Contel Global Marketing, Inc. v. Dreifuss, 2010 WL 374946 (App. Div. Feb. 4, 2010)
NJ Underlying Commercial Action
Facts: Contel, a New Jersey business venture that imported fruit from Chile, believed that participants in its joint venture in Chile were overcharging it by $10 million. Contel, therefore, hired counsel to bring an action in federal court against Aldo Cotera, Clear River Corporation, Nova Agencia DeCarga, and Agricola Punta Arenas Lida. The Complaint was filed on January 17, 2001 and defendants were to be served pursuant to the Inter-American Convention of Letters Rogatory.
DeCarga and Agricola were served in July and September 2002, respectively. Neither submitted responsive pleadings. In December 2002, the magistrate judge directed Contel to move for entry of default. Two days later, however, counsel for the Cotera defendants entered an appearance and filed a Motion to Dismiss. Contel filed a Cross-Motion for Entry of Default. In denying both motions, the judge remarked that, had Contel filed its motion in a timely fashion, and had the Court granted it, Contel could have carried a federal court judgment to Chile for enforcement. Contel, thereafter, retained new counsel and brought a suit for professional malpractice against its former counsel, Dreifuss & Nagel.
Issue: Can the possibility of a default judgment establish the requisite proximate cause to sustain an action for legal malpractice?
Ruling: No. Contel could not sustain the proximate cause element of a cause of action for legal malpractice, since it could plead no facts to establish how defendant’s failure to seek default directly resulted in additional damages and attorney’s fees:
How can any Court really assume that if default has been enetered and even assuming arguendo that a default judgment had been entered, which I think is another leap that the Court would have to take in order to accept plaintiff’s damage argument in this case, that the outcome would have been any different. I just can’t believe that…the Chilean defendants…who ultimately did defend the case vigorously would have just rolled over and accepted a default judgment against them.
Furthermore, the Court noted, Contel could point to nothing that discovery might offer, other than further speculation, to maintain the “necessary causal nexus element” of its legal malpractice claim. The Appellate Division, thus, affirmed the lower court and dismissed Contel’s claims against defendant law firm.
Lesson: Courts will not assume facts on the part of the plaintiff in a professional malpractice suit where he or she cannot show, that more likley than not, a favorable result would have been achieved but for the negligence of the attorney.