Thought Leadership

New Jersey Appellate Division affirms decision dismissing a complex legal malpractice action arising out of an underlying first-party coverage action in the United States District Court. 
Morris Properties, Inc. and Kristen Morris v. Jonathan Wheeler, Mario Barnebei and Law Offices of Jonathan Wheeler, P.C., August 22, 2023, New Jersey Superior Court, Appellate Division

In this case, the plaintiffs filed a complaint against Jonathan Wheeler, Mario Barnebei and the Law Offices of Jonathan Wheeler, P.C., alleging claims for legal malpractice. These claims were in connection with the defendants’ interaction with Morris Properties and Ms. Morris in an underlying lawsuit that concerned the plaintiffs’ right to recover from West American Insurance Company as a result of purported damage suffered on October 29, 2012, from Super Storm Sandy. 

At the close of discovery, a motion for summary judgment was filed on behalf of the defendants, asserting that an order for dismissal should be entered. In granting this motion, the trial court held that: 

1. The plaintiffs’ expert report was lacking in the damages analysis explanation; 
2. No individual attorney-client relationship existed between Ms. Morris and the defendants to confer standing to Ms. Morris to maintain an individual legal malpractice claim; and 
3. The plaintiffs’ allegations that the defendants acted with willful and with wanton disregard towards the plaintiffs to support a punitive damages claim was not supported by the record. 

Upon affirming the trial court’s decision, the Appellate Division, reviewing de novo the grant of summary judgment, held that the plaintiffs had not established proximate cause, as a matter of law, and that expert testimony was necessary to prove proximate causation and damages. The causal relationship between the defendants’ alleged malpractice, and the plaintiffs’ asserted loss was not so obvious that the trier of fact could have resolved the issue as a matter of common knowledge without the assistance of expert testimony. The court held that the expert’s opinion was an impermissible net opinion, with no evidential weight, since the expert failed to explain the why and wherefore behind the opinion.

The Morris Properties decision is key to many areas of practice since the Appellate Division, in affirming the trial court’s order granting summary judgment, opined on many thorny aspects of litigation, including the parameters of expert reports in legal malpractice claims and the extent that a party could maintain an individual legal malpractice claim when no attorney-client relationship exists. The Appellate Division carefully scrutinized when an attorney owes a duty to a non-client and held, consistent with established precedent, that the grounds on which any plaintiff many pursue a malpractice claim against an attorney with whom there was no attorney-client relationship are exceedingly narrow. See, Green v. Morgan Props., 215 N.J. 431, 458 (2013); see also, Banco Popular N. Am. v. Gandi, 184 N.J. 161, 182-83 (2005); Petrillo v. Bachenberg, 139 N.J. 472, 474 (1995). 

This matter involved hundreds of thousands of dollars in building damages caused by Super Storm Sandy and was handled by Jack Slimm and Jeremy Zacharias of our Mount Laurel, New Jersey, office, who were successful before the New Jersey Appellate Division.

Mere chance that relationship and lease agreement between lessor and lessee may spark future disputes under lease agreement is not the gauge the court measures whether their interests are directly adverse in local property tax appeals under RPC 1.7(a)(1).
Montclair Hospital, LLC v. Glen Ridge Borough, 2023 WL 4783596

The court’s decision in Montclair is helpful in analyzing when counsel is facing a disqualification motion. The court’s holding reinforces the holding that even if a dual representation may trigger future disputes, this is not the barometer by which the court will use to measure whether party interests are directly adverse to one another under a RPC 1.7(a)(1) analysis.

Glen Ridge Borough sought the entry of an order to disqualify Archer & Greiner, P.C. from serving as counsel for Montclair Hospital, LLC, MPT Legacy of Montclair, LLC, and Mountainside Hospital-MPT in commercial real estate tax appeals. The plaintiff (Montclair Hospital, LLC) was the tenant of a parcel owned by MPT Legacy of Montclair, LLC. On May 19, 2019, Montclair Hospital retained Archer as counsel for the purpose of pursuing property tax appeals. MPT Legacy stated that it, too, was represented by Archer as counsel in the pending property tax appeals and was also seeking a reduction in the assessed value of the subject property for each year under appeal.

In moving to disqualify Archer, Glen Ridge asserted that the interests of Montclair Hospital and MPT Legacy “are not only inherently and concurrently adverse but are intricately entwined in a complicated and ongoing commercial transaction coupled with a complicated and ongoing real estate transaction where large sums of money are at stake, where contracts contain complex contingencies, and where options are numerous.” Glen Ridge argued that the New Jersey Supreme Court’s “bright-line rule” prohibiting certain concurrent representations, as articulated under Baldasarre v. Butler, 132 N.J. 278 (1993), precluded Archer from representing both Montclair Hospital and MPT Legacy, based on a direct adversarial relationship, among other things.

Montclair Hospital asserted that the pendency of the property tax appeals did not provide a significant risk that Archer’s representation of the landlord of the subject property materially limited Archer’s responsibilities to the Montclair Hospital. Similarly, MPT Legacy asserted that it was not aware of any significant risk that materially limited Archer’s ability to fulfill its responsibilities to MPT Legacy as a result of Archer’s representation of the tenant in the appeals.

In response, Archer maintained that Glen Ridge had not meet its burden to justify disqualification and argued that Glen Ridge’s motions were based on a “falsehood” that “the relationship between a landlord and a tenant can only be inherently hostile or adversarial.” 

In analyzing this issue, the court noted that it was undisputed that Archer represented Montclair Hospital and MPT Legacy, the plaintiff and the third-party defendant/counterclaimant in the local property tax appeals. Under an RPC 1.7(a) analysis, the court did not find that Glen Ridge proved that: (1) Archer’s representation of Montclair Hospital in the local property tax appeal matters was “directly adverse” to MPT Legacy, or (2) Archer’s representation of MPT Legacy in the local property tax matters was “directly adverse” to Montclair Hospital under RPC 1.7(a)(1).

The court held that, while Glen Ridge correctly pointed out that the relationship between MPT Legacy and Montclair Hospital was that of lessor and lessee, that fact standing alone did not inevitably lead the court to conclude that they are “directly adverse.” The mere possibility that the relationship and lease agreement between Montclair Hospital and MPT Legacy may trigger future disputes involving the rent payable or other obligations under the lease agreement was not the barometer by which the court measured whether their interests are directly adverse in the local property tax appeal matters under RPC 1.7(a)(1).
 

^{Legal Update for Lawyers’ Professional Liability – September 2023 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 © 2023 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.}