Johnson v. Schragger, Lavine, Nagy & Krasny, 340 N.J. Super. 84 (App. Div. 2001)
NJ Underlying Commercial Action
Facts: Johnson hired the Defendant law firm to represent him in a dispute concerning the sale of a horse. The matter was settled, but the buyer refused to comply with the settlement. Shortly thereafter, the attorney handling the case left the Defendant law firm, but continued to represent the client in a motion to enforce the settlement. His motion was granted and an “Order Enforcing Terms of Settlement” was signed entering judgment in favor of the client against the buyer. Months later, the buyer sold a condominium and the judgment was deducted from the gross amount of the sale. One year later, the buyer filed for bankruptcy and the client’s judgment against him was discharged and the judgment was never actually satisfied from the proceeds of the sale.
The client sued the Defendant law firm and the attorney who was handling the case for malpractice, alleging that they were negligent in the conduct of the litigation between him and the buyer. More specifically, the client alleged that the attorney and the firm had failed to properly and promptly obtain and docket the judgment against the buyer. The client’s claim against the law firm was dismissed on summary judgment, and the client subsequently appealed on the grounds that the firm’s conduct was the proximate cause of his loss.
Issue: Was the law firm’s negligence the proximate cause of the damages sustained by the client?
Ruling: The Appellate Division affirmed the summary judgment and held that the law firm’s failure in obtaining the judgment earlier was not a substantial factor in the discharge of the judgment against the buyer, and therefore, was not the proximate cause of the client’s damages. The Court found that, because the law firm had only represented the client for 83 days before the attorney left the firm and continued to represent the client long after he left, nothing the firm did was a substantial factor in bringing about the loss to the client, and therefore, the firm was not a proximate cause of any damages sustained by the client.
Lesson: The Court held that the traditional jury charge on proximate cause as a continuous sequence is not appropriate for legal malpractice cases in which there are concurrent independent causes of action. In such cases, a jury must be instructed to determine whether the negligence was a substantial factor in bringing about the ultimate harm. In making that determination, the duration of the representation is a valid consideration.