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Baxt v. Liloia

September 27, 1995

SHERWOOD BAXT AND SAIDA BAXT, PLAINTIFFS-APPELLANTS,
v.
GERALD A. LILOIA AND ANTHONY J. SILVESTER, DEFENDANTS-RESPONDENTS.



Decided: March 13, 1995. Remanded by Supreme Court July 5, 1995. Resubmitted July 17, 1995. On appeal from the Superior Court, Chancery Division, Hudson County and the Law Division, Bergen County.

Approved for Publication September 27, 1995.

Before Judges Dreier, Wefing and Braithwaite. The opinion of the court was delivered by Wefing, J.A.D., Dreier (Dissenting)

The opinion of the court was delivered by: Wefing

The opinion of the court was delivered by WEFING, J.A.D.

This matter has been remanded to us pursuant to an order of the Supreme Court of July 5, 1995 "to consider the claim of petitioners that the settlement of the underlying litigation expressly excluded plaintiffs' claims against the attorney defendants." This court did not address that issue in its opinion since it concluded that plaintiffs had failed to state a cause of action in any event. We do not restate the facts of this matter, for they are contained within our original opinion.

Whether plaintiffs sought to exclude claims against the attorney defendants from the settlement of the companion foreclosure action (The Summit Trust Company v. The Grove Mercantile Center, et al, A-1102-93) was not material to this court's decision that plaintiffs did not have a cause of action against these attorney defendants based solely on an allegation that the conduct of these defendants violated the Rules of Professional Conduct. Our colleague has concluded that the apparent attempt by the plaintiffs to preserve a claim against these defendants from the settlement of the underlying mortgage foreclosure action is sufficient to permit this case to go forward. In our view, however, the language plaintiffs inserted into that settlement agreement is immaterial; a party cannot preserve a claim that does not exist. We adhere to the views expressed in the opinion of March 13, 1995.

DREIER (Dissenting)

Following the filing of the majority and Concurring opinions in this matter, 281 N.J. Super. 50, 58 (App. Div. 1995), plaintiffs petitioned the Supreme Court for certification. After review, the Supreme Court remanded the matter to this court for our reconsideration of a single issue, namely, "the claim of petitioners that the settlement of the underlying litigation expressly excluded plaintiffs' claims against the attorney defendants, contrary to the suggestion contained in the Appellate Division's opinion." *fn1

After the remand from the Supreme Court, we have made a full review of the settlement agreement entered into in the earlier foreclosure action and the express limitations contained in the release signed by plaintiffs in the present case. I realize that the new information does not affect my colleagues' position that an alleged violation of the Rules of Professional Conduct cannot engender civil liability. My disagreement was expressed in my earlier opinion Concurring only in the result reached by the majority. From this new material, however, I have concluded that my earlier concurrence with the dismissal of plaintiff's claim should have been a Dissent.

The facts of this case are adequately expressed in our earlier published opinion and need not be reiterated in detail here. Suffice it to say that plaintiffs were forced to expend sums for legal fees and costs of discovery as a result of defendants' actions allegedly misrepresenting to the court that a document copied from plaintiff's files during discovery was in fact a part of defendants' client's records.

In my earlier Concurring opinion, I stated that plaintiffs' civil claim for breach of the ethical rules provided a legitimate basis for a civil action against the defendant attorneys. I there concluded that the Rules of Professional Conduct impose "at least the minimum standards to which an attorney must adhere." 281 N.J. Super. at 61. I likened a breach of a duty imposed by the Rules of Professional Conduct to the breach of any other professional standard of care which could be a basis for a malpractice claim. Ibid. Such a claim may be asserted either by the attorney's client or by a foreseeably injured third party. Ibid.

I had found, however, that there was a failure in this case to show a basis for damages. I had assumed that the earlier litigation had been fully settled and that both the foreclosing bank's and the present plaintiffs' attorneys' fees would have been subsumed within that settlement. Id. at 62.

It now appears that the settlement agreement in the underlying mortgage foreclosure action had been entered into after the present suit against defendants had been filed and was specifically mentioned therein. (In fact, plaintiffs had agreed to indemnify the bank for attorney fees if the bank was called upon to produce witnesses in this suit). Furthermore, the releases signed by plaintiffs expressly excluded the release of the defendants in the present action. The release stated: "Nothing in this Release shall be construed as releasing Gerald A. Liloia, Esq. and Anthony J. Sylvester, Esq. in the action entitled Baxt vs. Liloia. *fn2 We could liken the settlement in the earlier action to that of one of two drivers in an automobile negligence case. The released driver may have allegedly caused most of the injuries, but rights could well be reserved against another party who allegedly only caused certain specific damage.

The plaintiffs and the bank in this case settled the mortgage foreclosure and related issues. Plaintiffs recognized, however, that there were increased expenses of the case, not attributable to the foreclosing bank, but which were allegedly caused solely by the ethical violations by the bank's attorneys. This was a separate claim, which I would find to be akin to the claim for fees in State Dept. of Environmental Protect. v. Ventron Corp., 94 N.J. 473, 504-505, 468 A.2d 150 (1983) and Dorofee v. Planning Bd. Tp. of Pennsauken, 187 N.J. Super. 141, 144, 453 A.2d 1341 (App. Div. 1982). See also Feldmesser v. Lemberger, 101 N.J.L. 184, 186-189, 127 A. 815 (E. & A. 1925); Katz v. Schachter, 251 N.J. Super. 467, 473-474, 598 A.2d 923 (App. Div. 1991); Hagen V. Gallerano, 66 N.J. Super. 319, 333, 169 A.2d 186 (App. Div. 1961). While the issue giving rise to this claim is not, as in these cited cases, a separate action into which plaintiffs were drawn by defendants' alleged conduct, the ...


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