level of forum-shopping and would provide a safe harbor for those malpractice actions that the state aims to preclude. See, e.g., Hum v. Dericks, 162 F.R.D. 628, 636 (D. Haw. 1995) (finding state screening statute inapplicable in federal court and noting that intolerable forum-shopping is forum-shopping with negative consequences, not forum-shopping for mere convenience). Furthermore, there seems to be no principled reason for allowing borderline cases involving diverse parties into federal court, where those very same cases could not be maintained in the courts of the state which created the cause of action. In addition, failure to apply the state statute would result in further inequitable administration of the law by denying "licensed persons" the protections from frivolous or meritless lawsuits based solely on their involvement in a controversy with diverse parties. See, e.g., Stoner v. Presbyterian Univ. Hosp., 609 F.2d 109, 111 (3d Cir. 1979) (benefits of requirement of arbitration in medical malpractice cases should not be denied to non-resident defendant); Hill, 870 F. Supp. at 982; Kanouse, 505 F. Supp. at 131.
3. Balancing Federal and State Interests
Having determined that the Affidavit of Merit statute does not conflict with any federal statute or rule and that the Affidavit of Merit statute is outcome determinative, the Court must determine whether any overriding federal interests require the application of federal law. Admittedly, the federal interests in this case, which was removed from a state court to this Court, are minimal. However, the one federal interest is the interest in maintaining the systemic integrity of the federal pleading scheme. See, e.g., Gasperini, 116 S. Ct. at 2221, 2224-25 (noting that courts should attend to "essential characteristics" of the federal court system" under Byrd); Connolly v. Foudree, 141 F.R.D. 124, 127 (S.D. Iowa. 1992) (finding state statute requiring early disclosure of expert's identity in professional liability cases applicable in federal court). In large measure, the federal interest in protecting the independence of the federal system of pleading is already protected by the Hanna test. That is, if a court determines that a federal rule of civil procedure and the state statute are in conflict, the federal rule applies and thereby protects the interests embodied in the federal rule. Thus, an "essential characteristic" inquiry would seem at least somewhat redundant where that characteristic is already fully embodied in a federal statute or rule. Nonetheless, because the Court can conceive of no aspect of federal practice or procedure which might be altered by application of the Affidavit of Merit statute,
because the issue is not covered by a federal rule, and because the state statute is outcome determinative, the state statute will apply.
B. Licensed Person
Having determined that the Affidavit of Merit statute must be applied by a federal court sitting in diversity, I must determine whether the statute applies in this action alleging malpractice by Caine, DiPasqua. The question the Court must answer is whether an out-of-state law firm not qualified to practice in New Jersey can be a "licensed person admitted to practice law in New Jersey" under N.J.S.A. § 2A:53A-26. Without any authority among the New Jersey courts as to how the statute should be applied, the Court must predict how the New Jersey Supreme Court would resolve this question. See Robertson v. Allied Signal, Inc., 914 F.2d 360, 378 (3d Cir. 1990). The Court predicts that the New Jersey Supreme Court would find that such a firm cannot fit within this definition and cannot claim the protections provided by the statute, i.e., it cannot demand that an affidavit of merit be filed in a malpractice case against it pursuant to N.J.S.A. § 2A:53A-27.
Some background on the practice requirements for New Jersey lawyers established by the New Jersey Supreme Court is helpful in order to determine whether Caine, DiPasqua fits within the statutory definition of "licensed person." In order to be qualified to practice law in New Jersey, among other things, an attorney must be admitted to the bar of New Jersey, must be in good standing, and must maintain a "bona fide office for the practice of law" in New Jersey, a requirement taken quite seriously by New Jersey courts. See N.J.R. Ct. 1:21-1(a) (1997); see, e.g., Matter of Kasson, 141 N.J. 83, 86-87, 660 A.2d 1187 (1995); Tolchin v. Supreme Court of the State of New Jersey, 111 F.3d 1099 (3d Cir.) (extensively reviewing policies behind "bona fide office" rule), petition for cert. filed, 66 U.S.L.W. 3129 (Jul. 31, 1997). At the time the allegedly negligent opinion letter was prepared, on August 29, 1988, a "bona fide office" was defined as:
a place where the attorney or a responsible person acting on the attorney's behalf can be reached in person and by telephone during normal business hours. A bona fide office is more than a maildrop, a summer home that is unattended during a substantial portion of the year, an answering service unrelated to a place where business is conducted.
N.J.R. Ct. 1:21:1(a) (1987).
On the record before the Court, it seems quite clear that Caine, DiPasqua was, at the time of the 8/29/88 Opinion Letter, practicing law in New Jersey in violation of the New Jersey Court Rules and the Rules of Professional Conduct ("RPC"). First, despite the quaint suggestion by counsel at oral argument that one need not be qualified to practice in New Jersey to do what Caine, DiPasqua did, that firm was both certainly practicing law and certainly doing so in New Jersey by preparing an opinion letter on numerous aspects of New Jersey law and holding itself out in the opinion letter as "members of the bar of New Jersey."
See, e.g., In re Opinion No. 26 of the Comm. on the Unauthorized Practice of Law, 139 N.J. 323, 339, 654 A.2d 1344 (1995) (separating elements of real estate transaction into practice of law and other activities, and including among former analysis of title search and explanation of its significance); In re Waring's Estate, 47 N.J. 367, 375-77, 221 A.2d 193 (1966); Appell v. Reiner, 43 N.J. 313, 204 A.2d 146 (1964) (finding that, absent exceptional circumstance, legal services to New Jersey residents with respect to New Jersey matters may only be provided by counsel who can practice in New Jersey); New Jersey State Bar Assoc. v. Divorce Ctr. of Atl. Cty., 194 N.J. Super. 532, 540, 477 A.2d 415 (Ch. Div. 1984) (consultation, advice, and assistance with respect to legal forms was practice of law in New Jersey).
Second, on the record before the Court, Caine DiPasqua was practicing law in New Jersey in violation of New Jersey's "bona fide office" rule. From its letterhead, it is clear that Caine, DiPasqua does not maintain any office, let alone a "bona fide" office, in New Jersey. Furthermore, counsel for Caine, DiPasqua did not rebut the Court and RTC's suggestion that Caine, DiPasqua did not have a bona fide New Jersey office, and admitted that Nigro did not have a New Jersey office.
That said, the Court must predict how the New Jersey Supreme Court would decide whether an out-of-state law firm not qualified to practice law in New Jersey can be a "person who is licensed as an attorney admitted to practice in New Jersey." I predict that the New Jersey Supreme Court would find that a firm such as Caine, DiPasqua, i.e., one without a bona fide office in New Jersey, cannot be "licensed" within the meaning of the statute.
An examination of the other categories of professions listed in N.J.S.A. § 2A:53A-26 reveals that behind the use of the term "licensed" is a fairly clear legislative intent to reach those who could lawfully practice their professions in New Jersey. See, e.g., N.J.S.A. §§ 45:3-5 ("[a] person shall, before entering the practice of architecture in this State, first apply to the board for a license"), 45:3-10 ("No person except an architect licensed in the State of New Jersey shall engage in the practice of architecture"); 45:6-13 ("No person shall practice dentistry within the meaning of this chapter unless licensed to do so"); 45:8-36 ("The board shall issue a license certificate upon payment of the application fee . . . to any applicant who . . . has satisfactorily met the requirements of this chapter, and who has paid the license fee . . . . The issuance of a license certificate by this board shall be evidence that the person named therein is entitled to all the rights and privileges of a licensed professional engineer); 45:8-39 (providing penalties for practice of engineering without legal authorization or with forged license); 45:9-6 ("all persons commencing the practice of medicine or surgery in this State shall apply to the board for a license to do so."); 45:5-11 (providing for penalties for "whoever practices podiatry in this State without first having obtained and filed the license herein provided for"); 45: 11-37(a) (providing for penalties for practice of professional nursing without effective license); 26:2H-12 ("No health care facility shall be operated unless it shall (1) possess a valid license issued pursuant to this act"); see generally New Jersey State Bar Assoc. v. Berman, 259 N.J. Super. 137, 150-52, 611 A.2d 1119 (App. Div. 1992) (statutory language indicated clear legislative intent to reach only those eligible to practice in New Jersey). Because the statute does not require an affidavit of merit in a suit alleging malpractice against a surgeon, dentist, or nurse who is not eligible to practice in New Jersey by virtue of not having a license, there seems to be no reason to read the affidavit of merit requirement to apply to a law firm which is not eligible to practice in New Jersey.
Additionally, in limiting the instances where an affidavit of merit is required to those practicing within the parameters established by the New Jersey Supreme Court, the statute may easily be read as providing a "shield" available only to those otherwise complying with state-mandated prerequisites to practice. Allowing those professionals who do not comply with such prerequisites to claim the protections of the statute seems, at best, anomalous, if not in direct contravention of the state's policies regarding professional qualifications. Therefore, because no affidavit of merit was required within 60 days of the filing of Caine, DiPasqua's answer to RTC's Complaint, Caine, DiPasqua's motion to dismiss the Complaint for failure to submit the affidavit will be denied.
C. Impact of Cornblatt v. Barow
On July 7, 1997, the Superior Court of New Jersey, Appellate Division, decided Cornblatt v. Barow, 303 N.J. Super. 81, 696 A.2d 65 (App. Div. 1997), certif. granted (Sept. 25, 1997). The Appellate Division held, among other things, that a claim against an attorney for legal malpractice is a claim for property damage within the meaning of N.J.S.A. § 2A:53A-27. While the issue was not argued before the Appellate Division or completely briefed, and the Appellate Division held that the issue had been waived, id. at 91-92, that court noted that the statute should apply to all actions filed after the effective date of the statute, June 29, 1995, rather than to all acts of negligence or malpractice which occurred after the effective date. On August 6, 1997, the New Jersey Supreme Court stayed the effect of the Appellate Division judgment, Cornblatt v. Barow, Case No. M-1672/1673, Order (dated Aug. 6, 1997), and granted certification on September 25, 1997. To say the least, the Appellate Division's decision with respect to the meaning of the effective date of the statute has sparked some controversy in the New Jersey legal community.
It is true that a decision by the New Jersey Supreme Court holding that the Affidavit of Merit statute applies only to causes of action which accrued after the effective date of the statute, would mean that RTC, whose cause of action accrued before June 29, 1995, would not be required to file an affidavit of merit in this action. Such a holding would make unnecessary this Court's determination of the issue of whether Caine, DiPasqua is a "licensed person" within the meaning of N.J.S.A. § 2A:53A-27. However, this case is a poor candidate for the exercise of this Court's discretion to abstain from deciding the motion before it.
First, none of the parties advanced with any seriousness the idea that the Court should not decide the motion before it. Caine, DiPasqua once sheepishly suggested by letter that the Court "may wish to defer ruling on the pending dismissal motion for a month or two in case the [New Jersey] Supreme Court issues a quick ruling." Letter from Michael S. Miller (dated Sept. 26, 1997). Nonetheless, knowing of the controversy and attention generated by the Appellate Division's decision in Cornblatt and the New Jersey Supreme Court's stay of the judgment in that case, Caine, DiPasqua also argued at great length that "it is not Cornblatt, but the plain meaning of the [Affidavit of Merit] statute, that suggests that [RTC's] affidavit was untimely filed." Defendant, Caine DiPasqua's Reply Memorandum of Law 5 (dated Aug. 20, 1997); see also id. at 6-12. RTC also suggested that a stay might be warranted, but only if the Court were called upon to address the issue before the New Jersey Supreme Court, the meaning of the effective date of the Affidavit of Merit statute. See Letter from Jonathan L. Goldstein (dated Sept. 4, 1997).
It is abundantly clear that neither party suggested that the Court should shy away from the statute entirely;
each side made the quite distinct argument that the Court should entertain the idea of a stay only if it were impossible to decide the motion without deciding the issue raised in Cornblatt. See, e.g., Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 842 n.16 (2d Cir. 1967) (Friendly, J.) (desire of party with respect to stay pending outcome of similar suit in state court was factor in deciding not to stay federal litigation).
Second, as a general rule, when a federal court has jurisdiction over a case solely by virtue of diversity of citizenship, mere difficulties and uncertainties in ascertaining the meaning of state law do not, in themselves, present a sufficient basis for declining to exercise that jurisdiction. See, e.g., Meredith v. Winter Haven, 320 U.S. 228, 234-35, 64 S. Ct. 7, 88 L. Ed. 9 (1943). As a general matter, federal courts have the obligation to exercise the jurisdiction given to them, an obligation which has been described as "virtually unflagging." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817-18, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976). The only conceivable basis upon which this Court might abstain from deciding this motion and await the filing of the New Jersey Supreme Court's opinion in Cornblatt would be Thibodaux abstention, as first announced in Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 3 L. Ed. 2d 1058, 79 S. Ct. 1070 (1959) (finding abstention proper in order to allow state court to determine whether city had legal authority to employ eminent domain power, where state law was unclear), and restated by Colorado River.
In Colorado River, the Supreme Court found abstention on the basis of Thibodaux "appropriate where there have been presented difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar." Colorado River, 424 U.S. at 814; see, e.g., Kaiser Steel Corp. v. W.S. Ranch Co., 391 U.S. 593, 594, 20 L. Ed. 2d 835, 88 S. Ct. 1753 (1968) (allocation of water rights is of vital concern to New Mexico and pending decision before New Mexico court on issue warranted abstention); Lac D'Amiante du Quebec, Ltee. v. American Home Assurance Co., 864 F.2d 1033, 1044 (3d Cir. 1988) (noting preference for "discrete approach" to applying individual abstention doctrines); Smith v. Metropolitan Prop. & Liab. Ins. Co., 629 F.2d 757 (2d Cir. 1980) (employing Thibodaux abstention).
However, completely apart from whether this Court is presented with a policy problem of such substantial import that abstention is warranted, I am greatly troubled by the notion of abstaining from deciding this motion in the hope that, at some point during the current term of the New Jersey Supreme Court, that court will decide Cornblatt in such a way that makes resolution of the issue of whether Caine, DiPasqua is a "licensed person" unnecessary.
The fact is that under any foreseeable outcome of Cornblatt, the claims against Caine, DiPasqua will survive and litigation in this Court will continue. For example, if the New Jersey Supreme Court finds that the Affidavit of Merit statute applies only to those actions which accrued after the effective date of the statute, then the claims against Caine, DiPasqua would still survive because no affidavit of merit would be required of RTC. If the New Jersey Supreme Court affirms the Appellate Division's interpretation of the effective date of the Affidavit of Merit statute, the claims against Caine, DiPasqua will survive because this Court's holding on the "licensed person" issue would be no different in the future. Finally, even if the New Jersey Supreme Court were to declare the Affidavit of Merit unconstitutional, see n.15, supra, this litigation will still continue.
The disservice to the litigants in this case which would be caused by a stay, pending resolution at some unpredictable moment in time of another issue in another case involving different litigants, a resolution which will not affect the substantive outcome of the federal litigation, does not justify abstention. See, e.g., Commerce Oil Refining Corp. v. Miner, 303 F.2d 125 (1st Cir. 1962) (delay, difficulty of predicting effect of state court litigation, and burden on parties should be considered in deciding whether to abstain, pending state court litigation); Federated Rural Elec. Ins. Corp. v. Arkansas Elec. Coop., 896 F. Supp. 912 (E.D. Ark. 1995) (finding, after circuit court remanded for district court to determine whether stay pending state court decision was proper, that state court litigation could not affect outcome of federal court litigation).
For these reasons, the Court will not abstain from deciding the motion, and the motion will be denied.
For the reasons set forth above, the motion of Caine, DiPasqua to dismiss the Complaint and all cross-claims asserted against it will be denied. The Court will enter an appropriate order.
Dated: October 20, 1997
STEPHEN M. ORLOFSKY
United States District Judge
This matter having come before the Court on the motion of Defendant, Caine, DiPasqua, Sloane & Raffaele f/k/a Caine, DiPasqua, Sloane, Raffaele & Nigro, to dismiss the Complaint and all cross-claims asserted against it, Michael S. Miller, Esq., Tompkins, McGuire & Wachenfeld, appearing on behalf of Defendant, Caine, DiPasqua, Sloane & Raffaele, and Jonathan L. Goldstein, Esq. and John A. Adler, Esq., Hellring, Lindeman, Goldstein & Siegal, appearing on behalf of Plaintiff, RTC Mortgage Trust 1994 N-1, a limited liability Delaware business trust, and Charles J. Vinicombe, Esq., Drinker, Biddle & Reath, appearing on behalf of Defendant, Lawyers Title Insurance Corporation, and Josiah A. Knapp, Esq., Tomar, Simonoff, Adourian, O'Brien, Kaplan, Jacoby & Graziano, appearing on behalf of Defendants, Fidelity National Title Insurance Company and Nations Title Insurance Company, and Rocco M. Nigro, Esq. appearing pro se ; and
The Court having considered the submission of Defendant, Caine, DiPasqua, Sloane & Raffaele, the response thereto of Plaintiff, RTC Mortgage Trust 1994 N-1, the reply thereto of Defendant, Caine, DiPasqua, Sloane & Raffaele, the submission of Defendant, Lawyers Title Insurance Corporation, and the supplemental submissions of Defendant, Caine, DiPasqua, Sloane & Raffaele, Plaintiff, RTC Mortgage Trust 1994 N-1, and Defendant, Lawyers Title Insurance Corporation; and
For the reasons set forth in an OPINION filed concurrently with this ORDER,
IT IS HEREBY ORDERED on this 20th day of October 1997, that the motion of Defendant, Caine, DiPasqua, Sloane & Raffaele, to dismiss the Complaint and all cross-claims asserted against it, is DENIED.
STEPHEN M. ORLOFSKY
United States District Judge