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Legal Updates for Lawyers' Professional Liability

Jack Slimm and Jeremy Zacharias Win Pivotal NJ Appellate Decision Impacting the Defense of Plaintiff’s Counsel in Legal Malpractice Actions

Presented by the Lawyers' Professional Liability Practice Group

May 22, 2024

by John L. Slimm and Jeremy J. Zacharias RPLU

In an appellate decision impacting the defense of the plaintiff’s bar in legal malpractice actions, Jack Slimm and Jeremy Zacharias were successful in defending an appeal in the matter of DeCaro v. Elkind & DiMento, A-2707-22 (App. Div. May 16, 2024).

This decision arose out of an underlying dram shop case in which the plaintiff claimed that another patron threatened and screamed profanities at her in the presence of the restaurant staff. The plaintiff asserted that she was later physically assaulted by the patron outside the restaurant. Everyone had been served alcoholic beverages. The plaintiff suffered debilitating injuries, including skull fractures and brain injuries, and retained our client to represent her in the case against the restaurant. 

Our client negotiated an expedited trial/high-low agreement with counsel for the nightclub, pursuant to which the plaintiff would receive a minimum recovery and a maximum recovery. The parties waived their right to appeal from the verdict. Under the agreement, the conditions included limiting opening statements to 15 minutes, closing statements to 30 minutes, and permitting each party to call five lay witnesses, stipulating to the admission of business records, expert reports, written statements and the like. The case went to trial in Ocean County, New Jersey, and resulted in a defense verdict in favor of the bar. However, as a result of the high-low agreement, the plaintiff did receive an award, albeit a low one.

Further, in the legal malpractice action, the plaintiff submitted an expert report, opining the case involved permanent brain injuries and the attorneys deviated from the standard of care by recommending an expedited trial with a high-low agreement. The trial court granted our motion to strike this expert report as a net opinion and then granted summary judgment.

On appeal, the plaintiff argued that her malpractice claim was dependent upon expert testimony establishing the standard of care and the concomitant duty the plaintiff alleged the attorneys breached during their representation of the plaintiff in the dram shop case. The plaintiff recognized that the sole issue on appeal was the adequacy of her expert report in creating a prima facie case against the attorneys.

New Jersey’s Net Opinion Rule
This case is an excellent review of New Jersey’s Net Opinion Rule, which is a corollary of N.J.R.E. 703, which forbids the admission into evidence an expert’s conclusions that are not supported by factual evidence but, rather, data. Notably, this is the first opinion of its kind dealing with recommendations made by plaintiff’s attorneys to their client to proceed with an expedited trial on a high-low basis.

In DeCaro, the Appellate Division affirmed the order of the trial court, which had dismissed the case and struck the expert opinion as a net opinion. The opinions of the plaintiff’s expert were all personal net opinions regarding: (a) how long he would have opened; (b) how long he would have closed; (c) what evidence he would have put into evidence; and (d) what witnesses he would have called at trial (lay and expert). However, the expert failed to provide the benchmark for the opinions he offered. He was unable to come forward with a document or unwritten custom accepted by the plaintiff’s bar recognizing what would constitute reasonable actions in such a dram shop case. The plaintiff’s expert was unable to provide evidence establishing any of the purported standards to which he vaguely referred.

Also, this case is important because typically a plaintiff’s expert will use the Rules of Professional Conduct in order to establish a cause of action for legal malpractice. The plaintiff’s expert tried that here. It is true that although the Rules of Professional Conduct set forth a standard of care by which to measure an attorney’s conduct, and was recognized by the Appellate Division, the expert only made conclusory statements pertaining to our client’s alleged misconduct and did not identify with any particularity how such misconduct violated any established and accepted standards of care under the Rules he cited. He failed to explain how the attorney’s representation of DeCaro in the dram shop case breached an established standard of care under those rules. He provided only conclusory assertions that the attorney’s conduct breached the Rules, without providing any evidence establishing the standard of care on which his opinions were based.

This is a key opinion in connection with the defense of plaintiff’s counsel in legal malpractice actions. It also covers when and how the Net Opinion Rule applies in legal malpractice cases.

Should you need further information regarding this recent decision, please contact Jack Slimm (jlslimm@mdwcg.com) or Jeremy Zacharias (jjzacharias@mdwcg.com). 

 

Legal Update for Lawyers’ Professional Liability – May 22, 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

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On motions for judgment on the pleadings, the District Court found for the insurers on the basis of public policy: There is no duty to defend or indemnify against actions arising out of an insured's criminal conduct related to the sex trafficking of minors. The Court appreciates that it may make public policy the basis of a judicial decision only in “the clearest of cases.” See Minnesota Fire & Cas. Co. v. Greenfield, 589 A.2d 854, 868 (Pa. 2004) (quoting Hall v. Amica Mut. Ins. Co., 648 A.2d 755, 760 (Pa. 1994)). Yet, the Court strains to imagine a clearer case than the one presented here in which the facts alleged indicate that Policyholders engaged in criminal conduct in violation of Pennsylvania's Human Trafficking Law. The hotel owners appealed the matter to the Third Circuit, which petitioned the Supreme Court of Pennsylvania to grant review of two certified questions of law: (1) whether Pennsylvania law had an “overriding public policy” against sex trafficking, such that an insurer’s duty to defend and/or indemnify is abrogated when an insured is alleged to have enabled or profited from such trafficking; and (2) if yes, is that duty abrogated whenever the insured’s alleged conduct would constitute a violation of the Pennsylvania Human Trafficking statute. Importantly, the certified questions did not ask the Supreme Court to determine whether the policies afforded coverage under their terms. Rather, the court was asked only whether Pennsylvania public policy independently barred coverage. As a result, the court assumed for purposes of answering the certified questions that the insurers otherwise owed a duty to defend and addressed only the public policy issue, leaving all policy-based coverage defenses for further proceedings. Because the court concluded that the answer to the first certified question was “no”, it did not reach the second issue. In reaching its determination that Pennsylvania public policy does not prohibit insurance coverage for sex trafficking claims, the court limited the impact of its decision in Minnesota Fire & Cas. Co. v. Greenfield, 855 A. 2d 854, 855 (Pa. 2004), which the RI Settlement opinion emphasized as having been an “Opinion Announcing Judgment of the Court” – or a plurality opinion. In Greenfield, the insured homeowner was sued by the estate of his houseguest who overdosed from heroin that he sold to her. 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