Court Opinion

ID: 9636392
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:26:35.590989+00
Date Added: 2024-06-11T18:09:45.016258
License: Public Domain

STEIN, J.,
dissenting.
I agree with the Court’s determination that attorney-malpractice claims are not exempted from the entire-controversy doctrine. However, because Circle Chevrolet Company (Circle) acted reasonably in choosing not to join as parties in the reformation action its former attorneys who had represented Circle in the underlying transaction, Giordano, Halleran & Ciesla (GH & C), principles of fairness dictate that the doctrine should not apply in this case.
I
This Court has recognized that “justice is the polestar [of our judicial system] and our procedures must be moulded and applied with that in mind.” New Jersey Highway Auth. v. Renner, 18 N.J. 485, 495, 114 A.2d 555 (1955); see also Handelman v. Handelman, 17 N.J. 1, 10, 109 A.2d 797 (1954) (stating that “rules of procedure were not designed to create an injustice and added complications”). Accordingly, we have consistently held that “the paramount policies of our law require * * * that the plaintiff be afforded an opportunity to have the claim adjudicated on the merits.” Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 388, 476 A.2d 250 (1984); see also X-L Liquors, Inc. v. Taylor, 17 N.J. 444, 454, 111 A.2d 753 (1955) (stating that dismissal pursuant to statute of limitations “would effectively defeat the plaintiffs action without any determination whatever on the ultimate merits — a result wholly inconsistent with the principles underlying our new judicial structure”). That overarching judicial policy is reflected by Rule 1:1-2, which provides that any Rule may be relaxed “if adherence to it would result in an injustice.” See also ADCO Assocs. v. Admiral Corp., 165 N.J.Super. 437, 440, 398 A.2d 584 (App.Div.1979) (“[Rule 1:1-2] confers general power to relax any rule of practice if adherence to it would result in injustice.”).
*305“The joinder requirements of the entire controversy doctrine are designed to achieve economy in litigation by avoiding the waste, inefficiency, delay and expense of piecemeal and fragmented litigation.” Cafferata v. Peyser, 251 N.J.Super. 256, 261, 597 A.2d 1101 (App.Div.1991); see Cogdell v. Hospital Ctr., 116 N.J. 7, 15, 560 A.2d 1169 (1989). However, in our application of that doctrine, we have “proeeed[ed] on a step-by-step basis recognizing that the doctrine is one of judicial fairness and will be invoked in that spirit.” Crispin, supra, 96 N.J. at 343, 476 A.2d 250. “[T]he doctrine must be invoked flexibly and sensibly.” Id. at 352, 476 A.2d 250 (Handler, J., concurring); see also Cogdell, supra, 116 N.J. at 23, 560 A.2d 1169 (stating that “party fairness is critical in the application of the entire controversy doctrine”). In addition, “[i]t must be noted too that the limits of a policy favoring mandatory joinder of claims and nonparties with an interest in the controversy that is the subject of the litigation are reached when the joinder would result in significant unfairness.” Crispin, supra, 96 N.J. at 354, 476 A.2d 250 (Handler, J., concurring). Because the entire-controversy doctrine is fundamentally predicated on a principle of fairness, we have been cautious not to “convert the entire controversy doctrine from an equitable device into a trap for the unsuspecting.” Cafferata, supra, 251 N.J.Super. at 263, 597 A.2d 1101.
II
Despite the commendable purposes of the entire-controversy doctrine, the unique factual circumstances present in this case suggest that strict adherence to the doctrine would be unfair. Given the state of the law in August 1990, when the reformation litigation was eventually tried, whether Circle’s cause of action against its former attorneys had accrued was unclear. For Circle to have assumed at that time that any legal-malpractice claim it might have had against GH & C would not have accrued until either the case underlying the malpractice claim was disposed of on appellate review, or the time to appeal expired, would have *306been entirely reasonable. An attorney who had surveyed the national case law in 1990 concerning legal-malpractice actions would have found that many jurisdictions subscribed to the view that the client was not injured, and therefore his or her claim against counsel did not accrue, until the plaintiffs underlying case was unfavorably disposed of on appeal. See, e.g., Woodruff v. Tomlin, 511 F.2d 1019, 1021 (6th Cir.1975); Bowman v. Abramson, 545 F.Supp. 227, 231 (E.D.Pa.1982); Amfac Distribution Corp. v. Miller, 138 Ariz. 152, 154, 673 P.2d 792, 794 (1983); Haghayegh v. Clark, 520 So.2d 58, 59 (Fla.Dist.Ct.App.1988); Diaz v. Piquette, 496 So.2d 239, 240 (Fla.Dist.Ct.App.1986), review denied, 506 So.2d 1042 (Fla.1987). That perception was subsequently confirmed by the Appellate Division in Grunwald v. Bronkesh, 254 N.J.Super. 530, 538, 604 A.2d 126 (1992) (“Postponing the accrual of a legal malpractice cause of action until appellate disposition of or the expiration of the time to appeal the case underlying the malpractice claim is consistent with decisions in many other jurisdictions.”).
Application of the entire-controversy doctrine, “as in the case of all other preclusionary doctrines, * * * requires, as a matter of first principle, that the party whose claim is being sought to be barred must have had a fair and reasonable opportunity to have fully litigated that claim in the original action.” Cafferata, supra, 251 N.J.Super. at 261, 597 A.2d 1101. A plaintiff is denied a. fair and reasonable opportunity to litigate a claim when the entire-controversy doctrine is applied to bar that claim, especially when that claim arguably is not ripe for judicial review at the time that it theoretically should have been asserted.
Surely, Circle' could not reasonably have forecast that this Court, thirteen months after the Appellate Division’s decision in Grunwald, would reverse and determine instead that “the statute of limitations begins to run * * * when the client suffers actual damage and discovers * * * the facts essential to the malpractice claim,” — an injury that could accrue prior to the completion of the appellate process. Grunwald v. Bronkesh, 131 N.J. 483, 494, 621 *307A.2d 459 (1993). But even if Circle could have predicted the law as it was to be, whether Circle would have known that it had suffered actual damage attributable to GH & C’s conduct until such time as it was inadequately compensated in the underlying litigation is another highly debatable issue.
“A legal-malpractice action derives from the tort of negligence. Therefore, a legal-malpractice action accrues when an attorney’s breach of professional duty proximately causes a plaintiffs damages.” Grunwald, supra, 131 N.J. at 492, 621 A.2d 459 (citation omitted). Because this Court has “conclude[d] that the discovery rule applies in legal-malpractice actions[,] the statute of limitations begins to run only when the client suffers actual damage and discovers, or through the use of reasonable diligence should discover, the facts essential to the malpractice claim.” Id. at 494, 621 A.2d 459. Thus, an injured party’s knowledge concerning the origin and existence of his or her injuries involves two elements: injury and fault. Id. at 492-93, 621 A.2d 459. Leaving aside the determination whether GH & C was at fault, whether Circle in fact was injured by GH & C at the time it brought the reformation action is less than clear. Rather, on this record, Circle was reasonable in not filing suit against GH & C based on the assumption that both the excessive rent payments and the attorney fees expended in the reformation action would be recovered in that action.
The reformation action was premised on a theory of mutual mistake, and Circle reasonably could have assumed that the reformation action would afford complete relief because the excessive rent payments could be entirely recovered in that suit. Indeed, the underlying matter was one that “ ‘presented a controversy [that] could * * * be resolved completely as to all concerned simply by’” resolution of the reformation action. Ellison v. Schenck, Price, Smith & King, 280 N.J.Super. 169, 176-77, 654 A.2d 1024 (App.Div.1995) (quoting Vacca v. Stika, 21 N.J. 471, 475, 122 A.2d 619 (1956)). Circle was reasonable in choosing not to join GH & C “‘in the prior action [because Circle] could have *308secured complete relief * * * without [GH & C].’ ” Ellison, supra, 280 N.J.Super. at 176, 654 A.2d 1024 (quoting Cogdell, supra, 116 N.J. at 13-14, 560 A.2d 1169).
Moreover, in respect of attorney’s fees expended as a result of the reformation action, Circle’s counsel stated during oral argument:
[Apparently, Circle was told by Mr. Wasserman that [its] legal fees will come back to [it] because what actions the * * * defendant is asserting are all frivolous and there is a frivolous statute out there, sp [it]’ll be made whole by way of recapturing their attorneys fees. In addition, this was a landlord-tenant dispute with a lease in place [that] had provision for attorneys fees. I can’t say whether that particular aspect of it was disclosed, but the potential existed since we’re in a landlord-tenant dispute, I can make application within the reformation suit to be made whole by not only the overpayment of rent but also my attorney’s fees.
Accordingly, given the indeterminate state of the law prior to this Court’s ruling in Grunwald, and Circle’s justifiable belief that its damages as a result of its attorneys’ failure to detect a rent-calculation error were fully compensable in the reformation action, to apply the entire-controversy doctrine and deny Circle its day in court to adjudicate the merits of its legal-malpractice claim cannot easily be justified.
As noted by the Court, the novel issue in this case “is whether the entire controversy doctrine applies to a malpractice action against an attorney who represents a client in the underlying transaction.” Ante at 285, 662 A.2d at 511. Although this Court’s decision to include attorney-malpractice claims in the scope of the entire-controversy doctrine was not entirely unforeseen, it was not preordained. In Cogdell, supra, this Court determined that the entire-controversy doctrine will apply to joinder of parties, but concluded that fairness to parties required that the doctrine be applied “only prospectively and to all cases not already on appeal.” 116 N.J. at 28, 560 A.2d 1169. Cogdell was decided while this litigation was pending, over one year after the reformation litigation had been initiated and thirteen months before the case was to go to trial. Significantly, however, Rule 4:30A, codifying this Court’s decision in Cogdell, was not effective until September 1990, after the reformation action already had gone to trial. *309Nevertheless, the Court concludes that Circle had “more than sufficient opportunity to comply with the Cogdell mandate.” Ante at 301, 662 A.2d at 519. Although an informed attorney should have been aware of the effect of the Cogdell decision, whether that decision required the application of the entire-controversy doctrine to bar related attorney-malpractice claims was far from settled. Indeed, that was not apparent until the Court’s decision today. As in Cogdell, simple fairness dictates that the effect of the Court’s ruling in this case not be applied to bar Circle’s claim.
Furthermore, although not entitled to great weight, I cannot disregard the intangible factors that understandably make clients reluctant to sue their lawyers:
A lawyer is a friend in regard to the legal system. He is someone who enters into a personal relation with you — not an abstract relation as under the concept of justice. That means that like a friend he acts in your interest, not his own; or rather he adopts your interests as his own. I would call that the classic definition of friendship.
[Charles Fried, The Lawyer as Friend: The Moral Foundations of the Lawyer-Client Relation, 85 Yale L.J. 1060, 1071 (1976).]
That reluctance was particularly justifiable on this record because of the prospect that a successful resolution of the reformation action would have made it unnecessary for Circle to sue GH & C.
Ill
Until today’s decision I assumed “that the limits of a policy favoring mandatory joinder of claims and nonparties * * * are reached when the joinder would result in significant unfairness,” Crispin, supra, 96 N.J. at 354, 476 A.2d 250 (Handler, J., concurring), and took for granted that the Court would not “convert the entire controversy doctrine from an equitable device into a trap for the unsuspecting.” Cafferata, supra, 251 N.J.Super. at 263, 597 A.2d 1101. Although a new rule of law, the Court’s holding that the -entire-controversy doctrine applies to legal-malpractice claims was not unpredictable. But I cannot fathom what interest is served by applying that new holding to a litigant whose legal-malpractice claim had not clearly accrued, and who plausibly *310anticipated a full recovery of its damages through a reformation action against its landlord. In my view, the Court has fallen short on its commitment that “party fairness is critical in the application of the entire controversy doctrine.” Cogdell, supra, 116 N.J. at 23, 560 A.2d 1169.