       Approximately      eighteen        months    after     he   filed    the

writ,   Grungo      informed    Robbins       he   could    no   longer     remain     as

counsel    of    record    in   the    placeholder         proceeding       due   to   a

conflict.        The    Pennsylvania      court      eventually      dismissed       the

matter, and the statute of limitations on the insurance claim

had run by the time plaintiff learned of the dismissal.

    Plaintiff next consulted with attorney Nick Sabatine, who

wrote to Grungo in March 2009, requesting a copy of his file and

alerting him of a possible "legal malpractice claim."                       In August

2010,     plaintiff     retained      another      attorney,      defendant       David

Wikstrom, to pursue the legal malpractice claim.                     Wikstrom never

filed a claim against Robbins or appellants; instead, in May

2011, Wikstrom informed plaintiff he believed plaintiff had a

legitimate malpractice claim, but he did not wish to pursue a

claim     against      Archer   "for    political          reasons."        In    2012,

plaintiff filed its initial complaint in Monmouth County.                              On

                                          4                                   A-1309-17T2
October    10,     2014,    plaintiff       amended         its    complaint          to    join

appellants, asserting legal malpractice claims against them.

    In December 2014, appellants moved to dismiss all claims

against them, arguing the Pennsylvania statute of limitations

barred    the     claims.      On    February         20,   2015,       the     trial      court

granted    appellants'        dismissal         motion.           The    court      found     an

undisputed        "conflict       between       New     Jersey          and    Pennsylvania

regarding the statute of limitations for a legal malpractice

claim."     In determining whether Pennsylvania's two-year statute

of limitations or New Jersey's six-year statute of limitations

applied,    the     court     applied    the        most-significant-relationship

test found in the Restatement (Second) of Conflicts of Laws §§

145 and 6 (Am. Law Inst. 1971).

    In     applying     the     most-significant-relationship                       test,    the

court     found    "both      states    have        a    substantial           interest       in

regulating the conduct of attorneys [who] practice within their

borders"; however, the court concluded Pennsylvania had the more

significant       relationship.         As      a     result,      the        court    applied

Pennsylvania's       two-year       statute      of     limitations           and   dismissed

plaintiff's complaint against appellants.

    On January 24, 2017, our Supreme Court decided McCarrell v.

Hoffman-La Roche, Inc., 227 N.J. 569, 574 (2017), which held

courts    should     use    the     substantial-interest                test     to    resolve

                                            5                                         A-1309-17T2
statute-of-limitations                 conflicts,        as        set   forth     in     the

Restatement (Second) of Conflicts of Laws § 142 (Am. Law Inst.

1971).       Based upon McCarrell, plaintiff successfully moved for

reconsideration and the trial court vacated its order dismissing

the malpractice claims against appellants.                           The court concluded,

"Maintenance of the claim would serve a substantial interest of

the    forum    state[:]            regulating       licensed      New   Jersey   attorneys

[who] practice law within the state."                         The court noted that it

previously found "both states have a substantial interest in

regulating the conduct of attorneys [who] practice within their

borders . . . ."               The court therefore applied New Jersey's six-

year        statute    of           limitations       and     reinstated      plaintiff's

malpractice claims against appellants.

                                              II

       We     apply    a       de    novo   standard        when     reviewing    an    order

dismissing a complaint for failure to state a claim.                              State ex

rel. Campagna v. Post Integrations, Inc., 451 N.J. Super. 276,

279 (App. Div. 2017).                  "The analytical framework for deciding

how    to    resolve       a    choice-of-law         issue     is   a   matter   of    law."

McCarrell, 227 N.J. at 583-84.                    We review issues of law de novo

and accord no deference to the trial judge's conclusions on

issues of law.         Nicholas v. Mynster, 213 N.J. 463, 478 (2013).

                                                 6                                 A-1309-17T2
      Here, the record reflects no dispute as to the underlying

facts of the case.        The parties agree that if Pennsylvania's

two-year statute of limitations applies, then plaintiff's claims

against   appellants    fail.   However,    if   New   Jersey's   six-year

statute of limitations applies, then plaintiff's claims against

appellants stand.       This appeal therefore presents the narrow

issue of which state's statute of limitations applies; because

this constitutes a strictly legal issue, we review de novo.

                                  III

      In McCarrell, the Supreme Court held "that section 142 of

the Second Restatement is now the operative choice-of-law rule

for   resolving    statute-of-limitations    conflicts . . . ."         227

N.J. at 574.      Section 142 provides:

           Whether a claim will be maintained against
           the defense of the statute of limitations is
           determined under the principles stated in
           § 6.    In general, unless the exceptional
           circumstances of the case make such a result
           unreasonable:

           (1) The forum will apply its own statute of
           limitations barring the claim.

           (2) The forum will apply its own statute of
           limitations permitting the claim unless:

           (a) maintenance of the claim would serve no
           substantial interest of the forum; and

           (b) the claim would be barred under the
           statute of limitations of a state having a
           more significant relationship to the parties
           and the occurrence.

                                   7                              A-1309-17T2
            [Restatement (Second) of Conflicts of Laws
            § 142 (Am. Law Inst. 1971).]

       "Under Section 142(2)(a), the statute of limitations of the

forum     state   generally     applies        whenever     that    state     has     a

substantial       interest     in   the        maintenance     of    the     claim."

McCarrell, 227 N.J. at 593.         "Section 142's presumption in favor

of a forum state with a substantial interest in the litigation

can be overcome only by exceptional circumstances that would

render that result unreasonable."               Id. at 596.        The Court chose

Section 142 because it: "benefits from an ease of application;

places both this State's and out-of-state's citizens on an equal

playing    field,   thus     promoting    principles      of   comity;      advances

predictability and uniformity in decision-making; and allows for

greater certainty in the expectations of the parties."                        Id. at

593.

       McCarrell involved a products liability claim.                  Id. at 596.

The plaintiff alleged the defendants — both incorporated in New

Jersey — "designed, manufactured, distributed, and labeled" the

defective product in New Jersey.                  Id. at 596-97.           The Court

found "New Jersey has a substantial interest in deterring its

manufacturers from developing, making, and distributing unsafe

products . . . ."      Id. at 597.            The Court therefore applied New

Jersey's statute of limitations.              Id. at 599.

                                          8                                  A-1309-17T2
      The Court in McCarrell also discussed two previous products

liability cases decided under the most-significant-relationship

test, and concluded the outcome would remain the same under the

substantial-interest test.             Id. at 595-96.        First, in Heavner v.

Uniroyal, Inc., 63 N.J. 130 (1973), the Court "found that the

only connection between New Jersey and the products liability

action    was    [the       defendant's]      incorporation       in   this       State."

McCarrell, 227 N.J. at 586 (citing Heavner, 63 N.J. at 134 n.3).

The     allegedly    defective        product       was   manufactured        and      sold

outside of New Jersey.              Id. at 585-86 (citing Heavner, 63 N.J.

at 134).     The Court reaffirmed that incorporation of a defendant

in New Jersey, without more, does not establish a substantial

interest.       Id. at 586 (citing Heavner, 63 N.J. at 141).                       In the

end, the Court held "plaintiff's complaint was time barred under

North    Carolina    law      and   therefore       dismissed."        Ibid.      (citing

Heavner, 63 N.J. at 141-42).

      Second, in Gantes v. Kason Corp., 145 N.J. 478 (1996), in

contrast to Heavner, the defendant manufactured the allegedly

defective    part    in      New    Jersey.        McCarrell,   227        N.J.   at    587

(citing Gantes, 145 N.J. at 481-82).                      The Court reasoned it

would not frustrate Georgia's public policy to allow a claim "to

proceed    against      a    New    Jersey       manufacturer   in     a    New     Jersey

court."     Id. at 587-88 (citing Gantes, 145 N.J. at 498).                             The

                                             9                                    A-1309-17T2
Court     found     New     Jersey    had        a        "substantial            interest       in

deterrence,"      and     applied    New    Jersey's            statute      of    limitations

allowing the claim to proceed.                   Id. at 588 (citing Gantes, 145

N.J. at 493, 499).

                                            IV

      Here, the trial court initially found both New Jersey and

Pennsylvania      "have     a    substantial         interest          in    regulating         the

conduct    of     attorneys      [who]     practice            within       their    borders";

however, because it found Pennsylvania has a more significant

relationship, it applied Pennsylvania's statute of limitations.

After   the     Supreme     Court    decided         McCarrell,          the      trial      court

reconsidered      its     decision    and     repeated           its    finding       that      New

Jersey has a substantial interest.                        Therefore, it applied the

New   Jersey    statute     of    limitations             in    reinstating         the    claims

against appellants.

      Appellants contend the trial court misapplied McCarrell in

finding     New     Jersey's        statute          of        limitations         applicable.

Plaintiff counters that New Jersey has a substantial interest in

regulating the conduct of New Jersey licensed attorneys.                                         In

reply, appellants emphasize the absence of any "causal nexus"

between    Grungo's       New   Jersey     attorney            license      and    plaintiff's

claimed damages.

                                            10                                            A-1309-17T2
       We agree with appellants that the trial court erred in

concluding the New Jersey statute of limitations applied to this

case.      The     only   pertinent     connection           to    New        Jersey – that

Grungo, a New Jersey licensed attorney, worked in a New Jersey

office – falls short of establishing a substantial interest for

New Jersey to apply its statute of limitations here.                             All other

relevant facts point to Pennsylvania: the fire and resulting

loss    occurred    in    Pennsylvania;          plaintiff        is    incorporated         in

Pennsylvania; Robbins enlisted Grungo because he is licensed in

Pennsylvania;       and   Grungo      filed       the     underlying          complaint     in

Pennsylvania.       The circumstances here are analogous to Heavner

where the only connection to New Jersey was the defendant's

incorporation in New Jersey.             See Heavner, 63 N.J. at 134 n.3.

Also,     unlike    the    defendants       in      McCarrell          and    Gantes     that

manufactured allegedly defective products in New Jersey, here

appellants       allegedly     acted    negligently           in        Pennsylvania        by

allowing a Pennsylvania court to dismiss a case concerning a

loss sustained by a Pennsylvania corporation to its Pennsylvania

restaurant.        Therefore     we    find       New     Jersey       does    not   have     a

substantial interest in plaintiff's claims against appellants.

       Furthermore,       as   the    New        Jersey    State        Bar    Association

contends in its amicus brief, applying New Jersey's six-year

statute    of    limitations     here       would       frustrate       the     purpose     of

                                            11                                       A-1309-17T2
adopting the substantial-interest test and defy public policy.

In McCarrell, the Court explained that the substantial-interest

test: "places both this State's and out-of-state's citizens on

an equal playing field, thus promoting principles of comity;

advances predictability and uniformity in decision-making; and

allows    for     greater    certainty          in   the     expectations     of    the

parties."       McCarrell, 227 N.J. at 593.                If Robbins had obtained

assistance from an attorney in Pennsylvania, the Pennsylvania

statute   of     limitations       would   apply      without    question.         That

Robbins sought assistance from an attorney, who holds a New

Jersey license and works in New Jersey, bears no relation to the

malpractice      allegation    and     therefore       should     not   change      the

outcome   here.       To    hold    otherwise        would    subject   New    Jersey

attorneys also practicing in other states to disparate, unfair

treatment.

    We also note defendant Wikstrom filed a brief arguing the

Rules of Professional Conduct establish that New Jersey has a

substantial interest in regulating the conduct of New Jersey

attorneys, whether that conduct occurs within or outside New

Jersey borders.        That argument lacks persuasion.                   While RPC

8.5(a) does provide for disciplinary action for conduct outside

of New Jersey, RPC 8.5(b) clarifies that disciplinary action

                                           12                                 A-1309-17T2
based on claims filed outside of New Jersey should apply the

rules of the jurisdiction where the claim is filed.

       For the reasons stated, we vacate the trial court's May 10,

2017    order,    and     remand    for   the       court   to   enter    an     order

dismissing       the     claims     against         appellants   as      barred      by

Pennsylvania's         two-year    statute     of    limitations.        We    do   not

retain jurisdiction.

       Vacated and remanded.

                                          13                                  A-1309-17T2