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The Mercadien Group v. David C. Maffei and Leona Maffei


November 28, 2012


On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1916-07.

Per curiam.


Argued September 11, 2012 -

Before Judges Messano, Lihotz and Ostrer.

Defendants Dr. David C. Maffei and his wife Leona Maffei, appeal from an order granting summary judgment and dismissing their counterclaim, which alleged professional negligence by their accountant, third-party defendants Esmond S. Druker, C.P.A., and the accounting firm employing Druker, plaintiff the Mercadien Group (Mercadien).*fn1 We affirm.

Dr. Maffei, a New Jersey licensed chiropractor, owned and operated two businesses: a chiropractic practice, formed as a professional corporation, and another entity known as Leige Corporation. Druker was Dr. Maffei's friend and the managing director of Mercadien; he performed accounting services for Dr. Maffei individually and for his businesses. From 1998 to 2004, Leona Maffei completed worksheets provided by Druker, gathered the necessary documentation, and transmitted it to Mercadien, along with payment of approximately $27,500 for the preparation of personal and business, state and federal income tax returns. However, from 1999 to 2004, no income tax returns were completed. Consequently, no returns were filed for defendants individually, for Dr. Maffei's chiropractic office, or for Leige Corporation. At some point, defendants contacted Druker and their personal tax returns were completed in September 2006.

Defendants' professional negligence claims relate to damages allegedly suffered by Dr. Maffei caused by the late filing of his tax returns. Specifically, Dr. Maffei maintains his inability to produce timely filed tax returns caused him to voluntarily dismiss separate litigation seeking disability benefits. Additional facts are necessary to understand the context of this assertion.

From 1993 through 1996, Dr. Maffei's chiropractic practice flourished. He reported working 55-65 hours and treating as many as 320 patients per week. The practice was comprised of as many as seven employees, including one other doctor, massage therapists, and a billing clerk.

When performing adjustments, Dr. Maffei employed the Applied Kinesiology Technique (AKT), which requires utilization of pressure to various parts of the back to reduce stresses, relax the muscles, and adjust the vertebrae. In addition to performing chiropractic adjustments, Dr. Maffei "screened and adjusted all massage patients"; "performed modalities" such as "ultrasound, heat, electric stimulation, G5 massage"; "took all x-rays"; "created and actively participated in several health fairs"; and performed "house calls" as necessary for patients.

In the late 1990s, Dr. Maffei began experiencing pain and swelling in his hands and arms. His ability to treat patients began to diminish because he "was only able to treat and adjust massage patients four hours, three days a week." He also stated he ceased making house calls, no longer participated in health fairs, and allowed his wife to perform all modalities.

By 2001, Dr. Maffei experienced great difficulty implementing AKT because his hands "began to swell daily . . . especially during the evening appointments. [His] upper body discomfort became more pronounced and [he] was unable to sleep [except] for only a few hours at a time." He continued to work and treat patients, explaining he was working in "consistent" "pain and discomfort" until 2002. From January 2002 through August 2002, Dr. Maffei stopped working because of his "inability to maintain finger contact" and need to "give [his hands] time to rest and heal." He hired another chiropractor, Steve Horowitz, to treat patients.

In February 2002, Dr. Maffei sought treatment by Brian J. Sennett, M.D. An EMG revealed "bilateral median nerve and ulnar nerve neuropathies[,]" resulting in Dr. Sennett's diagnosis that Dr. Maffei suffered from "[b]ilateral cubital tunnel syndrome, with ulnar nerve entrapment" and "[a]symptomatic carpal tunnel syndrome, bilateral hands." Dr. Sennett recommended Dr. Maffei avoid flexion and compression positions and continue his use of anti-inflammatory medications.

In April 2002, Dr. Maffei filed a total disability claim under the provisions of a Lincoln National Life Insurance Company (Lincoln National) disability insurance policy (the policy). In his claim, Dr. Maffei listed his occupational duties to include twenty-five to thirty hours of patient treatment along with twenty hours of paperwork each week. He described his disabling condition this way: "[a]rms, hands, and fingers have muscle fatigue, weak, painful, spasms, tingling sensation and atrophy of the forearms, numbness in fingers, fingers lock and wakes me up at night. Occasional swelling of the joints and hands, wrists, and arms[.]" Further, he stated pain in his hands occurred when he was treating patients, which caused him to reduce the number of patients he treated each hour.

The terms of the policy stated:

"Total Disability" means that because of Injury or Sickness:

a. You cannot do the main duties of Your Occupation; and

b. You are under a Physician's Care; and

c. You are not engaged in any other gainful occupation.

The policy also provided benefits for "residual disability":

"Residual Disability" means that during the Elimination Period because of Injury or Sickness:

a. You are not able to do one or more of the main duties of Your Occupation, or You can perform all of Your normal duties but not for as much time as is normally required to perform them; and

b. You are under a Physician's Care; and

c. Your Current Monthly Income is 80% or less of Your Prior Monthly Income.

MetLife served as the administrative agent for the disability income insurance business of Lincoln National. On June 13, 2002, MetLife wrote to Dr. Maffei explaining his submission contained "insufficient information as to the severity and extent that [his] conditions would restrict and limit [his] ability [to] perform the activities associated with being a self employed chiropractor at this time." MetLife sought additional medical records and arranged for a Field Claims Representative's observation of Dr. Maffei while working in his practice. The correspondence also noted the policy included coverage for residual disability benefits and sought copies of Dr. Maffei's 2000 and 2001 income tax returns.

Dr. Maffei returned to work in September 2002. He also underwent additional medical testing.

On August 9, 2002, Dr. Sennett requested "a functional capacity evaluation[,]" which was performed by Elizabeth Sweetland. The test revealed Dr. Maffei was "able to work at a light level of physical demand[,]" which included up to "20 pounds of occasional lifting, 10 pounds of frequent lifting, and no constant lifting." Dr. Sennett concluded "[i]t is within a reasonable degree of medical certainty that Dr. Maffei had limitations as a result of his bilateral upper extremity condition[,]" which was later described as "bilateral upper extremity pain and tightness[.]"

Following MetLife's subsequent review of additional medical reports and testing results, it informed Dr. Maffei its expert concurred with Dr. Sennett, and concluded his condition failed to qualify for "total disability" benefits under the terms of the policy. In an effort to "verify [Dr. Maffei's] occupation and business status leading up to and at the time [his] reported disability commenced and to determine [his] pre-disability income[,]" MetLife again requested copies of the chiropractic business tax returns for 1998 through 2001, and Dr. Maffei's personal income tax returns for 2000 and 2001.

Dr. Maffei continued to treat patients throughout 2003 and 2004. He explained his symptoms returned, impacting his ability to provide treatment because of pain and swelling in his fingers, hands, and arms. He also began experiencing pain in his cervical spine, which radiated to his elbows. His condition required a longer time interval to treat patients and additional days off for recovery following days he worked. Consequently, Dr. Maffei treated fewer patients, such that his patient load dropped to thirty-three per month in 2003, and just under thirty in 2004. He also found it necessary to refer patients with long-term problems to other chiropractors. As of March 7, 2005, Dr. Maffei permanently ceased working.*fn2

On August 11, 2004, Dr. Maffei initiated a coverage action against Lincoln National and MetLife, which was removed to federal court (the disability action). Ultimately, Dr. Maffei voluntarily dismissed the disability action, fearing possible ramifications regarding the late filed tax returns. Although all returns were filed in September 2006, Dr. Maffei declined to resubmit a disability benefit claim as he had canceled the disability policy in June 2006.

On July 27, 2007, Mercadien filed separate complaints seeking the balance of fees owed for accounting services provided to Dr. Maffei, his professional chiropractic corporation, and the Leige Corporation. Dr. Maffei answered and filed a counterclaim against Druker and Mercadien. Relevant to the issues raised on appeal are the allegations contained in the second count of the counterclaim alleging professional negligence by Druker and Mercadien in handling defendants' tax affairs, which caused Dr. Maffei to dismiss the disability action.

Mercadien moved for partial summary judgment seeking to dismiss the counterclaim, including count two pertaining to his necessary abandonment of the disability action. Mercadien asserted no proof of causation was presented as there was no relationship between the failure to complete the tax returns, MetLife's denial of total disability benefits, and Dr. Maffei's decision to dismiss his disability complaint.

Defendants admitted almost all statements of material fact presented in Mercadien's motion for partial summary judgment; however, they clarified certain facts, such as the actual hours Dr. Maffei worked pending his total disability claim. Further, defendants cross-moved for summary judgment on the same issue.

The motion judge determined the record contained no genuine disputes of fact. She found the unequivocal evidence revealed Dr. Maffei continued to treat patients from 2002 until 2005, the period for which he claimed total disability. Therefore, he was performing the main duties of his occupation and, as a matter of law, could not satisfy the requisites for total disability benefits under the plain language of the policy. Regarding defendants' cross-motion for partial summary judgment, the motion judge found Dr. Maffei had submitted proof of total disability from March 2005 through August 2010; however, he was not denied disability benefits for that period because he had never submitted a claim.

On May 27, 2011, the judge granted Mercadien's motion for partial summary judgment, dismissing any claims "arising out of Dr. David Maffei's allegations that he was forced to abandon his action seeking disability payments under [the disability policy,]" which effectively dismissed count two of the counterclaim. The motion judge also denied defendants' cross-motion for summary judgment. Thereafter, an order was entered disposing of all remaining claims in plaintiff's complaint and defendants' cross-claim.

On appeal, defendants limit their arguments to a challenge of the May 27, 2011 summary judgment dismissal of count two, arguing the motion judge erred in determining "Dr. Maffei was not totally disabled under the [disability] policy." Defendants maintain a determination of whether Dr. Maffei could perform the duties of his occupation should have been submitted to the factfinder. We reject defendants' contention that unresolved factual issues precluded entry of summary judgment.

Pursuant to Rule 4:46-2(c), a court grants summary judgment when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." A motion judge's determination of whether a genuine issue of material fact exists precluding entry of summary judgment "requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). In considering a summary judgment motion, the motion judge must not make credibility determinations, which remain the province of the factfinder. Ibid.

While a motion judge does not engage in the typical weighing of evidence that a factfinder would, the judge does not abstain from all balancing of evidence. The judge is required to analyze and sift through evidential materials and "determine 'the range of permissible conclusions that might be drawn'", id. at 531 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 596, 106 S. Ct. 1348, 1361, 89 L. Ed. 2d 538, 558 (1986)), to discern whether a genuine issue of material fact exists. See Millison v. E.I. du Pont de Nemours & Co., 101 N.J. 161, 167 (1985) (requiring a motion judge to make a "discriminating search" of the evidence); Tomeo v. Thomas Whitesell Constr. Co., 176 N.J. 366, 370 (2003) (stating that summary judgment necessitates some weighing of the evidence). The motion judge is "guided by the same evidentiary standard of proof . . . that would apply at the trial on the merits when deciding whether there exists a genuine issue of material fact." Brill, supra, 142 N.J. at 533-34 (citation omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254-55, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202, 215-16 (1986) (defining the standard in terms of "the criteria governing what evidence would enable the jury to find for either [party]"). Inevitably, the judge must consider not just the quantum of proof, but the quality of evidence as well. Brill, supra, 142 N.J. at 534; Schiavone Constr. Co. v. Time, Inc., 847 F.2d 1069, 1089 (3d Cir. 1988); Costello v. Ocean Cnty. Observer, 136 N.J. 594, 614 (1994).

In our review of a summary judgment determination, we employ the same standards used by the motion judge. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party demonstrated there were no genuine disputes as to any material facts, and then we decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing, we too view the evidence in the light most favorable to the non-moving party. Brill, supra, 142 N.J. at 523. Finally, we accord no deference to the motion judge's conclusions on issues of law, Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995), which we review de novo. Dep't of Envtl. Prot. v. Kafil, 395 N.J. Super. 597, 601 (App. Div. 2007).

It is also important to note, a professional malpractice matter is based on negligence. Grunwald v. Bronkesh, 131 N.J. 483, 492 (1993). A cause of action for malpractice accrues when the professional breaches a professional duty, which proximately causes damages. McGrogan v. Till, 167 N.J. 414, 425 (2001); Anderson v. Sammy Redd & Assocs., 278 N.J. Super. 50, 56 (App. Div. 1994), certif. denied, 139 N.J. 441 (1995).

One method of proving proximately caused damages is "by attempting to prove the 'suit within a suit.'" Jerista v. Murray, 185 N.J. 175, 191 (2005). "Under that approach, [Dr. Maffei] had the burden of proving by a preponderance of the evidence that [he] would have won a favorable verdict against [MetLife]." Ibid. (citing Garcia v. Kozlov, Seaton, Romanini & Brooks, P.C., 179 N.J. 343, 358 (2004) (requiring a plaintiff in a malpractice matter to prove the "suit within a suit")). To survive a grant of summary judgment dismissing their counterclaim alleging professional negligence, defendants would need "to show that they could have presented a prima facie case in the [MetLife] action." Ibid.

In the Law Division, Mercadien successfully argued Dr. Maffei's inability to present sufficient proof he was totally disabled and, therefore, entitled to benefits under the disability policy, meant he could not prevail against MetLife and consequently, could not demonstrate he suffered damages proximately caused by any alleged malpractice when that MetLife suit was dismissed. Defendants contend, however, the motion judge erred in interpreting the terms of the policy and in concluding Dr. Maffei did not present proof he was totally disabled and entitled to recover against MetLife. Defendants argue the term "main duties" used within the total disability definition is open to interpretation. Therefore, under a broad interpretation of the policy, he qualified for benefits. To support this position, defendants cite a myriad of case authority from widespread jurisdictions suggesting total disability does not mean a party is unable to work. We find this contention unfounded as the argument ignores the fundamental principles guiding our review of an insurance contract.

The interpretation and construction of a contract are matters of law subject to plenary review on appeal. Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div. 2009); Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363, 375 (App. Div.), certif. denied, 196 N.J. 601 (2008); Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 190 (App. Div.), certif. denied, 196 N.J. 85 (2008). "[U]nless the meaning is both unclear and dependent on conflicting testimony[,]" the court interprets the terms of a contract as a matter of law. Celanese Ltd. v. Essex Cnty. Improvement Auth., 404 N.J. Super. 514, 528 (App. Div. 2009) (citations omitted).

When interpreting a contract, "we first examine the plain language of the [contract] and, if the terms are clear, they 'are to be given their plain, ordinary meaning.'" Pizzullo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 270 (2008) (quoting Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001)). "Generally speaking, courts construe insurance policies consistent with the objectively reasonable expectations of the insured." Aubrey v. Harleysville Ins. Co., 140 N.J. 397, 404 (1995). However, "[w]e do not supply terms to contracts that are plain and unambiguous, nor do we make a better contract for either of the parties than the one which the parties themselves have created." Maglies v. Estate of Guy, 193 N.J. 108, 143 (2007). See also Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960) (stating "[c]courts cannot make contracts for parties"); Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999) (recognizing courts would not make better contracts for parties). "Whether a term is clear or ambiguous is . . . a question of law." Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) (internal quotation marks and citation omitted).

We find no ambiguity in the policy's provision specifying a determination of total disability required an applicant to show he or she "cannot do the main duties of [his or her] Occupation[.]" Giving these words their plain meaning, Morton Int'l v. Gen. Accident Ins. Co. 134 N.J. 1, 56 (1993), we determine the requirement does not suggest an applicant must prove an inability to work. On the contrary, the provision is directed to the inability to perform the main duties of the applicant's employment.

In this matter, benefits were denied because Dr. Maffei's injury did not prevent him from working as a chiropractor. As the motion judge properly noted, the main duty of a chiropractor is to adjust patients. From 1998 through 2004, Dr. Maffei continued to schedule and treat patients and did not abandon his implementation of AKT, although, at times, he modified the procedure using his elbow instead of his fingers. His appointment book recorded patient appointments. Further, in his March 17, 2009 deposition, Dr. Maffei provided the following testimony:

Q: And tell me how many patients were you seeing on the average in 2002 through 2004[?]

A: I think around 40 or 50 a week.

Q: Did you have any contract employees in 2002 through 2004?

A: No.

Q: In other words, did you have an employment relationship with another chiropractor at that time?

A: No.

Q: So you were doing all of the chiropractic work on your own?

A: Yes.

Q: Were you using the applied kinesiology technique?

A: Yes.

Although Dr. Maffei's work hours and the number of patients treated may have decreased, he continued to perform the main duties of his chiropractic occupation.

We also must view the total disability provision in the context of related policy provisions. See Prather v. Am. Motorists Ins. Co., 2 N.J. 496, 502 (1949) (holding insurance contracts must be read and considered as a whole, giving full effect to all of its provisions). This includes review of the related provisions addressed to residual disability, that is defined to include a diminished ability to perform normal duties, including instances when an applicant "can perform all of [his or her] normal duties but not for as much time as is normally required to perform them[.]" We conclude the motion judge properly interpreted the disability policy provisions in light of the record supporting Dr. Maffei's continued employment and performance as a chiropractor.

Once Dr. Maffei could not demonstrate he qualified for total disability benefits under the policy, he was unable to demonstrate a nexus between Mercadien and Druker's failure to timely prepare tax returns and the dismissal of the disability litigation. This lack of connection is fatal to presentation of a professional negligence claim against Mercadien and Druker. Accordingly, the motion judge properly awarded third-party defendants' request for summary judgment on this issue.

Defendants also argue the disability litigation complaint averred Dr. Maffei was totally disabled and not working from January 2002 through August 2002. He suggests this shows he was totally disabled at that time,*fn3 raising a disputed fact left for the jury. A review of Dr. Maffei's appointment books by an accountant employed by Mercadien showed he worked in January 2002 an average of three days treating 44.5 patients per week. Further, his deposition testimony and other documents confirm patient treatments were rendered during this period. Were these facts pivotal to the issue under examination, we would agree that the evidence was in dispute, obviating summary judgment. However, the April 2002 claim for disability benefits was denied by MetLife not because of Dr. Maffei's failure to prove a loss of income, but because MetLife determined his medical condition was insufficient to prove total disability under the terms of the policy. In its denial letter, MetLife stated its expert and Dr. Sennett agreed Dr. Maffei's condition failed to qualify as "total disability" under the terms of the policy. Thus, the denial for that period also had no relationship to the untimely preparation of tax returns. We finally, note, Dr. Maffei did not challenge the denial of his claim.

Any additional arguments advanced by defendants have been found to be without sufficient merit to warrant consideration in our opinion. R. 2:11-3(e)(1)(E). Following our review, we conclude summary judgment was properly granted dismissing count two of defendants' counterclaim.


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