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New Jersey Court Reverses Dismissal of Legal Malpractice Case That Arose out of Medical Malpractice Case

This unpublished opinion resolves an appeal in a legal malpractice case. The plaintiff sued his lawyer despite the fact that the lawyer settled the underlying case (a medical malpractice case) for $1.5 million.

The Defendant attorney moved to dismiss the case on the ground that the plaintiff was judicially estopped from proceeding because he consented to the settlement of the underlying case. The alleged malpractice was the lawyer’s alleged coercion of an expert witness (a medical doctor) into providing an opinion on surgical issues (and not informed consent). The trial court dismissed the case on estoppel grounds reasoning that because plaintiff had approved the settlement, he could not sue for legal malpractice.

The Appellate Court reversed. It held that it was premature to dismiss the case without conducting discovery and without holding a hearing. The key part of the opinion is quoted below:

Applying these principles, we conclude from the limited record that there are abundant and genuine disputed issues of fact that require resolution before principles of judicial estoppel or preclusion are applied here to bar plaintiff from proceeding with his legal malpractice claims.

Among other things, the record is unclear or disputed concerning such issues potentially relevant to an equitable assessment as: (1) what exactly Hoyt advised plaintiff about the actual reason(s) why the expert was not going to testify at the scheduled trial; (2) whether plaintiff was informed about the key disagreement between the expert and Hoyt over the viability of an “informed consent” theory; (3) whether pressure from the expert’s professional association was the actual or main reason why the expert was unavailable or reluctant to testify, as Hoyt had allegedly represented to plaintiff; (4) whether Hoyt informed plaintiff before the settlement was placed on the record or before signing the Release that a consequence of doing so would be to foreclose a future legal malpractice claim; and (5) why the trial court was asked to “approve” the settlement terms, and what plaintiff was told, if anything, about the significance of that approval when the settlement was put before the court.

Mindful that we do not have a complete record and fact-finding at present, it preliminarily appears that the trial court’s declaration of “approval” of the medical malpractice settlement may have been gratuitous. This was not a situation under the Rules of Court or statute calling for judicial approval of settlement terms, such as for settlements with a minor or incapacitated plaintiff, see Rule 4:44-3; or a class action settlement, see Rule 4:32-2(e)(1); or the approval of a transfer of structured settlement rights, see Rule 4:44A-1 to -2; N.J.S.A. 2A:16-66. It may well be that the trial court was asked to approve the settlement because of the difficulties that counsel was having with his expert and perhaps his client. We will not speculate on that here, other than to observe that the legal necessity for court approval is not readily apparent from the present record. This is another subject warranting factual development.

Given the existence of these many disputed or unknown facts critical to a fair analysis of the relative equities involved, the matter must be remanded for the completion of discovery and appropriate fact-finding. Cf. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) (analogously disfavoring dismissal on summary judgment where there are genuine issues of material fact).

Following the completion of discovery, defendants may renew their motion to dismiss the action on the grounds of judicial estoppel and preclusion. Plaintiff may then respond to that motion. The court shall then hold an evidentiary hearing, make appropriate credibility findings, and reconsider whether plaintiff’s claims equitably should be dismissed in light of the applicable case law including, most recently, the Court’s guidance in Guido. The equitable issues are for the court to decide, and not for a jury. See Sun Coast Merchandise Corp. v. Myron Corp., 393 N.J. Super. 55, 86 (App. Div. 2007) (recognizing that the “ultimate determination of equitable matters is for the judge alone to decide”), certif. denied, 194 N.J. 270 (2008).

In remanding the case, we by no means intimate an appropriate outcome. Nor do we intend on this incomplete record and in the absence of credibility findings to impugn the efforts of plaintiff’s former counsel, who collectively achieved $1.8 million in aggregate recovery for plaintiff in what may have been a difficult and risky liability case. We merely hold that it was premature for the trial court to have dismissed this case in its present posture….

Given the existence of these many disputed or unknown facts critical to a fair analysis of the relative equities involved, the matter must be remanded for the completion of discovery and appropriate fact-finding. Cf. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) (analogously disfavoring dismissal on summary judgment where there are genuine issues of material fact).

Comment: the court is holding that the lawsuit was dismissed too soon before the parties had time to develop the facts.

Source: Ressler v. Hoyt, NJ: Appellate Div. 2017 – Google Scholar