Hoppe v. Ranzini

Decision Date15 March 1978
Citation385 A.2d 913,158 N.J.Super. 158
PartiesEdward HOPPE, Plaintiff-Respondent, v. Joseph L. RANZINI and Frank J. Morelli, Defendants-Appellants.
CourtNew Jersey Superior Court — Appellate Division

Joseph Cooney, Oakhurst, for appellant, Joseph L. Ranzini (Richard A. Amdur, Oakhurst, attorney).

Allan Maitlin, Livingston, for appellant, Frank J. Morelli (Feuerstein, Sachs & Maitlin, Livingston, attorneys).

Andrew M. Rockman, Perth Amboy, for respondent (Levinson, Conover, Fink & Axelrod, Perth Amboy, attorneys).

Before Judges LYNCH, BISCHOFF and KOLE.

The opinion of the court was delivered by

KOLE, J. A. D.

Defendants, who are attorneys, were sued for malpractice. Plaintiff, a passenger in a car owned and operated by Joseph DePoe, was injured when the car was involved in an accident. For the purpose of this appeal, we consider that the only negligent party was DePoe. 1 The malpractice claim was predicated on defendants' failure to file a complaint within the period of the statute of limitations. It was stipulated that DePoe was uninsured and had no assets at the time of the accident or at the date the motion was argued, had an income that did not exceed $45 a week and had been in and out of jail on a number of occasions. Prior to trial both parties consented that the issue here involved be decided as if a motion for summary judgment had been made by defendants. The trial judge denied the motion and held, contrary to defendants' contention, that their liability was not limited to the maximum amount (then $10,000) set forth in the statute relating to the Unsatisfied Claim and Judgment Fund (the Fund). Defendants appeal. 2

The trial judge ruled that, assuming plaintiff would have obtained a judgment against DePoe, in no event would the damages collectible against the attorneys be limited to the maximum recoverable against the Fund, notwithstanding DePoe's obviously weak financial status at the time of the accident or thereafter. He stated that, had the case been tried before a jury, he would not have submitted the issue of collectibility of a judgment against DePoe, or the extent thereof, for the following reasons: (1) the judgment would be viable for a period of at least 20 years; (2) during that period, by reason of financial success, inheritance or other means, DePoe might have acquired sufficient assets to pay in full the total amount of the judgment that the jury might have awarded against him; and (3) to ask the jury to determine the future with respect to DePoe's likelihood of acquiring assets or otherwise being able to pay the judgment against him would be to require it to indulge in sheer speculation. For these reasons, he determined in advance of the trial that the judgment should not be limited to the $10,000 that plaintiff might have recovered from the Fund.

We affirm the denial of the summary judgment, but hold that the ruling of the court was premature. It should have awaited an appropriate time during trial.

Defendants claimed below, as it is also contended here, that plaintiff's rights to recover must be limited to the $10,000 which he would have received from the Fund had the matter actually been placed in suit and judgment been recovered against DePoe, and that the limitation of DePoe's assets and the extent of his solvency at the time of the accident or the malpractice action must be considered in determining the damages to which plaintiff is entitled in the malpractice action. The argument is that to the extent that any judgment against DePoe would be uncollectible, the damages suffered by plaintiff would not have been proximately caused by defendants' malpractice. To hold otherwise, it is argued, would put plaintiff in a better position by reason of his succeeding in the malpractice action than he would have been in had his claim against DePoe been properly pursued by defendants.

An attorney's duty to his client requires him to exercise the knowledge, skill and ability ordinarily possessed and exercised by members of the legal profession similarly situated. He is bound to exercise a reasonable degree of care and prudence, having reference to the character of the service he undertakes to perform. Failure to file suit before the running of the period of the statute of limitations plainly constitutes malpractice where there is no reasonable justification shown therefor. Passanante v. Yormark, 138 N.J.Super. 233, 238-239, 350 A.2d 497 (App.Div.1975), certif. den. 70 N.J. 144, 358 A.2d 191 (1976). For the purpose of the motion here involved, defendants admit their negligence in this respect.

The attorney is responsible for the loss proximately caused the client by his negligence. Passanante v. Yormark, supra. The measure of that loss or the amount of damages recoverable against an attorney for such malpractice necessarily depends upon the nature of his undertaking for the client.

If his negligence consists of failing to discover a lien in connection with a search of real estate title, then the damage recoverable is the amount of the lien. Bayerl v. Smyth, 117 N.J.L. 412, 189 A. 93 (E. & A.1937); Jacobsen v. Peterson, 91 N.J.L. 404, 103 A. 983 (S.Ct.1918), aff'd 92 N.J.L. 631, 105 A. 894 (E. & A.1918). See also French v. Armstrong, 80 N.J.L. 152, 76 A. 336 (S.Ct.1910). If the attorney is retained to give legal advice, is negligent in that respect and the client pays money to others as a result thereof, he is responsible to the client for the full amount paid, even though the client may have an action for damages against another in connection with the transaction involved. Fabry v. Jay, 104 N.J.L. 617, 141 A. 780 (E. & A.1928). If he is negligent in preparing a chattel mortgage so that it later is found to be invalid in a bankruptcy proceeding involving the mortgagor, he is liable for the difference between the amount the client received as a general creditor and the full amount that would have been received had the mortgage been valid. McCullough v. Sullivan, 102 N.J.L. 381, 132 A. 102 (E. & A.1926).

However, where, as here, the attorney is retained to conduct litigation against a defendant (hereafter referred to as "the main defendant") and is guilty of malpractice in connection therewith for example in failing to file a complaint within the statute of limitations the measure of the loss or damages recoverable by the client appears to be a novel question, at least on the appellate level, in this State. 3

The rule elsewhere, although not without exception, appears to be that such a malpractice action against the attorney involves a trial within a trial, in which the plaintiff has the burden of proving by a preponderance of the evidence that (1) he would have recovered a judgment in the action against the main defendant, (2) the amount of that judgment, and (3) the degree of collectibility of such judgment. Plaintiff's loss proximately resulting from the attorney's malpractice is deemed to be measured only by the amount of the judgment that could have been collected against the main defendant. To that extent evidence of the main defendant's financial status and solvency may be considered, although it is not entirely clear as to the period of time that should be taken into account for that purpose.

As to the foregoing, see Sitton v. Clements, 257 F.Supp. 63 (E.D.Tenn.1966), aff'd 385 F.2d 869 (6 Cir. 1967); Winter v. Brown, 365 A.2d 381 (D.C.Ct.App.1976); McDow v. Dixon, 138 Ga.App. 338, 226 S.E.2d 145 (Ct.App.1976); Baker v. Beal, 225 N.W.2d 106 (Iowa Sup.Ct.1975); Christy v. Saliterman, 288 Minn. 144, 179 N.W.2d 288 (Sup.Ct.1970). Cf. Duncan v. Lord, 409 F.Supp. 687 (E.D.Pa.1976); Allied Productions Inc. v. Duesterdick, 232 S.E.2d 774, including dissenting opinion at 776 (Va.Sup.Ct.1977); Smith v. Lewis, 13 Cal.3d 349, 118 Cal.Rptr. 621, 530 P.2d 589, including dissenting opinion, 118 Cal.Rptr. at 600, 530 P.2d 589 (Sup.Ct.1975); W. L. Douglas Shoe Co. v. Rollwage, 63 S.W.2d 841 (Ark.Sup.Ct.1933). See also, 7 Am.Jur.2d, Attorneys At Law, § 190 at 158; Annotation, "Attorney's liability for negligence in preparing or conducting litigation," 45 A.L.R.2d 5 (1956), including discussion and authorities cited at 23, 26, 27-28, 30; Annotation, "Measure and elements of damages recoverable for attorney's negligence with respect to maintenance or prosecution of litigation or appeal," 45 A.L.R.2d 62 (1956), including discussion and authorities cited at 64-66; 2 Dooley, Modern Tort Law, § 33.09 (1977); Coggin, "Attorney Negligence, * * * A Suit Within A Suit," 60 W.Va.L.Rev. 225 (1958); Comment, "Legal Malpractice," 27 Ark.L.Rev. 452 (1973); Comment, "Legal Malpractice in Mississippi", 43 Miss.L.Rev. 691 (1972); Comment, "The Attorney's Liability for Negligence: An Alabama Perspective," 7 Cumb.L.Rev. 68 (1976); Note, "Legal Malpractice Erosion of the Traditional Suit Within A Suit Requirement," 7 Tol.L.Rev. 328 (1975).

We consider the matter of whether and under what circumstances, if at all, collectibility from the main defendant should be a proper consideration in the award of damages in this type of malpractice action to be of sufficient public importance to warrant its determination only in a full factual setting developed at a trial, rather than on a hypothetical basis, such as that here presented, by way of a ruling on incomplete stipulated facts before trial.

In this State the amount of damages for which a negligent party is liable is that which his negligence was a substantial factor in bringing about. His negligence need not be the proximate cause of such damages. It suffices if it is a proximate cause thereof. The determination of the damages so caused involves the reasonable foreseeability thereof, although not necessarily its precise amount. Where it is certain that some damage has resulted, mere uncertainty as to the amount need not preclude the right to recovery. In that event, it is left to the good sense of the jury, as...

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