SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-5312-97T2
ROMANO DINIZO and R.E.P.
PARTNERSHIP,
Plaintiffs-Respondents,
v.
WILLIAM B. BUTLER,; MATTHEW T.
RINALDO; NEIL F. HOOLEY; DONALD T.
DIFRANCESCO AND GERALD C. KELLY;
HOLEY, BUTLER, DIFRANCESCO & KELLY
(a partnership;)
Defendants-Appellants,
and
JOHN MADDELENA and ANTHONY D.
RINALDO, JR.,
Defendants-Respondents,
and
RINALDO AND RINALDO
(P.C.); JOHN DOE I
and JOHN DOE II,
Defendants.
____________________________________________________
Argued September 15, 1998 - Decided September
30, 1998
Before Judges Muir, Jr., Keefe and Coburn.
On appeal from the Superior Court of New
Jersey, Law Division, Union County.
Meredith Kaplan Stoma, argued the cause for
appellant William B. Butler (Morgan,
Melhuish, Monaghan, Arvidson, Abrutyn &
Lisowski, attorneys; Richard E. Arvidson, of
counsel; Ms. Stoma, on the brief).
Robert J. Reilly, III, argued the cause for
respondents John Maddelena and Anthony D. Rinaldo
(Fitzpatrick, Reilly, Supple & Gaul, attorneys;
Mr. Reilly, on the brief).
Anthony V. D'Elia, argued the cause for
respondent Romano Dinizo and R.E.P.
Partnership (Mr. D'Elia, of counsel and on
the brief).
The opinion of the court was delivered by
KEEFE, J.A.D.
In this legal malpractice case we granted defendant William
Butler's motion for leave to appeal from an interlocutory order
of the Law Division.See footnote 1 The Law Division judge held that Olds v.
Donnelly,
150 N.J. 424 (1997), requires the tolling of the six
year statute of limitations for a malpractice claim against an
attorney until litigation in the underlying case brought by the
client against third parties has been completely adjudicated. We
hold that it does not and reverse the order under review.
The relevant facts are undisputed. Plaintiffs, Romano
Dinizo and R.E.P. Partnership, engaged defendant Butler to
represent them in a real estate transaction in which Anthony and
Jean Ciufo were the sellers, and plaintiffs were the purchasers
of real property located in Branchville. Title to the property
closed on July 20, 1988. Shortly after the closing, plaintiffs
discovered certain deficiencies in the title. Plaintiffs then
engaged defendant John Maddelena to represent them in a suit
against the sellers and Anthony Ciufo's parents, Frank and
Josephine Ciufo, who had a mortgage on the subject property
(hereafter referred to as the underlying litigation). Plaintiffs
filed the complaint in the underlying litigation on October 28,
1990, seeking a corrected deed and damages from the sellers of
the property and an order canceling the mortgage held by Frank
and Josephine Ciufo. Plaintiffs' complaint in the underlying
litigation was dismissed on August 26, 1992, when Maddelena
allegedly failed to respond to the Ciufos' motion for summary
judgment.
Plaintiffs filed their complaint against defendants Butler,
Maddelena, and their respective law firms on June 3, 1997.
Butler moved for summary judgment on the ground that the six year
statute of limitations had run. He contended that plaintiffs
knew or should have known of their damages stemming from the 1988
real estate transaction, as well as his alleged fault, at least
as early as October 28, 1990, the date on which plaintiffs filed
the underlying litigation. In response to the motion, Romano
Dinizo certified that Maddelena never informed him that Butler
may have been responsible in any way for the title deficiencies
that plaintiffs attempted to correct in the underlying
litigation. Dinizo also denied that he attributed any fault to
Butler for those problems.See footnote 2 Dinizo maintained that it was not
until December 1996, when he received an expert report from
Edward Wacks, that he learned of Butler's negligent
representation.
There were two hearings on the motion during which the
motion judge and attorneys discussed the interrelationship of
Olds, supra, and Grunwald v. Bronkesh,
131 N.J. 483 (1993).
Ultimately, the motion judge ruled that because of the Supreme
Court's decision in Olds v. Donnelly, supra,
[I]t doesn't matter that [the cause of action
against Butler] may have already accrued
under a strict Statute of Limitations
purposes [sic][.] [F]or all the reasons that
are asserted in Donnelly for not requiring
and recognizing the obligation of the client
to sue the attorney in Olds versus Donnelly
those same reasons would preserve the Statute
of Limitations for the client against the
attorney and would not have to be asserted
until after the determination of the
underlying litigation.
The judge further ruled that a new six year period would begin to
run after the termination of the underlying litigation. The
judge felt compelled to so rule because of "policy" reasons
stemming from the rationale of the Olds opinion, i.e., "to
protect the attorney/client relationship until after the
determination is made against the other party [in the underlying
suit]." Clearly, the motion judge assumed for the purpose of his
opinion that the cause of action against Butler accrued at some
time before termination of the underlying suit, otherwise there
would be no need to discuss either Grunwald or Olds since
plaintiffs commenced this litigation within six years of the
termination of the underlying litigation. See Olds, supra, 150
N.J. at 439; DiTrolio v. Antiles,
142 N.J. 253, 273-74 (1995)
(holding that party joinder as required by the entire controversy
doctrine is irrelevant if the cause of action has not accrued
before the underlying litigation is finalized).
We make the same assumption for the purpose of this opinion.
With that assumption in mind, we note that the specific holding
of Olds was that "the entire controversy doctrine no longer
compels the assertion of a legal-malpractice claim in an
underlying action that gives rise to the claim." Olds, supra,
150 N.J. at 443. The rule, applied to this case, simply means
that plaintiffs were not obliged to join Butler as a party in the
underlying litigation even though the cause of action against
Butler may have accrued either before or during that litigation.
We can find nothing in the Olds opinion that requires
attorneys to be exposed to essentially a twelve year statute of
limitations as a quid pro quo for being relieved from the
requirements of the party joinder rule announced in Circle
Chevrolet v. Giordano, Halleran & Ciesla,
142 N.J. 280 (1995);
cf. R. 4:30A, R. 4:5-1(b), and R. 4:29-1(b) (effective September
1998) (eliminating mandatory party joinder but requiring a party
to disclose the identity of a non-party who has "potential
liability" stemming from the same transactional facts). It is
apparent to us that by taking the entire controversy doctrine out
of legal malpractice litigation, we are required now to trace the
route back in time to the practice recognized by the Court prior
to Circle Chevrolet v. Giordano, Halleran & Ciesla, supra. The
path leads us inexorably to Grunwald v. Bronkesh,
131 N.J. 483
(1993).
In Grunwald, as in this case, a real estate transaction led
to a malpractice claim against the transactional attorney. In
barring the client's claim, the Supreme Court made it clear that
a cause of action for legal malpractice may accrue before the
underlying litigation is terminated against the client. Id. at
495-96. In that case, as here, the client argued that his cause
of action against his attorney must be tolled until the
exhaustion of the appellate process in the underlying litigation.
The Court disagreed and explained:
Delaying the accrual of a cause of action
until the appellate process on the underlying
claim has been completed undermines the
principal consideration behind statutes of
limitations: fairness to the defendant. ...
A system that would permit a plaintiff to
commence a malpractice claim fifteen years
after an attorney renders allegedly negligent
advice is simply unacceptable, yet that
result might very well occur, assuming a six-year limitations period for the underlying
contract claim, and an estimated three years
for the trial and appeal of that claim, and
another six-year limitations period for the
malpractice claim. Such a potential outcome
would frustrate the purposes of limitations
periods: to protect against the litigation of
stale claims; to stimulate litigants to
prosecute their claims diligently; and to
penalize dilatoriness.
[Id. at 496-97.]
More importantly and directly on point with the issue now before
us, the Court acknowledged potential difficulties arising from
the possibility that a legal malpractice claim might have to be
filed during the pendency of the underlying action brought by the
client against third parties. The remedy, however, was not to
extend the statute of limitations until the underlying litigation
was finalized, but rather to have the client file the malpractice
complaint and stay it pending the outcome of the underlying
litigation. The Court explained that, "because a cause of action
on a legal-malpractice claim may accrue while the underlying
claim is being litigated, a plaintiff can avoid maintaining
inconsistent positions by moving to stay the malpractice suit
pending completion of the appeal on the underlying action." Id.
at 499-500.
We find nothing in Olds, supra, Karpovich v. Barbarula,
150 N.J. 473 (1997), or Donohue v. Kuhn,
150 N.J. 484 (1997), that
even hints at the Court's disquietude with the position it took
in Grunwald. Indeed, Grunwald was relied upon heavily by the
Olds Court. Olds v. Donnelly, supra, 150 N.J. at 436-37.
The judgment under review is reversed. The matter is
remanded for further proceedings, including a LopezSee footnote 3 hearing to
determine the actual accrual date of the cause of action against
Butler.
Footnote: 1 Butler was a partner in the firm of defendant Holey, Butler, DiFrancesco & Kelly, a partnership. The individual partners, other than Butler, are also named defendants. All references herein shall be to Butler in the singular since the firm's and the partners' liability is derivative. Footnote: 2 Dinizo certified that he engaged Maddelena to represent him because he was purchasing the interest of his partners at the same time that he was attempting to correct the title problems. Because his partners were related to one of Butler's law partners, Dinizo believed he needed independent representation. Thus, plaintiffs did not engage Maddelena because of dissatisfaction with Butler. Footnote: 3 Lopez v. Swyer, 62 N.J. 267 (1973).