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Verdure Asset Corp. v. Wheeler

March 18, 2008

VERDURE ASSET CORP., A CORPORATION OF THE STATE OF NEW YORK, PLAINTIFF-APPELLANT,
v.
JONATHAN WHEELER, ESQ., THE LAW OFFICES OF JONATHAN WHEELER, P.C., DEFENDANTS, AND CHRISTINE CARTWRIGHT BAKER, ESQ., DRINKER, BIDDLE & REATH, LLP, A PENNSYLVANIA LIMITED PARTNERSHIP, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2899-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 8, 2008

Before Judges Skillman, Yannotti and LeWinn.

In this legal malpractice action, plaintiff Verdure Asset Corp. (Verdure) alleges that defendants Christine Cartwright Baker (Baker) and Drinker, Biddle & Reath LLP (DBR), were negligent in the handling of a lawsuit that Verdure brought against Environmental Strategies and Applications, Inc. (ESA) and Disposal Systems, Inc. (DSI). Verdure appeals from an order entered on August 25, 2005, which denied its motion for partial summary judgment; and an order entered on February 2, 2007, which granted defendants' motion for summary judgment. For the reasons that follow, we affirm in part, reverse in part, and remand for trial.

I.

In 1998, Verdure purchased six parcels of property on Quakerbridge Road in Hamilton Township, New Jersey. Three buildings were located on the property: a truck terminal, truck repair shop, and an office building. When it acquired the property, Verdure assumed responsibility for the remediation of any environmental contamination of the site. In furtherance of this obligation, Verdure retained ESA to remove twenty-eight underground fuel storage tanks. ESA hired DSI to excavate and remove the tanks.

Excavation began in August 1999 and revealed that the soil surrounding the tanks was contaminated with petroleum products. Verdure and ESA entered into a series of change orders to the contract, which required ESA to excavate the contaminated soils. As the excavation continued, ESA's personnel found that the contamination ran underneath the truck repair shop, and excavation of the soils in that area was required. The removal of the soil near the truck repair shop undermined the building's structural integrity.

Later, Verdure became dissatisfied with the manner in which ESA and DSI were performing the work. On October 28, 1999, Verdure discharged ESA and subsequently hired Environmental Liability Management (ELM) to complete the work. On December 6, 1999, the Township issued a notice to Verdure, which declared that the building was an unsafe structure and ordered Verdure to repair the building or demolish it.

On January 14, 2000, ESA filed a construction lien claim against Verdure, in which it asserted that $204,982 remained due and owing from Verdure on the contract. Thereafter, Verdure retained attorney Joseph Consiglio to represent it in the matter, and in February 2000, Consiglio filed an action against ESA on Verdure's behalf, asserting claims for breach of contract.

ESA filed an answer in which it denied the allegations and asserted a counterclaim for $204,982. Verdure subsequently filed an amended complaint, which included a negligence claim for damage to the building, and a fraud claim against ESA and its principal, Stephen E. Fauer, for allegedly misrepresenting their qualifications and the work that had been performed pursuant to the contract. Verdure also filed a separate complaint asserting claims against DSI. Verdure's actions against ESA and DSI were consolidated.

Verdure discharged Consiglio and on August 8, 2001, attorney Jonathan Wheeler assumed responsibility for the case. Wheeler retained Steven Glodack of The Glodack Construction Group to provide estimates of the costs to repair and replace the damaged truck repair shop. Glodack visited the site and inspected the building. He furnished two estimates: to demolish and rebuild the damaged sections of the building for $635,000; and to demolish the structure and replace it with a new 22,000 square-foot building at a cost of $1,965,000. On August 22, 2001, the Township issued another notice to Verdure, which ordered that the building be demolished. The building was torn down in March 2002.

Glodack was deposed in the underlying action on May 1, 2003. Glodack stated that he no longer had the work papers he used to prepare his estimates. He testified that when he saw the building had been demolished, he "figured that [his company] didn't get the project." Therefore, he discarded his files. Glodack also stated that when Wheeler asked him to submit his estimates, he was not aware that there was litigation regarding the building, or that he had been retained as an expert in a lawsuit. Glodack believed that he was merely submitting proposals for a job. Glodack also asserted that he did not consider himself to be an expert in estimating costs of construction.

On May 2, 2003, Wheeler met with Roger Davidson and Richard Kudlack, Verdure's principals. They told Wheeler that they had been "betrayed" by Glodack. Davidson claimed that Wheeler had offered Glodack some sort of financial incentive to come up with his estimates. Wheeler and Glodack stated that they did not do anything unethical or improper. Verdure's action against ESA and DSI was scheduled for trial on May 27, 2003.

On May 6, 2003, a New York attorney contacted Baker, a partner at DBR, and advised her that Verdure required new counsel for the lawsuit. Baker met with Davidson and Kudlack on May 7, 2003. Verdure retained Baker to file a motion for substitution of counsel; adjournment of the trial date; and an extension of discovery so that Verdure could obtain new experts. Baker filed the motion that day.

On June 4, 2003, the judge held an evidentiary hearing on Verdure's motion. The judge found that Verdure had established "exceptional circumstances" to adjourn the trial date and allow additional discovery. The judge stated that he did not "see any kickbacks here," but the allegations of unethical conduct by Wheeler were for another court. Nevertheless, the judge found that Wheeler's retention of Glodack raised questions of his "attentiveness and diligence" to the case. The judge stated that Wheeler's handling of the case amounted to "[m]ore than negligence[.]"

The judge entered an order on June 19, 2003, which memorialized his rulings. The order permitted the substitution of Baker for Wheeler as Verdure's attorney and adjourned the trial date. Verdure was granted leave to retain new experts to replace Glodack's estimates. Verdure was ordered to serve any new expert reports by August 15, 2003.

On June 19, 2003, Baker retained Jonathan P. Dixon (Dixon) to serve as Verdure's expert on the cost to replace the building. Baker stated in a certification dated April 1, 2005, that she did not retain Dixon to prepare an estimate of repair costs because at the time there was "virtually no secondary evidence of the damage to the building." Baker maintained that there was no way for an expert to render a credible opinion as to the cost to repair the structure in 1999, when the building had been demolished in 2002. She said that the file she received from Wheeler did not contain any photographs from September 1999, inspection reports, or other evidence showing the damage to the building or the repairs that were required.

Dixon furnished a report dated August 13, 2003, in which he opined that it would cost $2,672,130 to reconstruct the site and the structure to the condition that existed prior to the soil remediation project. Dixon based his estimate on shop drawings which depicted the design of the building and the specifications for its construction in 1965.

Trial in the matter had been re-scheduled for March 1, 2004. ESA filed motions in limine to bar Dixon's testimony, along with the testimony of Verdure's other three other expert witnesses: Sunil K. Garg, David J. Fielding, and Kenneth T. Hart. Garg had provided a report concerning ESA's remediation methodology and its work. Fielding stated in his report that the truck repair shop could be repaired but it would not be economical to do so. Hart offered an opinion on the remediation work performed after Verdure discharged ESA.

The trial judge considered the motions on March 2, 2004. The judge reserved decision after hearing arguments but set forth on the record his tentative decisions on the motions. The judge stated that he was inclined to bar Dixon from testifying at trial. The judge noted that Dixon had not presented any information as to the cost of repair. The judge additionally said that Dixon's "presentation" regarding the construction of a new structure was "outside the scope" of what the judge had anticipated when he entered his order on June 19, 2003.

The judge added that Fielding "may be out, at least with regard to his testimony as to having a new structure built and the cost of a new structure, entertaining that cost, as opposed to rebuilding . . . [or] repairing it." The judge stated that, in his view, Fielding's report "sounded like a net opinion[.]" The judge also stated that he was not inclined to bar Garg's testimony and, as to Hart, he would "wait and see."

After making these preliminary determinations, the trial judge commented that he thought that these were "pretty heavy-duty decisions." The judge suggested that the parties might consider his preliminary determinations "in terms ...


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