NJ: Underlying estate accounting
FACTS: The underlying matter was a probate proceeding where the beneficiaries challenged an accounting filed by the Executor. The challenge sought to contest the Executor’s sale of 2 New York Mercantile Exchange seats in order to pay attorneys fees, which were also contested. During the underlying proceeding there were allegations that the sale of the seats came about as a result of the bad advice of the Executor’s lawyer, Mary F. Thurber, who was primarily interested in seeking to have her fees paid notwithstanding that the value of the seats were experiencing rapid appreciation of value. Their sale to pay her fees, when other arrangements for payment could have been made, was allegedly malpractice and caused enormous financial damage to the beneficiaries. On the eve of trial in the estate matter, the Executor’s attorney moved to intervene in the proceeding to defend herself against the malpractice claim, believing she could prevail. (At the time she was being considered for appointment to the judiciary, which, though delayed, ultimately came about.). The beneficiaries withdrew their malpractice claims and the accounting proceeding was settled. Then, the beneficiaries filed this legal malpractice action. Thurber moved to dismiss the malpractice action on the grounds that the entire controversy doctrine would bar the re-litigation of the claims. The trial court granted Thurber’s motion to dismiss. The Appellate Division reversed. The Supreme Court affirmed the reinstatement of the malpractice claims against Thurber, who is now a sitting Superior Court Judge.
ISSUE: Does the entire controversy doctrine bar the re-filing of a subsequent legal malpractice action where the malpractice claims had been asserted in an underlying probate accounting action, which then gets settled?
RULING: No. The underlying accounting proceeding addressed the conduct of the executor, not the conduct of the Executor’s attorney. Here, the claims actually pled and prepared for the probate proceedings did not encompass a legal malpractice claim. No affidavit of merit was submitted in support of such a claim. The expert reports that were submitted in the accounting action were framed to address the Executor’s actions, not to support a malpractice claim against the Estate’s attorney. Plaintiffs did not have a “full and fair opportunity to litigate those claims .” Therefore, it would not be equitable to bar the subsequent malpractice action against the Executor’s attorney.
LESSON: The entire controversy doctrine requires the joinder of all claims and parties in a single lawsuit at the pain of any claim not brought being barred in a subsequent action. Legal malpractice claims, however, are an exception to the doctrine. See, Olds v. Donnelly, 150 NJ 424 (1997). This malpractice case clarifies that the exception applies to underlying accounting claims in probate proceedings.