Opinion
DOCKET NO. A-5650-11T3
11-17-2016
BERMAN, SAUTER, RECORD & JARDIM, P.C., f/k/a RAMSEY BERMAN, P.C., Plaintiff, v. ART ROBINSON; AOR HOLDINGS, INC.; OWEN PROPERTIES, LLC; and RIGHTER EQUITIES, LLC, Defendants, and DTH15, LLC, Defendant/Third-Party Plaintiff-Appellant, v. HERSH, RAMSEY & BERMAN, P.C.; and KENNETH R. SAUTER, ESQ., Third-Party Defendants-Respondents, and J. DAVID RAMSEY, ESQ.; and EDWARD A. BERMAN, ESQ., Third-party defendants.
Kenneth S. Thyne argued the cause for appellant (Roper & Twardowsky, LLC, attorneys; Mr. Thyne, on the briefs). Kurt W. Krauss, argued the cause for respondents (Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, attorneys; Mr. Krauss, of counsel and on the brief; Robert C. Neff, Jr., on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Lihotz, Fasciale and Nugent. On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1181-08. Kenneth S. Thyne argued the cause for appellant (Roper & Twardowsky, LLC, attorneys; Mr. Thyne, on the briefs). Kurt W. Krauss, argued the cause for respondents (Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, attorneys; Mr. Krauss, of counsel and on the brief; Robert C. Neff, Jr., on the brief). The opinion of the court was delivered by NUGENT, J.A.D.
Defendant third-party plaintiff DTH15, LLC (DTH) appeals from a trial judge's order granting third-party defendants Hersh, Ramsey & Berman, P.C. and Kenneth R. Sauter's trial motion in limine to bar the opinion of DTH's legal malpractice expert, and the consequent dismissal with prejudice of the third-party complaint. The judge who granted the motion did so without conducting a hearing under N.J.R.E. 104, notwithstanding that another judge had denied the identical motion a week earlier after determining the trial judge should hear the expert's testimony and decide whether the expert's opinion was a net opinion. We conclude that under these circumstances it was error to grant the motion in limine without providing the expert's proponent the opportunity to have the expert explain his opinions either at a hearing under N.J.R.E. 104 or at trial. Accordingly, we are constrained to reverse and remand this matter for trial.
This case has a lengthy procedural history. Plaintiff, Berman, Sauter, Record & Jardim, P.C., f/k/a Ramsey Berman, P.C., filed an amended complaint against defendants Art Robinson, AOR Holdings, Inc., Owen Properties, LLC, Righter Equities, LLC and DTH on November 17, 2008, seeking to recover fees for legal services. The following month defendants filed an answer, counterclaim and third-party complaint, alleging plaintiffs and third-party defendants committed legal malpractice in negotiating and preparing an agreement between DTH, as seller, and an entity known as Blue & Gold Development Group, Inc., as buyer, for a fifteen-acre parcel of land in Sussex County.
Following completion of discovery, the pre-trial judge denied third-party defendants' summary judgment motion. Trial was scheduled to begin on Wednesday, May 16, 2012. The pre-trial judge and the parties addressed various legal matters that day.
The next day, Thursday, May 17, 2012, the pre-trial judge learned that he would be unavailable for the entire trial. For reasons not relevant to this appeal, it was determined the pre- trial judge would dispose of the parties' motions in limine, and the parties would report to another judge the following Monday to begin jury selection. One of the in limine motions was the third-party defendants' motion to bar DTH's legal malpractice expert's opinion on the basis that it was a net opinion. The judge denied the motion after considering the expert's report and concluding the report sufficiently set forth the "whys and wherefores" of the expert's opinion. The judge commented that the trial judge could hear the testimony and determine whether the expert's opinions were sufficiently based to be considered by a jury.
The following week, the trial judge decided to revisit the pre-trial judge's ruling. Without taking testimony, the trial judge concluded DTH's legal malpractice expert had rendered a net opinion and barred his testimony. Because DTH was left without an expert to prove its case, the trial judge entered an order dismissing DTH's legal malpractice claim. Thereafter, the parties settled plaintiffs' fee claim.
DTH appealed. An Appellate Division panel reversed on the basis that the trial judge who granted the in limine motion, who was serving on recall, had been on the Appellate Division panel that affirmed the summary judgment in litigation that had arisen among the parties to the underlying real estate transaction. Berman, Sauter, Record & Jardim, P.C. v. Robinson, No. A-5650-11 (App. Div. Feb. 3, 2015). The Supreme Court reversed and remanded the matter to the Appellate Division to address the arguments of the parties on the merits. Berman, Sauter, Record & Jardim, P.C. v. Robinson, 224 N.J. 278 (2016).
To provide the context for the parties' arguments on this appeal, we briefly review the underlying litigation.
In August 2003, DTH and Blue & Gold entered into an agreement in which DTH agreed to sell Blue & Gold a fifteen-acre parcel of land. The agreement was contingent on Blue & Gold obtaining various governmental approvals for the construction of adult housing units on the site. The agreement provided that Blue & Gold had eight months to obtain the approvals, and also provided for two ninety-day extensions. The agreement further provided:
In the event this Agreement shall be terminated as a result of [Blue & Gold's] inability to obtain the Approvals . . . the Deposit shall be returned . . . and [Blue & Gold] shall, upon request by [DTH] assign all its rights it may have with respect to the applications and approvals and any related plans, tests, studies, investigations, reports, etc. to [DTH].
When Blue & Gold was unable to obtain the approvals within the allotted time, refused to close, and disputed DTH's termination of the agreement, the parties became embroiled in litigation. On July 28, 2006, summary judgment was granted in favor of DTH and other defendants. We affirmed the order granting summary judgment. Blue & Gold Dev. Grp., Inc. v. DTH15, LLC, No. A-0278-06 (App. Div. Feb. 13, 2008).
Later that year, plaintiffs in this action filed their complaint to collect legal fees from DTH and others, and DTH filed the counterclaim and third-party malpractice complaint. In support of its third-party complaint, DTH served an expert report authored by Erwin T. Apell. In his report, Apell opined "[i]t is standard practice . . . to include a termination date in a Contract and the failure to include such a termination date would cause an [a]ttorney . . . to fall below the Standard of Care exercised by an [a]ttorney, absent explicit and clear advice to the client regarding the risk of harm which would accompany such an omission." Apell stated that Sauter had committed legal malpractice by failing to assure an explicit termination clause was included in DTH's agreement with Blue & Gold.
Apell recounted the litigation that ensued between Blue & Gold and DTH when, relying on the absence of an express termination clause in the agreement, Blue & Gold filed a complaint which was not dismissed on summary judgment. According to Apell, the consequence was DTH's lost opportunity to market and sell the property. Apell detailed in his report his experience, recounted the facts of the underlying transaction and also stated he relied on depositions of witnesses, whom he identified.
When the action now before us came on for trial, the pre-trial judge, as noted previously, denied third-party defendants' motion in limine to bar Apell's report. The judge concluded his
ruling on the summary judgment motion and the first in limine motion do suggest that this motion should be denied so that the trial court can hear the testimony and determine whether the expert's opinions — which seem to set forth whys and wherefores at least in their reports — [were] sufficiently based so that, again, they would be legally sufficient to be determined or to be considered by the jury.
The following week, when the trial court barred Apell's testimony because his report expressed a net opinion, he stated that the two judges who heard motions in the underlying real estate litigation believed and found as a matter of law that the termination clause in the agreement "was perfectly unambiguous and perfectly clear, and thus it was an equivalent of an express termination clause . . . ." The trial judge further explained that an express termination clause would not have prevented Blue & Gold "from proceeding with its litigation in an attempt to get specific performance of the agreement it had made with DTH." The trial judge pointed out that Apell's report, insofar as its discussion of the "standard practice" allegedly breached, did not refer to any case, legal materials, rules of practice, ethics or evidence." Rather, the report contained merely the assertion as to the standard practice. The trial court also criticized Apell's characterization of certain aspects of the underlying litigation.
On appeal, DTH argues that the third-party defendants' in limine motion was nothing more than a thinly veiled summary judgment motion. DTH points out the in limine motion was not filed a week in advance of the trial as required by the N.J. Court Rules, and there was no opportunity for DTH to present written opposition. The consequence, according to DTH, was that the trial judge "had before him extensive papers filed by Sauter . . . ." Conversely, the court did not have DTH's opposition to the earlier summary judgment motion, which had been considered by the pre-trial judge the previous week when he denied the identical motion in limine.
DTH further argues that appellate courts have repeatedly cautioned trial courts against considering such motions. DTH also argues that the trial judge erroneously applied principles of law concerning net opinions.
Third-party defendants respond that Apell's report relied upon three assumptions that were without factual support, the trial judge correctly analyzed the report under appropriate legal principles, and the report "contained nothing substantiating the alleged 'standard' or 'custom' that every contract has to have an express termination clause. That is a classic net opinion, and contrary to the requirement that an expert identify and provide the basis for a professional standard, rather than a personal bias."
We agree with DTH that the third-party defendants' motion should not have been granted without a hearing. In Seoung Ouk Cho v. Trinitas Reg'l Med. Ctr., 443 N.J. Super. 461, 473 (App. Div. 2015), certif. denied, 224 N.J. 529 (2016), we recently noted the summary judgment rules have been amended over the years to ensure, among other things, litigants have an opportunity to be heard at a meaningful time and in a meaningful manner, a fundamental element of due process. The time requirements of the summary judgment rules serve this purpose. Id. at 474. Here, though not deciding a summary judgment motion, the trial court was deciding a motion that was indisputably dispositive of DTH's claim. The motion had apparently been submitted without appropriate notice, and in any event, DTH had an inadequate opportunity to respond. We consider it fundamentally unfair for one party, on the day a trial is scheduled or shortly before the trial is scheduled to commence, to submit a dispositive motion — regardless of how it is captioned — supported by briefs or other pleadings, when all parties have not had an adequate opportunity to review and respond to such a submission.
There is another reason we are constrained to reverse and remand this matter. Our Supreme Court has cautioned against barring an expert's testimony based upon a report, particularly if doing so will be dispositive of a case, when the expert has not had the opportunity to explain his opinions through testimony:
Although the parties did not request a [Rule] 104 hearing, we hold that it was plain error for the trial court not to conduct an evidentiary hearing in order to determine the reliability of plaintiffs' expert testimony. We fully agree with the Third Circuit's observation in In re Paoli [R.R. Yard PCB Litig.], 916 F.2d [829,] 854 [(3d Cir. 1990)] (internal citations omitted):
The adversarial process upon which our legal system is based assumes that a fact finder will give the parties an adequate opportunity to be heard; if it does not, it cannot find facts reliably. Thus, the detailed factual record requirement, firmly entrenched in our jurisprudence, requires adequate process at the evidentiary stage, particularly when a summary judgment may flow from it.
Moreover, although the need for a hearing is remitted to the trial court's discretion, in cases in which the scientific reliability of an expert's opinion is challenged and the court's ruling on admissibility may be dispositive of the merits, the sounder practice is to afford the proponent of the expert's opinion an opportunity to prove its admissibility at a [Rule] 104 hearing.
[Kemp ex rel. Wright v. State, 174 N.J. 412, 432-33 (2002) (alteration in original).]
The case before us does not involve the scientific reliability of an expert's opinion. Nonetheless, the pre-trial judge here, determined the expert's report contained sufficient detail to avoid a "net opinion" challenge based on its four corners. Moreover, an expert may testify to "the logical predicates for and conclusions from statements made in the report . . . ." McCalla v. Harnischfeger Corp., 215 N.J. Super. 160, 171 (App. Div.), certif. denied, 108 N.J. 219 (1987).
Our opinion should not be construed to suggest the expert either has or has not rendered a net opinion. Rather, we reverse and remand because DTH was deprived of the opportunity to be heard in a meaningful time and in a meaningful manner; and because, as the pre-trial judge stated when he denied the in limine motion, the expert's testimony should have been evaluated.
We leave to the discretion of the trial court, after conferring with the parties, the decision to conduct a N.J.R.E. 104 hearing before or during trial.
Reversed and remanded. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION