October 27, 2011
TERESA BUNKERS, F/K/A TERESA B. HUCK, PLAINTIFF-APPELLANT,
EDWARD S. SNYDER, ESQ., INDIVIDUALLY AND AS A MEMBER OF THE FIRM KNOWN AS WEINSTEIN SNYDER LINDEMANN SARNO, P.C., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-0916-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 3, 2011
Before Judges A. A. Rodriguez and LeWinn.
In this legal malpractice action, Teresa Bunkers, formerly Teresa B. Huck, appeals from the January 25, 2010, March 5, 2010 and the March 19, 2010 orders in favor of her former divorce lawyer, Edward S. Snyder, and his law firm, Weinstein, Snyder, Lindemann, Sarno, P.C. (collectively "Snyder"). Bunkers argues that the judge erred by finding that the report submitted by her legal malpractice expert, Toni R. Ann Marcolini, was a net opinion. This finding led to the entry of the January 25, 2010 order entering summary judgment in favor of Snyder and dismissing Bunkers' complaint. Bunkers also contends that the judge erred by denying her motion for reconsideration in the March 5, 2010 order. Lastly, she argues that the judge erred by entering the March 19, 2010 order denying her post-judgment motion for a limited extension to the discovery period in order to supplement Marcolini's report. We agree with Bunkers' first two contentions and, therefore, reverse and remand for further proceedings.
Bunkers and Anthony Huck were married for sixteen years and had four children. Buck retained Snyder who filed a divorce complaint on her behalf. Huck answered and counterclaimed.
The parties engaged in settlement discussions. Bunkers and Huck executed a property settlement agreement (PSA) on September 9, 2003. The terms of the PSA that are relevant to this appeal include: (a) any stock options are to be divided equally between the parties as of June 30, 2002; and (b) Bunkers is to receive limited term alimony of $10,000 per month, plus twenty percent of Huck's annual salary and bonuses over $450,000 for fourteen years, unless Bunkers remarries or one of the parties dies before that time. On the same day, Judge David J. Issenman, J.S.C. granted a divorce that incorporated the terms of the PSA.
Five years later in August 2007, Bunkers retained new counsel, Karin Duchin Haber, negotiated a consent order that increased Huck's child support obligation. The support was increased to $7,000 per month effective July 2007.
In July 2008, Bunkers sued Snyder, asserting a claim for legal malpractice. Specifically, Bunkers alleged that in negotiating the PSA, Snyder deviated from the accepted standard of care of an attorney by not treating the stock options as part of Huck's income. As a result, Bunkers' spousal and child support awards were not based on Huck's true income. Thus, she suffered economic loss. After issue was joined and as part of the discovery process, Bunkers timely served a September 5, 2008 expert report prepared by Marcolini.
Marcolini's nineteen-page report first listed the documents made available to her, followed by a summary of the facts. She described the marital life style as "upscale" and indicated that stock options generated a significant portion of Huck's income and supported the marital standard of living. Marcolini noted that in 2001 and 2002, respectively, Huck's income, attributable to the exercise and sale of stock options, was $2,757,912 and $841,389 respectively.
In the section titled "ALIMONY," Marcolini cited to the following governing authorities:
The goal of a proper alimony award is to assist a supported spouse in achieving a lifestyle that i[s] reasonabl[y] comparable to the one enjoyed while living with the supporting spouse during the marriage.
Crews v. Crews, 164 N.J. 11, 16 (2000); in accord with Innes v. Innes 117 N.J. 496, 503 (1990); Mahoney v. Mahoney, 91 N.J. 488, 501-502 (1982); Lepis v. Lepis, 83 N.J. 139, 150 (1980); Khalaf v. Khalaf, 58 N.J. 63, 69 (1971). It is an outstanding principle of law that investment income should be imputed to a payor spouse for purposes of calculating alimony. Miller v. Miller, 160 N.J. 408 (1999).
In the section titled "CHILD SUPPORT," Marcolini once again explained the governing standard, and her conclusions based on it. Marcolini opined that:
New Jersey statutes require that a determination of child support be based on "all sources of incomes and assets of each parent." N.J.S.A. 2A:34-23A(3). The guidelines refer to gross income as "all earned and unearned income that is reoccurring or will increase the income available to the recipient over an extended period of time." Pressler, Current N.J. Court Rules, App. IX-D. Typically, stocks are excluded from gross income because they are not income producing assets unless, of course, they were purchased with the [in]tention of avoiding child support. However, the Court has concluded that "the ability to exercise stock options does not, by itself, give rise to income for purposes of defendants child support obligation, but the actual exercise of the options may give rise to the income if there is a demonstrated fair market value of the stock above the option price . . . the exercise of the stock option may constitute income in New Jersey . . . the profitable sale of stock after exercise of the options, certainly constitutes income." Heller-Loren v. Apuzzio, 371 N.J. Super. 581...(App. Div. 2004).
[Here,] it appears that based on the numbers arrived at for child support just as with alimony, all calculations were done on the husband's base salary of $450,000 per year.
The reality is that the parties were supporting their lifestyle on the regularly and reoccurring income generated by exercising stock options. In these cases, earnings history is considered by the court.
The husband had received stock options each year commencing from 1997 and continuing through the present. That is a factor that would not have been disregarded by [the] judge establishing a child support figure.
Marcolini concluded that Snyder breached the applicable standard in three ways. First, he failed to advise Bunkers that stock options arising from work performed during the marriage are subject to equitable distribution. Second, he improperly advised Bunkers that a court would not include income from Huck's exercise of future stock options in calculating alimony and did not adequately advise her of the strength of her claim to permanent alimony. Third, he erroneously advised Bunkers that Huck's income from future stock options would not be considered in determining child support payments and, therefore, she was not entitled to more than the $5,000 per month in child support provided under the PSA.
The Marcolini report concluded with the following summary:
[F]or the reasons set forth above, I believe that the Huck settlement deviates materially from the reasonable expectations that a client would expect to receive from a competent matrimonial lawyer. It falls far below what I believe were the parameters for possible outcomes had the case gone to trial. As such, [Snyder] deviated from the standard of care owed to [Bunkers].
I believe that [Bunkers] should have received 50% of the options that resulted from work performed during the marriage as part of her share of the marital estate for equitable distribution purposes. Even though she mitigated her damages for 25%, the balance of 25% remains an issue to be addressed herein. Since she exercised these options and received $125,000 for her 25% share, had she had the full 50%, she would have received another $125,000.*fn1
Both the alimony and child support calculations should have been performed utilizing [Huck's] total annual income inclusive of the regular and reoccurring stock options income. That was not done in this case causing [Bunkers] to lose a substantial sum of regular support she required to maintain the marital standard of living. The probable loss suffered by [Bunkers] is $8,356,370.
After receiving the report and deposing Marcolini, Snyder moved for summary judgment. The principal argument was that Marcolini's report was merely a net opinion. In a letter opinion accompanying the January 25, 2010 order, the judge found that Marcolini's report was an inadmissible net opinion because the standards articulated therein were personal to her. The judge noted that the report is "rife" with first party references and "completely devoid of reference to formally accepted standards in the profession." He took particular issue to Marcolini's frequent use of the phrase "I believe" in her summary, finding that the phrase "obviously refers to her personal conclusions, because there is no reference to generally accepted standards."
Bunkers moved for reconsideration, arguing that summary judgment should be vacated because the judge failed to recognize that Marcolini's report cites numerous authorities and is not a net opinion. Bunkers also argued that the judge did not consider that Snyder had an obligation to further probe the basis of Marcolini's opinion during her deposition. Bunkers relied on an unpublished Appellate Division opinion and Ferrante v. Sciaretta, 365 N.J. Super. 601 (Law Div. 2003). Bunkers also argued that in the interest of justice, Marcolini should be permitted to address any deficiencies at trial or through an amendment of her report.
The judge denied Bunkers' motion for reconsideration. He was not persuaded that Marcolini should be given an opportunity to address any deficiencies at trial. He also found that Marcolini's responses to deposition questions about the basis for her opinion supported his conclusion that she was expressing her own personal opinion.
Bunkers then moved to reopen discovery for the limited purpose of adding the following two paragraphs to Marcolini's report:
Throughout my report, I have used the term "I believe". This is not my personal belief of the type found in Kaplan v. Skoloff and Wolfe, 339 N.J. Super 97 (App. Div. 2001) but rather an expression of my opinion in accordance with applicable standards of care and/or standard ranges of probabilities as the case may be.
The standards of care about which I opine in my opinion are not standards of care or conduct which are personal to me. They are accepted standards of attorney practice in both the community of attorneys at large and the more narrow field of attorneys who represent clients in matrimonial dissolution cases. These are standards with which I am familiar. They are objective standards, and are exemplified by the various cases and in one case a statute which I have cited in my report.
The judge denied the motion, finding that there were no changed or exceptional circumstances justifying relief from judgment pursuant to Rule 4:50-1(e) and (f).
On appeal, Bunkers contends that her expert report "is not a net opinion because it references written standards, explains the 'why and wherefore' of the opinion, and predicts probable outcomes." We agree.
The standard of review that applies to decisions regarding the admission or exclusion of expert testimony, the scope of direct and cross-examination of an expert, and the evaluation of expert testimony are reviewed in accordance with an abuse of discretion standard. State v. Torres, 183 N.J. 554, 572 (2005).
A net opinion is one identified by an expert as a deviation from a standard of care, which is based on speculation or mere possibilities. Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 11 (App. Div. 2001); Vuocolo v. Diamond Shamrock Chems. Co., 240 N.J. Super. 289, 300 (App. Div.), certif. denied, 122 N.J. 333 (1990). Such opinion is inadmissible. Brach Eiler, supra, at 11. A net opinion violates the requirement set in N.J.R.E. 703 that an expert's opinion must be based on "facts, data, or another expert's opinion, either perceived by or made known to the expert, at or before trial." Carbis Sales, Inc. v. Eisenberg, 397 N.J. Super. 64, 78-79 (App. Div. 2007) (quoting Rosenberg v. Tavorath, 352 N.J. Super. 385, 401 (App. Div. 2002)). Thus, the expert's opinion in a legal malpractice action must be based "on standards accepted by the legal community and not merely the expert's personally held views." Carbis, supra, 397 N.J. Super. at 79. The expert must offer "some evidential support . . . establishing the existence of the standard." Taylor v. DeLosso, 319 N.J. Super. 174, 180 (App. Div. 1999).
In addition, the expert generally must "'explain a causal connection between the [alleged malpractice] and the injury or damage allegedly resulting there from.'" Kaplan v. Skoloff & Wolfe, P.C., 339 N.J. Super. 97, 102 (App. Div. 2001) (quoting Buckelew v. Grossbard, 87 N.J. 512, 524 (1981)). In other words, the expert must "'give the why and wherefore of his or her opinion, rather than a mere conclusion.'" Ibid. (quoting Jimenez v. GNOC Corp., 286 N.J. Super. 353, 540 (App. Div.), certif. denied, 145 N.J. 374 (1996)).
Here, judging by that standard, Marcolini's report was not a net opinion. It identified the standard of care of an attorney. It also supplied statutory and case law guidelines for distinguishing between income and assets. Finally, the report gave a basis, governed on the facts alleged by Bunkers, from which a jury could conclude that Snyder had deviated from the standard of care, and this deviation resulted in a loss to Bunkers.
Therefore, pursuant to the standard set in Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995), we conclude that the competent evidence "viewed in the light most favorable to the non-moving party," with all favorable inferences granted to the non-moving party, is "sufficient to permit a rational fact finder to resolve the alleged disputed issue in favor of the non-moving party." Ibid. Thus, summary judgment was erroneously granted to Snyder.
Bunkers also contends that: (a) "even if the court excludes the expert report of Ms. Marcolini, an expert report is not necessary under these circumstances and summary judgment should not have been granted;" (b) "applying common law/case law standards for which no expert opinion is necessary, the trial court erred by failing to note that there are disputed issues of material fact which preclude the entry of summary judgment;" and
(c) "even if the court considers Ms. Marcolini's report and deposition testimony to be 'net opinion,' Bunkers is allowed leeway to amplify the opinion and report at trial or, alternatively, to amend the expert report to address this issue." We need not reach these contentions given our holding that the Marcolini report is not a net opinion.
Lastly, Bunkers contends that under the present limited factual circumstances, the trial court abused its discretion by refusing to allow Bunkers, pursuant to R. 4:24-1(c), to amend her expert report to add two paragraphs, but instead imposed a draconian consequence of exclusion of the expert report and dismissal of the Bunkers' case for reasons directly connected to the medical disability of Bunkers' counsel.
We disagree with these contentions. Bunkers did not meet the exceptional circumstances standard, so as to justify a post-judgment motion extension of discovery. However, given our reversal of summary judgment, and in light the advance notice received by Snyder, Bunkers may file an amendment to Marcolini's report, limited to the two paragraphs quoted in this opinion, no later than November 28, 2011.
Reversed and remanded.