On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-2680-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 29, 2010
Before Judges Fisher, Sapp-Peterson and Simonelli.
In this appeal, plaintiff Siete Urban Associates, LLC (Siete), which succeeded to the interests of One Washington Park Urban Renewal Association (OWPURA), claims the right to commence and pursue a legal malpractice action against defendants --based on defendants' alleged malpractice in representing OWPURA during a complex financial closing in 1996 -- when it filed an amended complaint in this action in 2009. We find no merit in Siete's contention that its amended complaint should relate back to when an action was first filed by Charles W. Geyer, a partner in OWPURA, who was subsequently found by this court to lack standing, or that the equities otherwise favor the tolling of the statute of limitations. Indeed, we conclude it would be unfair to defendants and injurious to the administration of justice to excuse Siete's thirteen-year slumber in the face of defendants' constant and prolonged insistence in prior proceedings that Geyer lacked standing. Accordingly, we affirm the dismissal of Siete's amended complaint.
Siete's claim, which, as noted, was previously asserted and pursued by Geyer, arises from defendants' representation of OWPURA during the refinancing of property OWPURA owned in Newark. The relevant circumstances were thoroughly outlined in our opinion regarding Geyer's prior appeal in this matter. Geyer v. Pitney, Hardin, Kipp & Szuch, No. A-4818-05 (App. Div. Apr. 15, 2008), certif. denied, 196 N.J. 466 (2008). It suffices to say for present purposes that the malpractice claim first asserted by Geyer, and now by Siete, focuses primarily on defendants' failure to submit a consent order to the bankruptcy court that had jurisdiction over OWPURA's assets and financial affairs. The lender in the financial transaction, which was closed over the course of a few days in August 1996, deemed the consent order critical because of its intention to transfer the new loan to a third party, and remoteness from the bankruptcy proceeding was deemed important in gaining the expected profit from the resale. As a result, the consent order was a document prepared for and exchanged at the closing; it called not only for the dismissal of the bankruptcy action but also expressed the parties' agreement to submit any future disputes to state court. However, as acknowledged at his deposition, defendant Bristol "mucked up" by failing to quickly submit the consent order for the bankruptcy judge's signature. By the time it was submitted, the order's execution was precluded by the interim filing of motions.
The claim of malpractice is based, in large part, on the contention that, had the consent order been submitted expeditiously, the bankruptcy action would have been dismissed and the lender would have achieved the desired remoteness from the bankruptcy proceeding. Due to defendants' failure to obtain a rapid dismissal of the bankruptcy proceeding, the original lender could not "flip the loan" and remained the holder of the mortgage. According to Geyer and now Siete, the lender thereafter manipulated matters in order to generate a default on the loan. Geyer, supra, slip op. at 34-35. At about the same time, a state court action was commenced by the other OWPURA partner against Geyer, and the lender filed a foreclosure action against OWPURA. These two actions were consolidated, and the judge appointed a receiver to dissolve OWPURA.
On July 31, 1997, while the consolidated actions were still pending and OWPURA not yet dissolved, Geyer filed an action in the trial court alleging defendants' malpractice. The action, however, was quickly dismissed without prejudice because, as the judge at that time concluded, OWPURA was "in receivership and the receiver alone ha[d] the sole authority to institute a legal action . . . and ha[d] not yet chosen to do so." Later, after Geyer and his partner resolved their disputes, the receiver expressed his intention to the judge in the consolidated actions "to abandon these claims in favor of Mr. Geyer, who would then be free, if he chooses, to proceed to litigate same as successor to OWPURA." An order memorializing that abandonment was entered on May 22, 1999.
Geyer filed a legal malpractice action against defendants on July 22, 1999. Defendants moved for summary judgment, arguing Geyer lacked standing, which prompted an evidentiary hearing as to the receiver's intentions. The receiver testified there were sufficient assets for the payment of OWPURA's debts and that he did not need to pursue the malpractice action in order to successfully complete the receivership; he further asserted that his purpose in abandoning the claim was to allow Geyer to pursue it, reasoning that Geyer would be the eventual sole owner of OWPURA since his former partner no longer possessed an interest in OWPURA. As the receiver testified, the abandonment of the claim to Geyer was "just [the means of] facilitating that [outcome] in advance." The judge thus permitted Geyer to pursue the malpractice action "on behalf of" OWPURA.
Discovery was completed, but the suit was dismissed without prejudice by way of a consent order entered on July 16, 2002, due to Geyer's inability to proceed to trial based on his former attorney's incapacity. The order also contained defendants' agreement not to assert the statute of limitations as a defense when Geyer later refiled his action.
As permitted by the consent order, Geyer filed a new legal malpractice action against defendants on July 15, 2003. In again seeking dismissal based on standing grounds, defendants argued that the receiver's abandonment of the claim constituted an impermissible assignment of a tort claim and that ownership of the claim devolved to the entity that obtained OWPURA's assets. That successor was Siete. The trial judge disagreed with defendants' standing argument but ultimately granted summary judgment in their favor.
Geyer appealed, and defendants cross-appealed, arguing again that Geyer lacked standing to pursue what had been OWPURA's legal malpractice action. By way of our unpublished April 15, 2008 decision, we agreed that Geyer lacked standing because the process by which the receiver "abandoned" the claim to Geyer was in reality an impermissible assignment and that the claim resided with the entity that succeeded to OWPURA's remaining post-receivership assets, which appeared to us at the time to be Siete. Geyer, supra, slip op. at 24-28. In holding that Geyer lacked standing, we directed the dismissal without prejudice of his legal malpractice action. Id. at 29. In the same breath, we also declared that we had "not foreclose[d] the substitution of the proper plaintiff or the amendment of the complaint to permit the action to be further pursued by the true party in interest, but we also intimate[d] no view as to how such an application should be decided if ever presented." Id. at 29-30.
Following that disposition, Siete successfully moved in the trial court for leave to file an amended complaint, which was filed on March 12, 2009. Defendants filed an answer, asserting the defense of the statute of limitations on which ground, as well as others, they soon thereafter moved for summary judgment. Defendants' motion for summary judgment was granted on June 26, 2009, on statute of limitations grounds.
Siete appealed, arguing that: (1) summary judgment was precluded because of material issues of fact as to whether the statute of limitations had run; (2) defendants' failure to raise the statute of limitations during Geyer's earlier appeal required that the argument be deemed abandoned; (3) the statute of limitations was tolled during the period of time when the trial court determined that Geyer had standing to pursue the action; (4) the July 16, 2002 consent order contained defendants' waiver of the statute of limitations defense; and (5) Rule 4:9-3 should apply and permit the filing of Siete's amended complaint to relate back to the filing of Geyer's 1999 complaint. We find insufficient merit in Siete's first three arguments to warrant discussion in a written opinion, Rule ...