Alcman Services Corp. v. Bullock

• Citation: 925 F. Supp. 252
• Decision Date: 26 March 1996
• Docket Number: Civil No. 95-02292.
• Parties: ALCMAN SERVICES CORPORATION, Plaintiff, v. Samuel H. BULLOCK, P.C., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

925 F. Supp. 252

ALCMAN SERVICES CORPORATION, Plaintiff, v. Samuel H. BULLOCK, P.C., et al., Defendants.

Civil No. 95-02292.

United States District Court, D. New Jersey.

March 26, 1996.

COPYRIGHT MATERIAL OMITTED

Stephen P. Yuhas, Crawshaw, Mayfield, Riordan, Turner, O'Mara, Donnelly, Thomas & McBride, Cherry Hill, NJ, for defendants.

Barry F. Penn, Cherry Hill, NJ, for plaintiff.

OPINION

IRENAS, District Judge.

Centuries ago alchemists endeavored to transmute lead into gold. The plaintiff before us today, equally inspired and perhaps more creative, has attempted to transform its leaden judgment against an impecunious adversary into claims of gold against the adversary's well insured lawyer. Plaintiff's black magic consisted of entering into a settlement with its adversary in which plaintiff agreed to stay execution of its judgment against the adversary in exchange for the adversary assigning to plaintiff the adversary's legal malpractice claim against its lawyer. Alas, such a transmutation is as impossible in law as it is in chemistry.

I. BACKGROUND

On June 24, 1988, plaintiff Alcman Services Corporation ("Alcman") purchased a fourstory apartment building located at 1305 Locust Street ("Building") in Philadelphia. Alcman is a Pennsylvania corporation formed by Rudolph Di Massa (father) and Anthony Di Massa (son), who are Pennsylvania attorneys as well as landlords.

On June 9, 1989, Alcman entered into a construction agreement with a general contractor, Joseph A. Cairone, Inc. ("Cairone"), for the renovation of the Building. Alcman also contracted independently with Majek Fire Prevention, Inc., ("Majek") a New Jersey corporation, to install and obtain a permit for a fire protection system.

In June 1990, Alcman filed a complaint in the Philadelphia Court of Common Pleas (Docket No. 3653; Def.Ex. B) alleging that Cairone, its subcontractors, and Majek had not adequately performed their contractual obligations. Alcman, which was represented by Rudolph Di Massa, served the complaint on Majek.

Majek retained the law firm of Samuel H. Bullock, P.C., ("Bullock") to represent it in the Philadelphia action.¹ Bullock is located in Pitman, New Jersey. Although one of the defendants, Thomas Holloway, is licensed to practice law in Pennsylvania, Bullock does not have an office in Pennsylvania. A default judgment for $7 million was entered against Majek on August 17, 1990, for failure to answer the Complaint. In oral argument, Alcman's lawyer stated that the $7 million default judgment was entered based on an affidavit that Alcman filed with the court representing that such amount was lawfully due and owing to Alcman. This judgment appears never to have been vacated. The plaintiff subsequently domesticated the judgment in New Jersey Superior Court. Alcman was able to collect $4,000 by garnishing payments made by a third party to Majek. Majek is a small company with few assets.

Four-and-a-half years after the entry of default judgment, on December 13, 1994, Alcman entered into an agreement ("Agreement") (Def.Ex. D) with Majek pursuant to which Majek assigned to Alcman its cause of action for attorney malpractice against Bullock.² Alcman in turn promised to stay execution of the Philadelphia judgment. The Agreement has a choice of law provision which states that "the Assignment of the subject legal malpractice cause of action including all agreements contained therein, is entered into in the State of New Jersey and shall be construed and interpreted in accordance with the Laws of the State of New Jersey." Def.Ex. D, ¶ 8.

Alcman filed a Complaint against defendants in this Court on May 19, 1995, six months after the Agreement, alleging that Bullock's malpractice was the proximate cause of the $7 million default judgment. The Complaint contains two counts. The first count charges Bullock with negligence. The second count asserts that Bullock lied to Majek about its actions on Majek's behalf and seeks punitive damages. The Complaint does not assert breach of contract.

Defendant Bullock moves for summary judgment on the grounds that New Jersey law prohibits the assignment of a cause of action for attorney malpractice. Plaintiff, in its opposition briefs, counters that such an assignment is permitted in New Jersey and that, if not, the contract should be construed under Pennsylvania law despite the choice of law provision to which plaintiff itself agreed.

II. STANDARD OF REVIEW

Under Fed.R.Civ.P. 56(c), "summary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A non-moving party may not rest upon mere allegations, general denials, or vague statements in opposition to a summary judgment motion. If the non-moving party's evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Bixler v. Central Penna. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir.1993); Trap Rock Indus. Inc. v. Local 825, Int'l Union of Operating Engineers, 982 F.2d 884, 890-91 (3d Cir.1992).

It is not the role of the judge at the summary judgment stage to weigh the evidence or to evaluate its credibility, but to determine "whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The Court must draw all inferences in the light most favorable to the non-moving party, and where the non-moving party's evidence contradicts the movant's, the Court must accept the non-movant's version as true. Pastore v. Bell Tel. Co. of Penna., 24 F.3d 508, 512 (3d Cir.1994).

The substantive law governing the dispute will determine which facts are material, and only disputes over those facts "that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. A genuine issue of material fact for trial does not exist "unless the party opposing the motion can adduce evidence which, when considered in light of that party's burden of proof at trial, could be the basis for a jury finding in that party's favor." J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir. 1987) (Becker, J., concurring).

III. DISCUSSION

A. Judicial Estoppel and Legal Malpractice

In obtaining its $7 million default judgment in the Philadelphia Court of Common Pleas, Alcman filed an affidavit swearing that Majek rightfully owed Alcman the full $7 million.³ Alcman now seeks to come before this Court and argue, in essence, that Majek did not actually owe the full $7 million, but, rather, that some portion of that $7 million was a result of Bullock's malpractice. We hold that the doctrine of judicial estoppel bars Alcman from arguing such fundamentally contradictory positions.

Under the doctrine of judicial estoppel, a party is bound by his representations to a court and may not contradict them in a subsequent proceeding involving the same issues or representations. Vogel v. Red Star Express Lines, 73 N.J.Super. 534, 180 A.2d 351 (1962), aff'd 40 N.J. 44, 190 A.2d 666 (1963). New Jersey courts have thus held that, "a party will not be permitted to play fast and loose with the courts, nor to assume a position in one court entirely different or inconsistent with that taken by him in another court or proceeding with reference to the same subject matter or thing." Koppel v. Olaf Realty Corp., 56 N.J.Super. 109, 151 A.2d 577, 583 (1959), aff'd 62 N.J.Super. 103, 162 A.2d 306 (1960) (holding that "the doctrine of equitable estoppel applies here because the defendant has heretofore performed acts and admissions inconsistent with its present claim." Id., 151 A.2d at 583).

In order to establish a claim for legal damages as Majek's assignee, Alcman would be compelled to argue that the $7 million judgment against Majek was obtained, not because Majek owed Alcman the money, but at least in part because of Bullock's negligence. This is so because, under the law of legal malpractice, both in New Jersey and elsewhere, it is not enough to prove that a lawyer was negligent. A plaintiff must also establish that he suffered damages proximately caused by the lawyer's negligence. Lamb v. Barbour, 188 N.J.Super. 6, 455 A.2d 1122 (A.D.1982); Lieberman v. Employers Ins. of Wausau, 171 N.J.Super. 39, 407 A.2d 1256 (1979), aff'd 84 N.J. 325, 419 A.2d 417 (1980); Cotton v. Travaline, 179 N.J.Super. 362, 432 A.2d 122 (1981); Snyder v. Baumecker, 708 F.Supp. 1451 (D.N.J. 1989). Even if a lawyer's malpractice is obvious, a client may not prevail in a suit against the lawyer where the underlying claim is meritless and no damages were caused by the lawyer's negligence. Vort v. Hollander, 257 N.J.Super. 56, 607 A.2d 1339 (A.D.1992).

If Majek was actually liable to Alcman for the full amount of the $7 million judgment, as Alcman has previously avowed, then Majek has no legal malpractice claim because it suffered no damages. Alcman would therefore have to argue before this Court that Majek's liability arose because of Bullock's negligence, while having previously sworn before the Pennsylvania court that Majek's liability arose solely, and rightfully, from Majek's failure to fulfill its contractual obligations towards Alcman.

In Zuniga v. Groce, Locke & Hebdon, 878 S.W.2d 313 (Tex.App.Ct.1994), the court forbade a similar assignment as a "transparent device to replace a judgment-proof, uninsured defendant with a solvent defendant." Id. at 317. In decrying the "demeaning reversal of roles" such assignments would create, the Court argued that,

The two litigants would have to take positions diametrically opposed to their positions during the underlying litigation because the

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