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Burke v. Skoloff & Wolfe

July 25, 2008


On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-2666-04.

Per curiam.


Argued February 6, 2008

Before Judges Parker, R. B. Coleman and Lyons.

In this action asserting legal malpractice, plaintiff Arlene Burke appeals from the November 3, 2006 order of the Law Division, Union County, granting summary judgment in favor of defendants Skoloff & Wolfe, P.C. and Edward J. O'Donnell.*fn1 We affirm.

Plaintiff and her ex-husband, William M. Burke, were married in June 1960. After approximately thirty-six years of marriage, on August 1, 1996, plaintiff filed a complaint for divorce. During the marriage, the couple accumulated substantial assets and enjoyed an affluent lifestyle. They owned a residence in Short Hills as well as a home in Mantoloking. Dr. Burke, a cardiologist, was sixty-three years old at the time of the divorce. Expert valuations of his medical practice varied, ranging from $800,000 to $1.5 million. Dr. Burke was also a majority shareholder in an entity known as Allied Risk, to which he had loaned $288,000 from marital assets. The net value of Allied Risk was estimated to be about $58,000. To manage some of their properties as part of an estate plan, the couple had set up a limited partnership in which they were the general partners and their five children were the limited partners. Dr. Burke and Mrs. Burke each held a twenty-three percent interest in the limited partnership and the remaining fifty-four percent was held in equal shares by the five children. The assets of the partnership included (1) an office building for Dr. Burke's medical practice located in Berkeley Heights, (2) vacant land in Monmouth County, and (3) the residential property in Mantoloking.

Following a great deal of negotiation, the parties arrived at a property settlement agreement, the terms of which were acknowledged and agreed upon in open court on May 22, 1998. Before entering the judgment, the trial judge questioned plaintiff about her understanding of the agreement, and she indicated that she had ample time to review the terms of the settlement, that she had entered into the settlement voluntarily, and that she believed the terms of the settlement represented a fair, reasonable and equitable compromise of the issues between herself and her husband. She also testified that she was satisfied with the advice of her attorneys and accountant.

Pursuant to the settlement agreement, which was signed on May 21, 1998, plaintiff was to receive $350,000 for her share of the medical practice. She agreed to assume $135,000 of the debt associated with Allied Risk, and the parties agreed that the Burke Family Limited Partnership had a gross value of $2,910,000 and a net value of $2,860,000. Consequently, Dr. Burke was to be paid $1,430,000 for his interest in the partnership. Fifty-thousand dollars was subtracted from the gross value to pay a debt to John Burke, defendant's brother. Property in Ocean County and the former marital home in Short Hills were to be sold immediately and the net proceeds shared equally. The parties also agreed that Dr. Burke was to pay Mrs. Burke $150,000 per year in alimony. The trial court did not then evaluate the fairness of the agreement but determined that the parties understood the terms and were acting voluntarily and without coercion.*fn2

In time, however, plaintiff retained new counsel in order to attempt to vacate and/or modify the judgment of divorce and settlement agreement. The trial court denied that motion and plaintiff appealed. In an unpublished opinion, another panel of this court remanded the matter because of its concerns regarding the fairness of three aspects of the agreement: (1) the amount plaintiff was to pay to purchase defendant's interest in the partnership, (2) plaintiff's agreement to assume $135,000 of the debt of Allied Risk, and (3) the amount of the alimony. Burke v. Burke, No. A-6367-98T1 (App. Div. April 3, 2001) (slip op. at 25-28).

The panel recognized in its opinion that plaintiff's attorneys had advised her against taking the settlement because the Mantoloking property, which she was determined to retain, would represent a large portion of her equitable distribution share. As to Mrs. Burke's strategy in the agreement, the panel commented:

As we will note later, we question the logic of some of the decisions she ultimately made. We stress, however, that these were her decisions, not those of her attorneys or her husband. Indeed, the problems we will address in our consideration of the fairness of the agreement would appear to stem from plaintiff's stubbornness and intractability. [Id. at 21).]

The panel also agreed with the trial court that Mrs. Burke had not acted under duress when the property settlement agreement was reached or when negotiations were taking place. In fact, it noted "her conduct belied any claim that she was coerced. Plaintiff was fully engaged in the negotiations and strongly objected when her attorneys wavered on issues she deemed important." Id. at 21.

Plaintiff did, however, fare better on remand than she had under the settlement agreement. In accordance with a written opinion dated November 14, 2001, the remand court reconsidered its decision of May 12, 1999 and concluded that notwithstanding the conclusion in its initial decision "that the plaintiff received the agreement she wanted and bargained for," on reconsideration, the court found that the agreement was not fair and equitable. As a result of the reconsideration, instead of assuming a $135,000 debt of Allied Risk, plaintiff was to receive $29,000 for her share of that company. In addition, the trial court determined that the new payout figure to defendant for his twenty-three percent share of the limited partnership would be $800,000, rather than approximately $1.4 million based on a fifty percent share of an assumed value of $2.8 million. The remand court also adjusted the alimony payable to plaintiff from a base of $150,000 a year or twenty percent of defendant's adjusted gross income to a base of $252,000 a year or twenty percent of the adjusted gross income, but not to exceed $252,000 a year. The court also revisited the issue of counsel fees and awarded $75,000 to plaintiff to be paid from defendant's share of the proceeds of the sale of the Short Hills home.*fn3

On April 5, 2004, plaintiff filed a three-count complaint in this action alleging that her attorneys, the defendants herein, failed to properly and adequately advise her with respect to the matrimonial action, thereby committing (1) professional malpractice, (2) breach of contract and (3) breach of an implied covenant of good faith and fair dealing. On or about June 8, 2004, defendants Skoloff & Wolfe P.C. and Edward O'Donnell answered the complaint, and the firm asserted a counterclaim seeking to recover the value of services rendered. On or about September 23, 2006, defendants moved for summary judgment, which was granted by order dated November 3, 2006. Thereafter, on February 20, 2007, the parties entered into a stipulation of dismissal without prejudice that resolved the counterclaim and all matters between them pending before the Law Division. That stipulation was filed with the Clerk of the Superior Court on March 7, 2007, and plaintiff's notice of appeal from the order granting summary judgment was filed with the court that same date.

In the instant appeal, plaintiff contends the trial court erroneously dismissed her action to recover the legal fees she alleges she incurred as a result of the deficient settlement agreement that she entered into while she was represented by ...

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