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Cupo v. Herten


March 10, 2010


On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3345-08.

Per curiam.


Argued February 23, 2010

Before Judges Wefing, Grall and LeWinn.

On motion of defendants Thomas J. Herten, Esq. and Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz, LLC (collectively defendants), the trial court dismissed plaintiff Michael Cupo's complaint for failure to state a claim upon which relief can be granted. R. 4:6-2(e). Cupo charged defendants with legal malpractice and alleged that they engaged in conduct that deprived him of due process rights guaranteed by the Fourteenth Amendment. Because there is no basis for finding that defendants owed a duty to Cupo or that their conduct was under color of state law, we conclude that this is one of those "rarest instances" in which dismissal pursuant to Rule 4:6-2(e) is appropriate. Lieberman v. Port Auth. of N.Y. and N.J., 132 N.J. 76, 79 (1993) (quoting Printing Mart v. Sharp Elecs., 116 N.J. 739, 772 (1989)).

These are the facts pertinent to Cupo's charges of malpractice and deprivation of due process. Defendants never represented Cupo; his claims are based upon defendants' conduct during the course of their representation of his former business partner, DeNike. Cupo and DeNike were the only members of Classic Mortgage, LLC, and DeNike retained defendants to represent him in an action to dissolve the company and acquire Cupo's interest. DeNike v. Cupo, 196 N.J. 502, 507 (2008). That matter was tried to the court. Id. at 508. Between the conclusion of trial and entry of the final order, defendants commenced discussions with the judge about joining their firm upon his upcoming retirement. Id. at 509. The judgment was entered before the judge agreed to join the firm and financial arrangements were finalized. Id. at 509-11.

Cupo raised the impropriety of defendants' negotiations with the trial judge on appeal from the final judgment entered in DeNike v. Cupo. Id. at 511-12. This court affirmed in part, reversed in part and remanded. 394 N.J. Super. 357 (App. Div. 2007). The Supreme Court concluded that the negotiations were in violation of RPC 1.12(c), Canon 3(C)(1), and Rule 1:12-1(f) and that the appropriate remedy was a new trial "to maintain public confidence in the impartiality of the judiciary." Id. at 522.

In his now-dismissed complaint against defendants, Cupo asserts that they committed legal malpractice by violating RPC 1.12(c) (prohibiting a judge from negotiating employment with an attorney involved in a matter before the judge), RPC 3.5 (prohibiting efforts to influence a judge and ex parte communications), and RPC 8.4 (defining misconduct). He asserts that as a consequence of those violations, he incurred damages in the amount of legal fees for the first trial and the harm of undergoing two trials. Cupo's constitutional claims rest on the same facts, which he alleges amounted to "intentional interference" with his due process rights warranting punitive as well as compensatory damages.

The standards governing dismissal of a complaint for failure to state a claim and review of an order dismissing a complaint on that ground are the same. See Lieberman, supra, 132 N.J. at 79 (articulating the standards to be applied by trial courts and applying them in review of the trial court's determination). The complaint must be read "in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary." Banco Popular North America v. Gandi, 184 N.J. 161, 165 (2005). The question is not whether the plaintiff can prove the allegations but whether the allegations, which are assumed to be true, suggest a cause of action. Id. at 166 (citing Glass, Molders, Pottery, Plastics, & Allied Workers Int'l Union v. Wickes Cos., 243 N.J. Super. 44, 46 (Law Div. 1990)). Dismissal is the "appropriate remedy" when the complaint, so viewed, "states no basis for relief." Ibid.

The legal malpractice claim was properly dismissed because Cupo cannot establish an essential element of the claim - "an attorney-client relationship creating a duty of care by the defendant attorney." McGrogan v. Till, 167 N.J. 414, 425 (2001). Although there is no dispute that Cupo's claim arises from defendants' representation of Cupo's adversary, Cupo relies on decisions of the Supreme Court and this court recognizing circumstances under which an attorney "owes a duty to a non-client third party." Petrillo v. Bachenberg, 139 N.J. 472, 479 (1995); see id. at 479-86 (and cases cited and discussed therein decided by our courts and others). In Banco, Justice Long summarized the rationale that defines the scope of attorney liability to non-clients - "the invitation to rely and reliance are the linchpins of attorney liability to third parties." 184 N.J. at 181. But the facts of this case do not bring Cupo within that rule.

Cupo asserts he relied on defendants' adherence to RPC 1.12(c), 3.5 and 8.4, which he asserts were violated. In our view, a litigant's reliance on the assumption that every attorney will comply with the Rules of Professional Conduct is qualitatively different than the reliance adequate to establish an attorney's duty to a non-client.

The distinction is critical. Action by the attorney inducing the non-client's reliance creates a relationship between them that substitutes for an attorney-client relationship by establishing privity, but when "the attorney does absolutely nothing to induce reasonable reliance by a third party, there is no relationship to substitute" for that element of a legal malpractice claim essential to imposition of a duty. Banco, supra, 184 N.J. at 180. "[W]hen courts relax the privity requirement, they typically limit a lawyer's duty to situations in which the lawyer intended or should have foreseen that the third party would rely on the lawyer's work." Petrillo, supra, 139 N.J. at 482. Cupo's alleged reliance on the ethical rules applicable to attorneys has nothing to do with an express or implied invitation extended by defendants to induce Cupo's reliance on their professionalism.*fn1

More important to our conclusion that this claim must be rejected, the Supreme Court has held that violation of RPC 1.2, which like RPC 1.12(c), 3.5 and 8.4 affords protection to persons other than the attorney's client, does not give a non-client injured by the attorney's ethical breach a cause of action for legal malpractice. In Banco, the plaintiff bank "aver[red] that [an] attorney assisted his client in transferring assets to defraud a creditor." Id. at 165. The bank argued, among other things, "the existence of a negligence cause of action based on RPC 1.2(d), prohibiting attorneys from assisting their clients in fraudulent acts . . . ." Id. at 182 n.8. The Supreme Court found that argument "unavailing." Ibid. Relying on Baxt v. Liloia, 155 N.J. 190, 201-02 (1998), the Court held: "Although the Rules of Professional Conduct may inform the scope of an attorney's duties, those rules do not, in themselves, create a duty, and a violation of those rules, standing alone, does not form the basis of a cause of action." Ibid.

Cupo offers no argument to distinguish a violation of RPC 1.2(d) from a violation of the provisions upon which he relies, and there is no basis for a distinction with apparent relevance to a claim for malpractice. Accordingly, we conclude that the dismissal of this claim for legal malpractice is consistent with Banco.

Recognizing that existing precedent does not support his cause of action for legal malpractice, Cupo argues that the trial court erred in "rejecting [his] invitation to establish a new, precedent-setting cause of action." Appropriate sanctions and remedies for ethical breaches by attorneys, however, are within the "exclusive province" of the Supreme Court. McKeown- Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 554 (1993). Thus, the trial court properly declined the invitation.

We turn to consider the dismissal of Cupo's claims against defendants based upon his allegation of intentional interference with his Fourteenth Amendment right to due process. Again, we may not and do not consider whether Cupo can prove the alleged conduct. Banco, supra, 184 N.J. at 166. The question is whether Cupo would have a cause of action for the conduct of a private attorney and a private law firm if he proved that they intentionally interfered with his right to due process. See ibid.

"As a general matter the protections of the Fourteenth Amendment do not extend to private conduct abridging individual rights." Nat'l Collegiate Ath. Ass'n v. Tarkanian, 488 U.S. 179, 191, 109 S.Ct. 454, 461, 102 L.Ed. 2d 469, 484 (1988) (citation omitted); see Rivkin v. Dover Twp. Rent Leveling Bd., 143 N.J. 352, 363 (noting that the plaintiff must establish that the person is one acting under color of state law), cert. denied, 519 U.S. 911, 117 S.Ct. 275, 136 L.Ed. 2d 198 (1996). Without citation to supporting authority, Cupo argues that defendants are state actors because their offer of future employment to the judge compromised him and ultimately caused Cupo to shoulder the burden of participating in two trials.

It is true that under some circumstances private parties can be civilly liable for damage caused by violations of constitutional rights accomplished through their cooperation with a state actor. While there is no single or uniform test to determine if a private act may be attributable to the state, it is clear that "a challenged activity may be state action . . . when a private actor operates as a 'willful participant in joint activity with the State or its agents.'" Brentwood Acad. v. Tenn. Secondary Sch. Ath. Ass'n, 531 U.S. 288, 296, 121 S.Ct. 924, 930, 148 L.Ed. 2d 807, 817 (2001) (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 941, 102 S.Ct. 2744, 2756, 73 L.Ed. 2d 482, 498 (1982)). There is no question that "[p]rivate parties who corruptly conspire with a judge" are deemed to act "under color of state law within the meaning of § 1983," but this complaint does not allege any concerted action undertaken with the purpose of depriving Cupo of a fair trial. Dennis v. Sparks, 449 U.S. 24, 29, 101 S.Ct. 183, 187, 66 L.Ed. 2d 185, 190 (1980) (discussing a claim based on bribery).

Cupo asserts that "[w]hen a [s]tate [c]court judge is the instrumentality that causes the injury, there is state action and the person who caused the [j]udge to be compromised" caused the injury, but Cupo provides no authority in support of that broad rule. The Supreme Court determined that the judge's action in creating an "appearance of impropriety" was aptly characterized as "'a momentary slip' in [the judge's] unblemished tenure" warranting a new trial, DeNike, supra, 196 N.J. at 522. As we understand the principles, the joint participation essential to establish state action requires more than contribution to circumstances that give rise to an appearance of impropriety. See generally Dahlberg v. Becker, 748 F.2d 85, 92 (2d Cir. 1984) (discussing the various circumstances under which a private actor's joint participation with state actors amounts to state action), cert. denied, 470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed. 2d 144 (1985); Delbridge v. Office of Public Defender, 238 N.J. Super. 288, 301-02 (Law Div. 1989) (discussing elements of a claim based on conspiracy to deprive another of constitutional rights), aff'd o.b. sub nom., A.D. v. Franco, 297 N.J. Super. 1, 5 (App. Div. 1993), certif. denied, 135 N.J. 467 (1994).


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