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Collectability: An Essential Element of Proximate Cause

Chimento v. Parsons, Powell & Lane, LLC, Superior Court of New Jersey, Appellate Division, January 5, 2010

Facts:  Plaintiff brought suit against a casino after his chair collapsed and, allegedly, caused him to sustain back and shoulder injuries.  Although Plaintiff’s attorney in the underlying matter sued the casino for negligent maintenance, he failed to assert a claim against the manufacturer of the chair.  After the statute of limitations expired, Plaintiff’s attorney learned of the identity of the manufacturer. 

Eventually, Plaintiff retained another attorney in the underlying matter who successfully filed an amended complaint naming the manufacturer and obtained default judgment for approximately $300,000.  Upon learning of the judgment, Plaintiff’s former attorney asserted his right to compensation.  Plaintiff, however, elected to bring the instant action in light of his former attorney’s failure to name the chair manufacturer in the initial complaint. 

Plaintiff’s former attorney moved to dismiss arguing that the chair manufacturer had ceased to exist as a legal entity before Plaintiff’s accident.

Issue:  Can a former client successfully pursue a legal malpractice action based on his attorney’s failure to pursue claims against a defunct entity? 

Ruling: No. 

The Court noted that the chair manufacturer and its successor in interest had ceased to exist as financially viable entities before Plaintiff’s accident.  The assets of both entities had been sold by a court appointed receiver for the benefit of the manufacturers’ creditors. 

[E]ven assuming that [the former attorney] deviated from the standard of professional competence expected of attorneys in this State by failing to name [the manufacturer] as a defendant in Plaintiff’s underlying cause of action, such a deviation was legally inconsequential because [the manufacturer] was not a legally or commercially viable entity at the time of Plaintiff’s accident.

Lesson: Plaintiff cannot pursue a malpractice action for his attorney’s failure to name a defendant, unless he can first prove that he had a possibility of collecting on a recovery against that defendant.  Otherwise, as a matter of law, the attorney’s alleged negligence is not a proximate cause of any damages sustained by his client.

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Posted in: New Jersey, Proximate Cause