May 22, 2012
ROBERT GITIN AND FRANCIS GITIN, PLAINTIFFS,
ELIAS M. KAFROUNI AND ISSAC H. KAFROUNI, DEFENDANTS/THIRD-PARTY PLAINTIFFS-APPELLANTS,
A. WILLIAM SALA, JR., THIRD-PARTY DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-152-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 30, 2012
Before Judges Grall and Skillman.
This appeal is from the dismissal of a third-party legal malpractice action filed by defendants/third-party plaintiffs, Elias M. and Issac H. Kafrouni, against third-party defendant,
A. William Sala, Jr. Sala represented the Kafrounis during the negotiation and performance of a contract to purchase commercial real estate from Robert and Francis Gitin. The Gitins, plaintiffs in the primary action, sued the Kafrounis for breach of contract. The Kafrounis and Sala are the only parties participating in this appeal.*fn1
One hundred and twenty-four days after filing his answer to the Kafrounis' third-party complaint, Sala moved to dismiss the third-party complaint because the Kafrounis did not comply with the affidavit of merit statute, N.J.S.A. 2A:53A-26 to -29. The Kafrounis filed a cross-motion asserting that an affidavit of merit was unnecessary because Sala's duty and breach were a matter of common knowledge and, in the alternative, seeking an extension of the statutory filing period. The trial court concluded that the alleged negligence was not a matter of common knowledge and that the Kafrounis had not shown extraordinary circumstances warranting an extension. Finding no error or abuse of discretion, we affirm.
Our statement of the pertinent facts is based on the pleadings and documents submitted on the motion and cross-motion. We have not considered additional materials improperly included in the record submitted on appeal without leave granted. See R. 2:5-4.
The commercial property at issue is located in the City of Passaic, and the Gitins used it as the site of operations for their printing business. The soil underneath the concrete on the property is contaminated. In 2006, the Kafrounis retained Sala to provide legal services related to their intended purchase of the property. They also retained Eikon Planning and Design, LLC (Eikon) to do environmental testing.
Months later, in January 2007, the Kafrounis and Gitins executed a contract of purchase and sale. Paragraph 16 of that contract requires the Kafrounis to accept the property subject to "recorded agreements" restricting use of the property, "unless the agreements . . . unreasonably limit the normal use of the property." In paragraph 17 of the contract, the Kafrounis reserved the right to cancel the contract if the Gitins failed to correct a title defect specified in paragraph 16 within thirty days of receiving notice of an objection from the Kafrounis. Paragraph 17 does not state a time within which the Kafrounis must give notice of an objection.
In May 2007, Eikon prepared documents for submission to the Department of Environmental Protection (DEP) reporting soil contamination and maps depicting the areas of this property covered by concrete. On June 6, 2007, DEP "approved a remedial action . . . such that soil contamination remains in certain areas of the Property which contains contaminants in concentrations that do not allow for the unrestricted use of the property." DEP determined that because of that contamination, a "deed notice" and "engineering controls" were required by N.J.S.A. 58:10B-13a. Subsequently the "deed notice" was prepared by Eikon, approved by DEP, signed by the Gitins on November 26, 2007, and recorded in the deed book by the Clerk of Passaic County on December 14, 2007. The clerk returned a copy reflecting the filing and recordation to Sala. With reference to a map prepared by Eikon, the deed notice identifies the restricted area of the property and describes the necessary "engineering control." The engineering control is described as follows:
The Restricted Area is currently capped with the existing structure constructed primarily slab on grade with a partial basement; the concrete measures approximately 4 to 6 inches in thickness. Based upon the analytical results for soil samples collected immediately adjacent to the building, the contaminant impacts occur at depths up to 6 to 7 feet below grade. The object of the engineering control is to prevent unobstructed access/exposure to underlying soil contaminants, in order to ensure that protectiveness of the public health and safety of the environment.
The deed notice obligates the owner to annually inspect and repair the concrete to maintain the integrity of this "engineering control" and to file biennial certifications.
On August 11, 2008, DEP issued a "Conditional No Further Action Letter and Covenant Not to Sue with Requirements for Biennial Certifications" (NFA). The NFA refers to the recorded deed notice prepared by Eikon, and it includes an explanation of the protections the NFA provides and the obligations it imposes. Those benefits and obligations extend to the Gitins and any subsequent owner of the property.
The Kafrounis received the NFA on September 4, 2008 and claim to have been unaware of the deed notice until that time. Within a week, they gave the Gitins notice of their cancellation of the contract. On September 26, 2008, the Gitins served a "Time of the Essence Letter" demanding a closing on October 15, 2008. Subsequently, the Gitins filed their complaint charging the Kafrounis with breach of the contract.
After answering the Gitins' complaint and filing a counterclaim, the Kafrounis filed their third-party complaint against Sala. All three counts - professional negligence, breach of a fiduciary duty arising from the attorney-client relationship and breach of contract - rest on the same factual allegation. That allegation is that standards applicable to attorneys in this State required Sala to advise them about the deed notice and that his breach prevented them from exercising their right to cancel the transaction pursuant to paragraph 16 of the contract. This factual allegation states a claim of professional negligence. Conklin v. Hannoch Weisman, P.C., 145 N.J. 395, 416 (1996) (stating the elements of a legal malpractice claim).
There is no question that the Kafrounis are obligated to comply with the affidavit of merit statute unless they can establish an exception. Pursuant to N.J.S.A. 2A:53A-27, a person seeking damages for "malpractice or negligence by a licensed person in his profession or occupation" must file an affidavit of merit within the time specified by the statute. This obligation applies in actions for legal malpractice, N.J.S.A. 2A:53A-26(c), and it cannot be avoided by attaching a different label to a claim based on a deviation from the professional standard of care. Couri v. Gardner, 173 N.J. 328, 340-42 (2002).
Generally, failure to comply with the affidavit of merit statute is "deemed a failure to state a cause of action," N.J.S.A. 2A:53A-29. The Kafrounis acknowledge that they did not file a timely affidavit of merit, but they rely on the "common knowledge" exception to the statute that the Supreme Court recognized in Hubbard v. Reed, 168 N.J. 387, 395 (2001).
An affidavit of merit requires an assertion by a qualified expert that there is "a reasonable probability that the care, skill or knowledge exercised . . . in the . . . work that is the subject of the complaint, fell outside acceptable professional . . . standards." N.J.S.A. 2A:53A-27. In Hubbard, the Court reasoned that the Legislature enacted this statute to "weed out frivolous lawsuits early in the litigation while, at the same time, ensuring that plaintiffs with meritorious claims will have their day in court." 168 N.J. at 395. Consequently, the Court concluded that the Legislature's purpose would not be served by requiring an affidavit from an expert "in common knowledge cases [where] an expert is not needed to demonstrate that a defendant breached a duty of care." Id. at 394.
A case falls within the "common knowledge" exception if the "'jurors' common knowledge as lay persons is sufficient to enable them, using ordinary understanding and experience, to determine a defendant's negligence without the benefit of the specialized knowledge of experts.'" Ibid. (quoting Estate of Chin v. Saint Barnabas Med. Ctr., 160 N.J. 454, 469 (1999)). Described differently, negligence is a matter of common knowledge if it involves "carelessness of the defendant [that] is readily apparent to anyone of average intelligence and ordinary experience." Rosenberg v. Cahill, 99 N.J. 318, 325 (1985).
"Ordinarily, expert testimony is required in a legal malpractice case." Kranz v. Tiger, 390 N.J. Super. 135, 147 (App. Div.), certif. denied, 192 N.J. 294 (2007). This case does not present an exception to that general rule. The legal malpractice claims that our courts have found can be proved without expert testimony involve blatant errors such as: failure to file a claim within the statute of limitations or conduct "any investigation" of a client's personal injury claim, Brizak v. Needle, 239 N.J. Super. 415, 429, 432 (App. Div.), certif. denied, 122 N.J. 164 (1990); failure to record a mortgage, Stewart v. Sbarro, 142 N.J. Super. 581, 591 (App. Div.), certif. denied, 72 N.J. 459 (1976); failure to arrange for an expert critical to the client's claim to attend trial, Kranz, supra, 390 N.J. Super. at 149; and failure to give a client accurate information about a settlement offer, Sommers v. McKinney, 287 N.J. Super. 1, 12 (App. Div. 1996).
The alleged negligence in this case is different. The Kafrounis retained an environmental consultant, Eikon, as well as an attorney, Sala, to represent and advise them in this transaction. Eikon, not Sala, drafted the deed notice. The question whether Eikon, Sala or both were responsible to explain the significance of the deed notice to the Kafrounis is not something an average juror can be expected to know.
In addition, this case involves legal intricacies not present in other cases where our courts have applied the common knowledge doctrine. There is no basis for concluding that the import of a deed notice required by DEP as a condition of a NFA is apparent to non-lawyers. See generally Hous. Auth. of New Brunswick v. Suydam Investors, 177 N.J. 2, 11 n.2 (2003) (referencing a deed notice in discussing the relevance of environmental clean-up costs to a condemnation action); N.J. Ass'n of Realtors v. N.J. Dep't of Envtl. Prot., 367 N.J. Super. 154, 156-57 (App. Div. 2004) (discussing deed notices as a component of a statutory and regulatory scheme administered by the DEP and invalidating a regulation promulgated by DEP related to realtors). Furthermore, it is not a case in which a judge could obviate the need for expert testimony by deciding the issue on these pleadings as a matter of law. Brizak, supra, 239 N.J. Super. at 429.
There are other reasons that preclude application of common knowledge. This case involves the legal intricacies of restrictive covenants included in a deed notice demanded by DEP, and the negligence alleged in this case also depends on the terms of the contract of purchase and sale and the law governing such contracts. Relying on the deed notice as an unreasonable limitation on the use of the property, the Kafrounis invoked a contract clause to cancel the transaction before the Gitins set a date for the closing. And, in this action, they allege that Sala's failure to advise or his delay in advising them about the deed notice caused them to forfeit that contractual right. The validity of this malpractice claim depends on whether the Kafrounis had a contractual right to cancel based on the deed notice and then lost it because of Sala's failure to act. See Conklin, supra, 145 N.J. at 416-17.
We conclude that the professional negligence the Kafrounis allege, like most legal malpractice claims, cannot be established without expert testimony. Unlike a case involving an attorney's missing a filing deadline or neglecting to have a critical witness appear for trial, this alleged duty and breach are not apparent to a person of common knowledge and experience.
The allegation requires an understanding of what the professional standard required Sala to do given that the deed notice was required by DEP and drafted by Eikon, and given the terms of the contract that defined the Kafrounis' right to cancel the transaction. In short, this question is different from and more complex than the question presented by simple inaction that directly results in the defeat of a client's viable claim.
We also reject the Kafrounis' assertion that the trial court erred in denying their request for an extension to file an affidavit of merit based on "extraordinary circumstances." See Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218, 247 (1998). Their effort to establish extraordinary circumstances warranting an extension rests on an unsubstantiated and unexplained assertion. They contend they were unable to file a timely affidavit of merit attesting to Sala's negligence because the Gitins did not provide information necessary for "a full accounting of the underlying real estate transaction." This claim does not have sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).