August 14, 2007
DIANNE VIGLIONE, PLAINTIFF-APPELLANT,
CHRISTINE FARRINGTON, ESQ., INDIVIDUALLY AND AS HER INTERESTS MAY APPEAR IN A LAW FIRM FORMERLY KNOWN AS BIAGIOTTI, MARINO, MONTECALLO & FARRINGTON, ESQS.; ROBERT M. BIAGIOTTI, ESQ., INDIVIDUALLY AND AS HIS INTERESTS MAY APPEAR IN A LAW FIRM FORMERLY KNOWN AS BIAGIOTTI, MARINO, MONTECALLO & FARRINGTON, ESQS.; PAUL F. MARINO, ESQ., INDIVIDUALLY AND AS HIS INTERESTS MAY APPEAR IN A LAW FIRM FORMERLY KNOWN AS BIAGIOTTI, MARINO, MONTECALLO & FARRINGTON, ESQS.; ROBERT MONTCALLO, ESQ., INDIVIDUALLY AND AS HIS INTERESTS MAY APPEAR IN A LAW FIRM FORMERLY KNOWN AS BIAGIOTTI, MARINO, MONTECALLO & FARRINGTON, ESQS.; AND BIAGIOTTI, MARINO, MONTECALLO & FARRINGTON, ESQS.,*FN1 DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9652-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 8, 2007
Before Judges Kestin, Weissbard and Lihotz.
In this matter, we are asked to determine whether, in the circumstances, a matrimonial litigant's acknowledged dissatisfaction with the result of a divorce settlement incorporated into a final judgment constitutes sufficient notice to commence the period for claiming a cause of action for legal malpractice, and the running of the statute of limitations. Plaintiff Diane Viglione alleged that defendant Christine Farrington, Esq. improperly represented her in a matrimonial action in which a dual final judgment of divorce (DFJOD) was entered on October 18, 1995. Plaintiff also asserted vicarious liability for Farrington's actions against the law firm in which she was a partner, defendant Biagiotti, Marino, Montecallo & Farrington, P.C. (Firm). Plaintiff appeals from summary judgment and the dismissal of her complaint as time-barred because she "knew of the essential facts" supporting a malpractice claim against Farrington upon entry of the DFJOD. We reverse and remand.
Plaintiff and her former husband, Peter Viglione, were married on June 9, 1973. The parties separated in April 1991. Peter filed for divorce in July 1993. Plaintiff retained the Firm, generally, and its partner Farrington, specifically, to represent her in the divorce proceedings.
The Vigliones had acquired substantial assets, which were evaluated by plaintiff's forensic accountant, James C. Ruitenberg. In his expert report dated June 26, 1995, Ruitenberg concluded that the Vigliones' net worth was $4,085,462 and Peter's average gross income from the years 1989 to 1994 was $399,149. The negotiated Property Settlement Agreement (PSA), executed on October 2, 1995, was incorporated into the DFJOD, filed October 18, 1995. The PSA provided that plaintiff would receive rehabilitative alimony in the amount of $40,000 per year for a period of eight years, and approximately $544,000 as her equitable share of the accumulated assets.
Plaintiff also entered into a post-divorce retainer agreement with Farrington on November 7, 1995, as a result of which, Farrington "successfully represented plaintiff" in post-judgment enforcement applications regarding life insurance, account transfers, and real estate tax issues.
On December 17, 1998, plaintiff retained the services of Robert T. Corcoran, Esq. to advise her of the likely success of modifying the alimony award. Corcoran told plaintiff, early in 1999, that "Farrington had committed legal malpractice." In April 1999, plaintiff filed a post-judgment application to "modify and restructure the alimony award" from rehabilitative to permanent alimony. Judge Humphreys, after trial, granted plaintiff's request and ordered that Peter pay plaintiff permanent alimony in the amount of $20,000 per year and attorneys fees and costs. We affirmed that decision in an unpublished opinion, Viglione v. Viglione, No. A-4096-03 (App. Div. March 1, 2006).
Plaintiff filed the present legal malpractice lawsuit on March 23, 2004, alleging Farrington negligently represented her in connection with the divorce proceeding. On November 4, 2005, Farrington and the Firm filed motions for summary judgment based upon the applicable six-year statute of limitations, N.J.S.A. 2A:14-1, and the doctrines of waiver and judicial estoppel.
Plaintiff opposed the motions and asserted she "had absolutely no conception that  Farrington had committed legal malpractice until sometime in early 1999 when  Corcoran . . . told [her] so." Plaintiff also cross-moved for leave to file an amended complaint based upon Farrington's alleged violations of the Rules of Professional Conduct (RPC) 1.7 and 1.8.
"In legal malpractice cases, as in other cases, summary disposition is appropriate only when there is no genuine dispute of material fact." Ziegelheim v. Apollo, 128 N.J. 250, 261-62 (1992) (citing Judson v. Peoples Bank & Trust Co., 17 N.J. 67, 74 (1954)). Summary judgment must be granted only "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995). In determining whether there is a genuine issue of material fact for summary judgment purposes, the trial court must ascertain "what reasonable conclusions a [factfinder] can draw from the evidence . . . ." Id. at 535. To make the determination, the judge must accept as true all evidence that supports the position of the party defending against the motion and accord him or her the benefit of all legitimate inferences which can be deduced therefrom. Ruvolo v. Am. Cas. Co., 39 N.J. 490, 499 (1963). If reasonable minds could differ, the motion must be denied.
A legal malpractice action is based on negligence. Grunwald v. Bronkesh, 131 N.J. 483, 492 (1993). A cause of action for malpractice usually "accrues when an attorney's breach of professional duty proximately causes a plaintiff's damages." Ibid. This occurs when a plaintiff "detrimentally relies on the negligent advice of an attorney." Id. at 495.
The timeliness of a complaint for legal malpractice is governed by N.J.S.A. 2A:14-1; McGrogan v. Till, 167 N.J. 414, 417 (2001). The statute requires that a legal malpractice action commence within six years from the accrual of the cause of action. Id. at 424-26; Grunwald, supra, 131 N.J. at 499.
While the above formulation may seem to provide a bright-line rule, the Court has recognized "the unfairness of an inflexible application of the statute of limitations when a client would not reasonably be aware of 'the underlying factual basis for a cause of action.'" Vastano v. Algeier, 178 N.J. 230, 236 (2003) (quoting Grunwald, supra, 131 N.J. at 492-93). To protect such uninformed clients, the Court has adopted a discovery rule in situations where the injury is "not readily ascertainable." Ibid. On this point, the Court has explained:
Without the discovery rule, the limitations period would run from the occurrence of the negligent act. Therefore, a scoundrel would have an incentive to conceal material facts from or to misrepresent those facts to the client so that a malpractice claim would be time-barred. Applying the discovery rule to legal-malpractice actions will remove the incentive to deceive and thus will preserve the fiduciary duty of full disclosure. [Grunwald, supra, 131 N.J. at 494.]
The Court concluded that the statute of limitation period for a legal malpractice claim, in these circumstances, does not run until "the client suffers actual damage and discovers, or through the use of reasonable diligence should discover, the facts essential to the malpractice claim." Vastano, supra, 178 N.J. at 236 (quoting Grunwald, supra, 131 N.J. at 494).
"The linchpin of the discovery rule is the unfairness of barring claims of unknowing parties." Caravaggio v. D'Agostini, 166 N.J. 237, 245 (2001) (quoting Mancuso v. Neckles, 163 N.J. 26, 29 (2000). Thus, "[i]n applying the discovery rule, a court must determine when the plaintiff became aware of the underlying factual basis for the legal-malpractice action." Olds v. Donnelly, 150 N.J. 424, 437 (1997).
Argument on the motions was heard on December 2, 2005.
Thereafter, on January 17, 2006, the motion judge issued a written decision and filed a conforming order granting defendants' motions for summary judgment, dismissing plaintiff's complaint and denying plaintiff's cross-motion. The motion judge determined plaintiff "knew of the essential facts to support a claim [for legal malpractice]" in October 1995, which included plaintiff's deposition testimony that: (1) she was "upset" when she agreed to the divorce settlement because she did not receive permanent alimony; and (2) Ruitenberg had "advised [her] prior to signing the [PSA] that she should be awarded permanent alimony." The motion judge concluded plaintiff's claims against defendants were time-barred, as the cause of action commenced in October 1995. In reaching her conclusion, the motion judge did not rely on the discovery rule, Olds, supra, 150 N.J. at 436-39, stating:
Even if the discovery rule is applied, plaintiff knew, or should have known, that she had suffered damages [on October 2, 1995], since plaintiff stated under oath at the time of her settlement that she was unhappy with the settlement. If she believed that she deserved permanent alimony at that time in 1995, then she was immediately damaged, especially in light of the fact that her accountant advised her that she was entitled to permanent alimony. At that point, when plaintiff discerned that she was being damaged, the statute of limitations period began to run.
The motion judge also added the following comments:
[P]laintiff waived her right to sue for legal malpractice by instead pursuing her right to convert the rehabilitative alimony to permanent alimony. This pursuit does not toll the running of the statute of limitations. Plaintiff's counsel intentionally withheld the filing of the Complaint until Judge Humphreys rendered his January 5, 2004 opinion, explaining that "the Complaint wasn't filed, because we didn't know what the extent of Ms. Viglione's damages would be, if any, until we got the decision from Judge Humphries [sic] . . . [and] we still don't know the answer to that question, the quantum damages of her damage claim, because the Appellate Division has the case."
Finally, the motion judge rejected plaintiff's motion to amend her complaint, observing that the alleged RPC violations were intertwined with the time-barred malpractice action. Plaintiff's motion for reconsideration was denied on March 24, 2006.
On appeal, plaintiff argues her cause of action did not accrue until she met with Corcoran who advised her that legal malpractice had occurred. Additionally, she challenges the application of waiver or estoppel to bar her claim, and suggests the motion judge misapplied her discretion in denying her motion to amend her complaint.
We are satisfied that the motion judge mistakenly granted summary judgment, as plaintiff should not be charged with constructive knowledge of the existence of a legal malpractice claim at the time the matrimonial settlement was filed. As is required, we accept the facts as presented by plaintiff. These include that the underlying matrimonial matter was complex, involving commercial and investment realty; five business interests titled to Peter; and income sources to Peter from salary, rents, partnerships, dividends and subchapter S corporations. Plaintiff had not been employed outside the home for much of the parties' twenty-two-year marriage, she does not have a college education, and she had a subordinate economic role with no input regarding family finances. Plaintiff engaged defendant, who represented she possessed the requisite legal skills and knowledge to provide representation in a complex matrimonial action. Plaintiff relied upon defendant's representations when she told her that: the PSA "was a fair compromise under the circumstances"; if plaintiff "did not settle the case and decided to take it to trial, she would have passed up the opportunity to have a very good settlement"; rehabilitative alimony was good enough for you"; and "[j]udges don't give permanent alimony anymore."
A motion judge's "interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Tp. Comm., 140 N.J. 366, 378 (1995). We reject the motion judge's conclusion essentially suggesting that unhappiness with the terms of a settlement equates to knowledge of sufficient facts so as to trigger the commencement of the statute of limitations period for barring a legal malpractice action. If that standard were applied, then every litigant would be on notice that his or her attorney may have committed malpractice simply because the terms of settlement were not highly desirable. The difficulty in determining when a litigant may reasonably obtain "knowledge not only of the injury but also that another is at fault" is illustrated by the comments of the Court in Grunwald, supra, 131 N.J. at 498:
Although litigants are not noted for an ability dispassionately to appraise both sides of their own lawsuits, nevertheless under some circumstances a litigant may conclude that the underlying case was lost on the merits; then, after seeking independent legal counsel regarding an appeal of the underlying claim, that litigant may become persuaded that the attorney's negligence actually caused the loss. Consequently, we reject the general assumption in Mant [v. Gillespie], 189 N.J. Super. [368, 374 (App. Div. 1983)], that, at the latest, a litigant should become aware of an attorney's fault when the trial court renders its decision in the underlying action.
Great emotional pain and stress are attached to contested matrimonial proceedings, where "the client's desires may be influenced in large measure by the advice the lawyer provides[.]" Ziegelheim v. Apollo, 128 N.J. 250, 261 (1992). An economically dependent spouse relies on his or her matrimonial attorney to lead the way through the litigation labyrinth to the path of future economic security. Nothing in this record suggests that plaintiff knew or should have known that defendant had taken her off-course. While plaintiff expressed disappointment with the final divorce settlement, she had no reason to know that defendant's advice regarding the resolution of the alimony and equitable distribution issues upon the termination of her long-term marriage, were significantly flawed.
Plaintiff's acceptance of defendant's expertise, supporting her lack of knowledge that malpractice had occurred, was accentuated by plaintiff's execution of a post-judgment retainer agreement with defendant one month following the divorce settlement. Had plaintiff possessed the knowledge that legal malpractice occurred, she would likely not have engaged defendant to provide new legal services.
Also, we do not agree that plaintiff's conversation with Ruitenberg prior to signing the PSA provided sufficient notice of the "facts essential to the malpractice claim," Vastano, supra, 178 N.J. at 236 (quoting Grunwald, supra, 131 N.J. at 494), such that her cause of action accrued. Ruitenberg, an accountant, is unqualified to give legal advice. Further, the record reveals Ruitenberg also told plaintiff "you have to listen to your attorney." And plaintiff did just that by accepting the PSA. Her actions are not only understandable, but were reasonable, under the totality of the circumstances. Giving plaintiff the benefit of the discovery rule, we conclude her cause of action was not barred by the six-year statute of limitations, N.J.S.A. 2A:14-1, when her malpractice complaint was filed.
The motion judge's tangential comments regarding the defenses of waiver and estoppel raise fact-sensitive issues, which cannot properly be determined in a motion for summary judgment. The specific representations by Corcoran, as well as any assertions by plaintiff in the post-judgment hearing before Judge Humphreys, need to be further examined.
Finally, we determine the motion judge must again review her discretionary denial of plaintiff's application to amend her complaint to add an additional cause of action for malpractice based on defendant's alleged violation of RPC 1.4, 1.7, and 1.8. Because the motion judge's conclusion was bottomed on the dismissal of the complaint as barred by the statute of limitations, which decision we have reversed, consideration of plaintiff's request must be made and fairly evaluated in the light of our disposition.
We note that "[w]hile violations of ethical standards do not per se give rise to tortious claims, the standards set the minimum level of competency which must be displayed by all attorneys. Where an attorney fails to meet the minimum standard of competence governing the profession, such failure can be considered evidence of malpractice." Baxt v. Liloia, 155 N.J. 190, 200 (1998) (quoting Albright v. Burns, 206 N.J. Super. 625, 634 (App. Div. 1986).
We reverse and remand for further proceedings consistent with this opinion.