Opinion
DOCKET NO. A-3724-13T1
02-12-2016
ORLOFF, LOWENBACH, STIFELMAN & SIEGEL, P.A., Plaintiff-Respondent, v. FRANK ANGRISANI, Defendant-Appellant.
Talbot B. Kramer, Jr. argued the cause for appellant (Freidel & Kramer, P.C., attorneys; Donna L. Freidel and Mr. Kramer, on the briefs). Brian J. Molloy argued the cause for respondent (Wilentz, Goldman & Spitzer P.A., attorneys; Mr. Molloy and Willard C. Shih, of counsel and on the brief; Karin K. Sage, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Alvarez, Ostrer, and Haas. On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-12053-10. Talbot B. Kramer, Jr. argued the cause for appellant (Freidel & Kramer, P.C., attorneys; Donna L. Freidel and Mr. Kramer, on the briefs). Brian J. Molloy argued the cause for respondent (Wilentz, Goldman & Spitzer P.A., attorneys; Mr. Molloy and Willard C. Shih, of counsel and on the brief; Karin K. Sage, on the brief). PER CURIAM
Defendant and counterclaimant Frank Angrisani appeals from the November 26, 2013 summary judgment dismissal of the remaining count of his legal malpractice counterclaim against plaintiff Orloff, Lowenbach, Stifelman & Siegel, P.A. (OLSS), and Larry Orloff, individually, and the January 23, 2014 order denying reconsideration of that decision. We affirm.
I.
On December 14, 2010, OLSS sued Angrisani for approximately $240,000 in attorney's fees and costs. In addition to an answer, Angrisani filed a counterclaim against Larry Orloff, alleging Orloff committed legal malpractice in his representation of Angrisani in complex commercial litigation. Allegations of fraud originally included in the counterclaim were earlier dismissed by way of summary judgment, which is not appealed. The parties eventually reached a settlement not disclosed on the record on the claim for legal fees.
II.
Angrisani, an expert in the field of worldwide money transfers, developed a business plan that resulted in his creation of a wholly owned corporation, Axxa Group, Inc. (AGI), in which he deposited his intellectual property and related business plan information. After forming AGI, he initiated a search for venture capital partners willing to invest in the new company.
Eventually Angrisani entered into an agreement with Financial Technology Ventures, L.P. (FTV). Angrisani continued to serve as chief executive officer and president of AGI, and was a member of its board of directors.
In order to develop the business, FTV approved AGI's acquisition of a Brazilian money transfer company, Uno Money Transfer Co. (Uno). Angrisani's authorization to participate in the ensuing due diligence inquiry, prior to the company's acquisition, is disputed. It is not disputed that the company was acquired in November 2003. AGI subsequently changed its name to Nexxar Group, Inc. (Nexxar). Angrisani turned his AGI stock over to the new venture.
The circumstances which resulted in Angrisani's retention of OLSS and Orloff as counsel are not entirely clear from the record, but certainty as to the details of the underlying suit is not required for purposes of our decision. After acquisition, it was learned Uno's operation was illegal under Brazilian law, and possibly under American law as well. When Angrisani advised the Nexxar board of Uno's illegality, he claims he was terminated as a result.
From 2006 to 2010, OLSS, and Orloff individually, represented Angrisani in lawsuits against FTV and Nexxar seeking to recover damages for Angrisani's significant financial losses as a result of Nexxar's financially disastrous acquisition of Uno, as well as from his termination of employment. The law firm withdrew from representing Angrisani in 2010. With new counsel, Angrisani settled his claims against FTV and Nexxar for approximately $800,000.
In support of his counterclaim in this case, Angrisani retained four experts. He alleges the expert opinions demonstrate that OLSS failed to meet the professional standard of care and the extent of damages in the underlying litigation.
For example, the report prepared by Frank D. Tinari, a forensic economist, stated that Angrisani had incurred $700,000 in legal fees for the litigation and arbitration of various actions arising from his involvement with Nexxar, and for replacement counsel in those proceedings. The Tinari report, captioned "a written appraisal of the economic loss sustained by Frank Angrisani[,]" concluded that Angrisani had sustained $11,583,180 in economic losses, including contract earnings, loss of investment, litigation fees, and interest.
Contract earnings losses were calculated by projecting Angrisani's earnings as if he had not been terminated. The report included such projected returns for 2005, 2006, and 2007. Tinari estimated $632,405 of economic loss attributable to lost contract earnings alone.
Investment loss was calculated by determining the liquidation value of Angrisani's stockholdings in Nexxar and projected earnings had Nexxar not failed because of the acquisition of Uno. Adjusting for various liabilities, Tinari opined that Angrisani suffered $10,806,192 in investment losses. We discuss other expert reports in more detail later in this opinion.
In deciding to dismiss the legal malpractice counterclaim, the trial judge found that none of the expert reports "performed the requisite analysis [of] what constitutes the fair settlement value of Angrisani's claims or what would have been the successful outcome of the underlying case, absent the alleged malpractice." He further found that Tinari's report, by performing liquidation analysis of Angrisani's share as of a relevant date, neither supported the diminished settlement value theory which formed the first grounds for recovery, nor the ultimate success on the merits theory. Because he found none of the reports demonstrated either the fair settlement value of the claims, or the likely outcome absent the alleged malpractice, the judge reasoned the motion for summary judgment had to be granted because "[w]hen no such testimony is offered, a legal malpractice claim must be dismissed."
With regard to Angrisani's claim that the firm and Orloff had failed to engage in discovery or depose witnesses to his advantage, the judge noted that Angrisani failed "to identify any documents that would have substantially strengthened his case in the face of the summary judgment [in the underlying lawsuit] which resulted in the alleged deficient settlement." Angrisani had suggested eight individuals to be deposed. OLSS deposed five of the eight proposed witnesses; each provided unfavorable testimony. When asked in deposition what the remaining potential witnesses would have added, Angrisani had no response other than "he could only speculate[.]"
The judge opined that Orloff's decision not to continue to engage in fruitless discovery was a strategic decision which "falls under the aegis of the attorney judgment rule." He further opined that Angrisani's dissatisfaction with strategic decisions could not constitute a basis for denial of the motion for summary judgment. In the absence of expert or other proffered evidence with regard to causation or damages, the judge concluded that summary judgment had to be granted to OLSS as a matter of law.
On appeal, Angrisani raises the following claims of error:
POINT I. SUMMARY JUDGMENT WAS INAPPROPRIATE WHERE MATERIAL ISSUES EXISTED MANDATING A JURY TRIAL.
POINT II. THE TRIAL COURT IMPROPERLY CONCLUDED THAT NO COGNIZABLE DAMAGES WERE CAUSED BY THE RESPONDENT'S MALPRACTICE.
POINT III. THE TRIAL COURT'S FAILURE TO GRANT RECONSIDERATION OF THE GRANT OF SUMMARY JUDGMENT WAS ERROR.
III.
In order to establish legal malpractice, a claimant must demonstrate that (1) an attorney-client relationship creating a duty of care existed, (2) the duty was breached, (3) the breach proximately caused damages, and (4) actual damages were incurred. Sommers v. McKinney, 287 N.J. Super. 1, 9-10 (App. Div. 1996).
Actual damages are damages that are "real and substantial as opposed to speculative." Grunwald v. Bronkesh, 131 N.J. 483, 495 (1995). Damages must be supported by more than "conjecture, surmise or suspicion." 2175 Lemoine Ave. Corp. v. Finco, Inc., 272 N.J. Super. 478, 488 (App. Div.) certif. denied, 137 N.J. 311 (1994). Generally, "the measure of damages is what result the client would have obtained in the absence of attorney negligence." Cortez v. Gindhard, 435 N.J. Super. 589, 604 (App. Div. 2014). The client must prove by a preponderance of the competent, credible evidence that "he or she would have prevailed or would have won materially more . . . but for the alleged substandard performance." Ibid. (alteration in original) (quoting Lerner v. Laufer, 359 N.J. Super. 201, 221 (App. Div.), certif. denied, 177 N.J. 223 (2003)). A client must show that "the missed opportunity had actual value." Id. at 604-05.
"In reviewing a grant of summary judgment, we apply the same standard as the motion judge." Fedor v. Nissan of N. Am., Inc., 432 N.J. Super. 303, 311 (App. Div. 2013) (citing EMC Mortg. Corp. v. Chaudhri, 400 N.J. Super. 126, 136 (App. Div. 2008)), certif. denied, 217 N.J. 52 (2014); see also Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). We consider whether the evidence, in the light most favorable to the non-moving party, suffices to "permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 231 (App. Div.), certif. denied, 189 N.J. 104 (2006). Our review is plenary. See ibid.
IV.
We first address Angrisani's contention that the Law Division judge improperly granted summary judgment because the expert opinions he provided were sufficient to raise material issues of fact requiring trial. We disagree, and conclude that the reports neither establish a breach of the duty of care or damages. The expert opinions do not connect the benefits that would have inured to Angrisani to the additional steps he claims Orloff should have taken. We note additionally that the record is devoid of any identification of the specific benefits that would have been gained had discovery been extended or additional depositions taken.
Angrisani contends he is owed damages under an insufficient settlement theory, in other words, that he would have settled for more but for his attorney's negligence. Alternatively, Angrisani asserts that he would have prevailed at trial but for his attorney's missteps, and seeks damages in the amount of the value of the claims under the trial-within-a-trial theory as well.
In a malpractice action based on an "insufficient settlement" theory, expert testimony is required to establish the value of the claim. Kaplan v. Skoloff & Wolfe, P.C., 339 N.J. Super. 97, 103-04 (App. Div. 2001). "Without expert testimony, a jury . . . does not have the knowledge, training, or experience to decide the settlement value of [a claim]." Kelly v. Berlin, 300 N.J. Super. 256, 269 (App. Div. 1997).
In other words, expert testimony is necessary to enable a jury to determine whether the alleged malpractice resulted in a settlement figure less than the fair value of the case. Kaplan, supra, 339 N.J. Super. at 104. Here, Angrisani has not provided any expert estimation of the fair settlement value of the underlying claim, nor does he address the requirement that fair settlement value be supported by expert testimony. He does not even identify which expert opinion fulfilled that requirement. None of the experts adequately explain how Orloff's conduct resulted in diminution in settlement value. Moreover, the matter was resolved after the law firm withdrew its representation of Angrisani.
Thus we concur with the motion judge's view concerning the lack of evidence of proximate cause and actual damages. "[A]n attorney is only responsible for a client's loss if that loss was proximately caused by the attorney's legal malpractice[,]" that is, "the negligent conduct is a substantial contributing factor in causing the loss." 2175 Lemoine Ave. Corp, supra, 272 N.J. Super. at 487. That burden is not met by mere "conjecture, surmise or suspicion." Id. at 488.
"Actual damages . . . are real and substantial as opposed to speculative." Grunwald, supra, 131 N.J. at 495. The measure of damages is the result the client would have obtained in the absence of attorney negligence. See Garcia v. Koslov, Seaton, Romanini & Brooks, P.C., 179 N.J. 343, 358 (2004). Proof of that figure is simply missing.
Nor did Angrisani present sufficient evidence of the likelihood of success at trial. In order to prove the harm inflicted by legal malpractice, a claimant may prove the harm by conducting a "suit within a suit." Id. at 358. This procedure simulates the result that would have occurred but for the attorney's malpractice. Ibid. Through this process, a client demonstrates that he would have obtained a favorable judgment, the amount of the judgment, and its "collectability[.]" Ibid.
Alternatively, a trial court may employ a procedure whereby an expert testifies as to the anticipated trial outcome, "as a matter of reasonable probability," but for the alleged malpractice. Id. at 361. The expert would testify as to his or her prediction of the outcome of the case in light of the expert's experience and expertise. Ibid.
Here, Angrisani advocates for proof by expert testimony rather than the "suit within a suit." (Ab30-32). Under either legal malpractice theory Angrisani is required to present proof as a "matter of reasonable probability" of the outcome at trial if the alleged malpractice had not occurred. Garcia, supra, 179 N.J. at 358, 361. Such proofs are absent in the expert reports.
One of Angrisani's experts asserted the trial was "highly likely to yield a judgment in . . . Angrisani's favor," but failed to analyze with specificity the evidence that would have been discovered had the law firm properly represented Angrisani, or how that evidence would have affected the outcome at trial. The expert opined:
But for the negligent failures of Mr. Orloff and his firm to prosecute the case, to obtain critical documents in a timely way, to act on those documents when obtained by moving to reinstate the high-value fraud claims based on the previously unavailable information in those documents, to depose numerous witnesses who would have supported the fraud claims by testifying that Mr. Angrisani's dismissal was made on pretextual grounds and his purchase of $500,000 worth of additional stock in Nexxar was made in reliance on fraudulent misrepresentations contained in the stock purchase agreement itself, Mr. Angrisani's claims would have been worth the millions of dollars Mr. Orloff admitted he thought they were worth. It is more likely than not that even the filing of such an application in conjunction with the production of such evidence, or even merely the identification of witnesses who could have provided such testimony, would have greatly increased the settlement value of Mr. Angrisani's claims to an amount commensurate with Mr. Orloff's initial estimation or resulted in a trial that was highly likely to yield a judgment in Mr. Angrisani's favor.
The lack of reasoned explanation for the conclusion makes this opinion the classic "net opinion" which is inadmissible and offers no support to an injured claimant. See Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 372 (2011). An expert must give both whys and wherefores of his opinion, and that did not occur here. See Rosenberg v. Tavorath, 352 N.J. Super. 385, 401 (App. Div. 2002).
Clearly, Angrisani suffered significant investment losses as a result of Nexxar's acquisition of Uno. But he fails to connect, as we have previously said, his failure to recoup those losses from FTV or Nexxar to his law firm's negligent conduct under any theory, be it insufficient settlement or trial-within-a-trial. We do not know the reason additional documents should have been obtained through discovery, or the reason they would have resulted in a more favorable outcome. We do not know what testimony the undeposed witnesses Angrisani named would have offered to advance his cause. Therefore, the trial court properly granted summary judgment.
V.
Having failed to establish either proximate cause or damages under either a diminished settlement theory or a trial within a trial theory, Angrisani's appeal of the judge's denial of reconsideration must also fail. Reconsideration is granted where the court (1) "expressed its decision based upon a palpably incorrect or irrational basis," or (2) "did not consider, or failed to appreciate the significance of probative, competent evidence." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (citation omitted). Reconsideration is a matter within the sound discretion of the court. Ibid. As required under Rule 1:49-2, the motion must specify those matters which "the court has overlooked or as to which it has erred . . . ."
In the application, as well as on appeal, Angrisani reiterates his original arguments, contending that the trial judge simply misapplied the law. We do not agree. The trial court did not abuse its discretion in granting summary judgment, nor did it abuse its discretion in denying reconsideration.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION