June 22, 2007
DR. GARY SAFIER, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
WALDER, SONDAK & BROGAN, P.C., JUSTIN WALDER, ESQ. AND JOHN BROGAN, ESQ., DEFENDANTS, AND AMBROSIO, KYREAKAKIS & DI LORENZO, ESQS., DEFENDANTS-RESPONDENTS, AND ANTHONY P. AMBROSIO, ESQ., DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Morris County, L-1135-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 23, 2007
Before Judges Weissbard, Payne and Graves.
In these consolidated matters, plaintiff, Dr. Gary Safier, appeals from orders dismissing his legal malpractice complaint against defendants, Anthony P. Ambrosio and the law firm of Ambrosio, Kyreakis & DiLorenzo (jointly, Ambrosio),*fn1 and from a subsequent order holding plaintiff and his attorney, Edward G. O'Byrne, jointly liable for counsel fees, pursuant to R. 1:4-8 and N.J.S.A. 2A:15-59.1, in the amount of $37,950 incurred by defendant Anthony Ambrosio. O'Byrne, also, has appealed from the counsel fee award. Additionally, Anthony Ambrosio has cross-appealed from that order, seeking recovery of an additional $7,500 from Dr. Safier.
We briefly outline the facts of the matter. Dr. Safier, an osteopathic family physician, was represented by Justin Walder and John Brogan (along with their firm, Walder, Sondak & Brogan, the "Walder defendants") in a criminal action charging Dr. Safier with accepting money in exchange for drugs prescribed for his patient Dan Stull.*fn2 Eventually, it was determined that Stull, a prescription drug addict, had stolen prescription pads from multiple physicians and forged their signatures in an effort to obtain drugs and had lied in portions of his testimony to the grand jury. These and other facts were brought to the attention of the prosecutor in a lengthy memorandum from the Walder defendants upon which Dr. Safier's daughter, Regan, a recently-admitted attorney, had also worked extensively.
Following receipt of the memo, the prosecutor recommended that Dr. Safier be admitted into the county's pre-trial intervention (PTI) program. Dr. Safier agreed to participate in that program upon the Walder defendants' recommendation, and he completed it successfully. The criminal charges against him were then dismissed.
As a result of a complaint to the New Jersey State Board of Medical Examiners, Dr. Safier's medical practice was supervised during the pendency of the criminal charges. However, in a consent order dated December 22, 2000, the conditions imposed by the Board upon Dr. Safier's license to practice medicine were lifted, and his unrestricted license was restored. The order additionally contained a reprimand to Dr. Safier for improperly monitoring Stull's Schedule II prescription drug consumption prior to his entry into a drug rehabilitation program, in violation of N.J.A.C. 13:35-7.2(a), and assessed civil penalties and costs. Dr. Safier continues to practice medicine, with a full license to do so.
The Walder defendants charged $356,000 for their services from November 1997 to May 2000, of which Dr. Safier paid $139,000, ceasing his payments upon entry into PTI. Dr. Safier contested the fees, but was unable to obtain fee arbitration pursuant to R. 1:20A-3 because the amount in dispute exceeded $100,000. The Walder firm sued, and Regan filed an answer on her father's behalf, and she asserted a counterclaim alleging billing fraud by the Walder firm, unjust enrichment and breach of contract.
After Regan surrendered the defense of Dr. Safier at her firm's demand, in May 2001, Dr. Safier contacted attorney Anthony Ambrosio. An initial retainer agreement, drafted by Ambrosio, provided that Ambrosio would represent Dr. Safier in the defense of the fee action and in the prosecution of a legal malpractice action against the Walder defendants for failing to file malicious prosecution and defamation complaints against Stull and Thomas Fruzynski, M.D., the person who instituted the medical ethics complaint against Dr. Safier, or properly advising him of the statutes of limitations applicable to such actions. The retainer was not signed because it contained a contingency fee clause applicable to the fee dispute to which Dr. Safier objected. Instead, Dr. Safier signed a more restricted agreement for representation "in the matter of: Fee Arbitration between" Dr. Safier and the Walder defendants. Safier provided a $6,000 retainer.
Binding arbitration was arranged. However, discovery served by the Walder defendants was not answered, and the expert proposed by Ambrosio, Paul Jackson, was not retained. Ambrosio took the position that it was Dr. Safier's responsibility to provide initial answers to interrogatories and to retain the expert.*fn3 In October 2001, the complete file in the matter was delivered to Jackson. However, Jackson refused to provide a report, stating there was insufficient time prior to the arbitration and that his retainer had not been paid in full, Dr. Safier having remitted only $1,500 of the $6,000 required.
After Ambrosio, allegedly without Dr. Safier's knowledge or consent, informed the arbitrator that Dr. Safier did not intend to cooperate with the arbitration, a default award was entered in favor of the Walder defendants in the amount of $235,188 plus interest of $69,917, for a total of $305,105. In January 2002, the Walder defendants moved to have the arbitration award confirmed, and an order was entered on January 25, 2002.
Around the time that the order confirming the arbitration award was entered, Dr. Safier retained Edward O'Byrne, who filed a legal malpractice complaint in the present matter against the Walder and Ambrosio defendants. In counts one through three of the complaint, Dr. Safier claimed legal malpractice on the part of the Walder defendants as the result of their advice to him to enter PTI, thereby precluding suit for malicious prosecution against Stull, their failure to institute a malicious prosecution action or advise him of the statute of limitations applicable to an action against Dr. Fruzynski, and their unethical billing practices. In count four, Dr. Safier claimed legal malpractice on the part of the Ambrosio defendants in failing to prosecute his legal malpractice claims against the Walder defendants as set forth in the first three counts, in failing to conduct discovery on plaintiff's behalf in the fee dispute case, failing to obtain additional time to answer discovery, failing to retain an expert to review the Walder firm's bills, and making unauthorized statements to the arbitrator. As damages, Safier claimed the amount of the arbitration award, fees incurred in retaining Ambrosio and Jackson, and the attorneys' fees incurred in the present litigation.
In August 2002, a motion by the Walder defendants for summary judgment on the fee-dispute count of the complaint (count three) was granted on the basis of the prior confirmation of the arbitrator's award. In November 2003, a motion for leave to file an amended complaint providing greater specificity in the allegations of malpractice on the part of the Walder defendants, as set forth in counts one and two, was granted. However, in January 2004, an order of summary judgment was entered dismissing those counts and thus all claims against the Walder defendants.
The matter was then tried before a jury. At trial, expert testimony was given by Dr. Safier's expert, Robert Cherry, and by the Ambrosio defendants' expert, Michael Ambrosio. At the close of the evidence, the trial judge granted the Ambrosio defendants' motion to dismiss Dr. Safier's complaint with prejudice pursuant to R. 4:40-1, concluding that Cherry's testimony regarding the damages sustained by Dr. Safier constituted a net opinion, and that no other competent evidence relevant to the issue of damages had been presented. Thereafter, the judge ordered Dr. Safier and his attorney, O'Byrne, jointly to pay Ambrosio $37,950 in fees and costs for instituting frivolous litigation. This appeal followed.
At trial, the judge adhered to the terms of the previously-entered order of summary judgment on Dr. Safier's claims, set forth in the first two counts of his amended complaint, that the Walder defendants committed malpractice when they failed to preserve or prosecute Dr. Safier's causes of action for malicious prosecution, libel and slander against Stull and Dr. Fruzynski. As a consequence, the trial judge precluded Dr. Safier from attempting to prove, through expert testimony, a cause of action against Ambrosio for failing to file those claims of malpractice against the Walder defendants. On appeal, Dr. Safier asserts legal error in the award of summary judgment, and he argues that, as a result, he is entitled to a new trial.
The judge granting summary judgment in the Walder defendants' favor found that because a grand jury ultimately returned an indictment against Dr. Safier, probable cause for his indictment existed, and thus the elements of a cause of action for malicious prosecution could not be established. The judge held further that Dr. Safier did not have a viable cause of action against either Stull or Dr. Fruzynski for defamation, because the litigation privilege provided them with absolute immunity from liability for statements made, respectively, to the grand jury and the New Jersey Board of Medical Examiners.
The litigation privilege provides immunity from liability for otherwise defamatory statements made in the course of a judicial or quasi-judicial proceeding. Hawkins v. Harris, 141 N.J. 207, 213 (1995); Williams v. Kenney, 379 N.J. Super. 118, 133 (App. Div.), certif. denied, 185 N.J. 296 (2005). However, an exception to the rule of immunity exists if liability is premised upon a claim of malicious prosecution. Baglini v. Lauletta, 338 N.J. Super. 282, 297 (App. Div.) (citing Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 564-66 (1955)), certif. denied and appeal dismissed, 169 N.J. 607-08 (2001).
A statement made to a law enforcement official implicating another in criminal activity is only qualifiedly privileged. Williams v. Bell Tel. Labs., Inc., 132 N.J. 109, 120-21 (1993); Citizens State Bank v. Libertelli, 215 N.J. Super. 190, 198 and n.3 (App. Div. 1987). The lesser privilege is based upon the recognition that the due process protections available in a judicial proceeding, along with actions for false swearing and perjury, are absent in this less formal setting. However, in this case, we regard Stull's statements to the grand jury, as well as any statements by Fruzynski to the Board of Medical Examiners, to have been made in judicial or quasi-judicial proceedings in circumstances accompanied by sufficient safeguards as to be worthy of full protection.
A claim for malicious prosecution arising out of a criminal proceeding requires proof that the proceeding was instituted by the defendant against the plaintiff,*fn4 that it was actuated by malice, that there was no probable cause for the proceeding, and that the proceeding was terminated favorably to the accused. Epperson v. Wal-Mart Stores, Inc. 373 N.J. Super. 522, 530 (App. Div. 2004); Turner v. Wong, 363 N.J. Super. 186, 203 (App. Div. 2003). Contrary to the motion judge's decision, the return of an indictment by a grand jury does not conclusively establish the existence of probable cause, but merely constitutes presumptive evidence to be considered along with other evidence in the case. Zalewski v. Gallagher, 150 N.J. Super. 360, 367-68 (App. Div. 1977). Admission into PTI is not considered a "favorable termination" for malicious prosecution purposes. Cressinger v. Bd. of Educ. of City of Newark, 256 N.J. Super. 155, 157 (App. Div.) (citing Thomas v. N.J. Inst. of Tech., 178 N.J. Super. 60, 62 (Law Div. 1981)), certif. denied, 130 N.J. 394 (1992). The advice by the Walder defendants that Dr. Safier enter PTI therefore precluded his malicious prosecution claim by eliminating an element of that claim.*fn5
On appeal, Dr. Safier suggests that the letter by the Walder defendants to the prosecutor (the "Stull lies" letter), exposing the falsity of some of Stull's statements to the grand jury, established a lack of probable cause for the indictment against him and thus a crucial evidentiary element that the motion judge had found, when granting summary judgment, to be missing from his proposed malicious prosecution claim.*fn6
However, at trial, Dr. Safier admitted to receipt of an amount in excess of $200,000 from Stull,*fn7 of which he repaid only $56,000. Dr. Safier did not impose any independent charge on Stull for his lengthy and often-daily office visits, despite the doctor's claim that he had spent "2,000 hours of [his] life providing services" to Stull. The "overwhelming percentage" of the money supplied by Stull was utilized by Safier to pay for family vacations, and on only one occasion, was used for a business enterprise in which Stull was also engaged. Receipt of money from Stull ceased in January 1995 when Dr. Safier refused to prescribe any additional Schedule II drugs. None of the money that Dr. Safier received from Stull was reported to the Internal Revenue Service.
Further, Dr. Safier admitted to prescribing Schedule II drugs, such as Percocet, for Stull from 1992 to 1995, while knowing him to be a prescription drug addict, in amounts sufficient to maintain the addiction. Dr. Safier testified:
I prescribed what I felt was required to maintain this individual. I did not prescribe anything more than that. I prescribed what I felt was necessary to maintain him, recognizing that this was an addicted individual at the time.
That the drugs were not necessary for treatment of a physical condition, and that the claims by Stull to the grand jury regarding Dr. Safier's conduct had some evidentiary merit, is further suggested by the fact that Dr. Safier agreed to a settlement of a medical malpractice action by Stull against him and to the payment of $478,000 in that regard. It is also supported by testimony by Dr. Safier that the prescriptions were for self-reported pain unconfirmed by diagnostic procedures. As a consequence, at the time that Stull spoke to the prosecutors regarding Dr. Safier and testified before a grand jury, the circumstances were such that an ordinarily prudent individual would believe that a criminal offense had been committed. Lind v. Schmid, 67 N.J. 255, 263 (1975). Stull's "lies" therefore lessened, but did not eliminate, the evidentiary basis for the State's criminal action against the doctor.
Moreover, we note that the retainer agreement engaging the Ambrosio defendants that was signed by Dr. Safier limited defendants' representation to their appearance on the doctor's behalf in a binding arbitration proceeding regarding fees. While nothing in that agreement precluded the use of evidence of alleged malpractice as a means of reducing fees, should such evidence have been deemed relevant by the arbitrator, the Ambrosio defendants did not affirmatively undertake to file suit against the Walder defendants on that basis, as they had in connection with the first -- rejected -- retainer agreement. A reasonable person in Dr. Safier's circumstances could not otherwise construe the executed retainer agreement, which is clear on its face. Cohen v. Radio-Electronics Officers Union, 146 N.J. 140, 156 (1996) (quoting Restatement of the Law Governing Lawyers, § 29A, cmt. d). A binding arbitration proceeding such as that envisioned by the parties here would have constituted a manifestly inappropriate forum in which to institute an affirmative suit against the Walder defendants for damages based upon legal malpractice. As a consequence, we affirm the order of summary judgment entered in this matter, albeit on grounds different from those utilized by the motion judge, and we discern no error in the trial judge's determination to preclude expert proof of that malpractice.
Dr. Safier appeals as well from the dismissal of his claim against the Ambrosio defendants for failure to properly defend him in the Walder defendants' fee action, claiming that the evidence was sufficient to establish that the Walder defendants' bills were excessive and unconscionable, and that the Ambrosio defendants bore the burden of demonstrating otherwise.
In his complaint and at trial, Dr. Safier portrayed the Walder defendants' conduct in charging allegedly unreasonable fees as a violation of RPC 1.5 and a form of legal malpractice. Relying on the Supreme Court's decision in Saffer v. Willoughby, 143 N.J. 256 (1996), he then argued that, because the Walder defendants had committed malpractice by charging fees that were not reasonable, he could avoid payment of the entire bill. As a consequence, the doctor's expert, Cherry, made no effort to identify specific charges that he found were not reflective of work performed, but instead, focusing primarily on entries relating to the "Stull lies" letter, he merely declared the bill as a whole to have been "atrocious" and "unconscionable."
In granting the Ambrosio defendants' motion to dismiss, the trial judge acknowledged that their negligence remained a jury question. However, he found that Dr. Safier had failed to demonstrate any negligence that was proven and proximately resulted in ascertainable damage to the doctor. In doing so, the judge rejected Dr. Safier's position that, pursuant to Saffer, if malpractice were found to exist, the Walder defendants would not have been entitled to any fee, and thus he did not need to particularize the extent of his damages in his suit against the Ambrosio defendants. The judge distinguished Saffer on the ground that it involved an affirmative claim of malpractice -- the failure to sue a potentially liable party -- whereas the present matter was simply a billing dispute over the value of services that were, in fact, rendered. The judge stated:
[I]n this kind of a case, I don't think the jury can make a determination simply because an expert says it's malpractice how much of this bill is legitimate and how much of it is incorrect. In other words, I don't think you can present to a jury this question of a bill and expect a jury to come to a reasonable conclusion about the bill and how much of it is legitimate without some expert testimony to the effect that half of it is legitimate, a third of it is legitimate, none of it is legitimate. And when he says none, he has to give some support for it. He can't just say the whole thing is not legitimate because then he's talking about a principle of law that I don't think applies to this case.
I don't think there's any way in this case that the bill could be nothing. I'm suggesting that no one expected . . . to come out of th[e] arbitration with . . . no money owed to the Walder firm. It was just not in the cards.
We agree with the analysis of the trial judge. Like him, we regard the principles of Saffer to be inapplicable to what was, in essence, a billing dispute between the doctor and the Walder defendants. A contrary holding, casting such disputes as claims of malpractice requiring forfeiture of all fees would unfairly penalize attorneys whose work was otherwise unexceptionable, and would provide too convenient an escape from payment of legitimate charges.
In contrast, the doctor's legal malpractice claim against the Ambrosio defendants was cognizable as a matter of law. To prove a cause of action for professional malpractice, a plaintiff must demonstrate the existence of a relationship creating a duty of care, a breach of that duty, and proximate causation between the breach and any damages sustained. McGrogan v. Till, 167 N.J. 414, 425 (2001); Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996). The malpractice plaintiff must show what injury he suffered as a proximate consequence of the attorney's breach of duty. The measure of such injury is the amount the plaintiff would have received but for the attorney's negligence -- or more accurately in this case, the difference between the fees ordered to be paid and those that would have been owed if properly represented. Frazier v. N.J. Mfrs. Ins. Co., 142 N.J. 590, 601 (1995).
"[I]n general, '[a] jury should not be allowed to speculate without the aid of expert testimony in an area where laypersons could not be expected to have sufficient knowledge or experience.'" Kelly v. Berlin, 300 N.J. Super. 256, 268 (App. Div. 1997) (quoting Biunno, Current N.J. Rules of Evidence, comment 2 on N.J.R.E. 702 (1996-97)). In the case of damages, "a plaintiff must 'prove damages with such certainty as the nature of the case may permit, laying a foundation which will enable the trier of the facts to make a fair and reasonable estimate.'" Id. at 268 (quoting Lane v. Oil Delivery, Inc., 216 N.J. Super. 413, 420 (App. Div. 1987)). A legal malpractice plaintiff does not satisfy this burden by mere "conjecture, surmise or suspicion." 2175 Lemoine Ave. Corp. v. Finco, Inc., 272 N.J. Super. 478, 488 (App. Div.), certif. denied, 137 N.J. 311 (1994).
Our review of the record in this matter satisfies us that the testimony of Cherry, Dr. Safier's expert, expressed merely a net opinion on the issue of damages sustained by the doctor as the result of the Ambrosio defendants' alleged improper failure to defend him in the arbitration proceeding. Buckelew v. Grossbard, 87 N.J. 512, 524 (1981); Kaplan v. Skoloff & Wolfe, P.C., 339 N.J. Super. 97, 102 (App. Div. 2001). As such, it gave insufficient guidance to the jury in how to calculate damages, rendering any jury determination infirm as a result. Consequently, the action was properly dismissed.
As a final matter in this regard, we reject Dr. Safier's position that, as "malpractice" defendants, the Ambrosio firm bore the burden of establishing the reasonable nature of the Walder defendants' bill. This position would be correct if the dispute were directly with the Walder defendants. Cohen, supra, 146 N.J. at 156. However, this was not such a dispute, but rather, a malpractice action against attorneys whose services did not encompass the work that was the subject of the disputed bill. Dr. Safier has offered no precedent that would suggest the customary burdens of proof applicable to a legal malpractice action would be reversed in this double-tiered malpractice suit, simply because excessive billing was claimed in the underlying matter.
The order of dismissal is therefore affirmed.
Dr. Safier and his attorney, O'Byrne, have appealed from the trial court's further order granting attorneys' fees for filing frivolous litigation in favor of Anthony Ambrosio. In a cross-appeal, Ambrosio seeks an increase in the fee award. We conclude that the fee order was improvidently granted, and we reverse, thereby mooting Ambrosio's cross-appeal. In reaching this conclusion, we agree with the trial judge that Dr. Safier's malpractice action was impelled by the doctor's perception of overbilling by the Walder defendants and by the alleged failure of the Ambrosio defendants to identify the overbilled items and to adequately defend him against the fee claim. That suit was dismissed not because of failure of proof of negligence on the part of the Ambrosio defendants -- an issue raising factual disputes requiring jury resolution -- but because the theory of recovery adopted by Dr. Safier was found, following trial, to have been legally untenable.
Although the purpose of both N.J.S.A. 2A:15-59.1 and R. 1:4-8 is to deter frivolous litigation, neither provision can be fairly interpreted so as to deter honest and creative advocacy or good-faith litigation, thereby restricting access to the courts. McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561-62 (1993); DeBrango v. Summit Bancorp, 328 N.J. Super. 219, 226-27 (App. Div. 2000) (interpreting statute applicable to parties); K.D. v. Bozarth, 313 N.J. Super. 561, 574-75 (App. Div.) (interpreting rule applicable to counsel), certif. denied, 156 N.J. 425 (1998). In this regard, we pay more than lip-service to the "American Rule" that litigants should usually bear their own litigation costs. DeBrango, supra, 238 N.J. Super. at 227.
"A claim will be deemed frivolous or groundless when no rational argument can be advanced in its support, when it is not supported by any credible evidence, when a reasonable person could not have expected its success, or when it is completely untenable." Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div.), certif. denied, 162 N.J. 196 (1999). When a party honestly attempts to pursue a perceived, though ill-founded and misguided claim, that conduct should not be found to constitute bad faith. McKeown-Brand, supra, 132 N.J. at 563; see also Wyche v. Unsatisfied Claim and Judgment Fund of State of N.J., 383 N.J. Super. 554, 560-61 (App. Div. 2006) (holding that honest, creative advocacy should not be discouraged). Our focus must be on the objective reasonableness of the actions of the parties under the circumstances. Ellison v. Evergreen Cemetery, 266 N.J. Super. 74, 85 (App. Div. 1993).
When we view Dr. Safier's claim against the Ambrosio defendants and its manner of presentation by O'Byrne in light of this precedent, we are unable to conclude that the rigorous standards for recovery either under the statute or the rule were met. While causes of action for malpractice arising out of the failure to preserve malicious prosecution and defamation causes of action can justly be viewed with skepticism, Dr. Safier's underlying claims of overbilling and of failure to adequately defend against the Walder defendants' counsel fee action cannot be similarly dismissed as entirely unfounded in fact. In reaching this conclusion, we do not in any sense seek to impugn the conduct of the attorneys of either of the firms involved in Dr. Safier's defense. We merely note that factual issues were raised by the doctor of sufficient merit to warrant submission to a jury. As such, the claims cannot be termed frivolous. Similarly, we perceive no breach of R. 1:4-8 in O'Byrne's determination to adhere to a legal theory of recovery that both we, and the trial court, found to be unsupportable. Such "creative advocacy" should not be met with so severe a monetary sanction.
The orders dismissing the complaint of plaintiff, Dr. Mark Safier, are affirmed. The order assessing attorneys' fees against Dr. Safier and his attorney, Edward O'Byrne, is reversed. The cross-appeal of Anthony Ambrosio is dismissed as moot.