Thought Leadership

In Mavroudis v. Vedder Price, P.C., Mitchell D. Cohen, McElroy, Deutsch, and William O’Connor, Jr., Esq., A-2568-21 (App. Div. September 6, 2024), the Appellate Division’s decision came after a decade of litigation in various courts stemming from a judgment GE Capital Corporation obtained against the plaintiff and his partners. The original judgment stemmed from the debtors’ default on certain MRI equipment leases. Litigation then ensued regarding debt collection. 

The debtors/non-clients filed a complaint against the attorneys (our clients) and the collection attorneys, alleging professional negligence and malpractice, malfeasance, breach of fiduciary duty, common law fraud, negligent misrepresentation, and gross negligence in connection with statements, arguments, affidavits, certifications made in the litigation over the debt, and the amount of the debt. The plaintiffs alleged, as a result of the statements and arguments made by the defendant attorneys in the underlying litigation regarding the debt, the attorneys committed fraud and misrepresentation that led to the plaintiffs’ damages, which they claimed were well in excess of $10 million. 

The Appellate Division found that, although privity is not necessary between an attorney and a non-client where an attorney has reason to foresee the specific harm which occurred, our clients owed no duty to the plaintiff-debtors as non-clients since the attorneys’ alleged misrepresentations were made during adversarial litigation and, thus, were not intended to induce reasonable reliance by a specific non-client. The court further held that, although lawyers have an obligation to speak truthfully on issues of material fact, their primary duty is to be a zealous advocate for their own client. Therefore, the Appellate Division rejected the plaintiffs’ contention that a duty was owed to the non-client under the circumstances of this case. 

In addition, the Appellate Division rejected the plaintiffs’ reliance on the Rules of Professional Conduct (RPC) to sustain their cause of action since in New Jersey a violation of the RPC, standing alone, does not create a cause of action for damages. Further, the court rejected the plaintiffs’ request to permit malpractice claims by non-clients in the presence of fraud, collusion, or malicious acts. 

According to the Appellate Division, although lawyers have an obligation to speak truthfully on issues of material fact under RPC 3.3 and 4.1, an attorney’s primary duty is to be a zealous advocate for his or her own client. Therefore, the court rejected the plaintiffs’ contention that a duty was owed to a non-client in the circumstances under which the attorneys make arguments as adversaries in litigation in certifications, affidavits, and statements in open court. The Appellate Division rejected the plaintiffs’ claim that the attorneys’ representations were actionable, holding that, permitting a cause of action against the adversary would not serve a legitimate purpose but would, instead, “become a weapon used to chill the entirely appropriate zealous advocacy in which a system of justice depends.” 

This decision is extremely important to the trial bar and provides attorneys with a level of protection/immunity in connection with statements and arguments they make as adversaries in litigation. 

Should you have any questions, do not hesitate to contact Jack Slimm of our Mount Laurel, New Jersey, office. 

^{Legal Updates for Lawyers’ Professional Liability – September 19, 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.}