The Supreme Court of New Jersey has reversed a summary judgment in favor of two attorneys in a legal malpractice action. In Gere v. Louis, a client sued two of her former attorneys for negligently representing her in her divorce proceedings. The client had been married to her former husband for over thirty years and the couple had substantial assets, including equal shares in both marina real estate and in a partnership to operate its underlying business.
The client’s first attorney represented her during the divorce proceedings, which concluded with a settlement agreement. The agreement provided the client with a six month period to decide if she wished to retain her half interest in the real estate and/or the underlying business or would rather be granted a release from any liabilities related to the enterprise. After the six months had expired, the husband requested advice in writing of her intentions.
The first attorney telephoned the client, and spoke to the client’s friend, whom the attorney knew the client relied on for advice. The friend advised the attorney “real estate, yes, marina, no.” The attorney took this to mean that the client wished to give up her interest in the marina business, but not the real estate. He subsequently wrote to the husband advising of his understanding of the client’s decision, but did not provide a copy to the client.
After learning of the attorney’s actions, the client maintained that she had not waived her interest in the marina business. The first attorney then withdrew his representation, the client hired a second attorney who filed a claim, but it was later alleged by the client that the second attorney failed to conduct sufficient discovery before a decisive hearing.
Consequently, the client hired a third attorney who negotiated a settlement agreement, which provided the client with a 40% interest in the marina and 50% of the real estate, This settlement was affirmed by the court based on a statement by the client that it was fair and reasonable.
Subsequently, the client filed a legal malpractice claim against the first two attorneys, who each successfully moved for summary judgment. The client appealed and the New Jersey Court of Appeals affirmed, on the basis that the client was precluded from bringing a legal malpractice claim based on an unfavorable settlement, after having acknowledged in a court proceeding that the settlement was fair and reasonable.
The Supreme Court reversed finding that the client’s case was distinguishable in that the client was not in the same position that she would have been in under the original divorce agreement. According to the Court, the first attorney’s conduct occurred following the divorce and jeopardized her rights under it. The court also reasoned that the second attorney’s failure to engage in meaningful discovery limited the client’s ability to claim her rightful share of the marina business. Her damages were the seven year period to regain any interest in the marina and the loss of 10 % of her interest in it.
Decision: Gere v. Louis