On certification to the Superior Court, Appellate Division, whose opinion is reported at 420 N.J. Super. 427 (2011).
The opinion of the court was delivered by: Justice Hoens
Frank J. Nostrame v. Natividad Santiago, Betsy Santiago and Mazie Slater Katz and Freeman, LLC
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interest of brevity, portions of any opinion may not have been summarized.)
Argued January 2, 2013 -- Decided March 11, 2013
HOENS, J., writing for a unanimous Court.
In this appeal, the Court considers three issues: whether, and under what circumstances, an attorney might have a cause of action against a successor attorney for tortious interference with an attorney-client relationship; the factual and procedural predicates required for assertion of and prosecution of such a claim; and whether plaintiff should have been afforded the opportunity to file an amended complaint or to pursue discovery to uncover evidence of wrongdoing needed to pursue his claim.
In October 2006, defendant Natividad Santiago underwent cataract surgery that resulted in a significant injury to her eye. In January 2007 she retained Frank J. Nostrame, Esq., to pursue a medical malpractice claim and signed a contingent fee agreement. Plaintiff secured needed medical records, engaged in research, and consulted with one or more medical experts. He filed a complaint on Santiago's behalf on May 23, 2007. During this time, Santiago moved to Florida to live with her daughter, Betsy. According to plaintiff, Santiago had an appointment with him on June 1, 2007, but she did not appear. On that day, plaintiff received a letter from Santiago, dated May 31, 2007, discharging him as her counsel, instructing him to turn over her file to Mazie Slater Katz & Freeman, LLC (Mazie Slater), and requesting that plaintiff not contact her because her decision was final. In spite of Santiago's admonition, plaintiff called and wrote to her, trying to determine why he had been discharged. Santiago forwarded a letter from plaintiff to her new attorney at Mazie Slater, Adam Slater, who directed plaintiff in writing to cease all further contact with Santiago and to turn over the client's file.
Plaintiff and defendant Mazie Slater thereafter engaged in litigation relating to the release of the file and plaintiff's assertion of a lien, resulting in a court order directing Mazie Slater to pay plaintiff's expenses in the amount of $2,654.06 and preserving plaintiff's lien pending resolution of the underlying malpractice litigation. Mazie Slater settled Santiago's malpractice suit for $1,200,000 and filed its motion to discharge plaintiff's lien, asserting that plaintiff was not entitled to any portion of that fee. Plaintiff then filed his complaint in this matter, seeking an additional award of damages in the nature of a contingent fee based on his claim that Mazie Slater had tortiously interfered with his contract with Santiago by inducing her to discharge him. The trial court determined that an attorney who is discharged is not entitled to a contingent fee, but instead is permitted to recover a quantum meruit award based on the value of services performed before his discharge. The trial court valued plaintiff's lien based on plaintiff's claimed hourly rate and the number of hours he certified he had worked on the file, and awarded him $11,623.75 as his fee.
Plaintiff's amended complaint in this matter named Santiago, her daughter Betsy, the Mazie Slater law firm, and ten fictitious John Doe defendants. Mazie Slater moved on behalf of all of the named defendants to dismiss the complaint for failure to state a claim upon which relief can be granted. R. 4:6-2(e). In response, plaintiff asserted that because there had been no discovery and therefore no opportunity to develop the facts, defendants' motion should be denied as premature. Following argument, the trial court determined that the complaint alleged facts which, if proven, would establish that Santiago was induced to discharge the plaintiff as her counsel. Observing that tortious interference with a contract is a legally cognizable claim and reasoning that the claim could be asserted in the circumstances identified by plaintiff, the trial court decided that plaintiff should be afforded an opportunity to conduct discovery prior to consideration of defendants' dismissal motion. Therefore, the trial court denied defendants' motion without prejudice.
After granting leave to appeal, the Appellate Division reversed the order of the trial court and dismissed plaintiff's complaint with prejudice. Nostrame v. Santiago, 420 N.J. Super. 427, 430 (App. Div. 2011). The panel concluded that clients are free to discharge their attorneys at any time and that "in the absence of any allegation that the successor attorney used wrongful means, such as fraud or defamation, to induce the client to discharge the original attorney . . . an action [for tortious interference] is not maintainable." Ibid. The appellate panel relied, in part, on general principles of tortious interference with contract (citing Restatement (Second) of Torts § 766 (1979)). The appellate court noted that plaintiff's factual allegations were conclusory and declined to permit discovery to proceed because of the potential for creating "a chilling effect upon a client's exercise of the right to select counsel of his or her choosing." Id. at 436. The Appellate Division dismissed plaintiff's claims against the other defendants.
The Supreme Court granted plaintiff's petition for certification. 208 N.J. 599 (2011).
HELD: Competition for clients among attorneys must be conducted in adherence to the Rules of Professional Responsibility and the means used to induce a client may be neither improper nor wrongful. Any claim that an attorney has engaged in behavior that would constitute a form of tortious interference with the attorney-client relationship of another must be specifically pleaded. Plaintiff's complaint lacks that specificity, and the Court rejects plaintiff's application to be permitted to engage in discovery in the hope of finding the requisite factual basis for his claim as both unnecessary and unwarranted.
1. A client is free to discharge an attorney at any time, without being subject to suit for breach of contract, because the agreement between an attorney and client is a contract that is terminable at will. The recognized family of business torts includes both claims for tortious interference with a contract and claims for tortious interference with a contractual relationship, whether existing or prospective. In either circumstance, liability rests upon whether the interfering act is intentional and improper. In making that determination, a variety of factors are to be considered, including the nature and motive behind the conduct, the interests advanced and interfered with, societal interests that bear on the rights of each party, and the relationship between the parties. See Restatement (Second) of Torts §767. Underlying the Restatement is a recognition that the one who acts to induce another is not free to do so by any means whatsoever. Regardless of whether the focus is on an existing contract, a contract terminable at will, or a purely prospective contractual relationship, the means utilized may be neither improper nor wrongful. Inducing another to end a contractual relationship through acts that amount to fraud, defamation, deceit or misrepresentation, among others, would be wrongful. Although attorneys are not competitors for business in the ordinary sense of that term or as that term is used in the Restatement, they are governed by the Rules of Professional Responsibility, some of which bear directly on the behavior in which they may and may not engage when seeking to attract clients. Attorneys may not make misrepresentations, may not use tactics to pressure or harass, may not, except in defined circumstances, make comparisons, may not disparage other attorneys, and may not offer promises about results. Competition among attorneys for clients is part of the practice of law, but a lawyer who improperly or wrongfully interferes with the attorney-client relationship of another will have more to fear than a lawsuit by his predecessor; he or she will likely be in violation of the Court's ethical rules as well. (pp. 14-23)
2. In this case, the complaint's assertions that the client failed to appear for a meeting, discharged her attorney, asked that her file be transferred, and directed that the former lawyer not contact her, fall well short of identifying the sort of wrongful means that would give rise to a cognizable claim for tortious interference. Even applying the generous standard used in addressing a motion to dismiss for failure to state a claim upon which relief can be granted, R. 4:6-2(e), this pleading fails. Plaintiff's complaint did not assert, and he cannot point to any fact that suggests, that the means employed were improper or wrongful. Although dismissals pursuant to R. 4:6-2(e) should ordinarily be without prejudice and plaintiffs generally should be permitted to file an amended complaint to cure the defects in their pleading, the Court finds no warrant for such relief here. The complaint's factual assertions were insufficient on their face to state a claim for tortious interference. Dismissal with prejudice was entirely appropriate lest plaintiff's former client and her newly-chosen attorney be subjected to a mere fishing expedition, a remedy that would raise the specter of chilling any client's exercise of the free choice to select counsel. In the end, there will be only rare circumstances in which an attorney will behave in a manner that could translate into a claim by another attorney for tortious interference. The Court's analysis of the universe of behaviors that would qualify as improper or wrongful includes certain claims that the Rules of Court demand be pleaded with specificity. Thus, the Court directs that any complaint filed in the future based on such a cause of action plead the facts and circumstances that constitute the allegedly wrongful means with specificity and particularity. (pp. 23-29)
The judgment of the Appellate Division is AFFIRMED as modified.
CHIEF JUSTICE RABNER, JUSTICES LaVECCHIA and ALBIN, and JUDGES RODRIGUEZ and CUFF (both temporarily assigned) join in JUSTICE HOENS's opinion. JUSTICE PATTERSON did not participate.
Argued January 2, 2013 --
JUSTICE HOENS delivered the opinion of the Court. This appeal arises from a dispute between two attorneys over their successive representation of a client. Plaintiff Frank J. Nostrame, Esq., alleges that defendant Mazie Slater Katz & Freeman, LLC (Mazie Slater), along with another unidentified person, wrongfully induced his client, defendant Natividad Santiago, to discharge him and to be substituted in his place as her counsel. Plaintiff asserts that defendant Mazie Slater thereby engaged in tortious interference with his contractual relationship with his client, making the law firm liable to him in tort. Plaintiff further argues that because his retainer agreement with Santiago was for a contingent fee, defendant's tortious behavior caused him to sustain a substantial loss that he should be entitled to recover from the law firm.
Defendant Mazie Slater contends that because the client always retained the right to be represented by counsel of her choosing, the law firm was free to discuss her case with her and to undertake her representation in plaintiff's place. Mazie Slater further asserts that plaintiff was fully compensated for his representation because he was reimbursed for the expenses he incurred and was paid a fee, based on quantum meruit, for the services he performed prior to his discharge.
The factual and procedural context of this dispute presents us with three interrelated questions. First, we consider whether, and under what circumstances, an attorney might have a cause of action against a successor attorney for tortious interference. Second, we address the factual and procedural predicates required for assertion of and prosecution of a claim against a successor attorney sounding in tortious interference. Finally, we address whether, in the circumstances presented in this record, plaintiff should have been afforded the opportunity to file an amended complaint or to pursue discovery to uncover evidence of wrongdoing needed to pursue his claim.
Our review of the applicable precedents and the ethical constraints that govern the behavior of attorneys leads us to the following conclusions. First, because the right of the client to be represented by counsel of his or her choosing is of paramount importance, there should be no interference with a client's free choice to retain and to discharge any attorney. Second, the ethical rules we have established that govern attorneys in the practice of law include limits on their behavior when seeking to attract clients with which, in all circumstances, they must comply. Third, although an attorney who uses wrongful means, including fraud, misrepresentation, or a violation of these generally applicable ethical rules, in his or her efforts to attract a client has engaged in behavior that would constitute a form of tortious interference, those circumstances will be both rare and so readily apparent that they can and must be specifically pleaded. Finally, the record before this Court falls far short of the rare or unusual circumstances in which such a claim might be cognizable and the pleading lacks any of the specificity that must be included in order to proceed. In light of plaintiff's concession that he has no evidence that could support a tortious interference claim, we reject his application to be permitted to engage in discovery in the hope of finding the requisite factual basis for his claim as both unnecessary and unwarranted.
This dispute arises in the context of a motion to dismiss plaintiff's complaint for failure to state a claim upon which relief may be granted. See R. 4:6-2(e). As a result, we derive the facts from plaintiff's complaint and the exchange of correspondence between counsel in connection with the motion to dismiss, and we recite them in the light most favorable to plaintiff. Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989).
In October 2006, defendant Natividad Santiago underwent cataract surgery that resulted in a significant injury to her eye. On January 18, 2007, she met with plaintiff to consult with him about the possibility of pursuing a medical malpractice claim that would compensate her for her injuries. Santiago signed a contingent fee agreement in which she retained plaintiff to represent her and she signed authorizations to permit him to obtain copies of her medical records. Plaintiff secured the needed records, engaged in research, and consulted with one or more medical experts. He filed a complaint on Santiago's behalf on May 23, 2007. During this time, Santiago moved to Florida to live with her daughter, Betsy, and plaintiff asserts that he communicated with both of them by telephone to monitor Santiago's medical condition and to keep her apprised of his efforts on her behalf. According to plaintiff, Santiago scheduled an appointment to discuss her case with him on June 1, 2007, and when she failed to appear, he called and spoke with her daughter who could not explain her absence.
That same day, however, plaintiff received a letter from Santiago, dated May 31, 2007, discharging him as her counsel. The letter further instructed plaintiff to turn over Santiago's file to Mazie Slater and requested that plaintiff not contact her because her decision was final. Plaintiff asserts that the letter, which Santiago signed, was drafted by Mazie Slater.
In spite of the direction that he not contact Santiago, plaintiff called and wrote to her, trying to determine why he had been discharged. In a letter, dated June 6, 2007, plaintiff defended his handling of the litigation in response to what he described as Santiago's complaint that he "had done nothing to further [her] case." Santiago forwarded the letter to her new attorney at the Mazie Slater firm, Adam Slater, who directed plaintiff in writing to cease all further contact with Santiago and who demanded that he turn over his file.
Plaintiff and defendant Mazie Slater thereafter engaged in litigation relating to the release of the file and plaintiff's assertion of a lien. That litigation is germane to the issues before this Court only to the extent that it resulted in an order directing Mazie Slater to pay plaintiff's expenses in the amount of $1,654.06 and preserving plaintiff's lien pending resolution of the underlying malpractice litigation.
Thereafter, Mazie Slater settled Santiago's malpractice suit and filed its motion to discharge plaintiff's lien. Adam Slater certified that a $1,200,000 settlement had been reached which, after payment of expenses, resulted in $358,396.31 in attorneys' fees. The law firm asserted that plaintiff was not entitled to any portion of that fee because he had filed the complaint prematurely and had done little to advance the litigation prior to being discharged. Plaintiff countered with a certification of services describing the work he had performed and asserted that he was entitled to be compensated at an hourly rate equivalent to the one that Slater had used in an earlier filing with the court. At about the same time, plaintiff filed his complaint in this matter, seeking an additional ...