United States District Court, D. New Jersey
May 24, 2004.
JOHN W. FINK, Plaintiff,
STEPHEN RITNER, ESQUIRE and STEVENS & LEE, P.C., Defendants
The opinion of the court was delivered by: JOSEPH RODRIGUEZ, Senior District Judge
This matter is before the court on Defendants' motion to dismiss
Plaintiff's Complaint for his failure to file an affidavit of merit as
required by New Jersey's Affidavit of Merit Statute. The Court has
considered the submissions of the parties and heard oral argument on the
record on Wednesday, May 5, 2004. The Court hereby incorporates the
record created during the oral argument on this motion, and further
relies on the reasons expressed on the record at that time.
On April 7, 2003, Plaintiff John W. Fink ("Fink") brought this action
against Defendants Stephen Ritner, Esquire and the law firm of Stevens & Lee,
P.C. ("S&L" or, collectively with Ritner, "Defendants"), alleging fraud
with respect to Defendants' handling of a series of financial
transactions between Fink and corporate entities represented by S&L.
On or around December 7, 2000, Fink alleges that he was retained as an
outside accountant and financial consultant by Advanced Logic Systems,
Inc. ("ALSI"), a corporate entity represented by S&L. (Pl. Statement of
Facts ¶ 5.) According to Fink, he performed work for ALSI and two of its
affiliates, Progressive Development Systems, Inc. ("PDS") and Advanced
Financial Solutions Group, Inc. ("AFSG"). (Id. ¶ 6.)
In his Complaint, Fink contends that he entered into a series of credit
agreements with ALSI, all dated April 12, 2001, that included a loan
agreement, line of credit note, and a security agreement (hereinafter
"the Loan Agreement"). (Id. ¶ 8.) According to Fink, he was told by the
CEO and Chairman of ALSI, PDS, and AFSG, Kaydon Stanzione, Ritner, and
unnamed "others" at S&L, that he would be granted a first priority lien
as to AFSG, a wholly-owned subsidiary of ALSI, and that "these
representations were incorporated into the April 12, 2001 loan
documents." (Id. ¶ 12.) Fink alleges that pursuant to the Loan Agreement
and its amendments,*fn1 Defendants agreed to file the appropriate UCC
financing statements protecting his interests in ALSI, PDS, or AFSG.
(Id. ¶ 57.)
Fink alleges that in August, 2001 he agreed with Stanzione to increase
the amount of the April 12, 2001 loan to $500,000. (Id. ¶ 17.) In exchange for this
increase, Fink alleges that he was to receive certain consideration,
including a second priority lien against ALSI and PDS. (Id. ¶ 18.)
According to Fink, contrary to the Loan Agreement and its amendments,
Defendants filed UCC financing statements on their own behalf that
improperly gave S&L a first priority lien on ALSI and PDS, leaving Fink
with a second priority lien on ALSI, and a third priority lien on PDS.
(Id. ¶ 59.) Fink contends that Defendants fraudulently obtained superior
creditor rights in ALSI and PDS in contravention of Defendants'
representations. This has become significant because Fink alleges that
ALSI, PDS and AFSG have been in default on the Loan Agreement since April
13, 2002. (Id. ¶ 32.)
Finally, Fink contends that on August 30, 2002, ALSI and PDS entered
into licensing agreements with a company called AFFLINK, Inc.
("AFFLINK"), whereby certain rights of PDS's computer software, assets
and collateral were transferred to AFFLINK for a period of twenty years.
According to Fink, this transfer was an attempt by Defendants to
circumvent his rights as a creditor of PDS.
Based on the above, Fink alleges that Defendants intentionally
defrauded him. He seeks monetary damages owed under the Loan Agreement,
as amended, with interest, as well as punitive damages for Defendants'
intentional and outrageous conduct.
Defendants contend that Fink's Complaint must be dismissed for his
failure to comply with New Jersey's Affidavit of Merit statute.
Defendants argue that because Fink's claims arise directly out of
Defendants' conduct in their capacity as attorneys, Fink was required by
the statute to file an affidavit within the statutory time frame. Since
Fink failed to comply with the statute's procedural requirements,
Defendants argue that his Complaint must be dismissed with prejudice.
Defendants move to dismiss pursuant to New Jersey's Affidavit of Merit
Statute, which states:
In any action for damages for personal injuries,
wrongful death or property damage resulting from an
alleged act of malpractice or negligence by a licensed
person in his profession or occupation, the plaintiff
shall, within 60 days following the date of filing of
the answer to the complaint by the defendant, provide
each defendant with an affidavit of an appropriate
licensed person that there exists a reasonable
probability that the care, skill or knowledge
exercised or exhibited in the treatment, practice or
work that is the subject of the complaint, fell
outside acceptable professional or occupational
standards or treatment practices. The court may grant
no more than one additional period, not to exceed 60
days, to file the affidavit pursuant to this section,
upon a finding of good cause. The person executing the
affidavit shall be licensed in this or any other
state; have particular expertise in the general area
or specialty involved in the action, as evidenced by
board certification or by devotion of the person's
practice substantially to the general area or
specialty involved in the action for a period of at
least five years. The person shall have no financial
interest in the outcome of the case under review, but
this prohibition shall not exclude the person from
being an expert witness in the case. . . . If the
plaintiff fails to provide an affidavit or a statement
in lieu thereof, pursuant to section 2 or 3 of this
act, it shall be deemed a failure to state a cause of
N.J. Stat. Ann. §§ 2A:53A-27, -29. Federal courts sitting in diversity must apply New Jersey's affidavit
of merit statute. See Chamberlain v. Giampapa, 210 F.3d 154
, 157 (3d
Cir. 2000). A court will consider the New Jersey legislature's purpose
for enacting such a statute, as well as how the New Jersey courts have
interpreted and applied the statute.
The New Jersey Supreme Court's "case law implementing the [affidavit of
merit] statute has acknowledged repeatedly that the primary purpose of
the statute is `to require plaintiffs in malpractice cases to make a
threshold showing that their claim is meritorious, in order that
meritless lawsuits readily could be identified at an early state of
litigation.'" Fink v. Thompson, 772 A.2d 386, 391 (N.J. 2001) (quoting In
re Petition of Hall, 688 A.2d 81, 87 (N.J. 1997)) (other citations
omitted). This threshold requirement seeks to balance the interests of
reducing frivolous lawsuits and the "imperative of permitting injured
plaintiffs the opportunity to pursue recovery from culpable defendants."
Id. (citing Burns v. Belafsky, 766 A.2d 1095, 1099 (2001)). Failure to
comply with the statute, either strictly or substantially, will result in
dismissal with prejudice, Cornblatt v. Barow, 708 A.2d 401, 415 (N.J.
1998), unless an exception applies, see N.J. Stat. Ann. § 2A:53A-28.
The statute weeds out frivolous claims by requiring a plaintiff to
obtain an affidavit of merit in an action against a licensed person. The
statute defines a "licensed person" as a licensed accountant, architect,
attorney, dentist, engineer, physician, podiatrist, chiropractor,
registered professional nurse, health care facility, physical therapist,
land surveyor, registered pharmacist, veterinarian, and insurance
producer. N.J. Stat. Ann. § 2A:53A-26. Although law firms are not
specifically enumerated in the definition of a "licensed person," New Jersey courts have applied the affidavit of merit
statute to law firms. See Diver v. Gross, Hanlon, Truss & Messer, P.C.,
722 A.2d 623 (N.J. Super. Ct. Law Div. 1998); Hyman v. Zamft and Manard,
L.L.C. v. Cornell, 707 A.2d 1068 (N.J. Super. Ct. App. Div. 1998). Based
on these decisions, it has been inferred that "a business organization
whose leadership is composed of `licensed persons' within the meaning of
[section] 2A:53A-26 is also considered a `licensed person' for purposes
of the Affidavit of Merit statute." Martin v. Perinni Corp.,
37 F. Supp.2d 362, 366 (D.N.J. 1999) (holding that architectural
corporation was considered a "licensed person" within the meaning of
When determining whether the statute applies to a claim against a
licensed person, a court must evaluate:
(1) whether the action is for "damages for personal
injuries, wrongful death or property damage" (nature
of injury); (2) whether the action is for "malpractice
or negligence" (cause of action); and (3) whether the
"care, skill or knowledge exercised or exhibited in
the treatment, practice or work that is the subject of
the complaint fell outside acceptable professional or
occupational standards or treatment practices"
(standard of care).
Couri v. Gardner, 801 A.2d 1134
, 1137-38 (N.J. 2002) (citing N.J. Stat.
Ann. § 2A:53A-27).
Prior to the New Jersey Supreme Court's decision in Couri, there was a
split in the appellate division concerning whether the statute should ever
apply to a breach of contract claim. See Darwin v. Gooberman, 772 A.2d 339
(N.J. Super. Ct. App. Div. 2001) (finding that the affidavit of merit
statute "plainly does not apply to breach-of-contract cases"); Charles A. Manganaro Consulting Eng'rs v. Carneys Point Township Sewerage
Auth., 781 A.2d 1116, 1118-19 (N.J. Super. Ct. App. Div. 2001) (holding
that the statute applied to a counterclaim for breach of contract wherein
defendant alleged that plaintiff engineering firm "failed to properly
prepare the plans and specifications" and "failed to properly review shop
drawings submitted by the general contractor").
Couri involved a breach of contract claim against a psychiatrist hired
as a potential expert witness in a divorce proceeding. Couri, 801 A.2d at
1136. The plaintiff husband alleged that the defendant improperly
disseminated the preliminary report to the plaintiff's wife without his
consent. Id. The defendant moved to dismiss the complaint based on the
plaintiff's failure to file an affidavit of merit. Id. The plaintiff
contended that an affidavit was not required because his claim was for
breach of contract and not negligence. Id.
Addressing this divisive issue, the Couri court looked to the plain
language and the overarching purpose of the statute. Id. at 1140. Given
the New Jersey Legislature's intent to "weed out frivolous lawsuits early
in the litigation while, at the same time, ensuring that plaintiffs with
meritorious claims will have their day in court," the court declined to
adopt a literal interpretation of the statutory language. Id. at
1140-41. Rather, in view of the statute's requirement that the affidavit
state that the defendant's "care, skill or knowledge . . . fell outside
acceptable professional or occupational standards or treatment
practices," and the fact that "standard of care" is the third element of
the statute, the court held, "[i]t is not the label placed on the action
that is pivotal but the nature of the legal inquiry." Id. at 1141. Accordingly,
when asserting a claim against a professional covered
by the statute, whether in contract or in tort, a
claimant should determine if the underlying factual
allegations of the claim require proof of a deviation
from the professional standard of care for that
specific profession. If such proof is required, an
affidavit of merit shall be mandatory for that claim,
unless either the statutory, [section] 2A:53A-28, or
common knowledge exception applies.
Thus, the determination of whether a claim falls under the affidavit of
merit statute requires an examination of the type of evidence required to
prove the underlying factual allegations. Not every complaint against a
licensed person acting in his professional capacity is subject to the
statute. Only claims that require proof of a deviation from a
professional standard of care will require an affidavit of merit unless an
Here, Defendants contend that the statute applies to Fink's fraud claim
because the alleged harm arises out of Defendants' conduct as attorneys
and, therefore, requires proof of a deviation from the standard of care.
Accordingly, Defendants argue that an affidavit is necessary to establish
that Fink's claim is not meritless.
Based on the New Jersey Supreme Court's decision in Couri, the
determination of whether Fink's fraud claim requires an affidavit of
merit turns on the type of proof Fink intends to rely upon at trial. If
Fink's claim is simply that Defendants committed fraud, then an affidavit
is not required. An affidavit is required, however, if Fink intends to
establish that Defendants deviated from a standard of care acceptable for
On May 5, 2004, the Court heard oral argument on this issue.
Plaintiff's counsel asserted that Fink does not intend to rely on expert testimony to
substantiate his fraud claim against Defendants. Consequently, because
Fink's claims do not require proof that Defendants deviated from the
professional standard of care for attorneys, the statute does not apply.
Fink was not required to file an affidavit of merit pursuant to New
Jersey's affidavit of merit statute because the statute is not applicable
in cases where the underlying factual allegations do not require proof of
a deviation from the professional standard of care. Accordingly,
Defendants' motion to dismiss Fink's Complaint for his failure to file an
affidavit of merit must be denied.
An appropriate order will be entered.
For the reasons set forth in the Court's Opinion filed even date,
IT IS HEREBY ORDERED on this 24th day of May, 2004 that Defendants'
motion to dismiss  is DENIED.