On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-8107-01.
The opinion of the court was delivered by: Cuff, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Lintner and Gilroy.
In 1993, Leon Grauer agreed to serve as local counsel for Carl S. Levine, who was retained to defend a matter commenced by plaintiff Nicolas Masone. In 2001, Masone filed a complaint against Levine and Grauer that asserted claims of professional negligence and negligent misrepresentation arising from the 1995 settlement of the initial litigation. Masone appeals from an order granting Grauer's motion for summary judgment and Masone's attorneys, Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart and Olstein, (Carella Byrne) appeal from an order imposing frivolous litigation sanctions against the firm. We affirm.
On appeal, we use the same standard as the motion judge to decide a motion for summary judgment. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Thus, the movant must demonstrate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); R. 4:46-2(c). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).
Here, the central factual issue is whether Grauer knew, at the time the 1993 litigation was settled, that Levine falsely represented that his client's insurance company would contribute to the cost of site remediation. The central legal issue in this case is whether Grauer's status as local counsel renders him liable for the defalcations of out-of-state counsel.
In 1982, plaintiff leased commercial property to A. Tarricone, Inc. (ATI) to operate a gas station. During ATI's tenancy in summer 1990, a gasoline tank leaked and caused a spill of at least 1200 gallons of gasoline. Plaintiff filed an action to compel ATI to remediate the ground contamination caused by the spill. ATI retained Carl Levine and his law firm Carl S. Levine & Associates to represent it. Levine, however, was not admitted in New Jersey; therefore, he sought and obtained admission pro hac vice. On December 3, 1993, Grauer was designated local counsel for ATI.
Levine advised Grauer that he would handle all aspects of the litigation commenced by Masone. Levine specifically told Grauer that he would handle all communication and negotiations with ATI and opposing counsel, all substantive law matters, all communications with ATI, and prepare all court documents and filings. Grauer agreed to appear in court when necessary and to review the pleadings and other court documents that were to contain his signature to assure compliance with New Jersey procedural rules.
On June 5, 1995, the parties and their attorneys were in the Essex County Courthouse to try the case. Plaintiff was represented by Carl Woodward, III, of Carella Byrne; Levine and Grauer represented ATI. At that time, settlement discussions had reached a point where ATI agreed to pay for the remediation but Woodward, on behalf of his client, required some security for the payment. Levine then placed a telephone call to an adjustor for ATI's comprehensive general liability insurance company. Woodward and Grauer were standing in a hallway of the courthouse during the telephone call and observed Levine speaking on the telephone. Neither Woodward nor Grauer heard the conversation between Levine and the adjustor. Both Woodward and Grauer saw Levine terminate the telephone call and both heard Levine state that "ATI's insurance carrier was on board with the settlement and would participate in the required cleanup and remediation of the Property."
As a result, all parties appeared before the trial judge to place the settlement on the record. Levine outlined the terms of the settlement. Woodward elaborated on certain terms and confirmed that the terms of the settlement were acceptable to plaintiff. Finally, the judge asked each attorney to "indicate for the record their agreement with what's been stated." Grauer informed the judge that "[o]n behalf of ATI, Your Honor, we agree with what has been stated." The terms of the settlement outlined on the record did not include any undertaking by ATI's insurance carrier.
Grauer did not sign the stipulation of settlement; he did not participate in drafting the stipulation. Woodward conceded that he did not know whether Grauer had even seen the document. Unlike the agreement detailed on the record on June 5, 1995, the stipulation of settlement refers to the availability of insurance proceeds to defray the cost of the remediation.
By letter dated December 15, 1995, Levine informed Woodward that neither ATI nor its insurance carrier had any intention to avoid the responsibilities agreed to in the settlement. At some point, however, ATI failed to perform further remediation required by the New Jersey Department of Environmental Protection (NJDEP), and in May or June 1997, Woodward received notice that ATI had filed for bankruptcy and would not perform any further work required by NJDEP. In July 1997, during a telephone conversation, Levine informed Woodward that ATI's insurance carrier had declined coverage, would not participate in any further remediation, had never agreed to do so, and had never authorized the settlement. Grauer was not a party to this telephone conversation.
On September 6, 2001, Masone filed a complaint against Levine, his firm and Grauer alleging professional negligence and negligent misrepresentation. Masone also filed the requisite affidavit of merit prepared by Edward Wacks, a New Jersey attorney. In this document, Wacks opined that Levine and Grauer performed their professional responsibilities "outside acceptable professional legal standards expected of New Jersey attorneys." Wacks stated that he relied on information provided to him by plaintiff's attorney and assumed that Levine and Grauer each represented to Woodward that the remediation costs would be paid by ATI's insurance. On August 11, 2003, while cross-motions for summary judgment were pending, Masone reached a ...