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May 24, 2004.

JOHN W. FINK, Plaintiff,

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 action.
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 ...

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