Inside Perspective: New Jersey Professional Law Negligence

Inside Perspective: New Jersey Professional Law Negligence, June 2022

Edited by KDV's Iram P. Valentin, partner and co-chair of our professional liability practice group and David J. Gittines, KDV associate.

Collected for your convenience and quick reference, this is a summary of recent New Jersey attorney professional negligence and ethics decisions. The New Jersey office of Kaufman Dolowich and Voluck, LLP endeavors to keep you informed of developments in the New Jersey laws governing lawyers.

New Jersey Affidavit of Merit – Better Safe?Than Sorry - Breach of Contract Claim or?Legal Malpractice Claim?

In Briley v. Dimon, No. A-2572-19, 2022 WL 333086 (App. Div. Feb. 4, 2022), the New Jersey Appellate Division upheld the dismissal of a plaintiff’s claims against his former attorneys due to his failure to serve an affidavit of merit as required under N.J.S.A. 2A:53A-27. Plaintiff brought claims against his former attorneys in connection with his habeas corpus petition. Plaintiffs sued his former attorneys for breach of contract for failing to file a notice of appearance in court or provide assistance. A Ferreira hearing was held by the Court and the defendant attorneys requested that plaintiff provide an affidavit of merit regarding his claims against them. At the Ferreira hearing, plaintiff argued that the affidavit of merit was not required because he was asserting a breach of contract claim. After the time had expired for the production of the affidavit of merit, Plaintiff sought leave to produce an affidavit of merit. The trial judge found that Plaintiff’s breach of contract claim was akin to a legal malpractice claim and indeed fell within the purview of the AOM statute. The trial judge further held that plaintiff was alerted to the need for the affidavit of merit by the Ferreira hearing and that no extraordinary circumstances existed to excuse plaintiff’s failure to file the affidavit of merit within the time allowed under the AOM statute. The New Jersey Appellate Division upheld the trial court’s dismissal and denied plaintiff’s appeal.

Client Funds and Attorney Business Funds?– Never the Twain Shall Meet

Under New Jersey’s Rules of Professional Conduct 1.15(a): A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained in a financial institution in New Jersey. Funds of the lawyer that are reasonably sufficient to pay bank charges may, however, be deposited therein. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of seven years after the event that they record.

The New Jersey Supreme Court recently reprimanded a former New Jersey attorney, Stanley R. Sherer of Hawthorne, for commingling thousands of dollars between his attorney trust account and business account, failing to keep proper records, and failing to safeguard his clients funds. In October of 2017, a random audit of the attorney’s trust and business accounts revealed multiple recordkeeping violations. The attorney was unable to provide proof that the thousands of dollars disbursed from his attorney trust account were for legal fees. Thereafter, the Office of Attorney Ethics (“OAE”) initiated an investigation. During the ethics investigation, the attorney violated his duty to cooperate with the Office of Attorney Ethics (“OAE”) by repeatedly failing to provide requested financial records. As a result, the OAE had to reconstruct the attorney’s financial records from subpoenaed bank and public records. The attorney admitted to commingling personal funds with client funds and using the funds in the attorney trust account to pay for a personal obligation to the IRS. The attorney also admitted to negligently misappropriating funds that he was required to hold for clients and third-parties. According to the OAE, the reconstruction of the attorney’s financial records could not fully determine the impact of the attorney’s misconduct on his client’s funds. The board reprimanded the attorney factoring the mitigating circumstances of admitting wrongdoing, lack of prior discipline, and no longer practicing law.

Solo Practitioners Beware – Recordkeeping is Sacrosanct

A Hackensack solo, Howard Miller, Esq., was recently reprimanded by the New Jersey Supreme Court after failing to comply with a deal that would have let him avoid punishment regarding his poor recordkeeping skills. In March of 2017, Miller admitted to the Office of Attorney Ethics (“OAE”) that he violated courts rules regarding bookkeeping requirements and that he failed to cooperate with disciplinary authorities. The OAE offered a deal that would allow him to avoid punishment if he took classes regarding attorney business accounting and if he got his practice’s books in order. Miller failed to take the required classes or offer an explanation why the classes were missed and the OAE revoked the deal. In January of 2018, he was offered a second chance by the OAE to avoid punishment if he could prove his firm’s recordkeeping problems were addressed. Miller provided some evidence that his recordkeeping was up to par, but not enough to satisfy the OAE. As such, the Disciplinary Review Board voted 9-0 for a reprimand, which was imposed by the New Jersey Supreme Court in January of 2022. The Court also ordered that Miller complete courses in attorney recordkeeping and law firm management as part of his punishment.

Attorney’s Invoices to a Public Entity not?Shielded by the Attorney-Client Privilege

The New Jersey Appellate Division recently overturned a trial court ruling that invoices with descriptions of an attorney’s generic legal work for a public entity are not shielded from disclosure by the attorney-client privilege. The Borough of Lawnside received a request under the Open Public Records Act (“OPRA”) from resident Erin Mears regarding legal work done for the borough by Ari Linden, Esq. The records custodian produced the invoices to Mears but redacted the description of work performed by Linden, citing the attorney-client privilege. Mears filed suit against the brough claiming that the redactions were improper. The trial court agreed with Lawnside that the attorney-client privilege applied and dismissed Mears’ lawsuit. On appeal, the New Jersey Appellate Division ruled that the attorney-client privilege did not apply to block generic tasks performed by attorney Linden. Upon review of the unredacted versions of the invoices, the Appellate Division determined that the vast majority of the entries were generic, single lined entries that did not reveal confidential information, trial strategy, or work product, and, as such did not fall under the purview of the attorney-client privilege. In overturning the trial court, the Appellate Division noted that the attorney-client privilege does not apply to lawyer’s bills for services to a public entity but only shields “confidential communications made within the strict relation of the attorney and client.” A records custodian seeking to invoke the attorney-client privilege should describe the nature of the documents not produced or disclosed in a manner that, without revealing privileged information, will enable other parties to assess the applicability of the privilege. Due to the fact Mears was the prevailing party in the records request, the Appellate Division ordered Lawnside to pay his legal fees at the trial and appellate level. The matter was remanded to the trial court for an award of fees.

Failed Takeover of Law Firm Leads to Ethics Violation for Attorney

An attorney in Vineland received a three-month suspension of her license to practice law by the Disciplinary Review Board for plotting to takeover a branch office of her law firm. In 2012, attorney Nancy Martellio was asked by her law firm, Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonichi & Gill, to establish a branch office for the firm in Vineland. In 2015, Martellio believed that the firm was planning to shut down the Vineland office after the managing partner sent out a memo on streamlining. Thereafter, she had the locks changed at the Vineland office, incorporated the name “Law Office of Nancy Martellio” at the Vineland address of the branch office, and convinced the landlord to terminate the lease with the firm and execute a new lease with her new firm. She also sent out letters to 150 firm clients (on firm letterhead), announcing that the Vineland office was being taken over by her new firm. Alerted to her machinations, the firm obtained a court order enjoining Martellio from interfering with the firm’s clients. Thereafter, Martellio and the firm reached an agreement to settle the matter. The Disciplinary Review Board found that the letter she sent out to the firm’s clients contained material misrepresentations and omissions that made it misleading. Further, her false representations to the landlord that she was authorized to terminate the lease was a forgery, and against the law, although she was not charged with a crime. There was no plan by the firm to close the Vineland office; Martellio’s misguided perception of the situation guided her actions, which she chose not to fact-check.

Pro Hac Vice No More for Fraudster Attorney ?

A Philadelphia attorney convicted of mail fraud in the Eastern District of Pennsylvania has been permanently banned by the New Jersey Supreme Court from being admitted pro hac vice in New Jersey. Neil Mittin, Esq. plead guilty to a mail fraud charge in September of 2019. Mittin had previously been admitted pro hac vice in New Jersey. He admitted coming up with a scheme to defraud his law firm, Gay & Chacker, by referring the firm’s personal injury cases to outside lawyers who resolved the cases and shared the proceeds with him. Over ten (10) years, Mittin referred cases to outside attorneys, advising them that he, not his firm, was entitled to a share of the financial recovery in the matters. After the cases were referred out, Mittin would close out the corresponding files in his firm, making it look like there was no recovery. The outside attorneys would mail Mittin’s shares to his home address. During Mittin’s scheme, the outside attorney’s generated approximately $10.8 million in recoveries on behalf of Gay & Checker clients, of which the firm would have been entitled to $4.2 million. In the criminal matter, Mittin was sentenced to 60 months in prison, followed by three (3) years of supervised release, and was ordered to pay the firm $4.2 million in restitution.

Serial Poster of Attorney Services Runs?Afoul of LinkedIn

In 2019, Edison attorney Kenneth Vercammen was banned by LinkedIn for posting more than 15 articles per day. LinkedIn stated that the excessive posting to promote his small law office in Edison violated its use agreement. Vercammen sued LinkedIn in the New Jersey Superior Court, claiming violations of the Consumer Fraud Act (“CFA”) and asserting that he had no notice of any terms limiting use of the site. He sought the reactivation of his LinkedIn account, free premium LinkedIn services for 5 years, in addition to compensatory, treble, and punitive damages. The trial court dismissed Vercammen’s claims against LinkedIn and he appealed. The Appellate Division upheld the dismissal of Vercammen’s claims but ruled that the trial court order should be changed from with prejudice to without prejudice. The Appellate Division’s ruling allows Vercammen to file suit again against LinkedIn in California, pursuant to the forum selection clause in the contract.

Fishy Fee-Sharing Arrangement Shot Down?by the Appellate Division

A Teaneck law firm, Davis Saperstein & Salomon, found itself in trouble after allegedly playing fast and loose with a fee agreement for a personal injury case. Attorney David Cohen had struck a deal with the firm that he was to receive 20% of the legal fees from a construction worker’s accident suit. Later, the firm claimed that Cohen was only entitled to 20% of the proceeds that remained after the firm paid its obligation to another attorney in a fee-splitting deal stemming from an insurance bad-faith claim. Cohen sued Davis Saperstein and the trial court found that he should have been paid in full. Davis Saperstein appealed, but the Appellate Division rejected the firm’s assertations, finding the underlying agreement unambiguous and ordered that Cohen should be paid in full as directed by the trial court. Davis Saperstein apparently turned its obligation from a subsequent fee-sharing deal into an expense that it deducted before paying Cohen, which greatly reduced the amount paid to Cohen.

Attorneys Not Easily Disqualified from?Representing Clients

A plaintiff’s recent bid to disqualify the new attorneys for her former counsel in a legal malpractice case was derailed by the Appellate Division. Plaintiff, a guardian ad litem for her grandson, had previously received a judgment of $165,000 against the State of New Jersey, which was reduced to $102,000 upon a motion for remitter. The judgement was for a lawsuit brought by plaintiff against the State for catastrophic injuries to her four month-old grandson caused by the criminal acts of his father, the boyfriend of plaintiff’s 18 year-old daughter. The jury assigned 100% of the liability against the State. The State filed a motion for judgment notwithstanding the verdict based upon qualified immunity, which was denied. The State appealed.

In the interim, while the appeal was pending, the parties attempted to resolve the matter through mediation. During mediation, the State made multiple offers, including one for $100,000, all of which plaintiff rejected. On appeal, the Appellate Division reversed the judgment, agreeing with the State that its employees were shielded from liability by qualified immunity, N.J.S.A. 59:3-3.

Thereafter, Plaintiff filed a legal malpractice claim against her former attorneys, claiming, among other things, that they failed to properly inform and educate her of the risk of the judgment being reversed on appeal, rendering her unable to make an informed decision about the settlement. During the case, defendants made a motion to have plaintiff removed as guardian ad litem on the basis of an alleged inherent conflict between her and her grandson. The motion was denied by the trial court. Defendants filed a motion for reconsideration, which was supported by a certification from the mediator. The mediator set forth his belief that the State was immune from liability and that he was present when plaintiff and defendants had a discussion regarding immunity – the uncertainty of the result in the content of current case law and the effect of losing on that issue. The trial court found no bar to the mediator testifying as a fact witness in view of Plaintiff’s claims against her former attorney, but the motion for reconsideration was denied.

While those motions were decided in 2018, defendants were represented by Margolis Edelstein. In January of 2021, defendants retained new counsel, Wilentz, Goldman & Spitzer. In February of 2021, the mediator joined Wilentz. This move prompted plaintiff to file a motion to disqualify Wilentz as counsel for defendants pursuant to RPC 1.12, in light of the mediator’s continuing role as a material witness in the case. The motion was denied by the trial court. The trial court was satisfied that the procedures put in place by the Wilentz firm adequately assured that the mediator could not participate in the case in a capacity as a lawyer and would not share in the fee, as required by RPC 1.12. Although the trial court found that the Wilentz firm should have notified plaintiff that the mediator had joined the firm and the procedures put in place to screen him from the case, the failure to do so did not disqualify Wilentz from representing the defendants. The trial court noted that Plaintiff’s counsel became aware of the mediator’s move by a public announcement and immediately brought the issue to Wilentz’s attention – which essentially achieved the notice requirement of RPC 1.12. The trial court further noted that a party is ordinarily entitled to defend a case with counsel of its choosing and concluded that plaintiff had not established a basis on which to interfere with the defendants’ choice. While finding RPC 1.12 plainly applicable, the trial court found that the procedures Wilentz put in place to screen the mediator satisfied its obligation under RPC 1.12. The Appellate Division, agreeing with the trial court, denied plaintiff’s appeal and found that plaintiff failed to carry the burden to prove that disqualification of the Wilentz firm was warranted.

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