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H. Rosenblum Inc. v. Adler

Decided: December 2, 1987.

H. ROSENBLUM, INC., A NEW JERSEY CORPORATION, SUMMIT GIFT GALLERIES, INC., A NEW JERSEY CORPORATION (FORMERLY KNOWN AS SUMMIT PROMOTIONS, INC.), BARRY ROSENBLUM AND HARRY ROSENBLUM, PLAINTIFFS-APPELLANTS-CROSS-RESPONDENTS,
v.
JACK F. ADLER, ET AL., INDIVIDUALLY AND AS PARTNERS TRADING AS TOUCHE ROSS & CO., SEVERALLY AND IN THE ALTERNATIVE, DEFENDANTS-RESPONDENTS-CROSS-APPELLANTS



On appeal from Superior Court, Law Division, Bergen County.

Antell, R. S. Cohen and Landau. The opinion of the court was delivered by Landau, J.A.D.

Landau

This case comes to us on leave granted, following cross-appeals by the litigants from an order entered by the trial judge at the conclusion of a lengthy collateral proceeding. The underlying law suit was initiated in 1974 by H. Rosenblum, Inc. and Summit Gift Galleries, Inc., New Jersey corporations, and their principals, against Touche Ross & Co., and individual partners therein, with counts of negligence and fraud arising out of 1971 and 1972 audits allegedly relied on by plaintiffs in selling their business in exchange for stock of Giant Stores Corporation, a publicly traded company. The stock turned out to be worthless. Touche Ross has since been censured by the Securities and Exchange Commission for the 1972 audit.

A detailed discussion of the underlying suit and the theory of its negligence count is contained in Rosenblum v. Adler, 93 N.J. 324 (1983).

The procedural history of this case, amassed with judicial toleration and even encouragement, merits a place on the shelf next to Bleak House and Alice in Wonderland. For three years, the substantive action, arising out of conduct alleged to have occurred in 1971 and 1972, has remained on a judicial sidetrack. The energies of counsel and the courts have been

devoted to considering whether plaintiffs' counsel fees are subject to R. 1:21-7, and to cross motions to disqualify lawyers.

The December 5, 1986 order under cross-appeal denied the motion by defendants for an evidentiary hearing and for disclosure regarding plaintiffs' counsel fee arrangements, for disqualification of counsel and revocation of pro hac vice admissions of New York counsel, and for a contempt proceeding. Although defendants' motion for adjournment of trial pending our resolution of this appeal was denied, the case has not been tried.

Plaintiffs' cross-motion for disciplinary and remedial sanctions against counsel for Touche Ross, Inc. and for revocation of pro hac vice admission of their New York counsel was denied.

Finally, the December 5 order concluded, inconsistently with the trial judge's earlier oral findings, that there was a contingent fee arrangement between plaintiffs and their [several] counsel. That order also provided that the:

With the exception of the question of contingent fee and the trial judge's interpretation of R. 1:21-7, the order of the trial judge reflects the exercise of discretion in which we perceive no abuse and therefore affirm substantially for the reasons expressed by the trial judge, concluding as we do that the issues of law raised by each party in connection with the order are clearly without merit. R. 2:11-3(e)(1)(E). Moreover, we disagree that the trial judge breached any judicial duty to disqualify counsel.

The lengthy briefs, appendices and imaginative constitutional and substantive arguments presented to us ...


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