Court Opinion

ID: 5175808
Source: CourtListenerOpinion
Date Created: 2022-01-04 15:07:12.519562+00
Date Added: 2024-06-11T08:26:17.867049
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-1356-20

SFI ADVISORS, LLC,

           Plaintiff-Appellant,

v.

THE LENNEY LAW FIRM, LLC,
and THOMAS M. LENNEY, ESQ.,

     Defendants-Respondents.
______________________________

                    Submitted October 28, 2021 – Decided January 4, 2022

                    Before Judges Alvarez and Mitterhoff.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Bergen County, Docket No. L-7025-19.

                    Asatrian Law Group, LLC, attorneys for appellant
                    (Martin V. Asatrian, of counsel; Jeffrey Zajac, on the
                    brief).

                    Respondent has not filed a brief.

PER CURIAM
      Plaintiff SFI Advisors, LLC (SFI) appeals from a December 31, 2020

order denying reconsideration of the trial judge's dismissal of its legal

malpractice complaint against defendants The Lenney Law Firm, LLC and

Thomas Lenney, Esq. The judge dismissed the case with prejudice after a proof

hearing, finding the lack of expert evidence on the liability issue was fatal to

SFI's professional malpractice claims. We affirm, substantially for the reasons

set forth in Judge Estela M. De La Cruz's October 26, 2020 written decision.

      Defendants represented SFI in the underlying lawsuit, in which a former

employee sued SFI's investment management director Scott Smith for sexual

harassment in violation of the New Jersey Law Against Discrimination

(NJLAD), N.J.S.A. 10:5-1 to 10:5-50. The complaint also asserted negligence

and wrongful termination claims against SFI and SFI's managing director, John

Sampers.

      SFI retained defendants to represent all parties before the Equal

Employment Opportunity Commission (EEOC) and in the litigation.

(Represented by Lenney, the NJLAD case went to trial and the jury found all

three defendants liable. The resulting judgment totaled $589,000, including

compensatory damages, punitive damages, and attorney's fees. Post-judgment

and pending appeal, SFI, represented by new counsel, settled all claims for

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$400,000. After resolving the NJLAD case, SFI sued defendants for legal

malpractice in their handling of the underlying suit.

      Because defendants did not timely answer the complaint, on December

23, 2019, default was entered against both defendants pursuant to Rule 4:43-1.

A two-day proof hearing was conducted on August 5, 2020, and October 14,

2020. Only Sampers testified at the hearing. Sampers stated that at the time of

the events, he was a co-owner of SFI. He testified that defendants advised him

that the plaintiff had made a demand of approximately $50,000 to settle. After

discussing the demand with defendants, Sampers rejected it, and SFI never made

any counteroffer to settle. According to Sampers, defendants viewed the case

as having nuisance value and Lenney told Sampers, "you can either pay me to

defend you or pay them to settle it." Sampers testified that defendants never

fully advised him of the risks of going to verdict, and specifically never advised

him that a judgment against SFI would entitle plaintiff to attorney's fees under

N.J.S.A. 10:5-27.1. Sampers testified that if he had known about the risk of fee

shifting, he would have settled.

      Sampers voiced his lay opinion that, in hindsight, defendant Lenney was

incompetent at trial, and lacked employment discrimination experience.

Sampers indicated defendants never suggested that Scott, as the harasser, should

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have retained separate counsel. Sampers attributed the poor result to defendants'

inexperience and their failure to adequately prepare the clients for depositions

and trial testimony. He testified that defendants' lack of preparation also caused

the underlying defendants to voluntarily dismiss a counterclaim, resulting in the

loss of a leverage point in negotiations.

      Sampers identified the following exhibits, which were entered into

evidence at trial:

             Exhibit A - plaintiff's settlement amount totaling
             $400,000 with evidence of cancelled checks, bank
             statements, and bank levies.

             Exhibit B - cancelled checks and bank statements of all
             legal expenses associated with the underlying lawsuit
             including legal fees to the Lenney Law Firm, John
             Scura, and the Asatrian Law Group.

             Exhibit C - checks, bank statements, credit card receipts
             for transcripts, Veritext, and legal expenses related to
             the appeal and the underlying litigation.

             Exhibit F - Contingent Fee Agreement dated January
             23, 2019 for the current litigation.

             Exhibit G – Wasserman's Affidavit of Merit (AOM).

      The AOM attested as follows:

             I hereby state, pursuant to N.J.S.A. 2A:53A-27, that
             there exists a reasonable probability that the care, skill
             or knowledge exercised in the practice or work of the
             attorney(s) at law about which Plaintiff makes

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             complaint in the counterclaim, i.e. THE LENNEY
             LAW FIRM, LLC and THOMAS M. LENNEY, ESQ.
             fell outside acceptable professional standards of
             practice.

      The AOM and Sampers' lay testimony were the only evidence presented

as proof on the issue of liability.

      On October 26, 2020, Judge De La Cruz denied plaintiff's request to enter

default judgment and dismissed plaintiff's complaint with prejudice. The judge

found plaintiff failed to present competent evidence of a breach of a duty by

defendants. She found the lack of an expert opinion fatal to SFI's professional

malpractice claims. Acknowledging that expert testimony "is not necessarily

required in a legal malpractice case to establish an attorney's duty of care[,]" the

judge reasoned that

             given the context, nature and distinctive stages
             involved . . . proofs required to establish a breach of
             duty in any of the levels accused must be more than
             with a one-line statement in an [AOM] and must be
             more than through plaintiff witness' lay opinions that
             the legal defendants were incompetent.

The judge recognized that the litigation was unopposed but found plaintiff's

claims to be "so sweeping[] and encompass[ing such] a complex case that was

litigated to verdict" that the claims "deserve[d], and indeed require[d],

knowledgeable explanation through competent expert evidence." Therefore,

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absent speculation, the judge was required to deny the request for default

judgment and dismiss the complaint with prejudice.

     On November 4, 2020, plaintiff filed a motion for reconsideration, which

the judge denied by order dated December 31, 2020.

     On appeal, plaintiff raises the following arguments for our consideration:

           POINT I

           BECAUSE THE PLAINTIFF PRODUCED A PRIMA
           FACIE CASE OF LEGAL MALPRACTICE AT THE
           PROOF HEARING, THE LAW DIVISION ERRED
           BY DENYING FINAL JUDGMENT ON THE BASIS
           OF AN ALLEGED FAILURE TO ESTABLISH
           LIABILITY.

                 A. The Testimony of John Sampers
                 Provided Evidence of Professional
                 Negligence by the Defendants.

                 B. The Defendants Were Negligent In the
                 Underlying Proceeding by Simultaneously
                 Representing Both the Employer and Scott
                 Smith, the Employee Who Allegedly
                 Engaged In the Sexual Discrimination.

           POINT II

           THE LAW DIVISION COMMITTED REVERSIBLE
           ERROR BY ADJOURNING THE PROOF HEARING
           AND REQUESTING FURTHER PROOF OF
           DAMAGES AND NOT THAT OF LIABILITY, AND
           THEN DENYING JUDGMENT BASED UPON A
           LACK OF LIABILITY.

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      We review the denial of a motion for reconsideration for an abuse of

discretion. Cummings v. Bahr, 295 N.J. Super. 374, 389 (App. Div. 1996). "A

motion for reconsideration is designed to seek review of an order based on the

evidence before the court on the initial motion . . . not to serve as a vehicle to

introduce new evidence in order to cure an inadequacy in the motion record."

Cap. Fin. Co. of Del. Valley, Inc. v. Asterbadi, 398 N.J. Super. 299, 310 (App.

Div. 2008).

      For these reasons, reconsideration should only be granted in "those cases

which fall into that narrow corridor in which either 1) the [c]ourt has expressed

its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious

that the [c]ourt either did not consider, or failed to appreciate the significance

of probative, competent evidence." Cummings, 295 N.J. Super. at 384 (quoting

D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990)). Therefore, we

have held that "the magnitude of the error cited must be a game-changer for

reconsideration to be appropriate." Palombi v. Palombi, 414 N.J. Super. 274,

289 (App. Div. 2010).

      Rule 4:43-2(b) provides in pertinent part:

              If, to enable the court to enter judgment or to carry it
              into effect, it is necessary to take an account or to
              determine the amount of damages or to establish the
              truth of any allegation by evidence or to make an

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                                         7
             investigation of any other matter, the court, on its own
             motion or at the request of a party on notice to the
             defaulting defendant or defendant's representative, may
             conduct such proof hearings with or without a jury or
             take such proceedings as it deems appropriate.

Pursuant to the Rule, the court can require plaintiff to prove "the right to relief."

Pressler & Verniero, Current N.J. Court Rules, cmt. 2.2.2 on R. 4:43-2(b)

(2022).    Thus, when required, a plaintiff must prove a prima facie case.

Heimbach v. Mueller, 229 N.J. Super. 17, 20 (App. Div. 1988).

      A prima facie case of legal malpractice has three elements: "(1) the

existence of an attorney-client relationship creating a duty of care by the

defendant attorney, (2) the breach of that duty by the defendant, and (3)

proximate causation of the damages claimed by the plaintiff." Jerista v. Murray,

185 N.J. 175, 190-91 (2005) (quoting McGrogan v. Till, 167 N.J. 414, 425

(2001)).

      Expert testimony is not always required to establish a prima facie case of

legal malpractice, especially if the issues are "within the grasp of common

understanding." Brizak v. Needle, 239 N.J. Super. 415, 431 (App. Div. 1990).

Expert testimony is, however, necessary when "the matter to be addressed is so

esoteric that the average [fact-finder] could not form a valid judgment as to

whether the conduct of the professional was reasonable."               Sommers v.

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                                         8
McKinney, 287 N.J. Super. 1, 10 (App. Div. 1996). The court has cautioned

"that a plaintiff's attorney who litigates a legal malpractice claim without the

opinion testimony of a legal expert unnecessarily exposes his client to a serious

risk of dismissal." Brizak, 239 N.J. Super. at 432.

      Guided by these standards, we discern no abuse of discretion in the judge's

denial of reconsideration. We agree with the judge that NJLAD claims are not

so self-evident or simplistic as to allow a factfinder to conclude, without expert

opinion, that an attorney's representation was negligent. Judge De La Cruz

correctly determined that, given the complex nature of the underlying litigation

and the scope of plaintiff's malpractice allegations, plaintiff should have proven

its case with expert testimony on the applicable standard of care and the breach

of that standard. We agree that Sampers' lay opinion regarding defendants

incompetence is not enough to establish either duty or a breach. Sampers is an

investment advisor, and nothing in the record suggests he has any legal

expertise.

      We also agree that Wasserman's AOM did not establish a breach of

defendants' duty. Wasserman's AOM did not address how defendants deviated

from a defined standard of care. Indeed, it is impossible to discern from the

record whether plaintiff's central grievance–defendants' advice whether to settle

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                                        9
or proceed to trial–was reasonable under the unique facts of the case. Expert

testimony on the elements of the NJLAD case and the proofs presented at trial

was necessary to determine the propriety of defendants' settlement advice.

      The judge also correctly found that the conflict of interest arising from

defendants' representation of all SFI defendants, even if an ethical violation, did

not suffice to prove negligence per se. An RPC violation alone is not enough to

establish legal malpractice. See Baxt v. Liloia, 155 N.J. 190, 198-99 (1998). At

a minimum, expert testimony concerning the element of causation would be

required to evidence how the SFI defendants were harmed by the representation.

      Plaintiff's argument that the judge, once she appreciated the deficiency of

the proofs, should have interrupted the proof hearing and advised plaintiff that

expert proof would be required is without sufficient merit to warrant discussion

in a written opinion. See R. 2:11-3(e)(1)(E).

      Affirmed.

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