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N.J. High Court to Weigh Client's Right to Sue Lawyer After Approving a Settlement
New Jersey Law Journal
October 21, 2009
The New Jersey Supreme Court will take another look at when a client can sue his or her lawyer over a settlement the client originally found to be acceptable.
On Oct. 8, it granted a motion for leave to appeal filed by Duane Morris in Guido v. Duane Morris, No. M-191-09.
The Appellate Division held on July 15 that Joseph and Teresa Guido could proceed with their malpractice suit against the firm and two partners at its Princeton, N.J., office, Frank Luchak and Patricia Kane Williams, over their representation of the Guidos in a shareholder dispute.
The firm asked the Court for an interlocutory appeal to answer the question: Under what circumstances should a client be allowed to sue his or her attorney after having knowingly and voluntarily accepted a settlement placed on the record by the trial court while two motions to enforce a similar prior settlement were pending?
Inconsistent lower court interpretations of Puder v. Buechel, 183 N.J. 428 (2005), and Ziegelheim v. Apollo, 128 N.J. 250 (1992) had created "persistent uncertainty," wrote Joseph LaSala of McElroy, Deutsch, Mulvaney & Carpenter of Morristown, N.J., in the brief he filed for the defendants.
Leaving the Appellate Division decision in place would encourage clients to sue their lawyers whenever they second-guess settlements, undermine the policy favoring finality of settlement and damage the trust underlying the attorney-client relationship, argued LaSala.
Appellate Division Judge Ariel Rodriguez and Alexander Waugh Jr. read Puder and Ziegelheim together as allowing a malpractice suit when "particular facts" support the claim of attorney incompetence and "negate the element of prior acceptance of the underlying settlement."
Flanders, N.J., solo Donald Fedderly, the Guidos' lawyer, says he is glad the Court will clarify the issue for future litigants, though the delay is bad news for his 75-year-old client.
"There is a litany of questions counsel almost always asks their own client in settling claims in open court to make sure the client understands the terms of the settlement," but the only one to ask questions was the judge, says Fedderly. The Guidos were asked whether they understood the settlement, whether they had any questions, whether they agreed to be bound and whether any health issues would impact their ability to understand and accept responsibility for the terms but not whether they found the settlement to be fair and reasonable, he says.
The result was that Joseph Guido, who started Allstates World Cargo and owned most of the stock and was trying to strengthen his control over the company, ended up with a settlement that stripped him of all power by prohibiting him from voting or selling his shares without the unanimous consent of the board, says Fedderly.
Duane Morris' general counsel, Michael Silverman of the Chicago office, says "we are pleased that the New Jersey Supreme Court has agreed to review the case and that the Trial Attorneys of New Jersey filed an amicus brief in support of our position."
TANJ asked for leave to appear as amicus in support of Duane Morris on Oct. 13. The brief, filed by Diana Manning of Bressler Amery & Ross in Florham Park, N.J., urges the Court to adopt a rule that would require plaintiffs with claims like the Guidos' to first seek enforcement, modification or vacation of the settlement in the original court.
Wow this raises many questions in my mind. I wonder what the statue of limitation would be for cases such as this one. In hind sight, I think many individuals believe that their attorney didn't perform up to par and that perhaps it was the direct result of the attorney’s negligence, the settlement wasn't sufficient. Realistically, if you believed that your attorney wasn’t doing his job correctly, wouldn’t you hire a different council?
ReplyDeleteI find it amazing that a case like this is even being considered. If the ruling is in favor of the former client, I believe that it will open the dcor for any and all individuals to sue any person(s) they hire to perform a service with the claim that they did not understand what the outcome would be. This will be the beginning of many more frivolous lawsuits which will tie up the legal system even more than it already is.
ReplyDeleteThis is an interesting situation that I believe truly deserves some thought and consideration. I'm not certain that this particular case actually is based on merrit, however, I'm not certain that there is not a basis to consider the negligence of an attorney as a basis for remedy. "Sour grapes" should not be a valid reason to later sue the attorney, however, what if there was actual negligence. If society chooses to "open this can of worms", careful thought to stringent regulations based on fact need to be put in place. If a client can prove, factually, that he was not properly informed and his interests were not properly represented then yes, that's malpractice. If a physician did not properly inform a patient of specific ramifications of, lets say, a drug interaction, and the patient, uninformed, took a drug on the physicians advice and suffered damages, the physician would be liable for malpractice. Seems to me that if you are paid to provide a professional services you are responsible to provide that professional service accurately and competently. If the DA doesn't bother to provide critical evidence in a murder trial and the jury finds the murder not guilty, wouldn't the DA be negligent in his performance and responsible to socienty for endangering the public?
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