The Wake Of Hurricane Sandy

A summary of a decision issued today by the New Jersey Appellate Division

In this legal-malpractice case, the corporate plaintiff and its president appeal from an order granting defendants’ summary-judgment motion.  The trial court found plaintiffs’ expert had failed to analyze how defendants’ alleged breaches of the standard of care would have impacted a potential jury verdict or settlement and had not opined that defendants’ alleged malpractice proximately caused any damages.  The judge also dismissed the president’s individual claim because the undisputed facts showed she and defendants did not have an attorney-client relationship.   

The court affirms, holding plaintiffs had not established proximate cause as a matter of law and that expert testimony was necessary in this case to prove proximate causation and damages.  With respect to the president’s individual claim of legal malpractice, the court holds she failed to demonstrate the existence of an attorney-client relationship between herself and defendants. 

The claim related to Hurricane Sandy damage

On February 4, 2019, plaintiffs filed a complaint against defendants, pleading two counts of legal malpractice against defendants, one on behalf of MPI and the other on behalf of Morris individually. Regarding MPI, plaintiffs faulted defendants for not naming an expert, submitting an expert report, or preparing Morris for her deposition in the coverage action. Plaintiffs asserted that due to defendants’ negligence, MPI was forced to settle its claims against West American “for a small fraction of their full value.” Regarding Morris individually, plaintiffs alleged defendants had known that West American accused her of committing insurance fraud in a report to New Jersey’s Department of Banking and Insurance. Plaintiffs faulted defendants for failing to advise them of that report and claimed that during the State’s subsequent investigation, Morris had “lived under the threat of significant fines and criminal incarceration.” Plaintiffs asserted the investigation, which did not result in any charges, would have been avoided had defendants properly prepared Morris for her deposition. Alleging defendants had acted willfully, wantonly, and in reckless disregard of duties they purportedly owed to both MPI and Morris, plaintiffs sought compensatory and punitive damages on behalf of MPI and punitive damages on behalf of Morris.

The court 

Plaintiffs’ legal-malpractice claims fail as a matter of law. We agree with the motion judge that plaintiffs had not established proximate cause as a matter of law and that expert testimony was necessary in this case to prove proximate causation and damages. The causal relationship between defendants’ alleged malpractice and plaintiffs’ asserted loss is not “so obvious that the trier of fact [could have] resolve[d] the issue as a matter of common knowledge” without the assistance of expert testimony. Sommers, 287 N.J. Super. at 11. As the motion judge recognized, many factors could impact the settlement value of or potential jury verdict on MPI’s insurance-coverage claim. Only an expert could show that MPI would have succeeded in obtaining a better result at trial – which would have required MPI to convince a jur of its entitlement to insurance coverage of its full claim of wind-related damages based on a record that included pre-Sandy complaints from tenants about roof leaks – or in another settlement had defendants not committed the alleged breaches of the standard of care.

As to the individual plaintiff

Plaintiffs claim defendants represented Morris because they “clearly interacted directly with [her].” Mere interaction does not establish the existence of an attorney-client relationship. With no citation to the record, plaintiffs also assert defendants “purported to represent her during her deposition in the underlying matter.” That unsupported assertion does not create a genuine issue of material fact sufficient to defeat summary judgment on this issue, especially when the record evidence demonstrates otherwise. The motion judge’s finding that Morris was deposed as a corporate representative of MPI is supported by credible and unrebutted evidence in the record.

(Mike Frisch)