OTHERWISE: NJ Justices Expand Fee-shifting Rule to Non-Clients

Source: OTHERWISE: NJ Justices Expand Fee-shifting Rule to Non-Clients


Rejecting the entreaties of the State Bar Association, the New Jersey Supreme Court expanded its fee shifting rule for prevailing legal malpractice plaintiffs.  The Court – which has since 1996 adhered to a judge-made rule that it slowly extended, first beyond negligence-based claims, to those involving other breaches of duty to clients.
But now in Innes v. Marzano-Lesnevich the court has extended the rule of Saffer v. Willoughby (1996) to  a non-client – the beneficiary of an escrow agreement breached intentionally by the defendant attorney.
Despite the slippery slope arguments of the dissenters the limitation to intentional breaches of duty by lawyers as escrow agents will in fact sharply limit the further expansion of the exception to the so-called American Rule.

The case arose from the decision of a successor attorney not to abide by the agreement of the parties – that the divorcing wife’s attorney would hold the child’s passport to prevent removal of the young child from the United States. The defendant lawyer handed over the passport to the mother without the father’s consent, the child was taken to Spain where Spanish courts, ruling in the father’s absence barred any contact with the young child of the marriage.  The mother was jailed for reusing to return the child to the U.S. and eventually convicted of child-napping.  A large verdict for plaintiff was awarded in the Superior Court,

I was plaintiff’s expert on breach of fiduciary duty at trial.  After initially denying that she had handed over the escrowed passport in violation of the agreement, the defendant admitted it.  She asserted that the  parties had abrogated the signed escrow agreement.   I treated the breach as a flagrant violation of a duty implied in law when she retained the passport and agreement as successor attorney in a divorce case.  But the case was sent to the jury as a negligence case.  The Supreme Court has now remanded the case to the trial judge to make a specific fact finding on intentional breach.  The court observed that the record was sufficient to support such a finding, so it is likely that the trial judge will make the required finding.  – GWC

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