December 20, 2006
ADRIANNA ROSA AND DIVA SPA, LLC, PLAINTIFFS-APPELLANTS,
IN SOOK CHANG, DIVA DAY SPA, JINNY CHOI, DEFENDANTS, AND JOHN LAVALLO, ESQ., DEFENDANT-RESPONDENT.
JOHN LAVALLO, ESQ., THIRD-PARTY PLAINTIFF,
IN YOUNG YI, ESQ., ELTON J. BOZANIAN, ESQ., AND JINNY CHOI, THIRD-PARTY DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-4730-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 28, 2006
Before Judges Coburn, Axelrad and Gilroy.
In this legal malpractice case, plaintiffs appeal from an entry of judgment, after a bench trial, in favor of their former attorney, defendant John Lavallo.
After carefully reviewing the record and briefs, we are satisfied that all of plaintiffs' arguments are without sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E); and that the judgment is based on findings of fact which are adequately supported by the evidence.
R. 2:11-3(e)(1)(A). Nonetheless, we add the following comments. This dispute arose from plaintiffs' sale of a make-up and skin-care studio in Ridgewood to In Sook Chang. At the time of the sale, plaintiffs were in serious financial straits. Lavallo represented plaintiffs in the transaction. Plaintiffs received $55,000 in cash at the closing and a promissory note for $75,000. The consideration from plaintiffs included the business's inventory, furnishings, and equipment. Plaintiffs' lease was about to expire and the agreement contemplated that Chang would enter into a new lease with the landlord. There was no evidence that a new lease was obtained by Chang. Lavallo failed to prepare and file UCC-1 Financing Statements under the Uniform Commercial Code with respect to the business assets. Chang sold the business to Jinny Choi. No payments were made on the note, and plaintiffs filed this action.
The trial judge entered judgment against Chang and Choi for the balance due under the note. She also found that the defendant's failure to file the UCC-1 Financing Statements was malpractice, but that plaintiffs failed to prove damages. That finding was clearly correct since plaintiffs offered no evidence respecting the value of anything transferred that could have been covered by a security agreement.
In their brief on appeal, plaintiffs also contend that the attorney committed other acts of malpractice, namely, failing to reserve to plaintiffs a right of reversion to the property, failure to advise plaintiffs of the risks of default, and failure to conduct due diligence. But those arguments are made without citation to any authority and, indeed, without any demonstration, or indeed argument, that the judge erred in failing to find malpractice in those respects.
In short, there was no evidence of any damages, apart from the failure to pay the note. There was no evidence of the value of the assets of the business, the value of the leasehold, or the value of the business at the time of Chang's breach. Although plaintiffs proved the first two elements of a malpractice action, an attorney-client relationship and a breach of the duty of care, they failed to prove the third element, proximate causation of damages. Conklin v. Weisman, 145 N.J. 395, 416 (1996).
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