On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2537-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 21, 2011 -
Before Judges Cuff and Lihotz.
Plaintiffs Richard Tietjen, Robert H. Ahrens, III, and Wainwright Estates Partners, LLC (Wainwright) appeal from the summary judgment dismissal of their legal malpractice complaint against their former attorney, defendant Richard Mazawey. On defendant's motion, the Law Division judge concluded plaintiffs' expert rendered a net opinion when analyzing plaintiffs' negligence claims in a commercial real estate transaction. On appeal, plaintiffs challenge the court's determination as error. We disagree and affirm.
These facts are taken from the motion record and viewed in a light most favorable to plaintiffs as the non-moving party. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010); Estate of Komninos v. Bancroft Neurohealth, Inc., 417 N.J. Super. 309, 313 (App. Div. 2010).
Wainwright was formed in June 2005 for the purpose of acquiring property for redevelopment in the City of Newark. Wainwright, as the redeveloper, contracted with the City to acquire several lots in Block 3067 to construct multi-family residential structures (the Development Agreement). The Development Agreement, at Section 701 B, contained a provision restricting the redeveloper's transfer of the realty prior to closing title, characterized by the parties as an "anti-flipping" clause.*fn1
JJMR, LLC (JJMR) owned 100% of the stock of Wainwright. In an effort to acquire the realty and assume its redevelopment without violating the "anti-flipping" clause of the Development Agreement, Tietjen and Ahrens created a construction company, Con Ro Construction, LLC, (Con Ro) to acquire JJMR's interest in Wainwright. A contract was drawn proposing JJMR would sell its "membership interest" in Wainwright, including "all interests to and in the [Newark] Property and the Development Agreement," to Con Ro, its "designees or assignees," for one million dollars (the contract). Upon signing the contract, Con Ro paid JJMR a $25,000 down payment.
The contract included various requirements regarding closing. For example, signing triggered a thirty-day contingency period during which Con Ro could conduct due diligence and was permitted to cancel the agreement. At the close of the due diligence period, Con Ro was required to remit a $50,000 deposit, then schedule closing, and pay the balance of the purchase price within thirty days. If Con Ro failed to comply, JJMR had the option of canceling the contract with the forfeiture of the $25,000 payment, but would return the $50,000 payment.
Contemporaneously, Con Ro executed a written legal services agreement retaining defendant to provide legal representation. Defendant advised Con Ro to keep him "fully and completely advised to all financing and investor funding matters." On February 8, 2006, defendant reviewed the contract and issued a written statement of concerns, noting the due diligence period ended on April 7, 2006. Defendant advised Con Ro "against going forward with the transaction," and specifically identified the problems posed by the anti-flipping provision of the Development Agreement and JJMR's failure to obtain approval from the City of Newark for the transfer.
In a second correspondence, dated March 1, 2006, defendant reiterated the difficulties posed for plaintiffs by the terms of the contract with JJMR, stating the provisions would likely result in difficulty obtaining financing. This letter also stated plaintiffs accepted the existing terms of the contract with full understanding of defendant's objections and were determined to proceed with the transaction. Defendant's correspondence again reminded Con Ro that the due diligence period expired on April 7, 2006.
At the conclusion of the due diligence period, Con Ro failed to remit the $50,000 deposit payment. On April 18, 2006, defendant advised plaintiffs that JJMR had demanded payment, which was past due, under the terms of the contract. JJMR also sought to schedule closing for May 8, 2006. A formal written extension does not appear to have been prepared. In any event, plaintiffs advised "an additional week to ten days" was needed and JJMR issued notice that the "'Time is of the Essence' closing date" was set for May 19, 2006.
On May 19, 2006, Con Ro failed to close. Consequently, JJMR declared Con Ro in default, cancelled the agreement, and retained the initial $25,000 deposit, pursuant to Section 18 B of the agreement. In late May 2006, defendant ceased his legal representation. Plaintiffs retained a different attorney to resurrect the transaction with JJMR. Because of the default, plaintiffs were required to renegotiate with JJMR. They asserted they paid an additional $200,000 plus approximately $20,000 in legal fees to their new counsel and "around $15,000" as legal fees to JJMR to secure the reinstatement.
On March 27, 2007, plaintiffs filed a complaint against defendant alleging he neglected "to timely comply with the timeframes set forth in [the contract], failed to properly advise [p]laintiffs of the same," did not properly explain communications he received on behalf of JJMR, and "failed to account . . . [and] return" deposited funds related to "other property transactions." Plaintiffs maintain defendant's actions and omissions frustrated their purchase of JJMR's interest in the Development Agreement and Wainwright.
Plaintiffs produced an expert report prepared by Thomas Ambrosio. After reciting a statement of facts and the various legal standards governing professional negligence claims, Ambrosio then set forth a section entitled "The Malpractice of Defendant . . . ." This portion of the report recited various Rules of Professional Conduct governing New Jersey Attorneys (RPC) and Ambrosio concluded defendant deviated ...