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Barsotti v. Merced

January 16, 2002


On appeal from Superior Court of New Jersey, Law Division, Cumberland County, L-1578-93.

Before Judges King, Wecker and Winkelstein.

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


Argued December 12, 2001

Defendant Jose LaBoy, Esq. is an attorney who represented defendant Aurelio Merced personally in a claim against Merced by plaintiff to recover damages for injuries plaintiff suffered in a car accident with Merced. Plaintiff claims LaBoy conspired with Merced to place Merced's assets out of plaintiff's reach as a potential creditor. Plaintiff appeals an order of the trial judge granting LaBoy's motion to dismiss plaintiff's complaint at the end of plaintiff's case pursuant to R. 4:37-2(b). We find no merit to the appeal and affirm.


Plaintiff filed a complaint against defendant Aurelio Merced*fn1 on November 22, 1993, alleging negligence for injuries arising out of a motor vehicle accident. On June 8, 1995 mandatory arbitration was held and defendant was found 100% liable. Damages were assessed at $225,000. Defendant appealed the arbitrators' award. On August 11, 1995 summary judgment was granted in favor of plaintiff on the issue of liability.

On October 19, 1995 plaintiff filed an amended complaint naming as additional defendants Joni M. Walsh, Esq., Merced's insurance defense attorney; Karcher, Salmond, Rainone & Barrett ("the Karcher firm"), the firm with which Walsh was associated; Material Damage Adjustment Corp. ("Material Damage"), the adjusting company for Merced's insurance company; and Jose LaBoy, Esq., Merced's personal attorney. The amended complaint alleges that the defendants, jointly and individually, misrepresented Merced's insurance policy limits and financial condition in an attempt to induce plaintiff to settle the case for an artificially low amount. LaBoy was also alleged to have assisted Merced to place the proceeds from the sale of his home out of plaintiff's reach as a creditor in the event plaintiff prevailed in the lawsuit.

The claims against the Karcher firm, Material Damage and Walsh were dismissed prior to trial. LaBoy is the only remaining defendant. Plaintiff has been paid Merced's policy limits, $25,000, for the injuries he received in the automobile accident.

Trial began on May 24, 2000, before Judge Curio and a jury. At the close of plaintiff's case LaBoy moved for involuntary dismissal under R. 4:37-2(b). The judge granted the motion on June 19, 2000. Plaintiff timely filed a R. 4:49-2 motion for reconsideration which was denied on August 4, 2000.


Plaintiff and Merced were involved in a motor vehicle accident on June 23, 1992. Plaintiff, who was driving a motorcycle, claimed that Merced, who was driving an automobile, failed to yield at an intersection and caused a collision with plaintiff. Plaintiff sustained serious injuries to his right leg as a result of the accident. He has undergone at least four surgeries. Plaintiff filed a complaint alleging negligence on the part of Merced, seeking damages. Merced was represented by Walsh who was assigned by Merced's automobile insurance carrier. LaBoy represented Merced personally for any potential excess liability above the policy limits.

At trial, plaintiff testified concerning the facts surrounding the accident and his injuries. LaBoy did not testify in person, but portions of his deposition were read to the jury.*fn2 LaBoy testified that the Merceds came to his office shortly before a scheduled settlement for the sale of their home and "asked our office to prepare a deed and he also asked us to attend settlement." Merced owned the house jointly, by the entireties, with Haydee. At the time LaBoy was hired to prepare the deed for the sale of the house, he had no conversations with Merced concerning Merced's assets or the impact that the sale of the house would have upon the lawsuit. LaBoy had previously been contacted by Merced concerning representation in the automobile accident. Merced had brought LaBoy the summons and complaint; LaBoy told Merced to send it to his insurance carrier who would provide an attorney to represent him in the lawsuit. The carrier later contacted Merced and advised him to obtain private counsel since the claim could exceed his $25,000 policy limits. Merced then retained LaBoy.

LaBoy testified that although he helped the Merceds convey title to the property, by preparing the deed and attending settlement, he did not know what other assets they owned. He said he never considered that the house was being conveyed to defraud plaintiff out of the chance to collect a future judgment if plaintiff was successful in the lawsuit. While it is unclear when the deed was actually prepared, it was dated November 30, 1994, the settlement date.

Previously, on July 31, 1993, at the request of plaintiff's counsel, LaBoy assisted Merced to complete a "fill-in the blank" affidavit, which stated, in pertinent part, that Merced had not transferred any assets since the date of the accident and that at the time of the accident, his insurance coverage was "$15,000/$30,000." The amount of Merced's coverage was actually $25,000, which was known to plaintiff as early as January 25, 1993 when the policy limits had been offered and rejected by plaintiff's counsel.

On November 30, 1994 Merced and Haydee sold their home for $85,000. LaBoy was not involved in negotiating the contract price or preparing the contract of sale. There is no evidence that the sale was other than an arms-length transaction for full value. The settlement proceeds were disbursed to pay off a $41,537.78 mortgage loan to Greentree Trust, and for additional closing expenses of $6,795.91, including a $5,100 real estate commission. The net cash paid to the Merceds at settlement was $37,017.95. At closing, LaBoy received a $350 fee for his services.

Subsequent to settlement, the Merceds executed the settlement check and cashed it in Tampa, Florida. The check was "apparently negotiated by them," as well as their daughter Elizabeth Hamilton. They had no bank account in Florida. There is no evidence in the record that before the check was cashed LaBoy knew of or discussed with the Merceds what they would do with the sale proceeds.

On May 10, 1995, after the house was sold, but prior to the arbitration proceedings in June 1995, LaBoy assisted Merced in completing an affidavit at ...

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