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Rene Abreu v. Richard Mackiewicz and Mackiewicz & Associates

December 5, 2012

RENE ABREU, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
RICHARD MACKIEWICZ AND MACKIEWICZ & ASSOCIATES, LLC, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2696-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 21, 2011

Before Judges Axelrad, Sapp-Peterson and Ostrer.

Plaintiff appeals from a no cause judgment after a jury trial in his legal malpractice action against defendants, Richard Mackiewicz and his law firm. Plaintiff argues the trial court erred in deciding, before it submitted the case to the jury, that plaintiff was only a former client or non-client, and not a current client of defendants. Plaintiff also argues the court erred in its jury instructions regarding the duty of care that an attorney owes to a former client or non-client. We affirm.

I.

We will discuss the pertinent facts in greater detail when we address the legal issues, but we begin with an overview of the case. Plaintiff's claim of legal malpractice arises out of defendant's*fn1 role in a December 31, 2005 transaction involving plaintiff and Ted Worthington. Plaintiff and Worthington had developed real estate together through various ventures in Hudson County.

The 2005 transaction amended a 2002 agreement. In the initial agreement, LMA Apartment Associates, LLC, ("LMA Apartment"), in which plaintiff had an interest, purchased the interests of Worthington and his sister Judy Basso in three limited liability companies ("LLCs"), each of which owned real estate in Hudson County. The contracting parties were represented by counsel other than defendant. Plaintiff already owned interests in the three LLCs. LMA Apartment, whose managing member was plaintiff's sister, agreed to pay $2.8 million to Worthington and Basso, pursuant to a schedule of payments extending until May 2007. As security, plaintiff agreed to purchase life insurance to secure amounts due and owing under the agreement. LMA Apartment and plaintiff agreed to pledge collateral consisting of all of LMA Apartment's and plaintiff's membership interests in 85 Madison House, LLC ("85 Madison"), one of the three LLCs.

LMA Apartment repeatedly missed scheduled payments due under the 2002 agreement to Worthington and Basso, who declared defaults and threatened to accelerate all payments due. An escrow agent also testified that plaintiff never provided the security required under the 2002 agreement. Plaintiff had also been found guilty by a federal jury in August 2004 of mail fraud, mail fraud conspiracy, check kiting conspiracy, structuring currency transactions, and conspiracy to do so; he had been sentenced on June 28, 2005 to an aggregate term of eighty-seven months; and he was to begin serving his sentence on January 2, 2006.

The December 31, 2005 transaction amended the 2002 agreement in various ways that plaintiff claims disadvantaged him. In place of the pledge of interests in 85 Madison, plaintiff executed a conditional sale of all his interests in another real estate-related LLC, Gateway 2001, LLC ("Gateway 2001").*fn2 Upon a default, regardless of the amount remaining due, Worthington would be entitled to plaintiff's Gateway 2001 interests. The 2005 agreement also shortened the payment schedule in the 2002 agreement, requiring payments in February 2006, and a final payment in September 2006, instead of May 2007.

Defendant asserted the 2005 agreement was not one-sided. He argued it allowed plaintiff and LMA Apartment to cure its then-existing default, which had already entitled Worthington and Basso to accelerate payment and declare all amounts due and owing. He also contended the conditional sale was utilized as an alternative to a mortgage of plaintiff's interests in Gateway 2001, which would have required consent of the other LLC members under the LLC's operating agreement. Defendant testified that plaintiff did not want to delay the transaction to seek that consent.

The 2005 agreement also granted plaintiff an option to buy from Worthington an additional 12.5 percent interest in Gateway 2001. Worthington was negotiating to buy out the twenty-five percent interest of another member, LNA Holding, LLC ("LNA Holding")*fn3 who opposed selling to plaintiff. Worthington agreed to sell to plaintiff at cost, fifty percent of the additional interest in Gateway 2001 that Worthington intended to purchase.

In his third-party complaint against defendant, plaintiff alleged defendant served as his attorney in the negotiation and drafting of the 2005 agreement, and defendant failed to protect his interests adequately. In the alternative, plaintiff asserted defendant breached fiduciary duties he owed to plaintiff.

In response, defendant asserted that he represented Worthington in the 2005 transaction, and he disclosed that representation to plaintiff, who consented to it in writing in the 2005 agreement. Defendant conceded he had in the past represented plaintiff personally and business entities in which plaintiff had interests, but asserted he ceased representing plaintiff in 2001. He claimed he did not breach any duties owed to plaintiff as a former client or non-client.

Plaintiff raised his legal negligence claims against defendant in a third-party complaint, after Worthington sued plaintiff for breach of the 2005 agreement, among other claims. Worthington alleged plaintiff had missed a scheduled payment. He sought a declaration that plaintiff was divested of his interests in Gateway 2001.*fn4 In plaintiff's third-party complaint, he alleged defendant had a conflict of interest; misrepresented terms of the 2005 agreement; exerted undue pressure on him; and failed to protect his interests. Plaintiff also alleged defendant engaged in negligent misrepresentation, legal fraud, and breach of fiduciary duty.

Worthington and plaintiff settled their claims with a proviso preserving plaintiff's claim against defendant. Judge Bernadette DeCastro granted partial summary judgment dismissing plaintiff's claim of duress. The remaining claims in plaintiff's third-party complaint were then tried before a jury, Judge Barry P. Sarkisian presiding.

Judge Sarkisian instructed the jury that plaintiff did not have a current attorney-client relationship with defendant and therefore, RPC 1.7 did not apply to define defendant's duty of care. The court consequently instructed the jury to disregard the part of plaintiff's expert's testimony in which the expert opined that RPC 1.7 was evidence of defendant's duty of care owed to plaintiff. However, the court instructed that defendant had a duty to plaintiff as a former client. Consequently, the court explained a finding that defendant violated RPC 1.9, pertaining to duties to former clients, could be considered evidence of malpractice. The court also instructed the jury that defendant owed a duty to plaintiff as a non-client, which arises "when the attorney knew or should have reasonably known that [plaintiff] would rely on the attorney's skills or services."*fn5

The jury found plaintiff had failed to prove defendant breached his duty of care in connection with the 2005 agreement. Although the jury found there was a fiduciary relationship between plaintiff and defendant, the jury found plaintiff failed to prove a breach of that duty. The jury also rejected the negligent misrepresentation and legal fraud claims. The court thereafter denied a motion for a new trial under Rule 4:49-1.

Plaintiff raises the following points for our consideration:

POINT I: THE TRIAL COURT ERRED IN INSTRUCTING THE JURY AS A MATTER OF LAW THAT ABREU AND MACKIEWICZ DID NOT HAVE AN ATTORNEY CLIENT RELATIONSHIP IN DECEMBER 2005.

POINT II: THE TRIAL COURT ERRONEOUSLY CHARGED THE JURY BY EQUATING RPC 1.9 WITH THE DUTY OF CARE THAT DEFENDANT OWED TO HIS FORMER CLIENT PLAINTIFF.

POINT III: THE TRIAL COURT ERRED IN FAILING TO INSTRUCT THE JURY THAT MACKIEWICZ OWED A DUTY OF LOYALTY BOTH TO PLAINTIFF AS A FORMER CLIENT AND WORTHINGTON AS A CURRENT CLIENT.

POINT IV: THE TRIAL COURT ERRONEOUSLY INSTRUCTED THE JURY NOT TO CONSIDER THE EVIDENCE OFFERED BY ABREU CONSIDERING HIS RELEVANT STATE OF MIND.*fn6

II.

We begin by addressing plaintiff's claim that the court erred in determining, and so instructing the jury, that as a matter of law, plaintiff was not defendant's current client when the 2005 agreement was negotiated and drafted. Judge Sarkisian held that there were insufficient facts from which a jury could reasonably conclude that there was a current attorney-client relationship.

There's no reasonable inference that a

[j]ury could draw, based upon the evidence that I've heard, that he [defendant] was acting as [plaintiff's] attorney with respect to the 2005 transaction.

There's the waiver, there's the acknowledgment and a confirmation they had the opportunity to get other attorneys. There's the acknowledgement in the record, . . . Abreu's own testimony, that he tried to get other attorneys to represent him. There's the testimony, clearly, during these operative periods that he had representation of other attorneys.

We know that Mackiewicz was not involved in the original underlying agreement in 2002. He directed parties to get separate [c]counsel. . . . Ultimately he was represented by - during the defaults after the original 2002 agreement, wasn't represented by Mr. Mackiewicz, he was represented, I recall, [by] Scarinci and Hollenbeck.

He had . . . representation as late as December 2005 . . . in major transactions with Mr. Mayerovic. [T]here is nothing where a [j]ury could reasonably infer that Mr. Mackiewicz was acting, or could Mr.

Abreu construe and feel, that [defendant] was acting as his attorney.

The existence of an attorney-client relationship is an essential element of a cause of action for legal malpractice. Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996) (stating elements are "(1) existence of attorney-client relationship creating a duty of care upon the attorney; (2) the breach ...


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