Hoppe v. RanziniHoppe v. Ranzini
Defendants, who are attorneys, were sued for malpractice. Plaintiff, a passenger in a car owned and operated by Joseph DePoe, was injured when the car was involved in an accident. For the purpose of this appeal, we consider that the only negligent party was DePoe.1 The malpractice claim was predicated on defendants’ failure to file a complaint within the period of the statute of limitations. It was stipulated that DePoe was uninsured and had no assets at the time of the accident or at the date the motion was argued, had an income that did not exceed $45 a week and had been in and out of jail on a number of occasions. Prior to trial both parties consented that the issue here involved be decided as if a motion for summary judgment had been made by defendants. The trial judge denied the motion and held, contrary to defendants’ contention, that their liability was not limited to the maximum amount (then $10,000) set forth in the statute relating to the Unsatisfied Claim and Judgment Fund (the Fund). Defendants appeal.2
The trial judge ruled that, assuming plaintiff would have obtained a judgment against DePoe, in no event would the damages collectible against the attorneys be limited to the maximum recoverable against the Fund, notwithstanding DePoe‘s obviously weak financial status at the time of the accident or thereafter. He stated that, had the case been tried before a jury, he would not have submitted the issue of collectibility of a judgment against DePoe, or the extent thereof, for the following reasons: (1) the judgment would
We affirm the denial of the summary judgment, but hold that the ruling of the court was premature. It should have awaited an appropriate time during trial.
Defendants claimed below, as it is also contended here, that plaintiff‘s rights to recover must be limited to the $10,000 which he would have received from the Fund had the matter actually been placed in suit and judgment been recovered against DePoe, and that the limitation of DePoe‘s assets and the extent of his solvency at the time of the accident or the malpractice action must be considered in determining the damages to which plaintiff is entitled in the malpractice action. The argument is that to the extent that any judgment against DePoe would be uncollectible, the damages suffered by plaintiff would not have been proximately caused by defendants’ malpractice. To hold otherwise, it is argued, would put plaintiff in a better position by reason of his succeeding in the malpractice action than he would have been in had his claim against DePoe been properly pursued by defendants.
An attorney‘s duty to his client requires him to exercise the knowledge, skill and ability ordinarily possessed and exercised by members of the legal profession similarly situated. He is bound to exercise a reasonable degree of care and prudence, having reference to the character of the service he undertakes to perform. Failure to file suit before the
The attorney is responsible for the loss proximately caused the client by his negligence. Passanante v. Yormark, supra. The measure of that loss or the amount of damages recoverable against an attorney for such malpractice necessarily depends upon the nature of his undertaking for the client.
If his negligence consists of failing to discover a lien in connection with a search of real estate title, then the damage recoverable is the amount of the lien. Bayerl v. Smyth, 117 N.J.L. 412 (E. & A. 1937); Jacobsen v. Peterson, 91 N.J.L. 404 (S.Ct. 1918), aff‘d 92 N.J.L. 631 (E. & A. 1918). See also French v. Armstrong, 80 N.J.L. 152 (S.Ct. 1910). If the attorney is retained to give legal advice, is negligent in that respect and the client pays money to others as a result thereof, he is responsible to the client for the full amount paid, even though the client may have an action for damages against another in connection with the transaction involved. Fabry v. Jay, 104 N.J.L. 617 (E. & A. 1928). If he is negligent in preparing a chattel mortgage so that it later is found to be invalid in a bankruptcy proceeding involving the mortgagor, he is liable for the difference between the amount the client received as a general creditor and the full amount that would have been received had the mortgage been valid. McCullough v. Sullivan, 102 N.J.L. 381 (E. & A. 1926).
However, where, as here, the attorney is retained to conduct litigation against a defendant (hereafter referred to as “the main defendant“) and is guilty of malpractice in connection therewith — for example in failing to file a complaint within the statute of limitations — the measure of
The rule elsewhere, although not without exception, appears to be that such a malpractice action against the attorney involves a trial within a trial, in which the plaintiff has the burden of proving by a preponderance of the evidence that (1) he would have recovered a judgment in the action against the main defendant, (2) the amount of that judgment, and (3) the degree of collectibility of such judgment. Plaintiff‘s loss proximately resulting from the attorney‘s malpractice is deemed to be measured only by the amount of the judgment that could have been collected against the main defendant. To that extent evidence of the main defendant‘s financial status and solvency may be considered, although it is not entirely clear as to the period of time that should be taken into account for that purpose.
As to the foregoing, see Sitton v. Clements, 257 F. Supp. 63 (E.D. Tenn. 1966), aff‘d 385 F.2d 869 (6 Cir.1967); Winter v. Brown, 365 A.2d 381 (D.C. Ct. App. 1976); McDow v. Dixon, 138 Ga. App. 338, 226 S.E.2d 145 (Ct. App. 1976); Baker v. Beal, 225 N.W.2d 106 (Iowa Sup. Ct. 1975); Christy v. Saliterman, 288 Minn. 144, 179 N.W.2d 288 (Sup. Ct. 1970). Cf. Duncan v. Lord, 409 F. Supp. 687 (E.D. Pa. 1976); Allied Productions Inc. v. Duesterdick, 232 S.E.2d 774, including dissenting opinion at 776 (Va. Sup. Ct. 1977); Smith v. Lewis, 13 Cal.3d 349, 118 Cal. Rptr. 621, 530 P.2d 589, including dissenting opinion 118 Cal. Rptr. at 600, 530 P.2d 589 (Sup. Ct. 1975); W.L. Douglas Shoe Co. v. Rollwage, 63 S.W.2d 841 (Ark. Sup. Ct. 1933). See also, 7 Am. Jur.2d, Attorneys At Law,
We consider the matter of whether and under what circumstances, if at all, collectibility from the main defendant should be a proper consideration in the award of damages in this type of malpractice action to be of sufficient public importance to warrant its determination only in a full factual setting developed at a trial, rather than on a hypothetical basis, such as that here presented, by way of a ruling on incomplete stipulated facts before trial.
In this State the amount of damages for which a negligent party is liable is that which his negligence was a substantial factor in bringing about. His negligence need not be the proximate cause of such damages. It suffices if it is a proximate cause thereof. The determination of the damages so caused involves the reasonable foreseeability thereof, although not necessarily its precise amount. Where it is certain that some damage has resulted, mere uncertainty as to the amount need not preclude the right to recovery. In that event, it is left to the good sense of the jury, as reasonable men, to determine from the evidence the best estimate that can be made under the circumstances of the amount of compensatory damages. See Rappaport v. Nichols, 31 N.J. 188, 203-205 (1959). See also, Dziedzic v. St. John‘s Cleaners & Shirt Launderers, Inc., 53 N.J. 157 (1969); Betenbaugh v. Princeton Hosp., 50 N.J. 390 (1967); Paolicelli v. Wojciechowski, 132 N.J. Super. 274 (App. Div. 1975) certif. den. 68 N.J. 153, 154 (1975).
In the instant case defendants seek a rule that would require proof of collectibility of the judgment against the main defendant in order to determine the amount of damages to be awarded in a malpractice action involving the negligent conduct of litigation. That rule may effect a change in or departure from the concept of proximate causation and the measure of damages in negligence actions generally, including other kinds of attorney malpractice cases and malpractice suits involving other professions. Whether such a rule should be adopted in this type of attorney malpractice action requires the consideration of many factors, in the light of an actual trial on the merits of the particular case, as hereinafter set forth. That task should be undertaken in the first instance by the trial judge. In the event of an appeal from his judgment, we should have the benefit of a full record upon which to make an appropriate determination.4
The rule that should be established may depend upon the nature of the litigation undertaken by the attorney and the reasonable expectations of the client, when the attorney was retained, as to the prospects for success in obtaining and collecting on a judgment against the main defendant. Among other things, evidence as to discussions or correspondence with, or the conduct of, the attorney may be pertinent to this inquiry. Cf. 45 A.L.R.2d supra, at 11, n. 15. See also Fabry v. Jay, supra, 104 N.J.L. at 619-620.
The rule to be adopted in a particular case should also take into account the fiduciary nature of an attorney‘s relationship to his client, and the fact that the practice of the law plainly affects the public welfare in a fashion not unlike that of other learned professions, such as physicians. Cf. dissenting opinion in Allied Productions, Inc. v. Duesterdick, supra, 232 S.E. 2d at 776-777; McCullough v. Sullivan, supra, 102 N.J.L. at 384. It should be one that effects a fair balance between the rights of, and burdens on, both the client and the attorney who negligently conducts litigation on the client‘s behalf.5
The fact that many of the matters going to collectibility of a judgment appear to be speculative in nature is not necessarily a bar to having them considered. Subject to appropriate proofs and control and instructions by the
We point to some of the matters that should be considered before the adoption of a rule as the measure of damages in this type of case to guide the trial judge in making a determination in that respect if and when that becomes necessary. There may be others. In any event, as indicated, we do not believe that a final decision should be made in a factual vacuum and, accordingly, have not endeavored to resolve the issue.
The trial of this case should be bifurcated in the event the matter of collectibility of the judgment against the main defendant is still a viable issue. The questions of malpractice and the amount of the judgment that would have been recoverable against DePoe had suit been timely instituted should be tried first. In that trial proof would not be admissible as to DePoe‘s income, solvency, wealth or assets, or the extent to which his liability was covered by insurance (or the Fund). See Leimgruber v. Claridge Assoc., Ltd., 73 N.J. 450, 456, 458 (1977); Brandimarte v. Green, 37 N.J. 557, 562-563 (1962); Belinski v. Goodman, 139 N.J. Super. 351, 357-358 (App. Div. 1976); Dalton v. Gesser, supra, 72 N.J. Super. at 106. See also, McDow v. Dixon, supra, 226 S.E.2d at 148. If the jury renders a money verdict in that proceeding, defendants, if they so desire, may move for a trial as to the collectibility of the judgment. In that event a further trial, preferably before the same jury (unless a jury is waived), should be held as to such collectibility in order to make a record upon which an ultimate
We have concluded that fairness requires that the burden of proof with respect to the issue of collectibility should be upon the attorney defendants, notwithstanding the rule elsewhere that places that burden on plaintiff. Cf. Fosgate v. Corona, 66 N.J. 268 (1974); Dziedzic v. St. John‘s Cleaners & Shirt Launderers, Inc., supra; Interchemical Corp. v. Uncas Printing & Fin. Co., Inc., 39 N.J. Super. 318, 329 (App. Div. 1956).
We have considered the case of Sproul v. Lloyd, 96 N.J.L. 314 (Sup. Ct. 1921). It is unclear whether the action of the attorney in that case was considered by the court as constituting negligence or malpractice. In any event, to the extent that the case may be construed as holding that collectibility is always an issue where the client sues the attorney for malpractice involving litigation or that the burden of proof of collectibility is on the plaintiff, we refuse to follow it.
The denial of the motion for summary judgment is affirmed. However, because the ruling by the trial judge on the legal issue here involved was premature, further proceedings in this case shall be in accordance with this opinion.