June 30, 2011
ASLANIAN & KHOROZIAN, L.L.C., PLAINTIFF-RESPONDENT,
GRACE KAY, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4540-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued Telephonically May 27, 2011 -Decided
Before Judges Payne, Baxter and Koblitz.
Defendant Grace Kay retained plaintiff, the law firm of Aslanian & Khorozian, L.L.C. (Aslanian) to represent her in litigation with her former husband. Plaintiff eventually sued defendant for unpaid legal fees, and defendant counterclaimed for malpractice. After a jury trial, plaintiff prevailed, obtaining $30,420 in counsel fees incurred in its collection action, in addition to $15,262 in unpaid counsel fees. Defendant appeals the court's (1) refusal to extend discovery again to allow her to submit an expert report; (2) dismissal of her malpractice counterclaim based on a rejection of the common knowledge exception to required expert testimony; (3) refusal to instruct the jury and supply interrogatories on malpractice and on an attorney's ethical obligation to act with reasonable diligence and promptness; and (4) award of counsel fees. After reviewing the record in light of the contentions advanced on appeal, we affirm.
Defendant and her ex-husband, George, continued to dispute property and alimony obligations after their divorce in New York in 1999. In July 2006, defendant retained plaintiff to represent her in a dispute over title to a condominium that George had conveyed to their son, James, and James had conveyed to defendant. Around the same time, defendant filed a post-judgment matrimonial motion in New York seeking to hold George in contempt of court for failure to comply with the divorce decree.
On May 15, 2007, the New York court granted defendant's motion. It fined George and ordered him to make certain payments to defendant. George could purge the contempt if he met certain conditions, one of which was to produce proof that he had obtained a $700,000 life insurance policy naming defendant as irrevocable beneficiary, as required by the divorce decree.
Thereafter, the parties mediated the condominium dispute pending before Judge Robert P. Contillo in the Chancery Division. The mediator urged the parties to settle all matters, including those relating to George's contempt of court for violating the New York divorce decree. The parties heeded that advice and began settlement discussions.
According to Antranig Aslanian, who represented defendant during the discussions, he relied on defendant's New York divorce attorney, Joseph Brettschneider, to handle the insurance issue. In a September 17, 2007 letter to Aslanian, George's New York attorney, Thomas Wacht, stated that as part of the proposed settlement George agreed to provide "confirmation of $700,000 life insurance" with defendant as the primary insured. Wacht attached a September 14, 2007 letter to Brettschneider, purporting to provide "documentation of life insurance coverage of $700,000 with Grace Kay listed as primary beneficiary." In that letter to Brettschneider, Wacht listed the New York Life policy numbers for coverages of $500,000 and $200,000 and attached a May 18, 2007 financial activity summary for the greater and an undated face page and coverage summary for the lesser policy.
The parties finalized the terms of the settlement and placed them on the record on October 15, 2007. As part of that settlement, George agreed to maintain the two life insurance policies with defendant as the beneficiary. He agreed to maintain the $500,000 life insurance policy through May 18, 2009, and the $200,000 life insurance policy through 2011. At the end of those terms, defendant had the option of owning the policies, and paying the premiums. Wacht, George's New York attorney, represented to Judge Contillo on the record at this hearing that these policies were in effect.
On November 7, 2007, defendant retained counsel to challenge the settlement on the ground that she had been coerced to settle by her counsel, plaintiff in this matter. After a two-day plenary hearing in February 2008, Judge Contillo found that defendant had willingly agreed to the terms of the settlement. Defendant appealed that decision, and we affirmed. Kay v. Kay, No. A-5212-07 (App. Div. Apr. 21, 2009).
On June 16, 2008, plaintiff filed a complaint to recover unpaid counsel fees plus interest and costs. In February 2009, defendant filed an answer and counterclaim alleging plaintiff had "misrepresented key facts, withheld critical information and exerted undue pressure on [her] in order to force her to settle her claims against her will."
On June 9, 2009, defendant filed an order to show cause in the Chancery Division to vacate the October 2007 settlement. She alleged that in May 2009, she found out that George had failed to maintain the premiums on the life insurance policies, and both had lapsed. The $200,000 policy lapsed in 1989 after payment of only one premium. The $500,000 policy lapsed in June 2008, although the cash value on this policy was used to extend it to June 2009, a date after the agreed-upon date for defendant to take over this policy.
On July 17, 2009, Judge John J. Langan Jr., the trial judge in the present matter, granted defendant's motion to extend discovery for 120 days, until December 28, 2009.
On January 6, 2010, defendant filed another motion to extend discovery another thirty days, so that she could submit an expert report on plaintiff's malpractice. She maintained that the extension would not affect the arbitration scheduled for February 16, 2010. She explained that on January 12, 2010, she expected Judge Contillo to issue a final decision on George's breach of the settlement and that opinion would impact the scope and degree of plaintiff's negligence and defendant's damages.
On January 15, 2010, Judge Contillo found that George had materially breached the terms of the October 2007 settlement. He created a trust and ordered George to procure two life insurance policies, one for $200,000 and one for $500,000, with the trust as the owner and defendant as the beneficiary. If defendant chose to pay the premiums after the agreed-upon termination dates of the policies, George would be responsible for the increased premium costs that resulted from his allowing the policies to lapse. Judge Contillo also awarded defendant $35,303 in counsel fees and costs.
On February 2, 2010, defendant submitted to plaintiff and Judge Langan an expert report opining that plaintiff was grossly negligent in failing to confirm that the life insurance policies were in existence before execution of the settlement agreement and that this negligence caused defendant damages. The report contained no analysis of damages.*fn1
On February 19, 2010, Judge Langan denied defendant's motion for an extension of discovery because the motion was filed after the discovery end date had passed and because defendant had not established exceptional circumstances to justify an extension pursuant to Rule 4:24-1(c). Judge Langan denied defendant's motion for reconsideration and granted plaintiff's motion to exclude the defense expert report as it was not timely filed. Thereafter, Judge Langan granted plaintiff's motion barring defendant from presenting any evidence at trial on her malpractice counterclaim, determining that, in the absence of an expert's report, defendant could not establish the standard of care that plaintiff allegedly breached. We denied leave to appeal.
At trial, the central issue for the jury to decide was whether plaintiff fulfilled its obligations to defendant under the retainer agreement.
During deliberations, the jury asked whether Aslanian was obligated to verify that the two insurance policies existed and were valid prior to recommending their inclusion in the settlement agreement. Judge Langan stated that the jury was bound by his charge, and the answer to the jury's question was "not in my charge." The jury returned a verdict in plaintiff's favor.
On appeal defendant raises the following issues:
POINT I: THE TRIAL COURT ERRED IN DENYING MS. KAY'S MOTION TO EXTEND DISCOVERY FOR THE LIMITED PURPOSE OF SERVING HER EXPERT REPORT.
POINT II: THE TRIAL COURT ERRED IN PRECLUDING EVIDENCE OF PLAINTIFF'S MALPRACTICE UNDER THE COMMON KNOWLEDGE EXCEPTION AND IN STRIKING HER COUNTERCLAIM AND DEFENSES SOUNDING IN MALPRACTICE.
POINT III: THE TRIAL COURT ERRED IN REFUSING TO TAKE JUDICIAL NOTICE OF RPC 1.3, AND IN REFUSING TO CHARGE THE JURY OR INCLUDE ANY JURY INTERROGATORIES REGARDING ANY DEFENSES OF MS. KAY TO PAYMENT BASED ON PLAINTIFF'S PERFORMANCE.
POINT IV: THE TRIAL COURT ERRED IN ENTERING JUDGMENT FOR PLAINTIFF AS TO ITS CLAIM FOR ATTORNEYS' FEES IN THE UNDERLYING LITIGATION AND AS A RESULT OF ITS OFFER OF JUDGMENT.
I Although acknowledging that motions for an extension of discovery returnable after the end of discovery should only be granted "in exceptional circumstances," Rule 4:24-1(c), in Point I of her brief defendant argues that such circumstances existed here. Defendant argues that although an arbitration date had been set, no trial date was set and the expert report was served even before the motion to extend discovery was decided. She argues further that her expert was unable to complete his evaluation of damages and hence was unable to complete his report until Judge Contillo determined what relief to provide her stemming from George's breach of their settlement.
Generally, motions for discovery extensions must be returnable before the discovery end date unless the court permits otherwise "for good cause shown." R. 4:24-2. If an arbitration or trial date has been set, then the motion is subject to the more stringent "exceptional circumstances" standard. R. 4:24-1(c).
"'For purposes of . . . "exceptional circumstances," there generally must be some showing that the circumstances presented were clearly beyond the control of the attorney and the litigant seeking an extension of time.'" Huszar v. Greate Bay Hotel & Casino, Inc., 375 N.J. Super. 463, 473 (App. Div.) (quoting Zadigan v. Cole, 369 N.J. Super. 123, 132 n.8 (Law Div. 2004)), remanded on other grounds, 185 N.J. 290 (2005). "'An excessive work load, recurring problems with staff, a desire to avoid expense associated with discovery, or any delays arising out of extended efforts to resolve [the] matter through negotiations generally will not be sufficient to justify [such] an extension.'" Ibid.
We review a trial court's decision on a motion to extend discovery under the abuse of discretion standard. Bender v. Adelson, 187 N.J. 411, 428 (2006). Judge Langan did not abuse his discretion in denying defendant's motion to extend discovery due to its untimeliness and defendant's failure to establish exceptional circumstances to justify the delay in filing.
Defendant waited until January 6, 2010, after the discovery end date had lapsed and after an arbitration date had been set, to request an extension. She could have requested this extension before the discovery end date had lapsed. Further, as of May 2009, defendant knew the basis for her malpractice claim. Her only reason for the extension was to permit her expert to await the Chancery decision to assess damages. However, her expert's report did not deal with damages and could have been submitted timely, prior to Judge Contillo's decision.
II Defendant contends in Point II of her brief that the court erred in striking her malpractice counterclaim because plaintiff's malpractice fell within the common knowledge exception to the expert testimony requirement.
Legal malpractice is a negligence action. "'The elements of a cause of action for legal malpractice are (1) the existence of an attorney-client relationship creating a duty of care by the defendant attorney, (2) the breach of that duty by the defendant, and (3) proximate causation of the damages claimed by the plaintiff.'" Kranz v. Tiger, 390 N.J. Super. 135, 147 (App. Div.) (quoting McGrogan v. Till, 167 N.J. 414, 425 (2001)), certif. denied, 192 N.J. 294 (2007).
"Generally speaking, a lawyer is required to exercise that 'degree of reasonable knowledge and skill that lawyers of ordinary ability and skill possess and exercise.'" Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 12 (App. Div. 2001) (quoting St. Pius X House of Retreats, Salvatorian Fathers v. Diocese of Camden, 88 N.J. 571, 588 (1982)). It is incumbent upon the plaintiff to "present expert testimony that establishes the standard of care against which the attorney's actions are to be measured." Ibid.
In most cases, the testimony of an expert is necessary to establish that the conduct of an attorney fell below the standard of care required of the profession. Sommers v. McKinney, 287 N.J. Super. 1, 10-11 (App. Div. 1996); Brizak v. Needle, 239 N.J. Super. 415, 432 (App. Div.), certif. denied, 122 N.J. 164 (1990). Exceptions exist, such as "where the questioned conduct presents . . . an obvious breach of an equally obvious professional norm." Brach, supra, 345 N.J. Super. at 12. Examples of this type of conduct are: failing to brief an issue; inaccurately conveying the terms of a settlement offer, including the fact that the opposing party had no defense to a claim, Sommers, supra, 287 N.J. Super. at 12; failing to comply with the statute of limitations or to conduct any investigation of a client's personal injury claim, Brizak, supra, 239 N.J. Super. at 431-32; and not appearing at trial resulting in entry of a default judgment, Vort v. Hollander, 257 N.J. Super. 56, (App. Div.), certif. denied, 130 N.J. 599 (1992).
Defendant contends that a simple phone call to the insurance company would have revealed that George had not maintained the $200,000 policy since 1989. Defendant insists that plaintiff had a duty to make that call, particularly since plaintiff knew that George had violated the terms of the divorce decree in the past. Plaintiff's position was that it had relied on the work of defendant's New York attorney who handled defendant's matrimonial dispute and the representations of George's New York attorney. Whether that reliance was reasonable was not a matter of common knowledge, as the jury demonstrated by its question: "Under the law or attorney Code of Conduct was Mr. Aslanian obligated to verify the validity of the two policies prior to recommending them as part of the settlement?" An expert is certainly required to establish the breach of duty when an attorney relies on fellow attorneys and documentation supplied by those attorneys to verify the viability of insurance policies.
Thus, Judge Langan did not err in precluding defendant's use of the common knowledge exception to the need for expert opinion in a legal malpractice claim.
III In Point III of her brief, defendant asserts, based on her previous arguments, that the court erred in "refusing to take judicial notice of RPC 1.3, to charge the jury regarding the relationship between [p]laintiff's negligent services and [defendant's] obligation to pay his fees, and to permit any jury interrogatories on these topics." R.P.C. 1.3 states that a lawyer should "act with reasonable diligence and promptness in representing a client." Whether or not Aslanian acted with reasonable diligence in relying on the New York matrimonial lawyers with regard to the investigation of the viability of insurance policies required in a matrimonial judgment is not a matter of common knowledge.
Judge Langan allowed defendant to testify at length about her dissatisfaction with her counsel's representation. Although precluded from raising a malpractice claim, she presented her defense based on failure to provide proper legal representation as required by the contract between the parties.
IV In her final argument, raised in Point IV of her brief, defendant argues that because the jury verdict was caused by the judge's error, the award of counsel fees pursuant to the offer of judgment rule, Rule 4:58-1, also constitutes error. An offer of judgment was made pursuant to Rule 4:58-1, on March 8, 2010, which was not accepted by defendant. The jury verdict was a money judgment in an amount more than 120% of the offer of judgment, and thus plaintiff was entitled to reasonable attorney fees. R. 4:58-2.
Because we find no error in Judge Langan's refusal to grant a further discovery extension and subsequent striking of defendant's expert report and malpractice claims, we find he acted properly in awarding plaintiff the counsel fees required to collect the underlying unpaid counsel fees.