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NJ: When is an Attorney a Joint Tortfeasor?

Cameron & Mittleman v. Chapman, N.J. App. Div., March 17, 2010 (Unpublished).

Facts:  Plaintiff sued his former attorneys ("Firm A") for professional negligence, alleging that it lost royalty income for which it had bargained in the sale of certain assets.  Plaintiff claimed that the loss was caused by Firm A’s failure to disclose to Plaintiff the negotiation of a further transfer of the assets by the acquiring company.  Plaintiff alleged that this failure deprived it of the ability to take certain preventive measures.  

Firm A filed a third-party complaint against "Firm B", the attorneys who represented Plaintiffs in a later transaction wherein they structured the agreement governing the sale of the Plaintiffs’ assets to the acquiring company.  Firm A alleged that the loss of the royalties would have been avoided had Firm B structured the agreement to prohibit any further transfer of the assets, or otherwise protected Plaintiffs’ interests with respect to the royalty payments in the event of such transfer.  

Firm B filed a motion to dismiss and argued that it was not a "Joint Tortfeasor" under N.J.S.A. 2A:53A-1 et seq., given that the two firms represented Plaintiffs in "two separate and distinct corporate transactions, that happened at separate points in time."

Issue:  Can attorneys be liable as joint tortfeasors where they represent the client in separate matters at separate times? 

Ruling:  Yes.  In deciding the issue, the Court first noted that the purpose of the Joint Tortfeasor Contribution Law ("JTCL") is "to promote the fair sharing of the burden of judgment by joint tortfeasors and to prevent a plaintiff from arbitrarily selecting his or her victim."

The Court then determined that Firm A and Firm B were responsible for the "same injury," i.e. loss of royalty income.  Moreover, the Court noted that Plaintiffs’ claims against Firm A and Firm B arose at essentially the same time: 

[W]e have concluded that, for the purposes of the JTCL, [Plaintiffs’] putative cause of action against both [Firm A and Firm B] arose at essentially the same time, i.e., the finalization of the transaction…When that transaction was finalized without [Firm B] having structured the agreement to protect against further transfer of the assets and without [Firm A] having disclosed…the negotiations concerning the planned, subsequent sale…the alleged wrongs by the parties to this action that are said to have caused the loss of the royalty income were essentially complete.

Accordingly, the Court held that Firm A could in fact pursue a claim for contribution against Firm B under the Joint Tortfeasor Contribution Law.

Lesson:  In order to show that multiple attorneys are responsible for Plaintiff’s damages under the Joint Tortfeasor Contribution Law, it is necessary to establish that each attorney’s negligence contributed to the "same injury", and that Plaintiff’s cause of action against each of the attorneys arose at the same time.

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Posted in: Joint & Several Liability, New Jersey