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Verdure Asset Corp. v. Wheeler

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 of whether or not this case has any potential for settling."

On March 8, 2004, after engaging in extensive negotiations, the parties reached a settlement agreement. Verdure agreed to pay $65,000 and drop its claims against ESA and DSI. ESA, in turn, dropped its claims against Verdure. They agreed to the exchange of mutual releases, and to the dismissal of the action.

On March 9, 2004, the parties advised the court that they had reached a "global" settlement of the matter. The judge stated on the record that his decisions on the motions to bar Verdure's witnesses from testifying were a "predicate" of the settlement. The judge then proceeded to render rulings on the motions, noting that his decisions were consistent with the tentative findings that he placed on the record on March 2, 2004.

Regarding the motion to bar Dixon's testimony, the judge stated that when he allowed Verdure to obtain a new expert to replace Glodack, he expected that the expert would be limited to the approach to damages that "[Glodack] had charted out[.]" Dixon's report was not what the judge expected. The judge stated that Dixon had not offered any opinion as to the cost of repairs although there was a basis for doing so. The judge additionally said that, in offering a report on replacement value, Dixon went "far beyond" what the court had allowed. On June 16, 2004, the parties filed a stipulation of dismissal in the underlying action.

Verdure filed this legal malpractice action against Wheeler, Baker, and DBR on November 8, 2004. Verdure alleged that Wheeler was negligent because he failed to "hire appropriate expert witnesses to render reports on the damages sustained" by Verdure in accordance with New Jersey law. Verdure further alleged that Baker and DBR were negligent because they failed to "hire appropriate replacement expert witnesses to render reports on the damages sustained" by Verdure in accordance with New Jersey law. Baker and DBR filed a cross claim against Wheeler and a counterclaim against Verdure for the counsel fees and costs that were billed but not paid.

On February 10, 2005, Verdure filed a motion for partial summary judgment on the issue of liability. Thereafter, Wheeler filed a cross-motion for summary judgment. The judge considered the motions on April 29, 2005 and placed his decisions on the record that day. The judge concluded that the matter was not ripe for summary judgment. The judge said that "responsive discovery" had not yet begun and "[t]here are questions of fact that abound[.]" The judge noted that a party asserting a claim for legal malpractice must present an expert report establishing the standard of care by which the actions of counsel should be measured. The judge added:

[Verdure] hasn't produced such a report here. This is not a clear cut case for malpractice, as for example, one in which an attorney may fail to abide by a statute of limitations. Here, the issues involved require complex legal analysis of damage questions, interpretation of somewhat cryptic instructions from the trial court regarding the aspects of an expert report that would be appropriate. And plaintiff claims that an expert report is not required because the defendant should know that the proper expert testimony to present, to prove their [damage] claims. . . . However, [Wheeler and Baker] both claim that they did create appropriate legal theories and that the services of an expert on legal malpractice or damages is clearly appropriate in this instance.

[There are] also questions of who did what, when and why, with the settlement of the case, and what the various motivations . . . and intentions of the parties [were] when the earlier case was settled. . . .

The judge entered an order on August 26, 2005 memorializing his decisions.

Thereafter, Verdure submitted an expert report dated March 2, 2006 from Robert H. Tell, in which Tell opined that Baker and DBR were negligent in "their improper selection" of Dixon as Verdure's expert. Tell asserted that Dixon "could have easily" rendered an opinion on the fair cost of repairing the damaged building, and that approach would have been in accord with New Jersey law. Tell maintained that Baker should have assembled the relevant information and guided Dixon "to enable him to arrive at a conclusion consistent with New Jersey law."

Tell additionally asserted that, had Baker and DBR acted otherwise, the underlying action "would have been concluded on an entirely different basis," and Verdure would have recovered: $221,000 to repair the building; lost rental income; and the monies paid to ESA for the work. Tell opined that Verdure would not have paid $65,000 to settle the case. Tell also opined that Verdure was entitled to recover the fees and costs paid to DBR, and a dismissal of the counterclaim for the recovery of additional fees and costs.

On May 4, 2006, Wheeler filed a motion for summary judgment, noting that Tell had not offered an opinion regarding Wheeler's alleged negligence. By order entered on October 31, 2006, the judge granted Wheeler's motion and dismissed Verdure's claims against him.

On November 14, 2006, Baker and DBR filed a motion for summary judgment. On February 2, 2007, the judge considered the motion and rendered an oral decision on the record. He found as a matter of law that Baker's handling of the case was reasonable. The judge observed that if Baker had more time, "perhaps" she may have taken different actions in representing Verdure. However, the judge concluded that Wheeler's actions "forced [Baker's] hand" and the only course open to her was to present an expert report on damages based upon the replacement of the building.

The judge therefore concluded that Baker and DBR were entitled to judgment on Verdure's malpractice claim and $240,300.05 on their counterclaim for the unpaid fees. The judge entered an order on February 2, 2007, memorializing his determinations. This appeal followed.

II.

Verdure argues that Baker committed legal malpractice by retaining an expert to opine only as to the cost of replacing the damaged repair shop with an entirely new structure. According to Verdure, Baker's handling of the matter was inconsistent with New Jersey law, and the error was so plain that the judge should have granted its motion for partial summary judgment on liability.

When reviewing an order granting or denying summary judgment, we apply the same standards that are applied by the trial court when ruling on a motion seeking that relief. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Stoffels v. Harmony Hill Farm, 389 N.J. Super. 207, 209 (App. Div. 2006). Summary judgment may be granted when there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). "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).

A plaintiff asserting a legal malpractice claim must establish: 1) an attorney-client relationship that creates a duty of care; 2) breach of that duty; 3) actual damages; and 4) proximate causation. Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996). Here, there is no dispute that Baker and DBR were Verdure's attorneys, and Baker and the firm owed Verdure a duty of care when representing Verdure in the underlying action.

Consequently, Baker and DBR were required "to exercise that degree of reasonable knowledge and skill that lawyers of ordinary ability and skill possess and exercise." St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 588 (1982). Among other things, an attorney must "formulate a reasonable legal strategy." Charter Oak Fire Ins. Co. v. State Farm Mut. Auto. Ins. Co., 344 N.J. Super. 408, 415 (App. Div. 2001) (citing Ziegelheim v. Apollo, 128 N.J. 250, 261 (1992)). An attorney must "use reasonably professional judgment in so doing, whether or not that strategy is ultimately successful." Id. at 416 (citing Spaulding v. Hussain, 229 N.J. Super. 430, 442 (App. Div. 1988)).

Initially, we note that when Verdure moved for partial summary judgment, discovery in the case had not begun. Moreover, Verdure had not yet presented an expert report addressing the alleged negligence of Wheeler and Baker. Contrary to Verdure's arguments, "[t]his was not a case in which an attorney's negligence is so clear as to be reasonably within the ordinary knowledge, experience and understanding of lay people." Spaulding, supra, 229 N.J. Super. at 443. The matter was one in which Baker was required to make a professional judgment that was "beyond the ken of lay jurors." Ibid. Thus, expert testimony was required to support Verdure's claims.

Verdure argues, however, that Baker's assessment of the law and her application of the law to the facts was negligence per se. We disagree. Although the case law provides some support for Verdure's argument, there is also legal support for the approach that Baker took on damages in the underlying action.

Indeed, our case law establishes that there are several acceptable ways to measure damages for injury to real property. In Rempfer v. Deerfield Packing Corp., 4 N.J. 135 (1950), the plaintiff claimed that the defendant caused pollution of a lake and that his property had been damaged by the deposit of tainted sediment on his part of the lake bed. Id. at 139-40. As damages, the plaintiff sought the cost of dredging the bottom of the lake, removal of the tainted soil, and installation of a concrete cover. Id. at 146. The defendant argued that the plaintiff's damage claim failed because "the true test of damages is the diminished value of the property injured." Id. at 147. The Court held that while the cost of restoring the property to its condition prior to the damage was admissible, the plaintiff should present evidence to show "whether the diminution in value was more or less than the cost of restoration." Id. at 148 (quoting Hartshorn v. Chaddock, 31 N.E. 997 (N.Y. 1892)).

The Court addressed the issue again in 525 Main Street Corp. v. Eagle Roofing Co., 34 N.J. 251 (1961). In that case, the defendant repaired a roof and guaranteed the work against leaks with a promise to repair over a five-year period. Id. at 253. The roof leaked within the period covered by the guarantee and, when the defendant refused to make repairs, the plaintiff brought an action for breach of the agreement. Id. at 253-54. The defendant argued that "the controlling rule of damages is the difference between the value of the entire building with the defective roof and the value of the building if the contract had been performed." Id. at 254. The Court noted that in Rempfer, it had concluded that "while diminution in value is the measure of damages, the cost of repair is a proper element to consider in ascertaining the amount of that diminution." Id. at 254-55.

The Court stated, however, that the appropriate measure of damages "rests in good sense rather than in a mechanical application of a single formula." Id. at 255. Writing for the Court, Chief Justice Weintraub observed that the Rempfer decision "does not mean that if a porch railing were tortiously damaged, it would be necessary to think in terms of the value of the whole building." Ibid. Accordingly, the Court held that the cost of repairing the roof "is the appropriate approach without reference to the value of the building as an entity." Ibid.

A similar decision was reached in Berg v. Reaction Motors Div., 37 N.J. 396 (1962). There, the plaintiffs sought compensatory damages for structural damage to their homes that was caused by the testing of a rocket engine for a supersonic aircraft. Id. at 399-403. The trial court held that the measure of compensatory damages was the reasonable value of the cost to repair the homes. Id. at 411. The defendant argued that the proper measure of damage was the diminution of value of the property due to its activities. Ibid. The Court noted that when personal property is damaged, the plaintiff has the option to recover either the diminution in value of the property or the reasonable cost of repairs. Id. at 411-12.

The Court held that this approach should apply as well in cases involving damages to real property. The Court stated:

The repairs to the plaintiffs' homes involve the correction of impaired foundations, seam openings and cracked floors, walls, ceilings, chimneys and fireplaces. They simply entail the restoration of the homes to their condition immediately prior to the defendant's activities. The plaintiffs are concerned with living in rather than selling their homes and, in all fairness, they should have the right to recover the reasonable cost of the necessary repairs without being subjected to the artificial burden of establishing that the diminution in the salable value of their homes was in a corresponding amount. [Id. at 412.]

Berg therefore held that, in certain circumstances, damages for injury to real property may be measured by the cost of repair without regard to whether the damage has caused a diminution in value to the property.

In N.J. Power & Light Co. v. Mabee, 41 N.J. 439 (1964), the Court recognized yet another basis for compensating a property owner for damage to property. In that case, the plaintiff's utility pole was struck by an automobile and replacement of the pole was required. Id. at 441. The defendant argued that it should only be required to pay the cost required to address the emergency, and a portion of the other expenditures "to reflect only the loss of the remaining life of the pole." Ibid.

The Court stated that while both parties had drawn upon "well known concepts in the field of damages[,]" the appropriate answer did not turn upon the "'mechanical application of a single formula.'" Ibid. (quoting 525 Main Street Corp., supra, 34 N.J. at 255). The Court noted that it was not feasible to prove the diminution in value of the entire electrical circuit resulting from the damage to the single utility pole. Ibid. The Court held that the plaintiff was entitled to the cost to replace the pole because the Court could not say "with reasonable assurance that the installation of a new pole did more than remedy the wrong done." Id. at 442.

We considered similar issues in Correa v. Maggiore, 196 N.J. Super. 273 (App. Div. 1984). There, the plaintiff alleged that the defendant sold her a home but failed to disclose certain latent defects in the premises. Id. at 277. The plaintiff purchased the home for $25,000. The jury awarded the plaintiff damages of $33,000, which was measured by the cost of a complete renovation of the property. Id. at 277-78.

We set aside the award, holding that it was excessive. We noted that, in certain circumstances, compensatory awards "may fairly be measured by the reasonable costs of repairs[.]" Id. at 285. However, that approach was unjust because the cost of repairs would result in "unreasonable economic waste." Ibid. (citing 525 Main St. Corp., supra, 34 N.J. at 255). We stated:

The economic waste doctrine has its origin in compelling considerations of equity and justice, and is justified on the ground that although damages measured by diminution in value may not be sufficient to place the injured party in the same physical position as would proper performance of the contract, his pecuniary status will be substantially as good. [Ibid.]

We concluded that the cost of repairs was not a valid measure of damages because it "vastly exceed[ed] the contract price and the probable market value of the property." Ibid. We held that "the diminution in value caused by [the] defendant's deceit better reflects [the] plaintiff's actual loss and satisfies the reasonable expectations of the parties." Id. at 286.

The case law therefore does not foreclose a claim based on replacement costs. As we have pointed out, the Mabee decision allowed damages to be awarded on that basis, although it was in a different context. While the case law suggests that a demand for damages based on repair costs might have been a better choice, we cannot say that pursuit of a claim based on replacement costs was negligence per se.

Moreover, the determination of whether Baker was negligent in her handling of the underlying action does not turn solely upon her decision to seek damages based on the cost of replacing the damaged truck repair shop. Rather, the question is whether Baker's approach to damages was reasonable in light of the totality of the circumstances, which include the strength or weakness of Baker's reliance upon Mabee; the facts upon which Verdure's damage claim was based; the positions that Verdure took regarding repairs to the building, and the procedural posture of the case when Baker chose to pursue the claim based on replacement costs.

A review of evidence, viewed in a light most favorable to Baker and DBR, illustrates why Verdure was not entitled to partial summary judgment on the issue of Baker's alleged negligence. When Baker took over the case from Wheeler, Verdure had no expert who could testify on the issue of damages. Glodack had provided estimates to repair and replace the damaged building but, after his deposition testimony, and after Davidson alleged that Wheeler had offered Glodack "kickbacks" for his estimates, Verdure could not realistically proceed with Glodack as an expert witness.

Furthermore, while he was representing Verdure, Wheeler endeavored to have an expert opine that the value of the property after the damage to the truck repair shop was less than it was before the damage occurred. Wheeler consulted two appraisal experts but both were unwilling to state that the value of plaintiff's property had been diminished by the loss of the building. Moreover, ESA had retained Michael P. Hedden as its appraisal expert, and he opined that the property was actually worth more without the old building.

Therefore, when Baker assumed responsibility for the case, she had no expert who could testify concerning the probable loss of value of the property due to the damage to the building. In addition, when the judge adjourned the trial, he only permitted Baker to produce an expert or experts to render reports on the issues that Glodack had addressed, that is, the cost to repair or replace the damaged truck repair shop. As a result of the judge's order of June 19, 2003, Verdure had no expert to testify regarding the loss of value of the property, and was faced with essentially uncontested testimony from ESA's expert that the property had not lost any value as a result of the damage to the structure.

In addition, Baker's ability to assert a claim based on repair costs may have been substantially limited by the positions Verdure had taken in the lawsuit before she took over the case from Wheeler. ESA and DSI had asserted that the truck repair shop could be repaired, and they submitted an expert report from Metropolitan Engineering Associates, Inc. which estimated that the cost of those repairs was $117,304.06. However, Verdure's principal Kudlack testified at a deposition that he thought the building could not be repaired.

Moreover, Fielding, who was Verdure's engineering expert in the underlying action, opined that although some parts of the building could be salvaged, it would not be economical to do so. Fielding stated in his report that the building and its foundations should be demolished and reconstructed. Furthermore, when the Township declared the building to be an unsafe structure, Verdure took no steps to make any repairs and, later, when ordered by the Township to do so, demolished the structure.

Baker and DBR also maintain that there was insufficient documentation for an expert to opine credibly as to the cost of repairing the truck repair shop. When Baker retained Dixon, the building already had been demolished. Baker stated that when she became involved in the case, "there was virtually no secondary evidence of the damage to the building." Dixon also believed that there was insufficient documentation upon which to estimate the cost to repair the building. Baker and DBR note that, in his deposition, Tell conceded that it was within Dixon's "sphere of expertise" to determine whether he had sufficient information to make a repair cost analysis.

In sum, there was some legal support for the assertion of a claim in the underlying action for damages based on the cost to replace the damaged truck repair shop. Although a stronger case might have been made for a claim based on repair costs, that alone does not establish that Baker was negligent in her handling of the lawsuit. Given the many factual issues that bear on the reasonableness of Baker's handling of the case, we are convinced that the issue of whether Baker committed legal malpractice could not be decided as a matter of law.

We therefore conclude that Verdure's motion for partial summary judgment on the issue of liability was correctly denied.

III.

Verdure next argues that the judge erred by entering summary judgment for Baker and DBR. We agree.

Here, the judge found as a matter of law that Baker's handling of the matter was reasonable. As stated previously, we have concluded that Verdure was not entitled to partial summary judgment because the issue of whether Baker committed legal malpractice in her handling of the underlying action cannot be resolved as a matter of law. We similarly conclude that Baker and DBR were not entitled to summary judgment in this case.

In considering whether the judge erred in denying Verdure's motion for partial summary judgment on the issue of defendant's liability, we viewed the evidence in a light most favorable to Baker and DBR, the parties who opposed that motion. Brill, 142 N.J. at 540. To determine whether the judge erred in granting summary judgment to defendants, we must view the evidence in a light most favorable to Verdure. Ibid. We are convinced that Verdure mustered sufficient evidence to raise a genuine issue of material fact as to whether Baker was negligent in her handling of the underlying action.

As we pointed out previously, Mabee provided some support for a damage claim based on replacement costs. However, as Verdure points out, there is a clear distinction between damage to a utility pole and structural damages to a building of some 22,000 square feet. Verdure argues that the only sensible approach in the circumstances was the assertion of a damage claim based on the cost to repair the damaged building. Although Baker and DBR have asserted that there was insufficient evidence to make an estimate of repair costs, experts in the underlying action and in this case provided estimates of those repair costs. Furthermore, Verdure's legal malpractice expert in this case has opined that Baker's handling of the underlying action deviated from the applicable standard of care.

We are convinced that this evidence is sufficient to raise a genuine issue of material fact as to whether Baker was negligent in her handling of the lawsuit. We therefore conclude that the judge erred by granting Baker's and DBR's motion for summary judgment.

Baker and DBR argue, however, that the order granting summary judgment should be affirmed on an alternative basis not addressed by the trial court in its decision. Defendants maintain that summary judgment was appropriate because the evidence conclusively established that Verdure suffered no provable loss due to the damage to the building. Defendants assert that, even if Baker had been negligent in pursuing a claim based on the cost to replace the damaged structure, Verdure suffered no monetary loss.

In support of this contention, Baker and DBR note that Verdure purchased the entire property consisting of six parcels for $1.9 million, and eventually sold the parcel upon which the truck repair shop had been located for $1.4 million. According to defendants, Verdure sold four other parcels for more than $7 million, and retained one additional parcel containing an office building from which it expects to receive rental income of $33,000 per month. Defendants therefore argue that Verdure cannot establish that it would have received any compensation for the damage to the truck repair building because it cannot show that it would have received more than $1.4 million for the property even if the building had been repaired.

Verdure disputes defendants' assertions on this issue. Verdure points to Baker's outline of the anticipated trial testimony of Verdure's witnesses. According to that outline, Baker contemplated that Verdure's witnesses would testify that they intended to seek $2.75 million for the sale of the parcel with the truck repair shop, but would only seek $1.4 million for the property without the building. Verdure maintains that although the parcel eventually was sold for a profit, the property was worth nearly twice as much with the building rather than without.

Therefore, we are convinced that there is a genuine issue of material fact as to whether Verdure suffered any monetary loss due to the damage to the truck repair shop. That issue cannot be resolved as a matter of law. We reject defendants' contention that the order granting summary judgment should be affirmed on this alternative basis.

Affirmed in part, reversed in part, and remanded for trial in conformity with this opinion.

20080318

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