August 18, 2011
STEELE R. CHADWELL, D/B/A STEELE R. CHADWELL, ATTORNEY AT LAW, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
DEBORAH A. POST, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Morris County, Docket No. DC-5309-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 23, 2011
Before Judges Fisher, Sapp-Peterson and Fasciale.
This is an appeal and cross-appeal arising out of a fee dispute and counterclaim alleging legal malpractice. Defendant, Deborah Post, appeals the denial of her motion for reconsideration of the final judgment and the dismissal of her counterclaim. Defendant also appeals the denial of her motion for an extension of time to file an affidavit of merit. Plaintiff, Steele R. Chadwell, an attorney, cross-appeals the judgment and the orders denying his motions to amend the judgment amount and for sanctions pursuant to Rule 1:4-8. Because we conclude the court erred when it dismissed defendant's counterclaim, we reverse and reinstate defendant's counterclaim. In light of this reversal, we are also constrained to reverse the judgment entered in favor of plaintiff.
Defendant initially consulted plaintiff in July 2002. According to plaintiff, defendant discussed a variety of issues during this first meeting, including a potential guardianship of her father. Defendant contends the only issue discussed was whether she could legally prevent her father from driving. Following this meeting, defendant paid plaintiff $400 for this initial conference. The parties had a telephone conversation in September related to defendant's contention that an Adult Protective Services (APS) worker improperly entered her home in an attempt to interview her father.
Apparently, defendant and APS were unable to reach a mutual agreement concerning defendant's father. As a result, APS filed a petition for protective services and an order to show cause (OTSC). APS served defendant with the petition on October 2, 2002. Defendant forwarded the petition to plaintiff, who in turn forwarded a retainer agreement to defendant on October 9. Defendant denied receiving the agreement before October 11, although a male at defendant's address signed for the delivery on October 10.
Also on October 10, despite not having a fully executed retainer agreement, plaintiff negotiated an alternative to the petition hearing with the assistant county counsel. The hearing was scheduled for the next day, and defendant claims that plaintiff had not prepared her for the hearing nor filed a response to the petition, as he told her he would do. Instead, defendant contends plaintiff told her that if she wanted to submit anything to the court, she would have to draft it herself. As a result, defendant drafted an eleven-page letter to the court, responding to the allegations in the petition.
At the hearing on October 11, plaintiff did not want to proceed on defendant's behalf without a retainer agreement, which defendant had not brought with her. Defendant wrote the following on a legal pad: "I hereby retain, Steele R. Chadwell, to represent me in connection with the matter of John Post, alleged to be a victim of neglect. Said retention will be on an hourly basis at the rate of $200 per hour."
No witnesses were presented at the hearing. The court admitted the report from APS and permitted defendant to submit her eleven-page letter, which the court reviewed when it took a recess. During the recess, plaintiff continued to engage in negotiations on behalf of defendant with the assistant county counsel, which were reportedly contentious. Nonetheless, when the proceedings resumed, counsel advised the court that they had reached a resolution, which was then placed on the record.
Subsequent to the hearing, defendant sent plaintiff a letter confirming that she had retained plaintiff to represent her in connection with the APS matter but that "[t]he need for future services [beyond the October 11 hearing] must await the outcome of the two evaluations that I have agreed to procure for my father." Defendant also reiterated her agreement to compensate plaintiff at the $200 hourly rate and enclosed a check for $2000, which she described as "an initial payment."
Plaintiff returned defendant's check and requested that she execute the October 9, retainer agreement and remit a check to him for $3500 as the initial retainer agreement. Defendant returned an executed retainer agreement but modified it by striking any references to any proposed guardianship proceeding.
In the interim, defendant had also directly contacted the assistant county counsel. Plaintiff, upon learning from the assistant county counsel what defendant had done, sent a letter dated October 22, requesting that defendant notify him, in writing, that she would not again contact any other attorney involved in the petition, or the court, except through him, and "sign, date, fax and mail to my office, in its original form, the complete Retainer Agreement . . . together with your check in the amount of $3500." The letter also stated:
If you cannot allow me to represent you according to the terms of that Retainer Agreement, including by refraining from direct communication with the court or my adversaries in this case, then I am sorry to say that you and I can no longer continue our attorney/client relationship in this matter.
Should I fail to hear from you in the affirmative on both of the points enumerated above very soon, then I will need to promptly notify the court, [assistant county counsel] and [counsel for defendant's father] that you are retaining other counsel or will be representing yourself in this matter.
Defendant retained new counsel to represent her in connection with the APS matter and, on November 10, contacted plaintiff and requested that he submit a final bill for his professional services. Plaintiff forwarded a final bill for $7525.62. Defendant did not pay this bill. Plaintiff continued to send correspondence to defendant as well as to her new attorney in an effort to have defendant remit the final payment.
On June 3, 2003, defendant remitted a check in the amount of $3000 as the balance she owed for plaintiff's legal services. One week later, defendant filed an ethics complaint against plaintiff. The District VII Ethics Committee dismissed the action on November 3, 2003. Defendant appealed the dismissal, which the Supreme Court Disciplinary Review Board upheld.
On March 16, 2005, plaintiff filed a complaint against defendant in the Special Civil Part seeking to recover $7589.10 in unpaid legal fees. On April 22, defendant, appearing pro se, filed an answer and, in addition, asserted a counterclaim alleging legal malpractice. Plaintiff filed his answer to the counterclaim on May 27. Defendant filed an affidavit of merit on June 28, the day before trial. The court dismissed plaintiff's complaint without prejudice because of plaintiff's lack of witnesses and inability to proceed. The court also dismissed defendant's counterclaim, without prejudice, for failure to properly answer or amend answers to interrogatories.
Plaintiff re-filed his complaint seeking to collect the unpaid counsel fees on June 20, 2007. Defendant, once again appearing pro se, filed her answer and a counterclaim, which alleged legal malpractice. Plaintiff filed his answer to the counterclaim on August 28.
On October 4, plaintiff filed a motion to dismiss defendant's counterclaim and to suppress certain affirmative defenses for non-compliance with plaintiff's discovery demands. Specifically, plaintiff contended defendant had failed to identify an expert or submit an expert report. In addition, plaintiff sought dismissal of the counterclaim based upon defendant's failure to serve an affidavit of merit. On October 19, plaintiff served defendant with a frivolous litigation letter pursuant to Rule 1:4-8, demanding that she withdraw her counterclaim and affirmative defenses.
By letter dated November 5, defendant notified the court that she was not prepared to proceed to trial on November 7, as scheduled, and requested an adjournment of the trial until December. She also advised the court that she intended to retain Peter Ouda, Esq., as her expert, but that he was unavailable for trial on November 7. Also on November 5, defendant sent correspondence to plaintiff advising:
I will rely on the letter prepared by Mr. Ouda in connection with your identical complaint that you filed on me in 2005 . . . until such time as I can meet with Mr. Ouda, formally retain him, review the facts of this matter, and obtain a current expert report. You have a copy of Mr. Ouda's report dated June 27, 2005 in your file.
The parties appeared before the court on November 7, at which time the court granted the adjournment.
Defendant served an affidavit of merit on November 18, as well as a notice to plaintiff that Ouda was prepared to testify consistent with the opinions expressed in his June 27, 2005 report. Four days later, defendant filed her opposition to plaintiff's earlier motion to dismiss her counterclaim, together with three motions seeking: (1) an extension of time to file an affidavit of merit, pursuant to N.J.S.A. 2A:53A-2; (2) dismissal of the complaint for failure to answer interrogatories; and (3) an order compelling production of documents. The court later denied these motions on December 10.
On November 26, the court granted plaintiff's motion to dismiss defendant's counterclaim, but denied plaintiff's motion to dismiss defendant's affirmative defenses. A bench trial commenced on November 28, and on December 1, defendant unsuccessfully moved to reinstate her counterclaim. On December 7, she requested that the court reconsider its dismissal of her counterclaim, which the court denied.
At the conclusion of the trial, the court reserved decision and subsequently issued a written opinion in which it first found there was no valid retainer agreement executed. Notwithstanding the lack of a retainer agreement, the court concluded that plaintiff was entitled to a quantum meruit recovery of legal fees "in the amount of $3905.12[,] together with costs of suit." The court entered an order of final judgment for a total recovery of $3905.12 on March 13, 2009. Thereafter, the court denied defendant's motion for clarification and reconsideration. The court also denied plaintiff's motion for reconsideration of the final judgment and for an award of attorney's fees and costs pursuant to Rule 1:4-8. The present appeal and cross-appeal followed.
On appeal, defendant contends: (1) the court incorrectly calculated the 120-day period during which she was statutorily required to file an affidavit of merit and erred when it relied upon the dismissal of her ethics complaint as a basis for dismissing her counterclaim; (2) plaintiff would not have suffered any prejudice had the court granted her motion for an additional sixty-day period in which to file an affidavit of merit; and (3) she satisfied the "good cause" requirement for a sixty-day period in which to file an affidavit of merit. Although we agree with each of these contentions, we deem it unnecessary to address the latter two contentions, since we are satisfied defendant filed an affidavit of merit within the time period prescribed under N.J.S.A. 2A:53A-27.
N.J.S.A. 2A:53A-27 provides, in pertinent part:
In any action for . . . negligence by a licensed person in his profession or occupation, the plaintiff shall, within 60 days following the date of filing of the answer to the complaint by the defendant, provide each defendant with an affidavit of an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards . . . . The court may grant no more than one additional period, not to exceed 60 days, to file the affidavit pursuant to this section, upon a finding of good cause.
Here, plaintiff filed the collection complaint on June 20, 2007. Defendant filed her malpractice counterclaim on July 23. Plaintiff filed an answer to the malpractice counterclaim on August 28. Defendant was required to serve her affidavit of merit within sixty days of the August 28 date, or by October 27.
On October 4, prior to the October 27 deadline, plaintiff filed a motion to dismiss defendant's counterclaim for failure to timely file an affidavit of merit. The court granted the motion by order dated November 26, but this order was entered after defendant had in fact served her affidavit of merit upon plaintiff on November 18, and filed it with the court on November 20.
Thus, although the affidavit of merit was filed before the court granted plaintiff's motion, the court apparently failed to consider this fact. The court calculated the 60-day period during which the affidavit of merit was required to be served from July 23, the date on which defendant filed her answer to plaintiff's complaint. Because defendant asserted a counterclaim, the filing date should have been calculated from the date plaintiff served his answer to the counterclaim, which was August 28.
"[I]f a professional brings an action to collect unpaid fees and the defendant responds by filing a counterclaim, the defendant is 'in effect . . . the plaintiff on the malpractice counterclaim.'" Charles A. Manganaro Consulting Eng'rs v. Carneys Point Twp., 344 N.J. Super. 343, 348 (App. Div. 2001) (quoting Cornblatt v. Barow, 303 N.J. Super. 81, 84 (App. Div. 1997), rev'd on unrelated grounds, 153 N.J. 218 (1998)). "Therefore, a defendant who files a counterclaim seeking damages for professional malpractice has the same obligation to file an affidavit of merit as a plaintiff who asserts a malpractice claim in a complaint." Ibid. Here, that obligation required defendant to serve her affidavit of merit within sixty days from August 28, the date plaintiff served his answer to the counterclaim, or by October 27.
Moreover, the court improperly considered the motion to dismiss because plaintiff filed the motion prior to the expiration of the first sixty-day period during which the affidavit was required to be filed. Rather than a dismissal, the court's response should have been to deny the motion without prejudice or convert the motion into a Ferreira*fn1 conference and enter an order directing the filing of the affidavit of merit no later than December 27. The court's precipitous dismissal of defendant's counterclaim requires reversal and reinstatement of the counterclaim.
Finally, in light of our reversal and reinstatement of defendant's counterclaim, we briefly comment upon defendant's contention that the trial court erred by relying upon the ethics proceeding as a basis for dismissing her malpractice counterclaim. The order dismissing the counterclaim stated: "Defendant's counterclaim asserting professional malpractice is dismissed for failure to timely provide an Affidavit of Merit, pursuant to N.J.S.A. 2A:53A-27." However, in its findings, the court explained that both the Supreme Court's District Ethics Committee and the Disciplinary Review Board found no ethical violation by plaintiff in his representation of defendant, and the court indicated that this disposition was another reason the court dismissed the counterclaim.
"The affidavit of merit statute 'is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint,' but with whether there is some objective threshold merit to the allegations." Hubbard v. Reed, 331 N.J. Super. 283, 292-93 (App. Div. 2000) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)), rev'd on unrelated grounds, 168 N.J. 387 (2001). The Hubbard court explained:
The affidavit of merit and the method a plaintiff intends to use to prove his or her claim are distinct. The affidavit establishes a threshold of merit, while plaintiff's proofs are a function of the law of evidence, which "regulates the burden of proof, admissibility, relevance and the weight and sufficiency of what should be admitted into the record of a legal proceeding." Black's Law Dictionary 576 (7th ed. 1999). [Id. at 293.]
Accordingly, the trial court's task was solely to consider the sufficiency of the affidavit of merit itself. Ibid.
In light of our reinstatement of the counterclaim, we vacate the judgment entered in favor of plaintiff. Should defendant prevail on the merits of her legal malpractice claim, plaintiff may not be entitled to fees. See Saffer v. Willoughby, 143 N.J. 256, 272 (1996) (holding that "[o]rdinarily, an attorney may not collect attorney fees for services negligently performed.").
Reversed and remanded for trial or other proceedings.