Puder v. Buechel
| Decision Date | 07 June 2005 |
| Citation | 183 N.J. 428,874 A.2d 534 |
| Parties | Virginia B. PUDER, Esq., Plaintiff-Appellant, v. Kathleen BUECHEL, Defendant-Respondent. |
| Court | New Jersey Supreme Court |
Joseph P. Castiglia argued the cause for appellant (Mr. Castiglia and Pashman Stein, attorneys; Mr. Castiglia and Michael S. Stein, on the briefs).
David Feinsilver, Millburn, argued the cause for respondent (The Feinsilver Law Group, attorneys; Mr. Feinsilver and H. Jonathan Rubinstein, on the briefs).
Christopher J. Carey, Morristown, argued the cause for amicus curiae, New Jersey State Bar Association (Edwin J. McCreedy, President, attorney; Mr. Carey and Mr. McCreedy, of counsel; Mr. Carey and Theodore H. Hilke, on the brief).
In this matter, a matrimonial attorney sued a former client to recover unpaid legal fees arising from her representation of the client in a divorce action. The client responded by filing a malpractice counterclaim against the attorney for negotiating an allegedly inadequate divorce settlement and for failing to obtain informed consent before accepting the settlement on the client's behalf. With the assistance of new counsel, the client then negotiated a second divorce settlement that she deemed "acceptable" and a "fair compromise of the issues." Subsequently, the matrimonial attorney moved for summary judgment on the malpractice counterclaim, arguing that by entering into the second settlement, the client waived her right to sue for malpractice arising from the first settlement. The Law Division granted the motion, but the Appellate Division reversed.
We hold that the client is bound by her representation to the trial court that the settlement was "acceptable" and "fair." Accordingly, we reverse the Appellate Division and remand for reinstatement of summary judgment in favor of the attorney.
In August 1994, respondent Kathleen Buechel retained petitioner Virginia B. Puder, Esq., to represent her in a divorce action against Dr. Frederick Buechel, her husband of nine years. Puder filed a divorce complaint on behalf of defendant about one month later. The parties twice attempted mediation but failed to resolve the matter. In April 1996, the parties and their counsel appeared before a court-appointed Early Settlement Panel. Dr. Buechel's attorney incorporated the panel's recommendation into a proposed settlement agreement, but Mrs. Buechel rejected the offer. Consequently, from April through July 1996, there were numerous conferences and telephone discussions between counsel and the parties for the purpose of settlement.
The predominant dispute was over the accurate valuation and equitable distribution of several lucrative patents held by Dr. Buechel, an orthopedic surgeon. Mrs. Buechel argued that the patents were worth millions of dollars, evidenced by Dr. Buechel's income rising from $80,000 at the beginning of their marriage to about $4 million in 1994. Mrs. Buechel argued that she was entitled to a share of the royalties generated from these patents. However, Dr. Buechel contended that the patents were declining in value because his principal patent was about to expire and because lawsuits were pending against the patents. It was also Dr. Buechel's position that Mrs. Buechel waived any entitlement to royalty income from the patents by signing a pre-nuptial agreement.
By mid-July 1996, with an August trial date looming, Puder was able to negotiate an oral proposed settlement agreement that she deemed "clearly more favorable to [Mrs.] Buechel than the proposal recommended by the Early Settlement Panel." Indeed, Puder believed that the settlement was a "great deal" for Mrs. Buechel. Among other things, the settlement called for Mrs. Buechel to receive over $1.5 million in cash, a house valued at $400,000, a $100,000 IRA distribution, $100,000 annually in alimony for five years, and $50,000 annually in support for the couple's three children. Mrs. Buechel would also agree to waive all claims against Dr. Buechel's patents and other business interests. Despite having conducted only limited discovery of Dr. Buechel's assets, Puder recommended that Mrs. Buechel accept the oral settlement and Mrs. Buechel subsequently authorized Puder to do so.
In July 1996, Dr. Buechel's attorney sent Puder a letter memorializing the proposed settlement agreement. The following day, Puder advised the trial court that the parties had orally settled the matter and that the attorneys were in the process of finalizing the written agreement. Over the next few days, the parties worked out the remaining details of the settlement.
In August 1996, Mrs. Buechel consulted with attorney David Feinsilver who characterized the settlement as "ridiculously inadequate." Based on that statement, Mrs. Buechel informed Puder that she would not abide by the settlement's terms. Mrs. Buechel then discharged Puder and retained new counsel, Neil S. Braun, Esq., to represent her in the divorce.
Dr. Buechel moved to enforce the settlement agreement. The trial court ordered that a plenary hearing be conducted to determine whether the parties had reached a binding agreement, and, if so, whether the agreement was enforceable.
In March 1997, while the hearing was still pending, Puder sued Mrs. Buechel for unpaid legal fees and costs associated with her divorce representation. Mrs. Buechel filed an answer and counterclaim, alleging that Puder committed legal malpractice. According to Mrs. Buechel, Puder negotiated an "insufficient and inadequate" settlement agreement "without ... adequate discovery and information concerning [Dr. Buechel's] income and assets." Mrs. Buechel further alleged that Puder accepted the agreement "without properly informing [Mrs. Buechel] of the shortcomings of th[e] proposed settlement and obtaining from her complete authority to enter into it." Mrs. Buechel also moved to stay the malpractice claim until the matrimonial hearing was resolved. The certification filed in support of the motion stated that a stay was necessary because the malpractice claim would be "rendered moot" if Mrs. Buechel prevailed at the matrimonial hearing. The motion to stay was granted in August 1997.
In June 1998, the trial court held a plenary hearing to determine whether the parties had reached a binding settlement agreement, and, if so, whether the agreement was enforceable. During the hearing, the judge stated several times that he had not, and would not, decide the existence or enforceability of the purported agreement until he heard all the proofs. After six days of testimony, Mrs. Buechel's counsel informed the court that Mrs. Buechel had agreed to settle the divorce.
The new settlement was substantially similar to the disputed settlement. The principal differences between them were that Mrs. Buechel received an additional $100,000 IRA distribution, and $8,000 more per year in alimony with all alimony payments now taxable to Dr. Buechel. On June 30, Mrs. Buechel testified before the trial court that the agreement was acceptable to her and that she entered into it voluntarily:
Mrs. Buechel's attorney then questioned her regarding the agreement:
Upon further questioning...
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...which he told the master he was accepting freely and voluntarily. A recent New Jersey case also is enlightening. In Puder v. Buechel, 183 N.J. 428, 874 A.2d 534 (2005), a wife in a domestic case accepted a property settlement agreement proposed by her husband upon the recommendation of her ......
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