Olds v. Donnelly

• Decision Date: 16 July 1997
• Citation: 150 N.J. 424,696 A.2d 633
• Parties: Robert OLDS, Plaintiff-Respondent, v. Dennis DONNELLY, Defendant and Third Party Plaintiff-Appellant, v. Joe MARAN, Third Party Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 424

150 N.J. 424

696 A.2d 633

Robert OLDS, Plaintiff-Respondent, v. Dennis DONNELLY, Defendant and Third Party Plaintiff-Appellant, v. Joe MARAN, Third Party Defendant-Respondent.

Supreme Court of New Jersey.

Argued Feb. 3, 1997.

Decided July 16, 1997.

Christopher J. Carey, Newark, argued the cause for appellant (Tompkins, McGuire & Wachenfeld, attorneys; John P. O'Toole, on the brief).

Joseph Maran, Jr., Newark, argued the cause for respondent Robert Olds (Maran & Maran, attorneys).

William W. Voorhees, Jr., Morris Plains, argued the cause for respondent Joe Maran (Voorhees & Acciavatti, attorneys).

Andrew P. Napolitano, Newark, argued the cause for amicus curiae, New Jersey State Bar Association (Cynthia M. Jacob, President, Somerset, attorney; Linda Lashbrook, Woodbridge, on the brief).

The opinion of the Court was delivered by

POLLOCK, J.

The basic issue in this case, as in Karpovich v. Barbarula, 150 N.J. 473, 696 A.2d 659 (1997) and Donohue v. Kuhn, 150 N.J. 484, 696 A.2d 664 (1997), also decided today, is the application of the entire controversy doctrine to legal-malpractice actions.

Plaintiff, Robert Olds, retained defendant, Dennis Donnelly, Esq., to pursue a medical-malpractice action against Dr. Floyd J. Donahue. Ultimately, Donnelly withdrew as counsel. Olds claims that before Donnelly withdrew, he failed to serve the summons and complaint on Dr. Donahue. The Law Division in the medical-malpractice action dismissed the complaint with prejudice for untimely service.

Olds then filed this attorney-malpractice action against Donnelly. Donnelly moved to dismiss, arguing that Olds should have joined him in the medical-malpractice action. The Law Division denied Donnelly's motion, holding that Olds's legal-malpractice claim did not accrue until dismissal of the medical-malpractice claim. The Appellate Division affirmed. 291 N.J.Super. 222, 677 A.2d 238 (1996).

We granted certification, 146 N.J. 565, 683 A.2d 1161 (1996), and now affirm and modify the judgment of the Appellate Division. We affirm the Appellate Division's holding that the entire controversy doctrine does not bar this action, which had not accrued during the pendency of the underlying medical-malpractice action. We further hold that the party-joinder requirements of the entire controversy doctrine do not extend to claims of attorney malpractice. We do not decide whether to relax the requirements of party joinder in cases involving others with a fiduciary relationship to the parties.

I.

The facts are undisputed. On June 27, 1985, Dr. Donahue allegedly committed medical malpractice while operating on Olds. Approximately one month later, Olds retained Donnelly to represent him in a possible medical-malpractice action against Dr. Donahue. The Retainer Agreement indicated that Donnelly accepted the retainer subject to investigation.

On June 25, 1987, two days before the expiration of the statute of limitations on the medical-malpractice claim, Olds and Donnelly met at Donnelly's office. Donnelly advised Olds that he no longer wished to represent him, but that he would prepare a pro se complaint and serve it on Dr. Donahue. Olds agreed, and Donnelly filed the complaint the same day.

Donnelly attempted service on Dr. Donahue by mail. He used the wrong address, however, and the summons and complaint were returned to Donnelly's office. On August 10, 1987, Donnelly mailed the summons and complaint to Dr. Donahue at a different address. The papers were sent certified mail, with the return receipt addressed to Olds. Olds never received the receipt.

Sometime in 1988, Olds received a notice from the Clerk of the Union County Superior Court informing him that the case would be dismissed for lack of prosecution. Olds called Donnelly to tell him that Dr. Donahue had not been served. According to Olds, Donnelly said that "he would take care of it." In July of 1988, Donnelly sent Olds a letter indicating that the attempts to serve Dr. Donahue by mail were unsuccessful and that Donnelly had closed his files on the matter. In this letter, Donnelly also informed Olds that it was "up to [Olds] to pursue this."

In 1989, Olds received another notice indicating that the case would be dismissed for lack of prosecution. A court clerk assisted Olds in preparing a summons. The Union County Sheriff served the summons and complaint on Dr. Donahue in July 1989. Olds continued to prosecute the action pro se.

In February 1991, Dr. Donahue filed a motion under Rule 4:4-1 to dismiss the complaint for Olds's failure to make timely service. On February 19, 1991, shortly after the filing of the motion, third-party defendant, Joe Maran, Esq., filed a Substitution of Attorney for Olds.

The Law Division heard oral argument on Dr. Donahue's motion to dismiss on March 22, 1991. Maran opposed the motion for Olds. The court determined that the two-year delay in serving Dr. Donahue had prejudiced him because of the loss or destruction of medical records. Accordingly, the court granted the doctor's motion to dismiss the complaint with prejudice.

Thirteen months later, in April 1992, Olds, represented by Maran, instituted this legal-malpractice action against Donnelly. Olds alleged that Donnelly had failed to effect timely service of the complaint in the underlying medical-malpractice action, thus causing the dismissal of the suit with prejudice.

With his answer to the complaint, Donnelly filed a third-party complaint against Maran. Donnelly alleged that Maran had failed properly to oppose the motion to dismiss and also had failed to notify Donnelly, thereby depriving him of the opportunity to oppose the motion himself. According to the third-party complaint, Maran's negligence caused the dismissal of Donnelly's pro se complaint against Dr. Donahue.

On February 5, 1993, the Law Division granted Maran's motion to dismiss the third-party complaint. The court noted that because "Maran was not on the scene in July of 1989," Olds's legal-malpractice claim was against Donnelly alone. Thus, the court concluded that Maran had not violated any duty to Donnelly.

On April 2, 1993, the trial court denied Donnelly's motion to reconsider the dismissal of the third-party complaint. On March 18, 1994, about one month before the scheduled trial date, Donnelly moved for summary judgment. He argued that under the entire controversy doctrine Olds should have asserted his legal-malpractice claim against Donnelly in the medical-malpractice action against Dr. Donahue. The trial court denied Donnelly's motion.

Olds's legal-malpractice action against Donnelly proceeded to trial in December of 1994. The jury returned a verdict of $500,000 for Olds. The trial court, however, granted Donnelly's motion for judgment notwithstanding the verdict. The court held that the evidence did not support a finding of legal malpractice that proximately caused the dismissal of the action against Dr. Donahue.

Olds appealed. Donnelly cross-appealed challenging the orders denying summary judgment on entire controversy grounds and dismissing the third-party complaint. The Appellate Division reversed and remanded for entry of a judgment in Olds's favor. 291 N.J.Super. at 234, 677 A.2d 238.

The Appellate Division also denied Donnelly's cross-appeals. It held that Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280, 662 A.2d 509 (1995), did not require Olds to have joined Donnelly in the medical-malpractice action against Dr. Donahue. 291 N.J.Super. at 232, 677 A.2d 238. The court reasoned that Olds's legal-malpractice claim against Donnelly did not accrue until the dismissal of Olds's medical-malpractice action against Dr. Donahue. Ibid. Because the entire controversy doctrine does not bar claims that are unknown, unarisen, or unaccrued at the time of the original action, the doctrine did not prevent Olds from pursuing his legal-malpractice claim against Donnelly. Ibid.

The Appellate Division further found that the trial court correctly dismissed Donnelly's third-party complaint against Maran. Id. at 233, 677 A.2d 238. It held that Maran "owed no duty to [Donnelly]" and that "[a]bsent that duty, no cause of action could exist." Ibid. (citing Malewich v. Zacharias, 196 N.J.Super. 372, 482 A.2d 951 (App.Div.1984)).

II.

Basically, the entire controversy doctrine seeks to assure that all aspects of a legal dispute occur in a single lawsuit. The goals of the doctrine are to promote judicial efficiency, assure fairness to all parties with a material interest in an action, and encourage the conclusive determination of a legal controversy. DiTrolio v. Antiles, 142 N.J. 253, 267, 662 A.2d 494 (1995); Prevratil v. Mohr, 145 N.J. 180, 187, 678 A.2d 243 (1996). One part of the doctrine, described generally as "claims joinder," requires that parties should present all affirmative claims and defenses arising out of a controversy. R. 4:30A; Wm. Blanchard Co. v. Beach Concrete Co., Inc., 150 N.J.Super. 277, 292-94, 375 A.2d 675, certif. denied, 75 N.J. 528, 384 A.2d 507 (1977). Another part, known as "party joinder," requires the mandatory joinder of all parties with a material interest in a controversy. R. 4:30A.

The origins of the doctrine precede the merger of equitable and legal powers in the Superior Court. For example, in Carlisle v. Cooper, 21 N.J.Eq. 576 (E. & A. 1870), the Court of Errors and Appeals held that equity courts could interfere with nuisance actions brought in law courts "on the ground of restraining irreparable mischief, or of suppressing interminable litigation, or of preventing [a] multiplicity of suits." Id. at 579; see also Smith v. Red Top Taxicab Corp., 111 N.J.L. 439, 440-41, 168 A. 796 (E. & A.1933) ("[N]o principle of law is more firmly established than that a single or entire cause of action cannot be subdivided into several claims, and separate actions maintained thereon.").

The 1947 Constitution recognized the doctrine by providing:

Subject to the rules of the...