Facts: Plaintiff retained Attorney 1 to represent it in a real-estate purchase. After the transaction failed, Plaintiff retained Attorney 2 to recover its deposit from seller. Attorney 2 failed to add a claim for legal malpractice against Attorney 1 in the suit. Plaintiff then hired Attorney #3, the Defendant, to file a malpractice claim against Attorney 1, but the suit was dismissed because he should have been sued in the case against the seller Attorney #2. Plaintiff then filed a malpractice complaint against Attorney 2 for failure to include Attorney 1 in the suit against the seller, but the suit was dismissed because he should have been sued in the case against Attorney 1. Plaintiff then sued Defendant and his law firm for failing to add a claim against Attorney 2 to the suit against Attorney 1. Defendant and his law firm added Attorney 2 and Attorney 1 to the case under a New Jersey statute providing for indemnification and contribution by those also responsible for Plaintiff’s damages.
Issue: Could the defendant attorney seek reimbursement for damages paid to the Plaintiff from the lawyers the plaintiff previously retained to try to recover its deposit?
Ruling: In reversing the lower court, the Appellate Division held that an attorney could seek to recover from the lawyers Plaintiff previously retained to try to recover its deposit, based on the following factors:
1) The Defendants’ liability and the predecessor attorney’s potential liability to the plaintiff were all for failing to protect the interest of the Plaintiff.
2) All liability in the case followed from Attorney 1’s potential malpractice in protecting the Plaintiff’s interest in its contract with the seller.
3) Defendant was liable for failing to protect Plaintiff’s claim against Attorney 2, who was potentially liable for failing to protect Plaintiff’s claim against Attorney 1, who was potentially liable for failing to protect Plaintiff’s interest against the seller.
Lesson: When attorneys are sued for failing to protect the plaintiff’s interest by a subsequent lawyer for that plaintiff, the attorneys remain potentially liable to the paying defendant lawyer for the extent of the damages to the plaintiff that they caused.
Editor’s Note: This summary is posted for educational purposes only, as the Appellate Division decision summarized above was reversed by the NJ Supreme Court. See, 182 N.J. 64,76 (2004). (PDF)
The Supreme Court stated:
…we are dismayed by the cottage industry of litigation that was spawned by a rather commonplace real estate transaction that occurred eighteen years ago. By this opinion, we bring this matter to an end today. We, therefore, hold that, under the circumstances of this case, the prior tortfeasors are not liabile for statutory contribution to the subsequent tortfeasor because the prior and subsequent tortfeasors were not jointly or severally liable to plaintiff for the same cause of action. We further hold that the subsequent totfeasor cannot claim statutory contribution form the prior tortfeasor inasmuch as the "injury" inflicted by the prior tortfeasrn is not the "same injury" as the one inlficted by the subsequent tortfeasor.