United States District Court, D. New Jersey
McNulty United States District Judge.
before the Court is the motion of defendants Hunt, Hamlin
& Ridley and Ronald Hunt to dismiss of the complaint
filed by plaintiff, Star Insurance Company
("Star"). The complaint seeks to recover funds Star
expended to settle a personal injury lawsuit. That underlying
lawsuit was Destiny Dickens, an infant, by her guardian
ad litem Yvone Smith, and Yvone Smith, individually v.
Irvington Board of Education, et al, docket No.
ESX-L-4698-13 ( N.J.Super. Ct. Essex Co.) (the "Dickens
Action"). In the Dickens Action, the plaintiffs sued
the Irvington Board of Education (the "Board") for
damages based on injuries Destiny Dickens sustained while
attending Union Avenue Middle School in Irvington Township.
Defendant Hunt, Hamlin & Ridley, by Defendant Ronald
Hunt, Esq., represented the Board in the Dickens Action.
complaint filed by Star Insurance in this action asserts one
cause of action against Mr. Hunt and Hunt, Hamlin 85 Ridley
(the "Hunt Defendants") for legal malpractice. The
allegation is essentially that these attorneys did not
competently represent the Board in the state-court Dickens
now move pursuant to Federal Rule of Civil Procedure 12(b)(6)
to dismiss for failure to state a claim. (DE 7). Defendants
also move to recover their attorney's fees and costs
pursuant to N.J. Court Rule 4:42-9(a)(6). Plaintiff has filed
a response in opposition to the motion. (DE 14).
reasons explained herein, I will grant the Hunt
Defendants' motion to dismiss without prejudice. I will
deny defendants' motion for attorney fees and costs.
allegations of the complaint are assumed to be true for
purposes of this motion only.
issued a policy to the Board as the named insured, policy
number CP 0641890, effective from 7/1/11 - 7/1/12 (the
"Star Policy"). (Compl. ¶ 1).
Star Policy, which is not attached to the complaint,
contained a self-insured retention (the "SIR") in
the amount of $250, 000. The SIR endorsement in the Star
Policy required the Board to, inter alia: (i) accept
any reasonable settlement offer within the SIR; and (ii)
adequately defend any claims brought against the Board.
(Compl. ¶ 15). The Star Policy also required the Board
to keep Star apprised of developments in the litigation and
to cooperate with Star, something the Board allegedly failed
to do. (Id. ¶¶ 16, 17).
complaint alleges that Star, as insurer, expended funds to
settle the Dickens Action. The claim in that action was that
Ms. Dickens, a minor at the time, was attending Union Avenue
Middle School when she fell and broke her elbow.
(Id. ¶ 10). The Star policy was in effect on
the date of Ms. Dickens's fall. (Id. ¶ 13).
Dickens sued the Board to recover damages arising from that
mishap. In June 2017, the parties to the Dickens Action held
an arbitration and Ms. Dickens was awarded $180, 000.
(Id. ¶ 12). The Board however rejected that
award and proceeded to trial, without notifying
Star. (Id.). At trial, the jury
returned a verdict in favor of Ms. Dickens, awarding her $6
million. (Id. ¶ 17). The Board appealed.
(Id. ¶ 18). Star participated in that appeal,
subject to a reservation of rights. (Id. ¶ 19).
While the appeal was pending, the parties held a mediation on
October 30, 2018. (Id. ¶ 20). At the mediation,
representatives of the Board directed the mediator to offer
plaintiffs a single settlement offer: $1 million to resolve
all claims. (Id.).
before the mediator conveyed the $ 1 million offer, Star
reached a separate agreement with the Board in which the
insurer limited its contribution to the settlement to
"25% of the amount of the $1 million settlement offer in
excess of the unimpaired portion of the Board's SIR under
the Star Policy." (Id. ¶ 21). Thus,
Star's contribution was fixed at $212, 500 under what the
complaint deems a "Settlement Funding Agreement."
(Id. ¶ 22; see also ¶ 25).
Ultimately, Ms. Dickens accepted the Board's $1 million
asserts that it contributed $882, 562.10 to the settlement.
The result was that Star paid $670, 062 in excess of what it
agreed to pay under the Settlement Funding Agreement.
(Id. ¶ 28).
Count IV of the complaint-a claim of legal malpractice-is
asserted against the Hunt Defendants. Count IV alleges that
the Hunt Defendants, as attorneys, owed Star a duty when they
represented the Board in the Dickens Action. That duty, Star
asserts, was then breached when the Hunt Defendants (1)
failed to move for summary judgment; (2) failed to make a
motion for judgment as a matter of law under New Jersey Rule
of Court 4:40-1 at the close of the plaintiffs' case; and
(3) conceded a permanent injury at the time of trial.
(Id. ¶¶ 11, 44, 45). Star asserts that
these failures impaired any prospect of negotiating a
reasonable settlement after entry of judgment, as well as the
prospects for appeal. (Id. ¶ 46). Therefore,
Star seeks to recover the entirety of what it paid to settle
the Dickens Action: $882, 562.10, plus its legal fees.
Hunt Defendants now move to dismiss Count IV for failure to
state a legal malpractice claim. See Fed.R.Civ.P. 12(b)(6).
(DBr at 19-31). Defendants also contend that Star failed to
comply with the notice requirements of the New Jersey Tort
Claims Act. (Id. at 31-36). Finally, the Hunt
Defendants move for an award of attorney fees and costs
should they prevail on their motion to dismiss. (Id.
Legal Standard on Motion to Dismiss
Rule of Civil Procedure 8(a) does not require that a
complaint contain detailed factual allegations. Nevertheless,
"a plaintiffs obligation to provide the
'grounds' of his 'entitlement to relief requires
more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do."
Bell AtL Corp. v. Twombly, 550 U.S. 544, 555 (2007);
see Phillips v. Cnty. of Allegheny, 515 F.3d 224,
232 (3d Cir. 2008) (Rule 8 "requires a 'showing'
rather than a blanket assertion of an entitlement to
relief." (citation omitted)). Thus, the complaint's
factual allegations must be sufficient to raise a plaintiffs
right to relief above a speculative level, so that a claim is
"plausible on its face." Twombly, 550 U.S.
at 570; see also West Run Student Hous. Assocs., LLC v.
Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013).
facial-plausibility standard is met "when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
556). While "[t]he plausibility standard is not akin to
a 'probability requirement'... it asks for more than
a sheer possibility." Id.
12(b)(6) provides for the dismissal of a complaint if it
fails to state a claim upon which relief can be granted. The
defendant, as the moving party, bears the burden of showing
that no claim has been stated. Animal Science Products,
Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d
Cir. 2011). For the purposes of a motion to dismiss, the
facts alleged in the complaint are accepted as true and all
reasonable inferences are drawn in favor of the plaintiff.
New Jersey Carpenters & the Trustees Thereof
v. Tishman Const, Corp. of New Jersey, 760 F.3d 297, 302
(3d Cir. 2014).
deciding a motion to dismiss, a court typically does not
consider matters outside the pleadings. However, a court may
consider documents that are "integral to or explicitly
relied upon in the complaint" or any "undisputedly
authentic document that a defendant attaches as an exhibit to
a motion to dismiss if the plaintiffs claims are based on the
document[.]" In re Rockefeller Ctr. Props., Inc.
Sec. Litig., 184 F.3d 280, 287 (3d Cir. 1999) (emphasis
and citations omitted); accord In re Asbestos Prods.
Liab. Litig. (No. VI), 822 F.3d 125, 133 n.7 (3d Cir.
2016); Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir.
2014) ("To decide a motion to dismiss, courts generally
consider only the allegations contained in the complaint,
exhibits attached to the complaint and matters of public
record"); Arcand v. Brother Int'l Corp.,
673 F.Supp.2d 282, 292 (D.N.J. 2009) (court may consider
documents referenced in complaint that are essential to
plaintiffs claim). The rationale for that exception is
apparent: "When a complaint relies on a document. . .
the plaintiff obviously is on notice of the contents the
document, and the need for a chance to refute evidence is
greatly diminished." Pension Benefit Guar. Corp. v.
White Consol Indus., Inc., 998 F.2d 1192, 1196-97 (3d
Cir. 1993). Thus reliance on such documents does not convert
a motion to dismiss into a motion for summary judgment.
Legal Malpractice Claim (Count IV)
malpractice is a variation on the tort of negligence."
Garcia v. Kozlov, Seaton, Romanini & Brooks,
P.C., 845 A.2d 602, 611 (2004). "Like most
professionals, lawyers owe a duty to their clients to provide
their services with reasonable knowledge, skill, and
diligence .... *What constitutes a reasonable degree of care
is not to be considered in a vacuum but with reference to the
type of service the attorney undertakes to
perform."' Ziegelheim v. Apollo, 607 A.2d
1298, 1303 (1992) (citing St. Pius X House of Retreats v.
Diocese of Camden, 443 A.2d 1052 (1982)).
present a prima facie legal malpractice claim, a plaintiff
must establish the following elements: "(1) the
existence of an attorney-client relationship creating a duty
of care by the defendant attorney, (2) the breach of that
duty by the defendant, and (3) proximate causation of the
damages claimed by the plaintiff." Jerista v.
Murray, 883 A.2d 350, 359 (2005) (internal quotation
omitted). In general, an attorney owes a duty to his client
to perform diligently and with a high degree of
"fidelity and good faith." Gilles v. Wiley,
Malehorn & Sirota, 783 A.2d 756, 760 (
N.J.Super.Ct.App.Div. 2001). The scope of an attorney's
duty is to exercise "'that degree of reasonable
knowledge and skill that lawyers of ordinary ability and
skill possess and exercise."' Id. (quoting
St. Pius X, 443 A.2d at 1060-61).
Jersey courts are generally reluctant to allow those not in
privity of contract with an attorney to maintain a
malpractice action against that attorney. See Banco
Popular N. Am. v. Gandi,876 A.2d 253, 264 (2005)
(citation omitted). In limited circumstances, however,
attorneys may owe a duty of care to non-clients. Petrillo
v. Bachenberg,655 A.2d 1354, 1359-60 (1995). A lawyer
may thus be liable to a third party "where an
independent duty is owed." Estateof
Fitzgerald v. Linnus,765 ...