Judge WEFING (temporarily assigned) delivered the opinion of the Court.
We granted certification in this matter to consider whether plaintiff's legal malpractice claim is barred under Puder v. Buechel, 183 N.J. 428, 874 A.2d 534 (2005), when, as part of her resolution of a property dispute with her former spouse, plaintiff entered a settlement agreement that included a reservation of rights to sue her former attorneys. The Appellate Division, in an unpublished opinion, affirmed an order of the trial court that dismissed plaintiff's legal malpractice claim, finding it barred under Puder. Because we deem this situation to be distinguishable from that which we considered in Puder, we conclude that her malpractice action is not
Plaintiff Julia Gere was married to Peter Ricker for more than thirty years; eventually, in 1997, they commenced divorce proceedings that were, unfortunately, acrimonious. The couple had acquired substantial assets over the course of their marriage, and they finally resolved the economic issues attendant to their divorce proceedings in a property settlement agreement dated March 13, 2000. Each of the parties was represented by sophisticated counsel in connection with the negotiation, preparation, and execution of that property settlement agreement. Plaintiff had the assistance of an accountant and a financial adviser as well.
Under the property settlement agreement, plaintiff was to receive alimony for a fixed term of seven years, in the set amount of $250,000 per year. The parties agreed that the amount of that alimony could neither be increased nor decreased and that the seven-year period could not be extended.
The agreement further provided in great detail for the equitable distribution of the parties' various assets. Article 17 of the agreement dealt with what they referred to as "Ancillary Real Estate Investments." Article 17.1(a) provided in pertinent part:
Article 17.3 provided in further pertinent part:
Defendant Louis was the attorney who represented plaintiff in the divorce proceedings and the negotiation of the property settlement agreement. He testified in his deposition that the property settlement agreement included this six-month window for plaintiff to decide how she wished to proceed with respect to these ancillary real estate investments. The six-month period would allow plaintiff to consider the economic implications of whatever choices she made as well as to consider whether she wished to remain in any business relationship with Ricker at all. Plaintiff's understanding of these provisions was that she would retain a one-half interest in all of her former husband's interest in the ancillary real estate investments unless she affirmatively advised him within six months that she did not wish to do so.
One of the assets included under the umbrella term "Ancillary Real Estate Investments" was Navesink Partners, LLC
Under 17.1(a) and 17.3 of the property settlement agreement, plaintiff was to notify Ricker in October 2000 of her decision with respect to these various ancillary investments.
On October 4, 2000, Ricker, not having heard from plaintiff, wrote to defendant Louis to request a written statement with respect to her decision regarding these assets. Upon receipt of this letter, Louis called plaintiff to inquire with respect to her decision.
Louis's call was answered by plaintiff's friend John Hope, on whom, Louis knew, plaintiff relied for advice. Louis testified in his deposition that in light of the close relationship between plaintiff and Hope, he viewed his conversation with Hope as the equivalent of a conversation with plaintiff. He asked Hope whether plaintiff had made a decision with respect to the marina, and Hope responded, "real estate, yes, marina, no." In his deposition, Louis was not certain whether he spoke directly to plaintiff during this conversation or whether he relied solely on Hope's response. Nor did he recall any discussion about the fact that one entity owned both the business operations of the marina and the land on which it was located.
Hope submitted a certification detailing his recollection of this telephone call. He said that Louis did not speak to plaintiff and did not ask to do so and, further, that he was never authorized to make any decisions on plaintiff's behalf. Hope said his understanding, and plaintiff's understanding, was that by the time of this telephone call, the six-month period had already expired, with the result that plaintiff held a one-half share of her husband's interest in these various real estate investments, including Navesink Partners. Hope said the thrust of what he communicated to Louis in this conversation, which he characterized as "short" and "abrupt", was that plaintiff wished to retain her interest in the marina's real estate but to be bought out with respect to its business operations.
Based on his interpretation of Hope's response, Louis prepared the following letter dated October 11, 2000, for Ricker's attorney: "In accordance with the option provided Julia Ricker under the real estate portion of the Property Settlement Agreement, this will confirm that except for the Marina, Mrs. Ricker wishes to maintain one-half interest in all other properties." He did not send a draft of this letter to either plaintiff or Hope before he sent it to Ricker's attorney.
Plaintiff testified in a deposition that she did not speak to Louis during his telephone conversation with Hope and did not even hear Hope speaking with him. In a deposition she was asked whether she had authorized Louis to send the October 11, 2000, letter and she responded, "Yes, I guess," but in a subsequent hearing she testified that she had been under stress during that earlier deposition and that in fact she had not authorized Louis to send that letter.
Approximately one year and two months after Louis sent this letter, he again wrote to Ricker's attorney, addressing certain issues that remained open between the parties. In this subsequent letter, dated December 17, 2001, he noted that plaintiff
Louis heard from Ricker himself in response to this letter and then wrote to plaintiff, relaying to her the substance of his conversation with her former husband. Louis noted that Ricker was taking the position that plaintiff had relinquished her rights in the marina and that Louis had informed Ricker that plaintiff did not agree with that view.
The parties' disputes with respect to this and certain other aspects of the property settlement agreement led to post-judgment litigation in which Ricker maintained that plaintiff had waived any interest in Navesink Partners, and plaintiff contended that she had not. Rather, she asserted she retained her interest, wanted to continue her ownership interest in the real estate, and was entitled to have her interest in the marina's business operations bought out at fair value. When it became clear that one of the disputed issues in this post-judgment litigation was the meaning of Louis's letter of October 11, 2000, and whether plaintiff had authorized its issuance, Louis withdrew from his representation of plaintiff and was succeeded by defendant John DeBartolo, Esq.
During the course of the post-judgment proceedings, plaintiff submitted a certification dated September 30, 2002, in which she stated:
She also submitted a certification dated July 10, 2003, in which she stated:
The parties agreed to the entry of a consent order that provided for a sixty-day period for discovery for the post-judgment litigation. Following the expiration of that sixty-day period, the parties filed cross-motions for summary judgment. The trial court denied the motions, noting on the orders entered in August 2003 that the question of the nature of plaintiff's ownership interest, if any, in these investments required a plenary hearing.
For reasons that are not apparent from the record before us, the plenary hearing was not scheduled until 2006. Shortly before that plenary hearing was to commence,
The plenary hearing commenced on April 12, 2006, and spanned eight separate days, concluding on October 12, 2006. On September 29, 2006, Soranno, concerned that the matter might not be concluded by October 11, 2006, the six-year anniversary of Louis's letter to Ricker's attorney, sent a letter to Louis requesting that he enter a tolling agreement with plaintiff. Louis signed the letter, agreeing that the statute of limitations for initiating a malpractice claim against him was tolled through and including January 9, 2007.
The trial court did not issue an opinion immediately upon the conclusion of the plenary hearing, and plaintiff requested that Louis sign another tolling agreement, through May 11, 2007. Although Louis did not sign that letter, plaintiff's counsel asserted that Louis had left a voicemail in which he said he would sign the second tolling agreement. The trial court later found that the period of limitations was equitably tolled up to May 11, 2007.
On July 27, 2007, prior to the trial court issuing its decision with respect to the question of waiver, the parties achieved a settlement and placed their settlement on the record. This July 2007 settlement was intended to supplement, rather than to replace, their original property settlement agreement. This supplemental agreement provided that as of January 1, 2007, plaintiff would have a one-half interest in Ricker's ownership in the real estate portion of the marina and a forty percent interest in his ownership of the business operations portion of the marina. If the matter had proceeded through the trial court issuing an opinion, and the court had concluded that plaintiff had not waived her interest, she would have a fifty percent interest in both the real estate and the operations as of 2000. If, on the other hand, the trial court had concluded that plaintiff had waived her interest in this asset, she would receive nothing. In short, plaintiff agreed to receive a reduced interest to avoid the risk of the trial court finding she was not entitled to anything.
In conjunction with this settlement, the parties executed a settlement document, exchanged releases, and placed the terms of their agreement on the record before the trial court. Certain of those terms give rise to the dispute before this Court and must be set forth in detail. After setting forth those claims plaintiff was releasing against her former husband, the document she executed contained the following limitation:
When the parties appeared before the trial court to place the terms of their agreement on the record, plaintiff was accompanied by two attorneys: (1) Soranno, who had represented her in connection with the trial of the post-judgment litigation and negotiated the settlement on her behalf, and (2) plaintiff's present counsel, who had been retained to represent plaintiff in a separate malpractice action against her former attorneys and experts. Plaintiff took the stand and was questioned by Soranno about her understanding and acceptance of the terms of this settlement. After Soranno outlined the terms of the settlement to plaintiff, she responded, "There was too much risk for me to continue.... So I settled the best I could." The colloquy continued:
Later, Soranno questioned plaintiff with respect to her acceptance of this settlement:
In response to a question from Ricker's attorney asking her whether she believed the agreement was fair and reasonable to her, she answered "Yes. I'm signing it. It's the best I could do."
This hearing occurred on July 27, 2007, more than two years after this Court held that a matrimonial litigant who resolves a dispute and testifies that the settlement is an acceptable, fair, and voluntary compromise may not thereafter sue the attorney for the balance not received in that settlement. Puder, supra, 183 N.J. 428, 874 A.2d 534. In November 2007, plaintiff filed a malpractice action against her two former attorneys, Louis and DeBartolo, alleging that each had been negligent and that as a consequence, she received less in the July 2007 settlement than she was entitled to receive under the original property settlement agreement.
Defendants moved for summary judgment, arguing that Puder barred plaintiff's action. The trial court agreed. The trial
Plaintiff appealed to the Appellate Division, and that court affirmed in an unpublished opinion. The panel separately analyzed the claims against Louis and DeBartolo. With respect to Louis, it agreed with the trial court that plaintiff's complaint was time-barred. With respect to DeBartolo, it agreed with the trial court that plaintiff, having voluntarily entered into the July 2007 settlement agreement, which she testified was "fair" and "reasonable," was precluded from seeking damages from him for alleged negligence. We granted certification, limited to the issue of whether Puder barred plaintiff's malpractice claim against DeBartolo. 205 N.J. 271, 15 A.3d 19 (2011). We also granted amicus curiae status to the New Jersey State Bar Association.
Plaintiff contends that because her claim is factually distinguishable in material respects from the claim asserted in the Puder litigation, the trial court and the Appellate Division erred when they applied Puder to bar her claim. She maintains that she has not taken contradictory positions as occurred in Puder. She stresses that she made an objectively reasonable decision to mitigate her losses when she entered into the July 2007 settlement, and that such an objectively reasonable decision should not be used to preclude her from seeking further relief in a subsequent malpractice action.
Louis asserts that plaintiff in fact waived her interest in the marina in the letter of October 11, 2000. In light of plaintiff's testimony that she intended to retain only her interest in the real estate portion of the marina, and considering the July 2007 settlement that gave her a forty-percent interest in the business operations of the marina, Louis contends that she ended up in a better position than she had originally intended. He argues that permitting plaintiff to pursue this malpractice action after she told the trial court that she considered the July 2007 settlement to be "fair" would fly in the face of the policies we articulated in Puder.
DeBartolo argues that plaintiff made a strategic decision to settle the post-judgment litigation prior to the trial court deciding on the merits of her claim. He joins in Louis's assertion that the terms of the July 2007 settlement were more favorable to plaintiff than the claim she initially asserted under the original property settlement agreement. He also stresses this State's policy of fostering settlements to resolve conclusively litigation.
Amicus New Jersey State Bar Association contends that Puder precludes plaintiff's malpractice action against DeBartolo despite the fact that he had no role in the preparation of the original property settlement agreement. It stresses that plaintiff was involved in litigation with respect to her rights under that agreement and then withdrew from that litigation in a settlement she agreed was fair and reasonable. According to amicus, New Jersey's public policy of favoring conclusive settlement of disputes would be furthered by an application of Puder to this matter.
We note first the standard governing our review of this matter. Because
We commence our analysis by noting New Jersey's strong public policy in favor of the settlement of litigation. Brundage v. Estate of Carambio, 195 N.J. 575, 601, 951 A.2d 947 (2008) (stating "[t]he settlement of litigation ranks high in our public policy" (quoting Jannarone v. W.T. Co., 65 N.J.Super. 472, 476, 168 A.2d 72 (App.Div.), certif. denied, 35 N.J. 61, 171 A.2d 147 (1961)); Continental Ins. Co. v. Honeywell Intern., Inc., 406 N.J.Super. 156, 195 n. 31, 967 A.2d 315 (App.Div. 2009)) (noting "New Jersey does have a strong public policy that favors the settlement of disputes."). This policy rests on the recognition that "parties to a dispute are in the best position to determine how to resolve a contested matter in a way which is least disadvantageous to everyone." Impink ex rel. Baldi v. Reynes, 396 N.J.Super. 553, 563, 935 A.2d 808 (App. Div.2007) (quoting Isetts v. Borough of Roseland, 364 N.J.Super. 247, 254, 835 A.2d 330 (App.Div.2003)).
In Puder, we noted that "[a]dvancing that public policy [of fostering the settlement of disputed claims] is imperative in the family courts where matrimonial proceedings have increasingly overwhelmed the docket.... This practice preserves the right of competent, informed citizens to resolve their own disputes in whatever way may suit them." Puder, supra, 183 N.J. at 438, 874 A.2d 534 (quoting Lerner v. Laufer, 359 N.J.Super. 201, 217, 819 A.2d 471 (App.Div.2003)).
We deem it necessary to set forth the underlying facts of Puder to demonstrate why, in our judgment, this matter is materially distinguishable. In Puder, Kathleen Buechel wished to divorce her husband, Frederick Buechel, M.D. Puder, supra, 183 N.J. at 431, 874 A.2d 534. She retained Virginia Puder, Esq., to represent her in that divorce action, and Puder filed a divorce complaint on her behalf. The principal issue to be resolved in terms of negotiating a property settlement agreement was the valuation of certain patents Dr. Buechel, an orthopedic surgeon, had obtained during the course of the parties' marriage. Ibid. The plaintiff asserted the patents had significant value and were largely responsible for the dramatic increase in the couple's income during the marriage while the defendant maintained that their value had peaked and was now on the decline. Ibid. Several weeks before the matter was scheduled to proceed to trial, Puder negotiated a settlement that called for her client to receive assets valued at $2 million, alimony of $100,000 per year for five years and child support of $50,000 per year for the Buechels' three children. Id. at 431-32, 874 A.2d 534. Puder considered this to be a "great deal" for her client and, despite the fact that she had not conducted significant discovery with respect to Dr. Buechel's assets, Puder recommended she accept it. Id. at 431-32, 874 A.2d 534. Mrs. Buechel accepted Puder's recommendation and authorized her to accept this settlement. Id. at 432, 874 A.2d 534. The attorneys advised the trial court that the matter had been settled and
Prior to completion and execution of a written settlement agreement, Mrs. Buechel consulted with another attorney who expressed the opinion that the agreed-upon terms were "ridiculously inadequate." Ibid. Based on that opinion, Mrs. Buechel, after telling Puder that she would not comply with the settlement, discharged Puder and retained new counsel. Ibid. Dr. Buechel, in response, moved to enforce the settlement, and the trial court ordered a plenary hearing. Ibid.
Before that enforcement hearing commenced, Puder sued Mrs. Buechel for legal fees she alleged were due and owing; in turn, Mrs. Buechel filed a counterclaim alleging that Puder had been negligent in the manner in which she negotiated the property settlement agreement. Ibid. The enforcement matter proceeded before the malpractice action, and the trial court heard six days of testimony, at which point Mrs. Buechel's second attorney advised the court that she had agreed to settle her dispute. Id. at 433, 874 A.2d 534. Mrs. Buechel testified about her understanding and acceptance of this settlement, which was similar in many respects to the settlement originally negotiated by Puder although it did afford her an additional $100,000 in equitable distribution and an additional $8,000 per year in alimony. Ibid. Questioned by both the trial court and her attorney, she testified that she was entering the settlement voluntarily, was not pressured to do so, and considered the agreement a fair compromise. Ibid. She also testified that it was her understanding that notwithstanding this settlement, she retained her right to pursue the pending malpractice action against Puder. Id. at 435, 874 A.2d 534. Based on that testimony, the trial court ruled that Mrs. Buechel had "knowingly and voluntarily" entered this second settlement agreement. Ibid.
Several months after the conclusion of this second settlement, Puder filed a motion for summary judgment in the malpractice action. Ibid. The trial court granted the motion, finding that plaintiff, by agreeing to the second settlement before the validity of the first settlement had been determined, had waived her right to pursue a malpractice action against Puder for her work in connection with that first settlement. Ibid.
Mrs. Buechel appealed, and the Appellate Division reversed, concluding that under this Court's decision in Ziegelheim v. Apollo, 128 N.J. 250, 607 A.2d 1298 (1992), "a former client [may] bring a legal malpractice action against an attorney for professional negligence in divorce litigation where a settlement ensued." Puder v. Buechel, 362 N.J.Super. 479, 485, 828 A.2d 957 (App.Div.2003). This Court thereafter granted Puder's petition for certification, 180 N.J. 147, 849 A.2d 181 (2004), and reversed the Appellate Division, holding that:
This Court noted that the trial court had questioned Mrs. Buechel closely and that she had answered that the settlement agreement was acceptable, that she considered it a fair compromise, and that she was voluntarily agreeing to the settlement.
This Court disagreed with the view of the appellate panel that Mrs. Buechel's malpractice action could proceed under Ziegelheim. Id. at 442, 874 A.2d 534. We noted that unlike Mrs. Ziegelheim, "Mrs. Buechel made a calculated decision to accept the second settlement ... before the trial court could decide whether the first settlement was enforceable." Id. at 442-43, 874 A.2d 534. We also noted that, again unlike Mrs. Ziegelheim, Mrs. Buechel entered the second settlement "admittedly aware of the discovery deficiencies leading up to the first settlement." Id. at 443, 874 A.2d 534. In that posture, this Court declined to permit Mrs. Buechel to pursue her claim of legal malpractice.
Puder, however, did not erect an absolute bar to a claim of malpractice if a former client enters into a settlement with regard to the underlying action before obtaining a decision with respect to the complained-of conduct of the attorney. That Puder did not erect such an insurmountable barrier is demonstrated by this Court's subsequent statement that "Puder represent[ed] not a new rule, but an equity-based exception to Ziegelheim's general rule" in which, by "applying equitable principles, [we] carved out a limited exception to the Ziegelheim standard." Guido v. Duane Morris, LLP, 202 N.J. 79, 94, 995 A.2d 844 (2010)(holding that plaintiffs who settled a dispute with respect to their rights in a close corporation were not precluded from suing their former attorneys for advice rendered in connection with that settlement). See also Hernandez v. Baugh, 401 N.J.Super. 539, 951 A.2d 1095 (App.Div.2008).
Our review of this record convinces us that it contains no basis to warrant applying the "equity-based exception" of Puder to the facts of this matter. In Puder, we barred the client's malpractice claim because her testimony demonstrated that the second settlement had the effect of placing her in the situation she contended she should have occupied at the outset. That second settlement cured the deficiencies she perceived in the first settlement.
That, however, is not the situation presented to us in this matter. First, plaintiff, unlike Mrs. Buechel, made no claim of malpractice with respect to the negotiation of the original property settlement agreement. Her claim of malpractice against defendant Louis revolved instead around his actions after the original property settlement agreement was executed. Plaintiff claimed that his post-settlement actions jeopardized her rights under the original property settlement agreement.
Plaintiff's claim with respect to defendant DeBartolo is similarly distinguishable from that asserted by Mrs. Buechel in Puder. In Puder, the settlement agreement that was entered into after six days of testimony essentially placed her in the
We are not persuaded by the contention that plaintiff's statement to the trial court in July 2007 that the settlement was "fair" and "reasonable" precludes her from now seeking damages from defendant DeBartolo. The assessment of the settlement's fairness and reasonableness must account for her allegation that DeBartolo's failure to engage in meaningful discovery severely hampered the ability of her successor attorney to establish her claim with respect to Navesink Partners. Hernandez, supra, 401 N.J.Super. at 542, 951 A.2d 1095 (noting that "plaintiff claim[ed] that he was compelled to settle ... because the negligence of defendant deprived him of the proofs he needed to prevail").
Further, we must be mindful of the fact that the matter was decided by way of summary judgment; consequently, we are required to view the record in the light most favorable to plaintiff. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536, 666 A.2d 146 (1995); Potomac Aviation, LLC v. Port Auth. of New York and New Jersey, 413 N.J.Super. 212, 222, 994 A.2d 536 (2010). We are thus compelled to credit plaintiff's assertion with respect to the effect DeBartolo's alleged discovery deficiencies had on her decision to enter the July 2007 settlement rather than to assume the risk of the post-judgment litigation court rejecting her claim in its entirety.
The judgment of the Appellate Division is reversed, and the matter is remanded to the trial court for further proceedings.
For reversal and remandment—Chief Justice RABNER and Justices LaVECCHIA, ALBIN, HOENS, PATTERSON and Judge WEFING (temporarily assigned)—6.