This is a  NJ case of legal malpractice, but it touches on "judicial estoppel"  "mutually exclusive positions" the difference between "successive and alternative tortfeasors" and what is in New York called the "effectively compelled" rule.  In New York a legal malpractice plaintiff must prove that a settlement was effectively compelled by the attorney’s mistakes, and was not simply a strategic position.

Here in this NJ case:

"While plaintiff in the first action could have joined the defendants in this case, he did not do so, nor did he put the defendants in the first action on notice of the Arnold defendants’ potential liability to the plaintiff. It would have been perfectly acceptable for plaintiff in the first action to have advanced alternative theories of liability. See City of Jersey City v. Hague, 18 N.J. 584, 603 (1955). Rather than doing so, however, plaintiff proceeded with his first action against the sellers, realtors, home inspector and other defendants and settled same.

Plaintiff pleaded the defendants in both of these suits as alternative tortfeasors rather than joint or successive tortfeasors. Joint tortfeasors are "two or more persons jointly or severally liable in tort for the same injury to persons or property, whether or not judgment is recovered against all or some of them," N.J.S.A. 2A:53A-1. The test for joint tortfeasor liability is whether defendants had "common liability at the time of the accrual of plaintiff’s cause of action." Markey v. Skog, 129 N.J. Super. 192, 200 (Law Div. 1974); and see Cherry Hill Manor Assoc. v. Faugno, 192 N.J. 64, 76 (2004). A successive tortfeasor is one whose liability succeeds that of an initial tortfeasor; for example, a doctor who negligently treats a party injured at an accident caused by an initial tortfeasor. See, e.g. Ciluffo v. Middlesex General Hosp., 146 N.J. Super. 476, 484 (App. Div. 1977), (holding that when a plaintiff settles with an initial tortfeasor for less than the full amount of her damages, she may proceed against the successive tortfeasor for the remainder of her damages).

In this case, the Arnolds are alternative tortfeasors, meaning that once plaintiff recovered from the sellers, he can not recover from the Arnolds. This is because the alternative theories advanced in each of the law suits are based on mutually exclusive inconsistent factual allegations. In going against defendants in the first action, plaintiff alleges that he was not appropriately informed of the serious structural defects in the home. In pursuing his cause against the Arnolds he states he was advised of the serious defects, directed his attorneys to terminate the contract or negotiate a reasonable price reduction to accommodate the repairs and that the attorneys negligently failed to do so. These are two mutually exclusive factually-based theories of liability against two groups of defendants. By settling with the sellers and the other defendants in the first action, plaintiff is estopped from proceeding against the attorneys. This is because in this factual setting the inescapable fact is that the plaintiff could not have recovered against both groups of defendants. See Norcia v. Liberty Mutual Insurance Co., 297 N.J. Super. 563, 570 (Law Div. 1966), aff’d o.b., 308 N.J. Super. 194 (App. Div. 1998), certif. denied, 154 N.J. 608 (1998). If plaintiff had joined all defendants together in the first action, an award against both the attorney defendants and defendants in the first suit, would have been impossible under the mutual exclusive alternative factual theories advanced.

We believe though, that the trial judge mistakenly used the phrase "judicial estoppel" as the rationale for her ruling. Judicial estoppel binds a party only to a position that it successfully asserted in the same or prior proceeding. Kimball Inter. v. Northfield Metal, 334 N.J. Super. 596, 606 (App. Div. 2000). Plaintiff by settling did not successfully advance for judicial acceptance his position. Hence, the doctrine of judicial estoppel does not apply.

That judicial estoppel is not applicable does not mean, however, that plaintiff may advance against defendants in a later suit a position that is mutually exclusive and factually inconsistent with a position advanced against other defendants in an earlier suit. Plaintiff’s choice to institute the first action without joining his alternative tortfeasors as co-defendants, and his election to settle the case against the seller defendants and receive those settlement funds can be viewed as confirming plaintiff’s assertion that the sellers failed to adequately disclose the conditions of the property. See, e.g., Norcia v. Liberty Mutual supra, at 569.

While we recognize that a party may advance an alternative and inconsistent pleading under Rule 4:5-6, we hold that a plaintiff is estopped from pursuing a successive action against a tortfeasor where: (1) plaintiff earlier settled a suit against other tortfeasors for the same damages; (2) the preceding suit was based upon a mutually exclusive inconsistent position with the successive action; (3) all of the alleged tortfeasors in both suits are alleged to be liable to plaintiff for the same damages but on the basis of a different standard of care or duty; and (4) plaintiff failed to provide the required Rule 4:5-1(b)(2) notice in the preceding suit. Such estoppel is in accord with fairness and public policy. See, e.g., Puder, supra, 183 N.J. Super. 428. Estopping plaintiff from bringing this action is consistent with our court’s policy of favoring settlements, promoting judicial economy, promoting party fairness, encouraging comprehensive and conclusive litigation determinations, avoiding fragmented litigation, preserving the integrity of the judicial process, and insuring candor and fair dealing with the courts.

The initial defendants, if informed of potential co-defendants, could have joined them and may have differently evaluated their litigation and settlement strategies. The attorney defendants, while they might file a third-party complaint against the initial defendants for indemnity or contribution in this case, would be prejudiced by having to advance plaintiff’s initial factual position without the cooperation of plaintiff – a difficult task where plaintiff’s allegation was he was defrauded. "

Two things cought our eye in this blog blurb from the West Virginia Business Litigation Blog.  The first is that one can watch a webcast of appellate proceedings in W.Va.  and the second is that this legal malpractice case is about a petition for appeal [similar to a cert request??] which is alleged to have been muddled for the attorney’s benefit. 

"According to the article by Gazette reporter Paul J. Nyden, Massey and two related entities have sued Wyatt, Tarrant & Combs, LLP of Lexington, Kentucky and McGuire Woods LLP of Richmond, Virginia for their alleged malpractice in representing Massey in a Virginia lawsuit filed by Hugh Caperton and his companies. In 2001, a Virginia jury awarded the plaintiffs $6 million. The Virginia Supreme Court refused Massey’s appeal because it was filed by a lawyer from Kentucky who wasn’t admitted to practice in Virginia. Massey ended up paying Caperton $7.2 million, including $1.2 million in pre-judgment interest. Here is Massey’s complaint, which was filed on July 13, 2007 in the Circuit Court of Fayette County (Lexington), Kentucky.

Massey alleged claims for negligence, breach of contract, and breach of fiduciary duty/conflict of interest, and claimed that the defendants failed to have a lawyer admitted to practice in Virginia sign the notice of appeal, which resulted in the dismissal of the appeal by the Virginia Supreme Court. Further, Massey alleged that the defendants changed language in its petition for appeal without Massey’s knowledge and for the purpose of making a legal malpractice claim more difficult to assert. Specifically, Massey alleged that the petition in draft form asked that the Supreme Court “reverse and remand” the verdict and “reverse and render final judgment.” But in the final version, only the “reverse and remand” language was included.

According to the complaint, if the defendants had properly filed the notice of appeal and not changed the language in the petition for appeal, “the Virginia Supreme Court would have reversed the judgment of the trial court due to its erroneous rulings at trial and entered final judgment in Wellmore’s [one of the plaintiffs] favor.” "

Caveat:  We can’t figure out this land deal from the News report.  Here it is:

"Developers behind the failed Pendleton Station project are firing back in court documents against allegations that they misused loan money.

Benjamin Daniel Sr., Benjamin Daniel Jr., Elizabeth Daniel and Thomas Daniel, the family members who ran Pendleton Station LLC, Coastal Plains Development, and the project’s major suppliers, denied claims that they misused money from Enterprise Bank of South Carolina and allege that the bank’s top officials were conspiring against them.

“I look forward to seeing what evidence they have to support it,” said Tom Dudley, a Greenville attorney who represents the bank.

Enterprise Bank says the Daniels and their related companies owed it more than $5.5 million at the beginning of the year.

But the family’s court filings say Enterprise Bank refused to allow construction loans on 10 units at Pendleton Station to be closed. Those units would have brought in $1.6 million. Court filings claim that the bank agreed to give Pendleton Station more money if William Spence, chief financial officer at Coastal Plains Development, cosigned for the loan and if the Daniels offered a piece of Daniel Island property worth about $750,000 as additional collateral.

William Cutchin represented the family and Mr. Spence in the transaction, but at the closing he presented sale papers to Ms. Daniel instead of a secured loan.

Under this new deal, the property was to be sold to Mr. Spence for $300,000, and the bank would pay Pendleton Station’s outstanding debts. When the Daniels could repay Mr. Spence, he would convey the land back.

The latter part of the arrangement never made it onto paper. When the family offered to pay Mr. Spence, he refused to sell it back for less than market value, according to court filings.

Mr. Daniel Sr. was hospitalized for cancer treatment at the time, and the filing claims that the bank and other parties involved in the transaction conspired to force Ms. Daniel into a vulnerable position so she would give them the property at less than half its value.

A similar situation occurred with property Mr. Daniel Sr. was developing on Lake Murray called The Club at Plantation Point, according to the family’s filing.

The family also accuses Mr. Cutchin of attorney malpractice for not advising Ms. Daniel during the land transactions. Mr. Henry and Mr. Mathias are charged with conspiracy. "

One would expect a lot of probate work in Florida, as well as a more moderate amount of medical malpractice litigation there.  As surely as night follows day, there will be mistakes, miscommunications and legal malpractice claims where there is legal work.  Probate work involves transfers of money, and one might expect litigation over mistakes in money transfers.

With that, the insurance industry follows the trends.  Here is a blog blurb from the Florida Probate blog which discusses an industry report.

"Against this backdrop, a recently published article by LawPRO, a Canadian professional liability (malpractice) insurance provider, should be of interest. Wills & estates law claims on the rise by Deborah Petch and Dan Pinnington provides claims statistics and risk management advice specifically focused on the probate/estate planning practice area. Although written for a Canadian audience, the advice seems equally applicable in Florida.

I was especially interested to see that "lawyer/client communication failures" was far and away the single most common cause of malpractice claims. This finding is in line with the med-mal statistics and "don’t-be-a-jerk" risk management advice given to doctors I previously wrote about [click here]. Another way of stating the don’t-be-a-jerk rule is: respectfully listen to and communicate with your clients. "

This story of an Arkansas lawyer who is alleged to have stolen money moved from the mere mistake, to theft, to tragedy, and then legal malpractice.

"Rogers tax attorney now faces federal charges of transporting stolen funds in addition to state theft charges.

Eric Dean Archer, 36, of Rogers was arraigned Wednesday in Fort Smith on the one-count federal indictment. He was given a Nov. 13 trial date.

If convicted, Archer faces up to 10 years in prison and fines of up to $250,000 or both.

Archer pleaded not guilty Aug. 6 to a theft of property charge in Benton County. Archer was arrested in May in Tunica, Miss., after Carol Fountain and her son, Charles, told police their 2005 federal tax returns, and payment, never reached the Internal Revenue Service.

Archer told police someone embezzled $300,000 from his business, including the Fountains’ money, and an insurance company was investigating. Rogers police say Archer never filed a report with them.

The Fountains have also filed a civil lawsuit against Archer in Benton County. That suit claims Carol Fountain gave Archer a check for $36,000 to pay her amended 2005 taxes but he never paid the IRS. Charles Fountain gave Archer $8,300, which was never paid to the IRS, according to the suit.

The civil suit alleges legal malpractice, breach of contract, conversion and constructive trust.

Land development in Florida was many years ago the subject of many a scam, with people buying property under water, in swamps and other undesirable places.  Now, the stakes are higher, and the problems less obvious.  Here is a story from Lauderdale about Harborage Club dry-storage marina in Fort Lauderdale’s marine district .

"Two days before the City Commission was to consider the project in May, residents of the nearby Mark I condo building asked Atlantic Marina Holdings for $550,000 and other conditions to quell their opposition to the 15-story project.

The developer didn’t pay, and the city approved a site plan in May for a 340-boat waterfront project at 1335 SE 16th St. about a quarter mile from the landlocked condo building at 1050 SE 15th St.

With approval in hand, Atlantic Marina turned around and sued the Mark I association, its law firm Becker & Poliakoff and several area residents in Broward Circuit Court last summer.

The Mark I proposal was “nothing less than an unlawful, extortionate ‘shakedown’ attempt,” the developer declared in an August court filing in its lawsuit seeking $40 million in damages.

The battle between the condo residents and Atlantic Marina is hardly isolated.

Across South Florida, land-starved developers have pushed into established areas with grandiose plans. "

Underlining why one does not litigate where one does not know the rules, here is an otherwise meritorious legal malpractice case which is now dismissed with prejudice for breaking the Washington state "two dismissal "rule.  Hinshaw explains:

"In March 2004, Feature filed a new complaint in Seattle against Mr. Neal and Preston Gates, but not Butler. Following a successful motion to change venue to Spokane, Washington, the defendants moved for summary judgment based on the so-called “two dismissal” rule found in Washington CR 41(a)(4), which provides “[u]nless otherwise stated in the order of dismissal, the dismissal is without prejudice, except that an order of dismissal operates as an adjudication upon the merits when obtained by a plaintiff who has once dismissed an action based on or including the same claim in any court of the United States or of any state.” Id. at *2. The lower court granted the summary judgment motion. Feature appealed and the case was transferred to the Supreme Court of Washington for direct review. Id. at *2.

The court noted that the purpose of the “two dismissal” rule was to prevent the abuse and harassment of defendants and the unfair use of dismissals. The court noted that the language of CR 41(a)(4) did not allow for court discretion and operated as a nondiscretionary adjudication on the merits when the dismissals are unilaterally obtained. The court also asserted that the rule should be strictly construed and that if a defendant stipulated to the dismissal or the dismissal was by court order, then it was not unilateral and the rule did not apply. On the other hand, the court would not look to the parties’ intent if the requirements of the rule were met. See also Spokane County v. Specialty Auto & Truck Painting, Inc., 103 P.3d 792 (2004); Burnett v. Spokane Ambulance, 933 P.2d 1036 (1997). "

Here is a budding legal malpractice case, arising out of a medical malpractice action.  2 defendants serve 90 day notices, and plaintiff tries to file a Note of Issue.  Clerk rejects NOI, and instead of immediately making a motion seeking more time, or the right to file a NOI, plaintiff puts the entire matter aside.

"Contrary to the defendants’ contentions, the Supreme Court could not have properly dismissed the actions for the plaintiffs’ failure to comply with the October 23, 2000, compliance conference order. Although a compliance conference order which directs a plaintiff to file a note of issue, and warns that the failure to do so will result in dismissal of the action, may constitute a valid 90-day notice pursuant to CPLR 3216 (see Bowman v Kusnick, 35 AD3d 643; Hoffman v Kessler, 28 AD3d 718), here the plaintiffs’ counsel was not present at the October 2000 compliance conference, and there is no evidence that the compliance conference order was ever properly served upon the plaintiffs.

However, the Supreme Court should have dismissed the actions based upon the plaintiffs’ failure to comply with the 90-day notices served by the defendants in May 2005. Where a party is served with a 90-day notice pursuant to CPLR 3216, it is incumbent upon that party to comply with the notice by filing a note of issue or by moving, before the default date, to vacate the notice or extend the 90-day period (see Serby v Long Is. Jewish Med. Ctr., 34 AD3d 441; Randolph v Cornell, 29 AD3d 557; C & S Realty, Inc. v Soloff, 22 AD3d 515; Chaudhry v Ziomek, 21 AD3d 922). The plaintiffs did not file a note of issue before the default date set by the 90-day notices, and their August 2005 motion for an extension was rejected without being decided. Since the plaintiffs thus failed to properly respond to the 90-day notices within the allotted period of time, in order to avoid dismissal they were required to demonstrate both a justifiable excuse for the delay and the existence of a meritorious cause of action (see CPLR 3216; Serby v Long Is. Jewish Med. Ctr., 34 AD3d 441; Randolph v Cornell, 29 AD3d 557; Parkin v Ederer, 27 AD3d 633; Chaudhry v Ziomek, [*3]21 AD3d 922). Although the plaintiffs’ August 2005 motion was rejected, they took no further steps to obtain an extension of time to file a note of issue until June 2006, when they responded to the defendants’ motions to dismiss by filing the cross motion now under review. The plaintiffs offered no excuse to justify their extensive delay in seeking an extension, or their lengthy delays in prosecuting this action (see Harrington v Toback, 34 AD3d 640). Moreover, the plaintiffs failed to demonstrate the existence of a meritorious malpractice cause of action against Eswar (see Mosberg v Elahi, 80 NY2d 941, 942; Salch v Paratore, 60 NY2d 851, 852; Serby v Long Is. Jewish Med. Ctr., 34 AD3d 441; Randolph v Cornell, 29 AD3d 557; Burke v Klein, 269 AD2d 348). "

This situation comes up more often than we might imagine.  Disbared attorney refers cases to lawfirm which settles them. What fees may the disbared attorney demand?

Rothman v Benedict P. Morelli & Assoc., P.C.
2007 NY Slip Op 06934
Decided on September 25, 2007
Appellate Division, First Department

"Defendants’ motion to dismiss the complaint should have been granted. "A disbarred, suspended or resigned attorney may not share in any fee for legal services performed by another attorney during the period of his removal from the bar" (Rules of App Div, 1st Dept [22 NYCRR] § 603.13[b]). Since plaintiff’s disbarment occurred during the pendency of the six actions, he is barred from recovering on any of the referral agreements. Accordingly, his claim for breach of contract fails to state a cause of action (Eisen v Feder, 307 AD2d 817, 818 [2003]); Lessoff v Berger, 2 AD3d 127 [2003]). "

"As to plaintiff’s unjust enrichment claim, while a disbarred attorney may be compensated on a quantum merit basis for legal services personally rendered prior to disbarment, "[t]he amount and manner of payment of such compensation . . . shall be fixed by the court on the application of either the disbarred . . . attorney or the new attorney, on notice to the other as well as on notice to the client" (22 NYCRR 603.13[b], supra; Eisen, supra). In contravention of this court rule, there is no evidence that any of the clients were given the requisite notice of this application. Also in contravention of this rule, plaintiff combined all six applications into this single proceeding brought in New York County when, at least with respect to the two pending [*2]actions, separate applications should have been made "in the court wherein the action is pending." Accordingly, plaintiff’s unjust enrichment claim is also defective."

Qualcomm, Apple, Oracle.  Their GCs are moving around, and from this article, it seems as if they are playing musical chairs.  Is the music coming from Qualcomm’s "legal malpractice?"

"In a shuffle between companies with legal challenges spanning the globe, Apple Inc. general counsel Donald Rosenberg is leaving for Qualcomm Inc. after just 10 months in the post.

Oracle Corp. general counsel Daniel Cooperman will replace Rosenberg on Nov. 1, Apple said Friday.

Rosenberg joined Apple last November, when the maker of iPod players and Macintosh computers was in the thick of a stock options scandal. His predecessor there, Nancy Heinen, is now fighting civil charges that she fraudulently backdated stock-options awards to the executive team and a grant to CEO Steve Jobs.

Jobs has a reputation as a tough boss, and his Cupertino-based company maintains an overflowing plate of legal work. In addition to shareholder lawsuits, Apple stays busy building and defending a large portfolio of patents and faces copyright concerns and anticompetitive complaints from a string of European agencies over its iTunes-iPod franchise.

Rosenberg, who spent more than 30 years at International Business Machines Corp. before joining Apple, is jumping to another general counsel post brimming with challenges.

San Diego-based Qualcomm, the world’s second-largest provider of cellular phone chips, is under investigation in the U.S., Europe and Asia for antitrust claims. It also faces major legal battles with rivals Nokia Corp. and Broadcom Corp. over its patents.

Qualcomm’s most recent general counsel, Lou Lupin, resigned in August after a string of legal setbacks and an embarrassing rebuke by a San Diego judge who said Qualcomm was dishonest and committed ‘legal malpractice.’

Apple did not disclose why Rosenberg left.