Lovett v. Estate of Lovett

• Citation: 593 A.2d 382,250 N.J.Super. 79
• Parties: Richard R. LOVETT, III, et al., Plaintiffs, v. The ESTATE OF Ruth K. LOVETT, et al., Defendant.
• Decision Date: 24 January 1991
• Court: New Jersey Superior Court

Page 79

250 N.J.Super. 79

593 A.2d 382

Richard R. LOVETT, III, et al., Plaintiffs, v. The ESTATE OF Ruth K. LOVETT, et al., Defendant.

Superior Court of New Jersey, Chancery Division Atlantic County.

Decided Jan. 24, 1991.

Lawrence T. Neher, for plaintiffs (Hannoch Weisman, P.C., attorneys), Roseland.

[593 A.2d 384] Michael A. Orlando, for defendants Morgan Thomas and Thomas & Colaneri (Slimm, Dash and Goldberg, attorneys), Westmont.

Edward Suski, Jr., for defendants Morgan Thomas and Thomas & Colaneri on the counterclaim (Parker, McCay & Criscuolo, attorneys), Cherry Hill.

OPINION

GIBSON, J.S.C.

This is a legal malpractice action in which plaintiffs seek to recover attorney's fees allegedly necessitated by defendants' negligence. They also seek to be relieved of paying real estate commissions for sales in which one of the defendants allegedly acted as both attorney and broker. Although at one point, plaintiffs also asserted claims against the non-attorney defendants, those claims have either been resolved or abandoned. The following represents my findings of fact and conclusions of law.

FINDINGS OF FACT

Plaintiffs, Richard R. Lovett, III and Susanne Lovett Ethridge, are the former guardians and surviving children of the decedent, Richard R. Lovett, Jr. They initially brought this suit in their capacity as guardian for their father who, at the time, was 76 years of age and confined to a nursing home. They also sued in behalf of Longport Marine Company, a New Jersey corporation in which their father was the controlling shareholder. The first defendant was the estate of Ruth K. Lovett. Ruth was Richard, Jr.'s second wife. She died on March 16, 1988 two months prior to the initiation of this suit. Also named was Paula Magner Construction Company and John Peduto, buyers under separate agreements of sale regarding properties sold by Ruth Lovett pursuant to Richard, Jr.'s power of attorney. Finally, plaintiffs sued their father's former attorney, Morgan Thomas and his law firm, Thomas & Colineri. Thomas drafted the power of attorney, Lovett's last will and certain other documents. Lovett died while this action was pending and plaintiffs continued the suit in behalf of his estate.

Prior to his death, Lovett was a successful businessman, having operated a marina in Longport and a boat pump business in Somers Point. He owned properties in Somers Point, Longport and Egg Harbor Township and during his prime was in complete control of his affairs. He and Ruth K. Lovett were married on December 25, 1976. Both had been married previously and prior to their marriage to each other they entered into a premarital agreement. In furtherance of the premarital agreement, Richard Jr. executed various codicils to his will. Those codicils and Lovett's original will were prepared by the Hannoch Weissman law firm, the same firm representing plaintiffs here. The documents were quite sophisticated and together, comprised over a hundred pages. How much of their content Lovett actually understood is open to question but it is clear that he eventually became disenchanted with their complexity and sought to create a simple will. For that purpose he did not return to Hannoch Weissman and instead consulted Morgan Thomas, Esq.

Lovett was seventy-three at the time and had been having some difficulty with his memory. He thus decided to create a power of attorney in favor of his wife so that he could conduct his business and financial affairs through her. By then, he and Ruth had been married about nine years and decided that they wanted their prenuptial agreement cancelled. Lovett advised Thomas of their plans who then made arrangements to obtain Lovett's prior will and the codicils. He reviewed them briefly and then advised Lovett that the new will would have less favorable tax consequences than the existing plan. Lovett responded that he did not care about taxes since he was not going to be paying them and wanted to proceed in any event. Thomas thus completed the new will together with a revocation of the earlier prenuptial agreement and a power of attorney. On August 7, 1985, at a third meeting between the Lovetts and Thomas, all of the documents were read, explained and eventually executed. A tape recording was made of the dialogue between Lovett and Thomas during the signing of these documents.

Ruth Lovett was in attendance at all three of the meetings with Thomas but she made no effort to assert herself or to direct the process in any way. By all outward appearances, if not in reality, it was Richard Jr. who was in control. It is true that during the period from 1985 up until her death in March of 1988, Ruth did assume increasing control over Lovett's business affairs. In June of 1987, for example, she made arrangements for the sale of the three properties which had been owned by Richard Jr. and/or Longport Marine Co., Inc. Ruth sought the assistance of Morgan Thomas in that connection. In addition to agreeing to act as her attorney he also said that he would perform the necessary brokerage services and agreed to accept a commission in lieu of a legal fee. Agreements formalizing that arrangement were prepared and signed. Although he was not licensed as such, Thomas' activities in connection with the sales were primarily those of a broker. He prepared a listing agreement, fielded a number of offers and negotiated contracts. Eventually he drafted contracts of sale and entered into fee splitting agreements with other real estate brokers.

In March of 1988, while the above contracts were pending, Ruth died. By that point, Richard Jr. was suffering from Parkinson's disease and was in a nursing home. He was disoriented in time, place and person and was unable to manage any of his affairs. On April 15, 1988, one month after Ruth's death, Richard III and his sister Susanne, filed the complaint seeking to be named guardian. On May 17, 1988, Richard Jr. was formally declared incompetent. Approximately two weeks later plaintiffs filed the within complaint.

LEGAL CONCLUSIONS

Plaintiffs complaint initially charged Ruth with undue influence, breach of fiduciary duty and conversion. It sought to have the sales set aside and to have compensatory and punitive damages awarded. It also sought to invalidate Lovett's most recent will, the power of attorney and the release of the premarital agreement, all based on the alleged incompetency of Richard Jr. and Ruth's undue influence. Thomas was charged with a breach of fiduciary duty. A declaration was sought that all fees and commissions paid to or taken by him and his firm should be accounted for and returned. Finally, plaintiffs sought damages based on Thomas' alleged malpractice claim. Thomas counterclaimed for the real estate commissions. All of these claims other than those relating to malpractice and the declaration regarding the real estate commissions were either settled or abandoned. Unfortunately, in the process, plaintiffs incurred legal fees and costs amounting to almost $275,000.00. They now claim those as damages. No other losses are asserted.

Two sets of issues need to be addressed in order to resolve the remaining claims. The first relates to the elements of malpractice and the corresponding issues of proximate cause and damages. The second relates to defendants' entitlement to commissions arising from the real estate sales and the ethical considerations that bear on that. The malpractice claims will be dealt with first.

LEGAL MALPRACTICE

Plaintiffs claim that Thomas deviated from the applicable standard of care in various ways but primarily by negligently failing to advise Richard, Jr. of the ramifications of changing his estate plan. For example, plaintiffs claim that Thomas should have advised Lovett of the possible need for separate counsel in order to evaluate the documents he prepared. They also claim that Thomas should have met with Lovett outside the presence of his wife Ruth. They say that Thomas failed to advise Lovett of the likelihood of a will contest and that he failed to recommend a psychological evaluation in order to address the question of Lovett's testamentary capacity. They also say that he failed to determine exactly what assets Lovett owned and never fully advised Lovett regarding the tax differences between the old and the new plan. Plaintiffs' final contention is that Thomas' conduct in connection with the property sales was an ethical breach and constitutes a separate form of malpractice.

The requisite elements of a cause of action for legal malpractice are: (1) the existence of an attorney-client relationship creating a duty of care upon the attorney; (2) the breach of that duty; and (3) proximate causation. Albright v. Burns, 206 N.J.Super. 625, 632, 503 A.2d 386 (App.Div.1986). In this case, there is no doubt that an attorney-client relationship existed between Richard, Jr. and Morgan Thomas. The appropriate focus here is whether Thomas breached any duty and if so, whether that breach was causally related to any measurable loss. Attorneys are required to exercise that knowledge, skill and ability ordinarily possessed and exercised by members of the legal profession similarly situated and, in that regard, to employ reasonable care and prudence. Lamb v. Barbour, 188 N.J.Super. 6, 12, 455 A.2d 1122 (App.Div.1982), certif. den., 93 N.J. 297, 460 A.2d 693 (1983). The burden of proving a breach of that duty and a causal connection to any losses claimed is on the plaintiff. Ibid.; Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 341, 419 A.2d 417 (1980).

Although plaintiffs recite a number of things which Thomas allegedly failed to do, no case law has been cited to support the conclusion that any one of them constitutes a breach of the relevant standard of care. It is therefore necessary that I determine whether what Thomas did constituted something less than "reasonable care and prudence" under all the circumstances. Lamb v. Barbour, supra 188...