Category Archives: Business Litigation and Legal Malpractice
I am a commercial litigator and occasionally I’m asked, what does commercial litigation mean? In its simplest form: disputes over contracts. Here’s a case we handled recently at Maselli Warren, P.C. that illustrates commercial litigation. Names have been changed to insure client confidentiality.
Our client, Mr. D, was sued by a large company (“Big Company “) on a lease for a copy machine used in Mr. D’s business. Like many small companies, Mr. D’s business leased their copier.
When Mr. D turned 77, he retired and closed his small business. When he retired, the lease term had a few years of monthly payments remaining, amounting to over $140,000. The copy machine was returned to Big Company, after which Big Company sued the business and Mr. D personally for the remaining payments. Although Mr. D had signed the lease as president of his corporation (which would shield him from being personally liable for acts of the corporation), Big Company claimed that 22 years ago, Mr. D signed a personal guarantee on another copier lease and that it was still effective. In the years since that guarantee was signed, the copier under the guarantee was returned and there had been 12 different copiers leased every few years under 12 different leases without personal guarantees signed. Big Company argued the 22 year old personal guarantee was a continuing guarantee that Mr. D had never cancelled and was still in effect for the 2019 lease.
We filed a motion in which we asked the court to dismiss the suit against Mr. D. Big Company opposed our motion and both sides appeared in court to argue the law before a judge.
On behalf of our client, we pointed out that two contracts were before the court with conflicting terms; 1.) the 22 year old lease with the continuing personal guarantee; and 2.) the newest lease with a blank, unsigned personal guarantee.
Statutory law and case law instruct what happens when there are conflicting terms in a contract, and what terms will apply. When a contract has ambiguous terms, the contract will be construed against the party who wrote the contract. Big Company wrote these leases and therefore, the terms would be construed against it. The leases also contained an integration clause, which provides that the contract terms are the entire agreement between the parties. When a contract has an integration clause, the law states that no other evidence can be considered in interpreting the contract, and the court’s examination is limited to the “four corners” of the document.
These were our arguments and we were successful – the court dismissed all of Big Company’s claims against Mr. D.
And that, my friends, is what commercial litigation is.
Lawsuits for legal malpractice are all about what the lawyer was supposed to do.
For a client to successfully sue his or her former attorney for legal malpractice, the client must first establish what a lawyer is supposed to do in handling a matter like the one the lawyer handled for the client. If the lawyer represented the client in a car accident lawsuit and the lawyer failed to submit court papers that resulted in the lawsuit being dismissed, the client in a malpractice lawsuit has to prove that lawyers in these types of lawsuits are required to submit these types of papers to the court. The client proves this by hiring a lawyer to provide an “expert opinion report” which states exactly what a lawyer handing a car accident lawsuit is supposed to do. (Note – this is the third lawyer hired by the client: the first was the lawyer who malpracticed by failing to submit the court papers; the second is the lawyer hired to sue the first lawyer for malpractice; and the third is the lawyer who acts as expert witness.)
After proving that the lawyer did not do what the lawyer was supposed to do, the client must then prove that the client was financially harmed because the lawyer did not do what the lawyer was supposed to do. In our lawsuit example, the client would have to prove that if the lawyer did submit the papers to the court, the client would have won the lawsuit and collected a chunk of money from winning the lawsuit.
The client proves this by having a trial on a “case within a case.” This is what it looks like. The client and the malpractice lawyer go to trial and first put the expert witness on the witness stand who testifies that lawyers handling car accident cases are supposed to submit the papers, and that the lawyer being sued failed to submit the papers. Then the client’s malpractice lawyer puts on witnesses and evidence to prove the car accident case. The jury decides first if the lawyer being sued messed up by failing to submit the papers. If the jury decides that lawyer messed up, then the jury decides how much money to award the client for the car accident case. The lawyer that messed up, or the lawyer’s insurance company, pays the lawyer’s former client the amount of money the client would have received if the lawyer had properly handled the car accident litigation.
Not every legal malpractice case deals with a situation where a lawyer messed up a lawsuit. The lawyer may have failed to properly handle a transaction, let’s say, a real estate deal. Suppose a seller sells real estate to a buyer who pays $100,000. The buyer receives a deed and the lawyer is supposed to record the deed in the county clerk’s office. The lawyer fails to do so. The seller, an unscrupulous skulduggerer finds another buyer a week later and sells that buyer the same property for $80,000. The seller gives the second buyer a deed and the second buyer’s lawyer does what a lawyer is supposed to do and records the deed with the county clerk. The seller beats a fast path out of town with a cool $180,000 while the first buyer legally is not the owner of the property because the first buyer’s lawyer did not do what the lawyer was supposed to do.
In this type of legal malpractice case, the unhappy client hires a legal malpractice lawyer. Together, they hire an expert witness lawyer to write an expert opinion report that says lawyers are supposed to promptly record deeds and that, had the client’s lawyer done what a lawyer is supposed to do, the client would be the owner of the property. Instead, the expert explains, the buyer paid $100,000 and received nothing. In that case, if the jury agrees that the lawyer did not do what lawyer is supposed to do by failing to record the deed, the jury will award the client $100,000 which is how much the client lost as a result of the lawyer’s failure.
Do you think your lawyer failed to do what a lawyer was supposed to do in a legal matter you were involved with? Contact us to discuss.
Usually attorneys know their clients and their clients know their attorneys. But not always.
In a recent New Jersey appellate court decision (Greening v. Levine), the appellate court grappled with the issue of whether a lawyer who represented a condominium association in claims made by a construction company also represented the individual unit owners. One unit owner claims the lawyer provided her with legal advice on a number of issues regarding her obligations to the construction company, and that the lawyer gave some bad advice that caused her damage. The unit owner sued the lawyer for legal malpractice.
The trial court dismissed the lawsuit, finding that the lawyer only represented the condominium association and not the individual unit owner. However, the appellate court reversed that decision finding that there were facts in dispute regarding who the lawyer represented. The appellate court sent the case back to the trial court so a jury could decide whether the lawyer represented the unit owner and whether the lawyer committed malpractice.
The lesson to be learned here is that if you are a client or think you are a client, make it clear and in writing. Send the lawyer an email or write a letter and state that you are proceeding on the basis that the lawyer is providing you with legal representation. If you are a lawyer and believe that a non-client may have the notion that you represent that person, send an email or letter that clearly states that you are not that person’s lawyer and that the person should seek advice from a different lawyer of his or her own choosing.
Even though your case did not turn out the way you hoped, most of the time, it is not your lawyer’s fault.
But sometimes it is.
In New Jersey, an attorney will be liable to a former client if the attorney fails to meet the “standard of care” and as a result, the client is damaged.
In performing legal services, an attorney must exercise the care, skill, and diligence that are commonly exercised by other attorneys representing clients in similar matters. If the attorney does so, the attorney meets the standard of care.
The attorney most often fails to meet the standard of care in dealing with the technical or procedural components involved in the services being rendered to the client.
Technical and procedural components include such things as recording documents, providing notice, drafting deeds and mortgages, filing a lawsuit within the filing-deadline set by a statute, drafting wills and other estate documents that accurately reflect the client’s intention, obtaining expert witness reports on the pertinent issues of the case being litigated, following a client’s instructions regarding a transaction or a lawsuit, providing tax advice to a client involved in a transaction or an estate administration, meeting all the requirements of proceeding with a lawsuit, informing a client of a settlement offer or other pertinent information needed for the client to make a decision as to how to proceed, advising a client of potential adverse consequences of a client’s decision and other similar events.
Take a look at our blog article titled “Real Life Legal Malpractice Cases,” for more detailed examples of cases.
One of the key elements of a legal malpractice case is that the person suing the lawyer must prove there is “an attorney-client relationship.” This means that the person and the lawyer agreed that the lawyer would provide legal services to the person.
Sometimes, however, a person is harmed by a lawyer’s actions or inactions, but the person is not a client of the lawyer. Courts have ruled that where an attorney provides information or takes on a responsibility that the attorney knows is not just for the client, but is also relied upon by other people, those other people can sue the lawyer if the information turns out to be unreliable or if the attorney fails to fulfill the responsibility undertaken.
Courts have ruled that an attorney who provided inaccurate information in a bid package could be held liable to a contractor who relied on that information and suffered harm because the information was inaccurate. Courts have also ruled that where a lawyer represents a person selling property and agrees to record the deed from the client (seller) to the buyer, and then fails to record the deed, the lawyer could be responsible for damages caused to the buyer even though the buyer was not the lawyer’s client.
Look for other blog posts on the topics of Discovery, Expert Witnesses, Mediation, Non-Binding Arbitration and the Trial.
This article is intended as general information and not as legal advice. If you are considering starting a lawsuit, contact an attorney at Maselli Warren, P.C. to schedule a consultation.
Imagine that you or your business runs into a legal problem. You don’t think you understand enough about the issue to tackle it on your own, so you make the prudent decision to enlist someone who does: you call an attorney. You willingly give this attorney your time, your money, and your sensitive personal and financial information, because you rightfully trust that he or she is a qualified professional who will treat you and your case with competence and care. But soon, things start to go wrong. Return calls are few and far between, until your calls stop being returned altogether. Documents are lost. Deadlines are missed. You take a huge financial loss, and struggle to patch up the pieces left behind. Was it legal malpractice?
In April 2014 the Working Group on Business Litigation, formed in the fall of 2013 by New Jersey Chief Justice Stuart Rabner, issued its report and recommendations on the needs of business litigants. This process is a continuation of the steps the Judiciary has taken to improve New Jersey’s business friendliness. Previous steps have included:
- The creation of the General Equity part in the Chancery Division.
- A 1996 Bergen and Essex vicinage commercial pilot program where a judge with a business background is given discretion to handle complex commercial cases from start to resolution.
- The 2000 Best Practices 4-track case management system.
- The 2003 adoption of Rule 4:38A addressing Multicounty Litigation.
- A 2004 pilot program permitting a party to complex commercial litigation to request a General Equity designation in lieu of one in the Law Division, Civil Part.
We’ve written about Detroit’s bankruptcy on our blog in the past. Back in December of 2013, Judge Steven Rhodes catapulted the Motor City into national headlines when he announced he would allow Detroit to file for Chapter 9 bankruptcy. The announcement of the biggest municipal bankruptcy in the nation’s history stunned the press and public alike, and left Detroiters with a mixed bag of emotions. On one hand, the move inspired hope that a fresh start and a chance to heal would be attainable at last — but on the other, it also led to widespread anxiety regarding the thousands of pensions hanging precariously in the balance. Since then, four tumultuous months have passed. Is Detroit’s bankruptcy making progress?
Major lawsuits are always popular news fodder, and when big businesses lock horns, the media frenzy escalates to an even higher degree of intensity. When a large and well-known company finds itself confronted by another company’s claims, the fate of popular and long-standing business empires — and millions or even billions of dollars — hangs in the balance. In this entry, we’ve compiled five big business battles.
Planted firmly at the corner of 10th and Federal St. in the Bella Vista neighborhood of South Philadelphia, Chickie’s has been loading up hoagies for peckish customers since 1993. Now, after nearly twenty years, Chickie’s is available for purchase. But while Chickie’s may be a tempting piece of commercial real estate, the buyer may want to consider enforcing a non-compete agreement with its seller before moving in.
It sounds like something that could have come out of Hollywood. After years of legal maneuvering, a prominent, accomplished attorney promises a client a whopping six-figure settlement. Facing unrelated disciplinary actions from another case, that same attorney takes his own life. When his former client tries to collect her check, she discovers no such lawsuit was ever filed — and moves against his mourning estate for millions of dollars in damages.
It’s a strange, sad story which demonstrates that even the best and most highly-regarded attorneys sometimes become tangled in malpractice. John Fahy was well-known, well-respected, and successful. What happened toward the end of his life? Friends and family still struggle to find answers — even as they struggle against a massive malpractice lawsuit that has opinions sharply divided.