PER CURIAM.
In this legal malpractice action, plaintiff Leslie Smith sued her former attorney, defendant Bette Grayson, alleging professional negligence in advising plaintiff to take an inadequate divorce settlement. Grayson then filed a third-party negligence complaint against Jeffrey Epstein and his former law firm, Wilentz, Goldman, and Spitzer, P.A. (Wilentz), who was retained by plaintiff as a consultant in her then pending divorce action. As part of discovery, plaintiff obtained an expert report from a matrimonial attorney who concluded Grayson was negligent. Following discovery, Grayson sought summary judgment on plaintiff's complaint and to strike plaintiff's expert report as a net opinion. Epstein and Wilentz also sought summary judgment on Grayson's third-party complaint. The trial judge granted both motions and dismissed all claims. As to the former, the court held plaintiff was equitably estopped from suing Grayson because the terms of the settlement had been set forth on the record and plaintiff testified she believed the settlement was fair and equitable. The court also found that plaintiff's expert rendered a net opinion, and, without it, she could not prove breach, causation or damages. In dismissing Grayson's third-party action against Epstein and Wilentz, the court found that there was no expert proof of their professional negligence. Both plaintiff and defendant filed appeals, which were consolidated. For reasons that follow, we affirm the summary judgment dismissal of the third-party action and reverse the dismissal of plaintiff's complaint and remand.
On May 10, 2000, plaintiff retained defendant to obtain a divorce from her husband of twenty-two years, Lorre Smith. At the time, plaintiff, an audiologist, was forty-six years old with an earning history averaging $42,000 per year dating from 2000, the year she returned to full-time work. Her husband was forty-eight years old and an attorney with a solo practice and average reported income of $246,000 for the years 1998 to 2000. There were two children of the marriage born in 1985 and 1989.
Plaintiff filed her divorce complaint in September 2000. By all accounts, the ensuing litigation was acrimonious and contentious, exacerbated by the fact that the couple continued to reside together in the marital home. Frustrated at the pace of the litigation, plaintiff retained Epstein, then of Wilentz, in November 2001. According to plaintiff, Epstein was retained as a "consultant" and he and Grayson were "hired to do two different things." Grayson was to "get the case settled, to get [plaintiff] a fair settlement, or to go to trial." Epstein, meanwhile, was "to propose different settlement agreements that. . . Grayson could revise to help get the case moving along."
Settlement negotiations commenced in June 2001 when the husband proposed limited duration alimony of $28,600 per year for ten years and child support of $300 per week. Plaintiff countered with a demand for $100,000 annual permanent alimony and weekly child support of $850. Privately, Grayson advised plaintiff that given the length of the marriage, she was likely entitled to permanent alimony in the approximate amount of thirty percent of the difference in the couple's respective yearly incomes. Their strategy, then, was to "stop the bleeding" and use permanent alimony as leverage or a bargaining chip to obtain assets for plaintiff to which she otherwise might not be entitled in equitable distribution. Consequently, a draft property settlement agreement, prepared by Epstein on February 14, 2002, provided that plaintiff retain the marital home, appraised at $750,000, less $75,000 representing the husband's share of its equity, in return for agreeing to waive permanent alimony and accepted limited-duration alimony, stepped-down for nine years.
On April 3, 2002, plaintiff and Grayson, together with their accountant, appeared in court for a settlement conference. The judge informed the parties that their matter would be transferred to another judge's calendar for trial and that they would not likely receive a trial date until late 2002 or early 2003. All-day settlement talks ensued, with plaintiff's accountant doing most of the back-and-forth shuttling and negotiations.
At the end of the day, Grayson informed plaintiff that an agreement had been reached and urged her to accept it. The agreement called for, among other things, plaintiff to leave the marital residence and receive $240,000, as her one-half share of the equity in the home; a $90,000 lump sum payment representing plaintiff's interest in her husband's law practice; limited duration alimony of $50,000 per year for five years and $35,000 per year thereafter for four years; and a $50,000 lump sum payment for her waiver of any claim to permanent alimony.
After the settlement was reached, the parties returned to court to explain its terms on the record and give their assent. Plaintiff testified that she understood the settlement, had conferred with Grayson and Epstein, had taken part in negotiations, understood that she was giving up her right to lifetime alimony and voluntarily decided to do so, and believed the settlement was a reasonable one. Plaintiff later confirmed in her deposition that at the time the agreement was reached, she believed she was getting the best settlement possible.
It was not until several years later — when plaintiff consulted Epstein on a post-judgment matter in 2006 and Epstein supposedly told her that Grayson should not have recommended the buyout of plaintiff's interest in the house together with the limited-duration alimony — that plaintiff suspected defendant of being professionally negligent in her legal representation of plaintiff's divorce. According to plaintiff, her removal from the marital home was not proposed until the very end of the negotiations, "came out of nowhere," and Grayson "encouraged and pushed" her to accept the deal lest she "was never going to get divorced."
In her legal malpractice action filed on March 20, 2008, plaintiff's core complaint against Grayson focused on this change from plaintiff retaining the marital home to having her interest therein bought out by her ex-husband. To this end, plaintiff retained as her expert a matrimonial attorney, who prepared a twenty-two page expert report concluding that Grayson was professionally negligent in not counseling plaintiff to reject the settlement, which was well below the range she would have received at trial. The expert first opined that plaintiff was entitled to permanent alimony based on the applicable factors of
As to the quantum of alimony, the expert pointed to a rule of thumb amongst matrimonial practitioners that alimony should be one-third of the difference in the parties' incomes. Based on the husband's historical earning capacity of between $225,000 and $250,000,
Despite the certainty of such an outcome at trial, the expert nevertheless recognized that the parties are "free to negotiate for duration of alimony less than the court would award in a permanent alimony case." In fact, the expert acknowledged that it would have been advantageous for plaintiff in this case to trade permanent alimony for either additional assets in equitable distribution, a higher amount of alimony for a shorter period of time, a satisfactory buyout of the permanent alimony obligation, or any combination of these alternatives, none of which, however, plaintiff obtained in the settlement.
As to one of these options, the expert attempted to calculate the husband's cost to buyout his permanent alimony obligation. According to the expert, the appropriate methodology "would have been to calculate the amount that would otherwise be paid as permanent alimony. This amount is then reduced by the taxes [plaintiff] would be required to pay and is further adjusted by a present value discount factor since she is receiving the money, theoretically, up front." Using this approach, and assuming a seven-year term, the expert calculated the lump sum buyout would be in the range of $225,000 to $300,000. So measured, the expert concluded "[t]here is no justification for the $50,000 payment in lieu of permanent alimony" in this case and that Grayson's failure to engage in this calculation "was a deviation from the standards of matrimonial practice." Instead, the expert concluded, a waiver of the husband's interest in the marital home, assuming his equity share to be $240,000,
The motion judge found that plaintiff's legal malpractice claim was barred as a matter of law by
Whether
In
Outright rejecting "the rule . . . that a dissatisfied litigant may not recover from his or her attorney for malpractice in negotiating a settlement that the litigant has accepted unless the litigant can prove actual fraud on the part of the attorney[,]"
That said, the Court did warn, however, that its decision was not meant to "open the door to malpractice suits by any and every dissatisfied party to a settlement" and that "[m]any such claims could be averted if settlements were explained as a matter of record in open court in proceedings reflecting the understanding and assent of the parties."
In
In other words, unlike the plaintiff in
The most recent examination of the issue occurred in
In
In sum,
Having decided that there is no per se bar to plaintiff's lawsuit, we now address whether the facts of record support plaintiff's claim of attorney negligence in order to defeat defendant's summary judgment motion, in particular, whether plaintiff's expert rendered a net opinion as determined by the motion judge. For reasons that follow, we find the court's evidential ruling to be a mistaken exercise of its discretion.
In challenging the expert's opinion in this case as "net," Grayson contends the expert failed to explain (1) why plaintiff would have received permanent alimony had she gone to trial; (2) the basis for her projection as to the quantum of the annual award; (3) how she calculated the worth of a lump sum buyout of that award as well as plaintiff's resultant damages. We disagree.
First and foremost, the expert articulated the legal duty an attorney owes a client, supported by citation to case law and the rules of professional conduct. In particular, the expert relied on
The expert then measured Grayson's performance in the representation of plaintiff against the objective standard of matrimonial practice to determine whether there was a breach of the legal duty owed her client. In doing so, the expert first determined that, under the specific facts and circumstances presented, plaintiff would have been entitled to permanent alimony given her age, income, earning capacity and financial needs; her husband's ability to pay; the marital standard of living; and, most significantly, the long duration of the marriage. On this score, in her report, the expert analyzed all applicable factors of
Of all the statutory factors implicated, the expert placed greatest weight on the long duration of the marriage, based, in part, on our decision in
Consequently, the expert opined that the accepted standard of care required Grayson to recognize that plaintiff would be entitled to permanent alimony and to act accordingly. So measured, the expert concluded that the settlement in this case was substantially below the range of award she most likely would have received at trial because plaintiff waived her entitlement to permanent alimony in exchange for a lump sum $50,000 payment; gave up her right to receive an award of counsel fees for no apparent consideration; and abandoned her option to retain the marital home worth $720,000 for only her rightful one-half share of the equity therein.
The expert laid the foundation for this conclusion, detailing step-by-step the methodology she employed. Before quantifying the amount of anticipated alimony to be awarded at trial, the expert correctly recognized — citing
As to the former, the expert used the average of the husband's income over several years to account for spikes and dips in his solo law practice, and arrived at a range of between $200,000 and $250,000 annually. Plaintiff, on the other hand, after returning to work in 1999, averaged about $42,000 per year. The expert then derived a yearly alimony figure by taking one-third of the difference between the spouses' incomes. In doing so, the expert relied on a generally accepted objective standard of matrimonial attorney practice and not simply a standard personal to her.
From there, the expert estimated that a lump-sum buyout of plaintiff's anticipated permanent alimony award would have been $225,000 to $300,000. Once again, she detailed the basis for her calculation, which was dependent in part upon the estimated amount of annual alimony and the number of years of alimony. In her report, the expert expressly states that the "appropriate methodology would have been to calculate the amount that would otherwise be paid as permanent alimony. This amount is then reduced by the taxes [plaintiff] would be required to pay and is further adjusted by a present value discount factor since she is receiving the money, theoretically, up front."
Utilizing this approach, the expert multiplied what she calculated to be a fair, yearly amount of alimony ($65,000 to $72,000) by the number of years until the husband retired. In this regard, she assumed a normal retirement age of 65 or 66, and therefore used a conservative seven-year remaining term. Since alimony is taxable to the payee, the expert then deducted from the total alimony figure the amount plaintiff would have paid in taxes, and assumed, in this respect, a 28 percent tax rate. Moreover, because damages for future expenses must be discounted to present value,
The expert calculated the value of the permanent alimony buyout, in part, to determine whether Grayson was negligent in recommending that plaintiff accept the $50,000 lump sum buyout feature of the settlement agreement. On this score, the expert compared the settlement figure not only to her own estimated range of $225,000 to $300,000, but as well to the $165,000 price tag in Epstein's original proposal.
In fact, plaintiff's strategy from the outset had been to use her right to permanent alimony as leverage or in exchange for securing more assets in equitable distribution (
In other words, Grayson allowed the settlement negotiation to be "flipped," in which plaintiff yielded both her right to permanent alimony and her retention of the marital home due to her attorney's failure to give her proper advice. Compounding the matter, Grayson "also negotiated away a $25,000 award of counsel fees to [plaintiff] pursuant to a court order without any apparent consideration." Moreover, "there was no significant enhancement in child support that would justify the $50,000 for a waiver of permanent alimony . . . . Based upon the current Guidelines, [husband] agreed to pay child support that represented a slight deviation from the Guidelines but was not sufficient to justify the alimony waiver."
Having set forth with particularity the legal duty owed plaintiff and the breach thereof, the expert went on to estimate the damages caused by Grayson's deviation and to describe how she calculated the range of award — $240,000 to $320,000 — plaintiff would have received had the settlement reflected her likelihood of recovery at trial. To that end, the expert derived a figure based on the calculated buyout cost "less the $50,000 [actually] paid for that waiver, adjustment for the reduced alimony of limited duration alimony and consideration of the counsel fee award which [husband] would have been obligated to pay."
As is evident, the expert report states much more than a bare conclusion and contains the requisite "why and wherefore" of her opinion. The expert properly identifies the facts and data on which her opinion is founded; accurately analyzes the relevant law, both statutory and common; correctly describes the generally accepted professional standard; and adequately explains the methodology employed in ascertaining breach and measuring damages.
To be sure, alimony calculations, by their very nature, are inexact, but such imprecision does not render any less valid the expert's use of her knowledge and experience in the matrimonial field to estimate the range of an alimony award she would have received had she rejected the settlement agreement and proceeded to trial. By the same token, while the
Admittedly, the expert opinion at issue here is not without challenge. But the deficiencies identified by defendant go to the weight, rather than the admissibility, of this proof, and are appropriate for attack on cross-examination. After all, an expert's opinion "is not inadmissible merely because it fails to account for some particular condition or fact which the adversary considers relevant."
For all of these reasons then, we conclude that the expert opinion in this case contains the requisite factual foundation and therefore the motion court mistakenly exercised its discretion in disallowing its admission into evidence.
We now turn to Grayson's appeal of the motion judge's grant of summary judgment to Epstein and Wilentz, wherein she argues that there is a question of material fact as to Epstein's role in plaintiff's divorce that bars dismissal of her third-party complaint. We need not determine whether the proofs of Epstein's involvement are sufficient to raise a genuine factual dispute because whatever his role, Grayson has offered no competent expert evidence of the duty he owed plaintiff or any breach thereof, or whether any such breach substantially contributed to her loss.
On this score, Grayson relies on
In contrast here, the proofs indisputably established that Epstein's role was considerably more limited than defendants. Plaintiff labeled him a "consultant" and stated that he and Grayson were "hired to do two different things." Grayson was to "get the case settled, to get [plaintiff] a fair settlement, or to go to trial." Epstein, on the other hand, was "to propose different settlement agreements that . . . Grayson could revise to help get the case moving along." Similarly, Epstein understood he was "primarily to participate in . . . mediation in the hopes to resolve the matter amicably[,]" and that his representation was "sort of as a secondary role" that did not involve litigating the case or going to court. Even Grayson, who now claims Epstein was co-counsel, understood that Epstein was engaged "to help facilitate a settlement" and described their arrangement as plaintiff being "represented by" Grayson with the "consultation of" Epstein. Indeed, plaintiff wanted Epstein to take over responsibility for the whole case, but he expressly refused, stating that it would cost too much to bring himself up to speed on the file.
We have previously approved of arrangements where attorneys take on less-than-complete representation of a client.
"Because the duties a lawyer owes to his client are not known by the average juror, a plaintiff will usually have to present expert testimony defining the duty and explaining the breach[,]"
The summary judgment dismissal of defendant's third-party complaint is affirmed. The summary judgment dismissal of plaintiff's complaint is reversed and the matter is remanded for further proceedings in accordance with this opinion.