PAUL E. NEWELL, ESQ.,
CHARLES S. ADUBATTO, ESQ.
and NEWELL & ADUBATTO,
Plaintiffs-Respondents,
v.
DORA M. HUDSON,
Defendant-Appellant.
___________________________________
Submitted February 2, 2005 - Decided March 16, 2005
Before Judges Newman, Axelrad and R.B. Coleman.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County,
L-2763-01.
Edward G. O'Byrne, attorney for appellant.
Giordano, Halleran & Ciesla, attorneys for respondents (Michael J. Canning, of counsel; Mr.
Canning and Catherine J. Bick, on the brief).
Respondent Paul E. Newell filed a supplemental pro se brief.
The opinion of the court was delivered by
AXELRAD, J.T.C. (temporarily assigned).
Defendant Dora Hudson ("Hudson") appeals from two orders for summary judgment in
favor of plaintiff Paul E. Newell, Charles S. Adubato
See footnote 1
and their law firm
(collectively referred to as "Newell"), dismissing her counterclaim for legal malpractice and awarding
attorneys' fees and costs to Newell on his affirmative claim for services rendered
to defendant in her divorce litigation.
At issue in this appeal is whether a litigant who either lied, or
later claimed she lied, about her understanding and voluntary acceptance of the terms
of her property settlement agreement, in order to induce the court to accept
and incorporate it into a judgment of divorce, is judicially estopped from asserting
a claim for malpractice against her matrimonial attorney based on the settlement. The
trial court found she was. We agree and affirm.
I
Hudson, an accountant, retained Newell to defend her in a matrimonial action
filed by her then-husband Mark Hudson. The parties had a nine-year marriage with
no children. On the trial date, January 31, 2001, after lengthy negotiations and
discussions with her attorney, Hudson signed an Interspousal Agreement. The settlement agreement provided,
among other terms, for Hudson to receive limited duration alimony of $3,000 per
month for four years
See footnote 2
"based upon an annual income to [husband] of $175,000
base pay plus discretionary bonus and an annual income to [Hudson] of $60,000."
The agreement also provided for an even distribution of non-personal property assets, including
the marital home and investment accounts. The agreement contained the following pertinent language:
6.1 Knowledge of Facts. [Husband] and [Hudson] expressly acknowledge that this Agreement has been
prepared without exchange of financial statements, records, and other documentation pertaining to his
or her financial status, income, expenses, assets, and liabilities, as each party is
satisfied that he or she is aware of the others financial circumstances. The
parties have exchanged Case Information Statements and waive their right to further discovery,
including interrogatories and depositions, as each is satisfied that the financial condition of
the parties is as stated in the Case Information Statements. Each party represents
to the other the completeness, truthfulness, and accuracy of representations made by the
other party, with the understanding that the other party is relying thereon in
accepting the terms of the settlement contained herein and execution of the within
Agreement. In the event that either party has willfully misstated his or her
financial status, income, expenses, assets, or liabilities, the other party shall be entitled
to file an appropriate application with the court.
6.3 Voluntary Execution. The parties each acknowledge and represent that this agreement has
been executed by them, and each of them, free from persuasion, fraud, undue
influence, or economic, physical, or emotional duress of any kind whatsoever exerted by
the other party.
Prior to Hudson signing the agreement, Newell had given her a copy of
our Supreme Court's decision in Crews v. Crews,
164 N.J. 11 (2000), and
explained the concept of alimony and advised her that the amount of alimony
she received might depend, in part, on the marital standard of living. When
Hudson told Newell she wanted permanent alimony, he advised her she would likely
only receive limited duration alimony and suggested they attempt to negotiate the amount.
After entering into the agreement, Hudson and her husband each testified that they
understood and voluntarily consented to the terms of the agreement. Paraphrasing her testimony,
Hudson further stated:
The limited duration alimony would permit her to maintain the standard of living
she enjoyed during the marriage for at least the next four years;
She understood that if the divorce went to trial she might get more
or less alimony than provided by the agreement;
The agreement was a compromise but was a fair deal; and
She had discussed the settlement with Newell at great length throughout the course
of the day and he had answered all of her questions.
Based upon this testimony, Judge Locascio approved the agreement which was incorporated into
a final judgment of divorce.
On or about February 1, 2001, Hudson wrote a letter to Newell in
which she stated she felt pressured and intimidated by [her husband's counsel], the
Judge, and [Newell], and took issue with the adequacy of Newells preparation and
legal representation. Newell replied in a February 3, 2001 email, expressing his belief
that Hudson would have received less alimony had the case proceeded to trial.
He noted that she had reviewed the settlement carefully over approximately eight hours
of negotiations between the parties and that she had testified under oath she
understood the terms of the settlement agreement and voluntarily entered into it.
Hudson retained different counsel who filed a motion to modify or set aside
the divorce judgment on the grounds that her husband had misrepresented his income
in that his bonus was not discretionary but was guaranteed. The following colloquy
transpired at oral argument on April 12, 2003:
[HUDSON'S COUNSEL]: My client would just like me to point out, Your Honor,
that her main contention . . . is that the salary stated in
the property settlement agreement from Mr. Hudson at [$]175[,000] wasn't entirely accurate, that
his salary is actually [$]260,000.
. . . .
[MARK HUDSON'S COUNSEL]: First of all, Judge, there's no mistake whatsoever. If you
look at her own case information that she had filed the previous year,
she knew what my client's income was. . . She said $290,000. .
. In addition, on the day we were coming in for trial her
attorney had . . . sent the proposal for resolution of this matter
[stating] . . . "Your client will be free and clear to enjoy
his $225,000 per year income."
I mean, all along we've discussed this based upon my client making more
income. The only thing was that [$]175[,000] was his base. There was no
mistake here, absolutely not. . . I attached the previous certifications [6/7/00] that
were filed with the Court in her pendente lite motion. She was fully
aware of how much income [her husband] made.
. . . .
THE COURT: Let me see. Paragraph 2. ["] He described his income as
[$]175[,000] annually, plus a discretionary bonus. The Court should be made aware that
this discretionary bonus has been as high as [$]50[,000] . . ." So
she knew that.
. . . .
[HUDSON'S COUNSEL]: She's saying that it's not discretionary, the property settlement agreement is
wrong.
. . . .
THE COURT: She knew about a bonus of every year of $50,000 in
her own certification. She's playing fast and loose with semantics, counsel. She's jumping
on the word discretionary when her own certification indicates she knew darn well
he got it.
Following oral argument, Judge Locascio denied Hudsons motion and awarded her husband $1250
in counsel fees on his cross-motion.
II
Hudson failed to pay the outstanding bill of $8,128.75 for the legal services
rendered by Newell. Newell sent her a pre-action notice as required by Rule
1:20A-6 and, on June 11, 200l, instituted suit for collection. Hudson answered and
filed a counterclaim alleging that Newell had committed legal malpractice by failing to
serve interrogatories upon or depose her former husband, secure documents reflecting the status
of certain investment accounts as of the date of filing of the divorce
action, have an expert conduct an analysis of the assets acquired during the
course of the marriage, and attempt to reopen the divorce settlement at her
request. These failures, Hudson claimed, resulted in her "accept[ing] a settlement which was
woefully insufficient in terms of both alimony/spousal support and equitable distribution."
In her deposition taken in the malpractice action, Hudson repudiated her January
31, 2001 testimony pertaining to her understanding of the settlement agreement and the
fact she might be awarded more or less alimony if the case went
to trial, the fairness of the agreement, the voluntary manner in which she
had entered into it, her belief that the alimony provided under the agreement
would permit her to maintain her standard of living, and the degree to
which Newell discussed the settlement and answered her questions in a satisfactory manner.
In essence, Hudson testified that her sworn testimony to Judge Locascio, which she
understood was being offered to obtain his approval of the settlement, was false.
Hudson also stated during her deposition that during the course of her marriage
she was aware of all of her own, her former husband's, and their
joint assets; she was unable to identify any asset that would have been
discovered had Newell requested the discovery cited in her counterclaim.
On November l9, 2003, Newell filed a motion for summary judgment to dismiss
Hudson's counterclaim, attaching the settlement agreement, transcripts of the two hearings before Judge
Locascio, Hudson's June 7, 2000 certification filed in the divorce action, and portions
of Hudson's deposition transcript. Hudson cross-moved for an in limine order to bar
reference to her allegedly false testimony during the divorce settlement. In opposition to
Newell's motion, she presented a July 16, 2003 report of Robert B. Cherry,
Esquire and a November 13, 2003 report of Stephan C. Chait, CPA. Following
oral argument, by order of February 5, 2004, Judge Quinn granted Newell's summary
judgment motion and denied Hudson's in limine motion, stating:
This is a case for a legal malpractice saying that [Hudson] wasn't adequately
advised as to the impact of the Crews decision.
See footnote 3
As indicated in the moving papers, [Hudson] as an accountant was completely familiar
with all of the financial information that would be relevant for purposes of
the divorce and indeed, from that time to the present time, no non-disclosed
income has ever been forthcoming. So the fact that the lawyer didnt conduct
discovery is really not relevant. This information was known to Ms. Hudson and
her husband. Theres no dispute then and theres no dispute now that that
information would have changed or was in any way inadequate.
[Hudson] now maintains that the alimony should have been more and should have
been permanent [a]lthough quite frankly, the award in the property settlement agreement was
more than the pendente lite alimony and certainly more than the expenses of
[Hudson] as reflected in the case information statement.
The deposition testimony of [Hudson] is interesting because quite frankly, it is completely
at variance with her sworn testimony at the hearing in connection with this
case. At the hearing in the case, [Hudson] clearly testified that she understood
what she was entering into and thats what she wanted the Court to
do, to approve.
[t]his Court finds that Judge Locascio accurately described [Hudson]s position as just simply
changing her mind. And I agree with Judge Locascio. This is not a
case where she was misinformed as to the criteria to be employed and
indeed, the record reflects under oath that she previously had herself been given
a copy of the Crews decision.
Shes a sophisticated party. She has an accounting degree. The Court can readily
assume that she understood what she was doing in connection with this matter
and I find that she clearly took the position with the Court that
she wanted to approve this settlement. And that she did so knowingly and
that she didnt have any questions of anyone.
And again, the record reflects, she actually acknowledged having discussed the Crews decision
. . . and having read it and had a copy of it.
It would be impossible in this Courts view to frankly have . .
. any finality associated with divorce cases particularly with reference to establishing the
issues articulated in Crews if . . . a party such as Ms.
Hudson who is herself an accountant [can go before a court and] say
yeah, Ive got the Crews decision. I understand the Crews decision and then
decide that later that she wants a different settlement than was entered into
between the parties in this case.
Judge Quinn explained the reason he was invoking the doctrine of judicial estoppel:
[T]he Court is going to grant the motion for summary judgment essentially based
on the doctrine of estoppel or judicial estoppel and that is to say
a party cannot take one knowing and willful position in connection with a
judicial proceeding and then completely repudiate that decision. The doctrine of estoppel [is]
essentially set forth in Scarano v. Central Railroad [Co.,
203 F.2d 510 (3d
Cir. 1953)] . . . there is a five element test for judicial
estoppel.
. . . .
The doctrine of estoppel is really intended to protect the integrity of the
judicial process(citations omitted).
. . . .
Here, [Hudson] clearly, and it couldnt be more clear, set forth her understanding
of the agreement and clearly satisfied Judge Locascio on her understanding of the
agreement. Judge Locascio based on the directive of the court in Stout v.
Stout,
155 N.J. Super. 196 [(App. Div. 1977)] and Crews v. Crews [citation
omitted], made the appropriate inquiry of her at the time of the divorce
proceeding.
And [Hudson] again is an accountant and answered all of the questions,
the property settlement agreement had been altered substantially throughout the course of the
day and she clearly indicated that she understood she had received a copy
of Crews and understood what she was doing.
[Hudson] changed her mind later that night; thats what Judge Locascio found in
connection with his denial of post judgment motions. And indeed, I think everyone
can understand and acknowledge that thats what occurred in this case. [Hudson] just
simply changed her mind. The argument that she was misinformed or misled is
one that has come up, you know, substantially later as a rationale for
bringing this suit.
[Hudson] isnt misled in any circumstance where she simply changes her mind. The
letter that she directed later that night to [Newell] indicates that she changed
her mind, not that she had been misled. Being misled or misinformed which
would be the basis of the legal malpractice action is that she received
subsequent information that would result in her either trying to change the agreement
or bringing an action against [Newell] for the agreement itself.
. . . .
She just simply changed her mind and I dont think that you are
misinformed by your lawyer when you testify under oath that you know about
the decision, that youre actually getting a property settlement agreement alimony amount that
is greater than the pendente lite amount and that it is clearly an
amount sufficient to cover your expenses and that you know what youre doing.
Theres no way that any matrimonial lawyer under these circumstances could ever protect
themselves from a legal malpractice case. Indeed and in fact, any matrimonial litigant
need only enter into a property settlement agreement getting whats as easy as
they can get from their spouse, and the very next day, turn around
and try and get more money from their matrimonial lawyer.
I find, therefore, in order to protect essentially the integrity of the judicial
system, that here [Hudson] simply changed her mind, that based on the doctrine
of estoppel and specifically, judicial estoppel, that this case should be dismissed and
Im going to grant the motion for summary judgment dismissing the counterclaim for
legal malpractice for those reasons.
Thereafter, Newell moved for summary judgment on his affirmative claim for counsel fees
and Hudson cross-moved for summary judgment pursuant to Saffer v. Willoughby,
143 N.J. 256 (1996), asserting Newell was barred from collecting fees for services negligently rendered.
Considering that Hudson had not challenged the reasonableness of the time expended by
Newell or the amount of his bill, on April 2, 2004 Judge Quinn
granted summary judgment in Newell's favor for the outstanding fees, costs, and interest
totaling $10,768.51. The judge denied Hudson's cross-motion based on his prior order dismissing
her malpractice claim, stating:
If all you needed to do was to make an allegation of malpractice
and try and cherry pick specific things that could have or should have
been done in connection with a matrimonial case, wed never have any finality
to them and matrimonial lawyers would be in constant litigation because you can
always second guess someone and you can always with the benefit of hindsight
argue that certain things should have been done.
III
In support of her appeal of Judge Quinns orders granting summary judgment on
her legal malpractice counterclaim and Newells collection action, Hudson asserts: (1) there is
undisputed material evidence that Newell improperly advised her to settle her divorce action;
(2) under Ziegelheim v. Apollo,
128 N.J. 250 (1992), judicial estoppel is not
a defense to a lawyer who improperly advises his client to accept a
divorce settlement; (3) she relied upon the bad advice she received from Newell
and her background as an accountant or knowledge of the Crews decision is
irrelevant; (4) her knowledge of her husband's assets and of the Crews decision
does not preclude her from suing Newell for negligently advising her to accept
an inadequate settlement; and (5) in light of the competent proof that Newell
had committed attorney malpractice, his motion for summary judgment for fees and costs
should have been denied. We are not persuaded by any of these arguments.
The doctrine of judicial estoppel is well entrenched in New Jersey's jurisprudence. It
is "an equitable doctrine precluding a party from asserting a position in a
case that contradicts or is inconsistent with a position previously asserted by the
party in the case or a related legal proceeding." Tamburelli Properties v. Cresskill,
308 N.J. Super. 326, 335 (App. Div. l998).
Over a hundred years ago the United States Supreme Court set forth the
fundamental precepts of the doctrine of judicial estoppel:
It may be laid down as a general proposition that, where a party
assumes a certain position in a legal proceeding, and succeeds in maintaining that
position, he may not thereafter, simply because his interests have changed, assume a
contrary position, especially if it be to the prejudice to the party who
has acquiesced in the position formerly taken by him.
[Davis v. Wakelee,
156 U.S. 680, 689,
15 S. Ct. 555, 558,
39 L. Ed. 578 (1895).]
This doctrine is intended to protect the integrity of the judicial system and
is designed to prevent litigants from "playing fast and loose with the courts."
See Tamburelli, supra, 308 N.J. Super. at 335 (citing Scarano v. Central Railroad
Co., 203 F.
2d at 513).
Several courts throughout our country have granted summary judgment motions in legal malpractice
actions based on the doctrine of judicial estoppel where a litigant repudiates a
prior, sworn inconsistent statement made in order to secure an advantage in or
judicial approval of the underlying settlement. "The rationale underlying the theory of judicial
estoppel is the preservation of the sanctity of the oath and elimination of
prejudice in the administration of justice. One may not assert a particular position
in order to serve one purpose, then assert a wholly contrary position to
serve another." Owen v. Knop,
853 S.W.2d 638, 643 (Texas App. l993)
(holding a client was judicially estopped from asserting attorney's failure to timely file
suit as the basis for her legal malpractice claim in view of her
earlier sworn statement that the discovery rule applied to save her cause of
action for medical malpractice).
In McKay v. Owens,
937 P.2d 1222 (Idaho l997), the Idaho Supreme
Court applied the doctrine of equitable estoppel to dismiss the plaintiff's legal malpractice
claim stemming from an underlying medical malpractice action. The prior action had settled
and been approved by the court, following the plaintiff's testimony that she understood
and approved the terms. In the subsequent legal malpractice action, she claimed she
was not truly satisfied with the settlement and her attorney had settled it
without her consent, despite her testimony on the record. The plaintiff alleged she
was "forced" to lie to the court about her acceptance of the settlement
due to her attorney's alleged malpractice. In dismissing the malpractice action on the
basis of judicial estoppel, the Court stated:
[The plaintiff] asserts that she never really meant to approve the settlement, and
that she always intended to file this legal malpractice action. Judicial estoppel, with
its attendant policies, is tailor-made to prevent just such a tactic, and to
block the "secret or subjective intent" of the litigant. The sanctity of court
proceedings is something that cannot be trifled with, nor will we permit a
party to play fast and loose with the courts. To allow [plaintiff's] argument
that [her attorney's] alleged malpractice "forced" her to lie in court, desecrates the
sanctity of court proceedings, and impedes the administration of justice.
[Id. at 1228].
Similarly, in Broad v. Conway,
675 F. Supp. 768 (N.D.N.Y. l987), aff'd,
849 F.2d 1467 (2d Cir. l988), cert. denied,
488 U.S. 927,
109 S. Ct. 313,
102 L. Ed.2d 331 (1989), the federal District Court applied the
doctrine of estoppel to dismiss the plaintiffs' legal malpractice claim where they voluntarily
and unconditionally settled their underlying defamation action on the record and later alleged
they were forced into accepting it. The court emphasized the policy basis behind
this equitable doctrine:
[B]ecause the plaintiffs expressly stated on the record, in open court, that they
were not coerced or influenced to settle, plaintiffs are precluded here from claiming
that there is an issue of fact as to whether they voluntarily settled
the underlying action.
. . . .
Under these circumstances, plaintiffs cannot now disavow the plain and unequivocal terms of
the settlement, which they entered into voluntarily on the record, in open court.
As defendants correctly noted, allowing plaintiffs to disavow a voluntary settlement made on
the record in open court would "wreak havoc" with the judicial system. Not
only would defense counsel be more reluctant to settle, out of fear that
those settlements would later be set aside simply because plaintiffs changed their minds,
but the attorney client relationship would also be undermined. Plaintiffs' attorneys would also
be more reluctant to settle, because even if their clients agreed to a
voluntary settlement, plaintiffs' counsel would be concerned that plaintiffs would sue them for
malpractice at a later time.
[Id. at 772].
In Vogel v. Touhey,
828 A.2d 268 (Md. Ct. Spec. App.), cert. denied,
837 A.2d 927 (Md. 2003), the Maryland Court of Special Appeals utilized the
doctrine of judicial estoppel to bar a client's legal malpractice claim based on
failure to adequately perform in her underlying divorce action. The client, herself an
attorney, had negotiated a property settlement agreement with her husband; thereafter she learned
that her husband had failed to disclose substantial marital assets and diverted or
dissipated other marital assets. She retained defendant attorney to challenge the agreement in
the pending divorce action, uncover the full extent of the parties' marital assets
and renegotiate a more beneficial property settlement agreement. Unhappy with the attorney's performance,
she discharged him and a few days later settled her dispute with her
husband for a fraction of the additional sum she had hoped to recover.
The court held the client bound by her position in the divorce proceeding,
noting that given the client's knowledge at the time of the divorce hearing
that her attorney had failed to obtain and analyze certain of her husband's
financial documents and she was not in a position to make an informed
decision as to the settlement, she still represented to the master that she
was fully aware of the issues and that the settlement was "fair and
equitable." Id. at 716. Based on the extensive voir dire conducted by the
master to establish that the settlement was a voluntary and knowing one, the
court found the client's decision to settle her underlying matrimonial action to be
a matter of her choice, not the product of duress or coercion. Ibid.
The court dismissed her malpractice action, finding that she had created the circumstances
that culminated in the claim and would derive an unfair advantage were she
not estopped from asserting an inconsistent position in the malpractice action. Ibid.
Hudson's reliance on
Ziegelheim v. Apollo,
128 N.J. 250 (1992), and Puder v.
Buechel,
362 N.J. Super. 479 (App. Div. 2003), certif. granted,
180 N.J. 147
(2004), in support of her argument that the equitable doctrine of judicial estoppel
was improperly invoked by the Law Division judge, is misplaced.
In Ziegelheim, the Court held that a client's acceptance of a negotiated matrimonial
settlement did not bar her subsequent recovery from her attorney for the negligent
handling of her divorce action. In that case, a plaintiff who had been
married for thirty-five years retained defendant Stephen Apollo to represent her in a
divorce action. During their meetings, she told him about all of the marital
and separate assets of which she was aware, discussed her suspicion that her
husband was either concealing or dissipating certain other assets, and requested he make
a thorough inquiry into her husband's assets. She thereafter entered into a property
settlement agreement which provided, among other terms, that she receive fourteen percent of
the value of the marital estate as appraised by Apollo and the accountant.
Id. at 257. After the settlement was read into the record, both the
plaintiff and her husband testified they understood the agreement, thought it was fair,
and entered into it voluntarily. Ibid. Thereafter, she filed a malpractice action, asserting,
among other claims, that she accepted the agreement only after Apollo advised her
that wives in her position could expect to receive no more than ten
to twenty percent of the marital estate if they went to trial, and
she could expect to receive no more than twenty percent, which advice did
not comport with that which a reasonably competent attorney would have given under
the circumstances. Ibid.
The trial court granted summary judgment, noting that the client had stated on
the record in the divorce action that she thought her agreement was "fair."
Id. at 257-60. We affirmed the dismissal of all but one of the
five counts of the malpractice complaint. Id. at 260.
The Supreme Court reversed and remanded the matter for trial on all counts
of the complaint. Id. at 260-67. The Court noted New Jersey's judicial policy
encouraging settlements but declined to adopt the rule espoused by the Pennsylvania Supreme
Court in Muhammad v. Strassburger, McKenna, Messer, Shilobod and Gutnick,
587 A.2d 1346 (Pa.), certif. denied,
502 U.S. 687,
112 S. Ct. 196,
116 L.
Ed.2d 156 (1991), as urged by Apollo, barring a malpractice action against
an attorney who negotiated a settlement accepted by the litigant in the absence
of actual fraud on the part of the attorney. Ibid. Recognizing that litigants
rely heavily on the professional advice of counsel when they decide whether to
accept or reject offers of settlement, the Court found no reason to apply
a more lenient rule to attorneys who negotiate settlements than it does to
those who provide other legal services. Id. at 263-64.
The Court further held that the plaintiff's statement on the record that the
settlement agreement was fair and the Family Court's denial of her motion to
set aside the agreement on that basis did not collaterally estop her from
litigating her subsequent malpractice claim. Id. at 265-66. The Court reasoned that "[t]he
earlier ruling did not implicate the competence of counsel and, indeed, was premised
on the presumptive competence of counsel." Id. at 266. According to the Court,
"[t]he fact that a party received a settlement that was 'fair and equitable'
does not necessarily mean that the party's attorney was competent or that the
party would not have received a more favorable settlement had the party's incompetent
attorney been competent." Id. at 265.
Thus the plaintiff was permitted to maintain a legal malpractice action based on
the proofs presented, which raised a genuine issue of material fact as to
whether her matrimonial attorney gave deficient advice or inadequately investigated her husband's assets.
The Supreme Court, however, was cautious that its decision in Ziegelheim not be
read so broadly as to "open the door to malpractice suits by any
and every dissatisfied party to a settlement," noting that "[m]any such claims could
be averted if settlements were explained as a matter of record in open
court in proceedings reflecting the understanding and assent of the parties." Id. at
267. The Court further stated,
[P]laintiffs must allege particular facts in support of their claims of attorney incompetence
and may not litigate complaints containing mere generalized assertions of malpractice. We are
mindful that attorneys cannot be held liable simply because they are not successful
in persuading an opposing party to accept certain terms. Similarly, we acknowledge that
attorneys who pursue reasonable strategies in handling their cases and who render reasonable
advice to their clients cannot be held liable for the failure of their
strategies or for any unprofitable outcomes that result because their clients took their
advice. The law demands that attorneys handle their cases with knowledge, skill, and
diligence, but it does not demand that they be perfect or infallible, and
it does not demand that they always secure optimum outcomes for their clients.
[Ibid.]
In Puder, supra, 362 N.J. Super. at 485, we held under Ziegelheim that
the client was not precluded from pursuing a malpractice counterclaim against her matrimonial
attorney who negotiated an oral settlement in the divorce action, which the client
refused to formalize after having consulted another attorney who advised her the terms
were unfavorable, merely because she entered into a new and slightly more favorable
divorce settlement agreement while the malpractice action was pending. We focused on the
allegation that the attorney negligently negotiated and recommended the settlement with only limited
discovery of the husband's assets and, more significantly, settled the case even though
the client accepted only "some but not all of the terms." Id. at
482. The client was then arguably placed in a "vulnerable" and "untenable" position
in the enforcement action by reason of her former attorney's breach of duty,
prompting her acceptance of the second settlement. Id. at 489-90. We also held
that the trial court's invocation of judicial estoppel was error, but that was
in the context of the malpractice counsel's certification with his motion for a
stay stating that resolution of the matrimonial action would moot her malpractice counterclaim.
Id. at 494-94. The basis for that ruling is not pertinent to the
issues before us.
In Ziegelheim and Puder, the courts recognized legal malpractice as a viable cause
of action where a matrimonial attorney's negligent pretrial preparation and advice led to
the recommendation of an improper settlement. By declining to apply a per se
bar, these cases preserve a malpractice claim of a vulnerable litigant who unknowingly
enters into an inadequate settlement, believing it is fair, as a result of
the arguable negligence of her matrimonial attorney. These cases, however, do not bestow
special protection or immunity from the doctrine of judicial estoppel on a litigant
such as Hudson who claims to have perjured herself to obtain judicial approval
of her marital settlement agreement in order to maintain a subsequent legal malpractice
counterclaim. The case before us is factually inapposite and has none of the
policy considerations inherent in Ziegelheim and Puder.
As the Supreme Court of Idaho recognized,
For guidance purposes and to avoid misapplication of judicial estoppel, it should be
made clear that the concept should only be applied when the party maintaining
the inconsistent position did have, or was chargeable with, full knowledge of the
attendant facts prior to adopting the initial position. Stated another way, the concept
of judicial estoppel takes into account not only what a party states under
oath in open court, but also what that party knew, or should have
known, at the time the original position was adopted. Thus, the knowledge that
the party possesses, or should have possessed, at the time the statement is
made is determinative as to whether the person is playing "fast and loose"
with the court.
[McKay v. Owens, supra, 937 P.
2d at 1229.]
Mrs. Ziegelheim accepted a property settlement agreement believing it to be fair and
reasonable based on the advice of her attorney and truthfully testified as such
to the court. It was only later that she learned that her attorney's
advice was arguably erroneous and the settlement inadequate. In contrast, according to Hudson's
deposition testimony, she knew at the time she entered into the interspousal agreement
that it was unfair, she was forced to enter into it, she was
dissatisfied with her attorney, he did not answer her questions or properly explain
the law, and she knew the settlement would not permit her to maintain
her marital standard of living. Hudson chose, however, to testify under oath, in
open court, in elaborate detail to the contrary.
Newell, the adversarial party and his counsel and, most significantly, Judge Locascio relied
on Hudson's sworn statements regarding settlement of her matrimonial action. Following hours of
negotiations on the trial date,
Newell relied on his client's representations to him
prior to signing the agreement that she understood her legal rights, particularly with
regard to alimony; that he had fully explained all of the provisions to
her satisfaction; and that she was voluntarily accepting the terms as an alternative
to trial. Accordingly, he permitted her to sign the agreement and proceeded with
the settlement in open court. By signing the agreement, Hudson again affirmed the
truth of her representations. Hudson's then-husband and his attorney also relied on the
truthfulness of her answers that an agreement had been voluntarily reached between the
parties which, absent husband having withheld information (of which there was no evidence),
would withstand challenge.
Judge Locascio then conducted an exhaustive question and answer session of the parties
under oath on the record, in accordance with the directives of Stout,
See footnote 4
Crews,
See footnote 5
and Ziegelheim.
See footnote 6
Counsel and the court elicited specific testimony from Hudson regarding the
base points, term and amount of alimony, Crews prerequisites, and her voluntary understanding
and assent to all of the terms of the agreement. In reliance upon
Hudson's representations, the Family Part judge approved the parties' settlement and entered a
final judgment of divorce incorporating its terms. See Cummings v. Bahr,
295 N.J.
Super. 374, 375-376 (App. Div. 1996) (concluding that a position has been "successfully
asserted" in the context of applying judicial estoppel it if has helped form
the basis of a judicial determination).
This is not a case where the litigant was misinformed of the criteria
to be employed or was without full knowledge of the attendant facts prior
to adopting her initial position. Contrary to Hudson's assertion, her profession was a
relevant consideration by Judge Quinn in invoking the principle of judicial estoppel. Hudson
is an accountant by education who performs internal auditing for a corporation; she
was not an unsophisticated individual or a vulnerable litigant. It is clear from
the record of the divorce proceeding that Hudson was fully familiar with the
financial circumstances of the parties, and the regularity of her husband's bonuses and
total income, and waived her right to further discovery. Hudson was unable to
point to any income or assets that had not been disclosed at the
time of the divorce. Moreover, the agreement was presumptively fair; as Judge Locascio
noted, Hudson's alimony settlement was more than the pendente lite award and more
than her expenses reflected in her case information statement.
In order for Hudson to subsequently pursue this malpractice action, she had to
disavow her prior contradictory sworn testimony before Judge Locascio. She now claims she
testified falsely in the prior action in order to mislead both the court
and her counsel, neither of whom would have permitted the settlement agreement to
be accepted had she offered the contradictory testimony set forth in her deposition.
It is immaterial whether Hudson
either
deliberately lied in the matrimonial action or
in the malpractice action; her statements are clearly inconsistent and uttered to obtain
judicial advantage.
We agree with Judge Quinn's summary disposition. Hudson's acknowledgements during the voir dire
of her divorce settlement bar her inconsistent statements in the malpractice action. Thus
Hudson's
claim of legal malpractice is barred as a matter of law. If
she was honest in the first proceeding and simply changed her mind after
the settlement was placed on the record, there was no professional malpractice by
Newell. If she intentionally misrepresented in the matrimonial action with "secret intent" to
obtain judicial approval of the agreement and a divorce, as she now claims
she did, she is subject to judicial estoppel of her legal malpractice claim.
Hudson's self-serving behavior is precisely the type of inconsistent judicial position-taking that the
doctrine of judicial estoppel is designed to prevent. To permit this litigant to
assert
a contrary position in the malpractice action presumably to bolster her counterclaim
in an effort to defeat Newell's legitimate claim for counsel fees would result
in a miscarriage of justice and impugn the integrity of the judicial process.
Kimball Int'l, Inc. v. Northfield Metal Prods.,
334 N.J. Super. 596, 606-608 (App.
Div. 2000), certif. denied,
167 N.J. 88 (2001).
Even though Judge Quinn need not have addressed Hudson's expert reports in view
of his ruling on judicial estoppel, he nonetheless did consider both the attorney's
report and the untimely report of the accountant and entertained oral argument on
the significance of the reports. The judge commented on the reports in his
decision, including his assessment that the report of plaintiff's legal expert "tends to
help the other side as opposed to helping [her]." He gave no credence
to the reports, which were purely speculative and contained net opinions, and properly
concluded there was no evidence of malpractice on the part of Newell that
would preclude the granting of summary judgment in his favor. We reject Hudson's
argument that she and her expert witnesses presented sufficient credible proof of Newell's
malpractice to withstand summary judgment on her malpractice counterclaim or Newell's affirmative action
for fees. R. 2:11-3(e)(1)(E).
Affirmed.
Footnote: 1
Adubato's name is misspelled in the caption.
Footnote: 2
Respondent represents in his appellate brief that in December 2000, the Matrimonial Early
Settlement Panel (MESP) recommended limited duration alimony of $4000 per month for three
years. The settlement agreement provided for the same gross amount, varying the monthly
amount and extending the years to four. We note this for informational purposes
only, recognizing that a settlement is not evidentiary and Hudson was under no
obligation to accept the MESP panel's recommendation. See Rule 5:5-5 regarding mandatory participation
in Matrimonial Early Settlement Programs.
Footnote: 3
Hudson's counsel conceded at oral argument that his client did not allege any
impropriety associated with the equitable distribution.
Footnote: 4
Stout v. Stout, supra,
155 N.J. Super. 196.
Footnote: 5
Crews v. Crews, supra, 164 N.J. ll.
Footnote: 6
Ziegelheim v. Apollo, supra,
128 N.J. 250.