Opinion
Civil No. 01-2600 (JBS).
December 19, 2003
George W. McCarter, Esquire, McCarter Higgins, Esqs., Red Bank, NJ, Attorney for Plaintiff Carey Strom.
Lawrence C. Welsh, Esquire, Media, PA, Attorney for Defendants Barnett Barnett, P.C. and Peter P. Barnett and Richard C. Clarkson, Jr., Esquire, Woodlyn, PA, Attorney for Defendant Edwin B. Barnett.
OPINION
This matter comes before the Court upon defendant Edwin B. Barnett's motion for relief from judgment of this Court's Memorandum Opinion of October 31, 2002, see Strom v. Barnett Barnett, P.C., et al., No. 01-2600 (D.N.J. October 31, 2002), in which the Court granted Plaintiff Casey Strom's motion for summary judgment.
For reasons discussed herein, defendant's motion will be granted upon certain conditions, and the judgment against Edwin B. Barnett will be set aside due to his excusable neglect under Rule 60(b)(1), Fed.R.Civ.P.
BACKGROUND
In 1995, Plaintiff retained Barnett Barnett to represent him in certain matters to be litigated in New Jersey against Plaintiff's former attorney and financial manager, Gary Friedmann, a New Jersey lawyer. Plaintiff sought to bring suit for amounts due to Plaintiff on a note, to compel Friedmann to place a mortgage on property securing the note, and for professional malpractice and fraud. At that time, the defendant firm maintained an office in Cherry Hill, New Jersey, and Defendant Edwin B. Barnett was a member of the New Jersey bar.
Plaintiff alleged that Defendant had advised Plaintiff to file suit in Superior Court, Burlington County, on his claim on the note, and to file a separate suit in federal court for the malpractice and fraud claims while the Superior Court action was still pending. In Strom v. Friedmann, Civil No. 96-209 (JBS), this Court on September 26, 1996, dismissed Plaintiff's action for malpractice and fraud, as his two separate actions in federal and state courts were in derogation of the entire controversy doctrine. On November 13, 1997, the United States Court of Appeals for the Third Circuit affirmed this Court's dismissal.
Plaintiff ultimately prevailed on his suit in state court, as the Superior Court, Burlington County, ordered on June 26, 1996, that judgment be entered in favor of Plaintiff. Friedmann appealed, and the Appellate Division affirmed the trial court decision on liability, ordering Judge Gottlieb to recalculate attorneys' fees and to allow certain interest on offsets claimed by Defendants. On remand, Judge Gottlieb issued a letter opinion, awarding Plaintiff "$177,055 (as of June 16, 1996)." J. Gottlieb Letter Op., 10/19/98. Judge Gottlieb asked Mr. Barnett to prepare and submit under the five-day rule an Amended Judgment and Order to Provide Mortgage. Id.
The Amended Judgment and Order to Provide Mortgage was filed on November 9, 1998, in the Superior Court. See Amended Judgment Order, 11/9/98. The Order provided that "[d]efendants shall prepare and deliver by the 20th day of November, 1998 to plaintiff's attorneys, Barnett and Barnett, a mortgage . . . in the principal sum due of $177,055.00 plus interest at nine percent per annum, and the full amount to be due and payable on November 20, 1998." Id. ¶ 2. Although the Order provides for interest at nine percent, it does not provide that interest shall run from the date of June 26, 1996, as indicated by Judge Gottlieb's letter opinion.
Defendants satisfied the mortgage in February 2001, including interest only from November 9, 1998. Plaintiff asserted that Judge Gottlieb ruled orally on the record in February 2001, that Defendants could satisfy the Amended Judgment by including interest only from November 9, 1998, because the Amended Judgment did not include interest from June 21, 1996, and Plaintiff was not entitled to amend the judgment because Mr. Barnett did not seek relief from that omission in the Amended Judgment within a year after its entry in accordance with N.J. Ct. R. 4:50. Judge Gottlieb's Order of February 7, 2001 thus awarded a payment of $196,464.02, which included interest from November 9, 1998, to Plaintiff. See Order, 2/7/01, ¶ 4.
Plaintiff Strom filed the underlying action on June 1, 2001, asserting legal malpractice against Defendants. While Lawrence C. Welsh, Esq. filed an appearance and Answer on behalf of all Defendants and appeared at a September 11, 2001 scheduling conference, sometime thereafter Peter P. Barnett took over defense of the case. In an Order of April 29, 2002, then-Magistrate Judge Kugler noted that Plaintiff had voluntarily abandoned all claims except for those contained in paragraphs 14 through 16 of his Complaint, determining that it was not financially prudent to pursue the other claims. Plaintiff then filed a motion for summary judgment on September 18, 2002. Plaintiff asserted that had defendants not omitted interest from June 21, 1996, the total amount due him as of February 7, 2001, calculated with interest at 9% per annum, compounded annually, would have been $263,855.05, or a difference of $67,391.03 from the amount of $196,464.02 actually awarded to him. Plaintiff thus sought summary judgment in that amount, plus lost interest at a per diem rate of $16.62 since February 7, 2001.
Defendants did not file any opposition to that motion. Therefore, this Court issued a Memorandum Order on October 31, 2002, granting plaintiff's motion for summary judgment and awarding plaintiff $72,922.71, plus costs to be taxed. See Strom v. Barnett Barnett, No. 01-2600 (D.N.J. October 31, 2002).
On March 5, 2003, Defendant Edwin B. Barnett, through his new attorney Richard Clarkson, Jr., filed this Motion for Relief from Judgment pursuant to Fed.R.Civ.P. 60. Defendant asserts that he had been retained by Plaintiff in 1995, but that in January of 1996, he suffered the first of two strokes. Furthermore, Plaintiff represents that his son, Peter P. Barnett, tried the case of Strom v. Friedmann, before the Honorable Myron H. Gottlieb in May, 1996, in Burlington County. By the time of Judge Gottlieb's letter opinion of October 19, 1998, and the Amended Judgment and Order filed November 9, 1998, Edwin B. Barnett was allegedly practicing law on a limited, part-time basis and not involved with representation of the plaintiff. Defendant further asserts that he had no knowledge of this case, nor of the fact that Mr. Welsh filed an answer on his behalf, nor of the Notice of Motion for Summary Judgment and supporting papers in this case until November 11, 2002, after this Court's October 31, 2002 Memorandum Order. It is on this basis that Defendant moves for relief from judgment. This Court heard testimony from Edwin Barnett and received the proffers of attorney Welsh regarding Edwin Barnett's retirement from the practice of law and entrustment of his firm's affairs to his son, Peter Barnett, as detailed below, all at oral argument on November 13, 2003.
DISCUSSION
Fed.R.Civ.P. 60 regulates the procedures by which a party may obtain relief from a final judgment. Defendant Edwin B. Barnett moves for relief under Fed.R.Civ.P. 60(b), which provides:
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence . . .; (3) fraud, misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged . . .; or (6) any other reason justifying relief from the operation of the judgment. . . .
Fed.R.Civ.P. 60(b). Here, Defendant Edwin B. Barnett asserts that he had no knowledge of the Notice of Motion for Summary Judgment until November 11, 2002. Neither side disputes that Plaintiff served only Defendant Peter P. Barnett with papers pertaining to the Motion for Summary Judgment.
Defendant argues that his son, Peter P. Barnett, took sole responsibility in this action and was attempting to shield his retired father from knowledge of the instant lawsuit and allegations of malpractice. Defendant further asserts that his son, Peter, may have signed his father's name without his authorization to various documents. In light of the lack of notice and this alleged surprise, Defendant claims that he should be entitled to the right to defend himself from and against the allegation of malpractice.
The Third Circuit, along with a number of other circuits, has long recognized that a motion for relief from a judgment under Rule 60(b) is addressed to the discretion of the court, and will not be disturbed absent a showing of abuse of that discretion.Wagner v. Pennsylvania Railroad Co., 282 F.2d 392, 398-99 (3d Cir. 1960). Furthermore, the case law overwhelmingly suggests that discretion should incline toward granting rather than denying relief, especially if no intervening rights have attached in reliance upon the judgement and no actual injustice will ensue. As the Third Circuit wrote in Tozer v. Charles A. Krause Milling Co., 189 F.2d 242 (3d Cir. 1951), "Any doubt should be resolved in favor of the petition to set aside the judgment so that cases may be decided on their merits." Id. at 245. This liberal construction of the Rule acknowledges that the interests of justice are best served by a trial on the merits. See e.g., Spann v. Commissioner of District of Columbia, 443 F.2d 715, 716 n. 1 (D.C. Cir. 1970) ("Although relief under Rule 60(b) is discretionary with the trial court, we think that the liberal spirit of the rule, together with the basic policy favoring resolution of litigation on the merits requires us to review closely the exercise of that discretion in cases such as the instant one where denial of the motion has precluded consideration of the merits of the controversy").
The cases calling for great liberality in granting Rule 60(b) motions, for the most part, have involved default judgments.See e.g., Leong v. Railroad Transfer Service, Inc., 302 F.2d 555 (7th Cir. 1962). This reflects the logic that there is much more reason for liberality in reopening a judgment when the merits of the case never have been considered than there is when the judgment comes after a full trial on the merits. Here, Defendant seeks relief from summary judgment, rather than a default judgment. Nevertheless, the underlying rationale is the same. In both instances, the opportunity for a trial on the merits is foregone.
At the heart of this case is not only whether Edwin B. Barnett was actually serving as counsel for the plaintiff at the time of the alleged malpractice in 1998, but more importantly if and when he knew of this malpractice action brought against him in 2001. Edwin B. Barnett claims that he was practicing law on a limited, part-time basis during the period in which his firm represented the plaintiff, a question the Court does not reach at this time. Edwin Barnett was elderly and infirmed by strokes before the present case was filed. His son, Peter, had taken over the law firm and received the summons and complaint herein, of which Edwin disclaims knowledge. Edwin says he formally resigned from membership in the New Jersey Bar in 1998, and from the Pennsylvania Bar in 2000. (Edwin Barnett Aff. ¶ 7). Peter turned the defense of this case over to Lawrence Welsh, who was formerly affiliated with Barnett Barnett, P.C. but who now serves as a public defender. Welsh left his affiliation with Barnett Barnett, P.C. in October 2001, just two months after he had filed an Answer on behalf of Edwin, Peter and the firm. Welsh says he never discussed this case with Edwin Barnett, despite representing him, and he believes Edwin had no knowledge of this case. Peter continued practicing under the Barnett Barnett name until about the time when plaintiff served the underlying motion for summary judgment upon Peter on or about September 18, 2002. Lawrence Welsh attended a Scheduling Conference before then-Magistrate Judge Robert B. Kugler on September 11, 2001 (when the conference was aborted due to events of that day). Peter also sat as a witness for his deposition in this case at an earlier date.
Welsh's affiliation was also rather irregular. He was not an associate and drew no compensation, according to his statements at oral argument, but he may have performed services in exchange for office space. His answer filed with this court indicates his firm as "Barnett Barnett" in the signature blocks. This may not have been literally true at that time.
According to Edwin Barnett and Lawrence Welsh, Peter Barnett relapsed into drug use in September, 2002 and abandoned his office without filing any opposition to plaintiff's summary judgment motion. Welsh indicated at the November 13, 2003 hearing that Peter entered a 28-day drug rehabilitation program at that time and that the law office was unmanned at the time when Peter should have been preparing opposition to the summary judgment motion in this case. According to Welsh, Peter completed a 28-day drug rehabilitation program in October, 2002, and moved to Florida where he has resided in a halfway house for recovering substance abusers.
Peter never filed opposition, and this Court entered its Memorandum and Order for final judgment on October 31, 2002. When Edwin Barnett made his first trip to his son's office in Media, Pennsylvania to pick up his mail, he says he found this Court's Memorandum and Order sitting on Peter's desk on November 11, 2002. The landlord of Peter Barnett's office space at 42 East Second Street in Media verified that Peter's lease commenced in November, 2001, and that neither Edwin Barnett nor Lawrence Welsh has been a tenant or practiced law at that address.
In short, Edwin B. Barnett alleges that he made his first visit to the Media, Pennsylvania law office on November 11, 2002, at which time he discovered the October 31, 2002, Memorandum Order of this Court; Barnett claims that visit, eleven days after judgment was entered against him, was his first notice of the existence of this lawsuit.
Although Rule 60(b)(1) does not define the term "excusable neglect," the courts have determined the existence of excusable neglect by making an equitable determination based upon the following facts: "(1) the danger of prejudice to the other party, (2) the length of delay, (3) its potential impact on judicial proceedings, (4) the reason for the delay, and (5) whether the movant acted in good faith." Jinks v. AlliedSignal, Inc., 250 F.3d 381, 386 (6th Cir. 2001) (citing Pioneer Inv. Services Co. v. Brunswick Assocs., 507 U.S. 395 (1993)).
Here, the equities counsel in favor of a determination of excusable neglect. First, the plaintiff is unlikely to be seriously prejudiced by granting Edwin B. Barnett the relief sought. The October 31, 2002 Judgment would be vacated in part only as to defendant Edwin B. Barnett and plaintiff's Complaint against that defendant would be restored to the active docket for further proceedings. Second, both the length of delay and the potential impact on judicial proceedings would be minor here. Finally, any resulting delay is a product of the lack of notice and knowledge on the part of Edwin B. Barnett, and there is no evidence from which to draw a conclusion that Edwin B. Barnett acted in bad faith. If Edwin Barnett's professed lack of knowledge of the present lawsuit were untrue, his motion to set aside the judgment against him would be unsuccessful. The Court has carefully weighed Edwin's credibility and is persuaded, by a preponderance of the evidence, that he did not know.
On the one hand, this Court does not believe that Edwin was unaware of the existence of the law firm Barnett Barnett, P.C., because he himself used Barnett Barnett, P.C. letterhead when writing to his client, Kathy Strom, on October 19, 1995 (Ex. P-1), and on July 11, 1995 (Ex. A to Strom Cert.), at a time before his strokes in 1996. Subsequent letters in the Strom v. Friedmann case purportedly bearing his signature are also on this letterhead, but he denies the later signatures as authentic. Further, Edwin visited Peter's old office in Havertown, Pennsylvania from time to time, according to Welsh, and Peter did not move from Havertown to Media until November, 2001, about a month after Welsh left the firm, so there is the possibility that Edwin learned of this matter when it was first filed in 2001, since the complaint was served upon the firm and was handled by Welsh for several months. Moreover, Welsh admitted during the hearing on November 13, 2002, that he continued to be friends with Peter and visited the firm through the fall of 2002, and that he was in fact aware of plaintiff's summary judgment motion and understood that Peter would prepare opposition.
On the other hand, Welsh claims he never discussed this case with Edwin, whose visits to the office grew infrequent in 2001, and Edwin's picking up of the mail did not involve legal mail but just incidental personal mail directed to the old office. Edwin never came to the new Media office until November 11, 2002, after his son completed his detox and relocated to Florida. According to Welsh, that was five days after Peter moved to the Florida halfway house. Moreover, Edwin's post-judgment conduct is consistent with a person who has no prior knowledge of this lawsuit and was surprised to learn that he was a party to a judgment against him — namely, he promptly consulted Mr. Clarkson on November 26, 2002, to request that he enter an appearance and seek to set aside the judgment by explaining the circumstances. Thus, this excusable neglect would relieve defendant Edwin B. Barnett from the October 31, 2002 Judgment.
Through all of this, however, plaintiff Strom and attorney McCarter have been given the run-around by their opponents. Edwin Barnett, even if he did not know of this suit, nonetheless knew that his son was continuing to practice under the Barnett Barnett name (although Edwin incredibly denies this) and he visited his son's office while this suit was pending and was acquainted with the attorney of record, Lawrence Welsh. Plaintiff had the right to rely upon Welsh's signature on the Answer that he too was an attorney in the firm of Barnett Barnett and that he represented all three defendants including Edwin Barnett. Welsh never withdrew his appearance, nor did he arrange for substitution of counsel, despite leaving that firm in October, 2001, and Peter purported to represent Edwin and the firm although Peter was not a member of the New Jersey Bar. Welsh's conduct itself is highly irregular, and perhaps unethical, if he failed to receive Edwin's authorization to represent him, and if he failed to keep Edwin informed of the litigation, and if he failed to obtain substitute counsel who was a member of the New Jersey Bar before abandoning this case. Plaintiff, on the other hand, has done nothing wrong and has relied at face value on the good faith of Welsh and Peter Barnett. There is no reason, even if the judgment against Edwin should be set aside, that plaintiff should bear the burden of this enormous waste of time and effort in the wake of Edwin's failure to monitor the affairs of his former firm and his own son, whom he knew to be practicing under his name as if they were partners.
The rubric of excusable neglect under Rule 60(b)(1) derives in large part from the field of relief from default judgments, as noted above. Both sorts of relief are discretionary. Relief from default judgment can be accompanied by a condition requiring the recalcitrant party to pay the plaintiff's attorney's fees and costs as a condition of setting aside a default judgment in which plaintiff was not at fault. Howard Fischer Associates, Inc. v. CDA Inv. Technologies, 1995 WL 472115 (E.D. Pa. 1995);Hendricks v. Alcoa Steamship Co., 32 F.R.D. 169 (E.D. Pa. 1963). So too in this case, Edwin Barnett will be required, as a precondition to setting aside this judgment, to reimburse plaintiff's reasonable fees and costs in connection with this motion, including research, briefing, hearing preparation and attendance at the November 13, 2003 hearing. Although this Court finds that Edwin was probably not aware of the plaintiff's summary judgment motion, he was not without fault in the matter. He is lucid, cogent, and retains a fair memory, and he practiced with his son until retiring in 2000 and continued to visit his office afterwards, even after this suit was filed, yet failed to keep himself informed of the affairs of his firm, even as his son's drug dependence overcame him. Furthermore, Edwin's lack of diligence in the matter caused delay to such an extent that it becomes unfair to plaintiff to merely excuse defendant's conduct altogether. It is Mr. Barnett, not plaintiff, who must take responsibility for his neglect.
Therefore, plaintiff may submit counsel's affidavit of costs and fees in connection with this motion for relief from judgment, submitting same in the form required by L. Civ. R. 54.2 within fourteen (14) days. If defendant objects to the reasonableness of the hourly rate or the time expended, defendant's opposition is due within ten (10) days thereafter. This Court will decide the amount of reasonable fees and costs without further hearing and require Edwin Barnett to reimburse plaintiff for same as a condition upon the granting of this motion. Plaintiff will thereupon have fourteen (14) days to make payment of the fees and costs, and upon payment the judgment will be set aside as to Edwin only.
If Edwin Barnett believes he has incurred this monetary obligation as a result of the culpable conduct of Mr. Welsh or of Peter Barnett, he is free to seek reimbursement from them in an appropriate forum, after he satisfies this obligation to plaintiff. I will not require plaintiff, who has been mistreated by Welsh and Peter Barnett, to pursue them for these wasted efforts.
Finally, granting the motion for relief from judgment would not disturb plaintiff's judgment against Peter P. Barnett nor prevent plaintiff from pursuing his claim against Edwin B. Barnett.
CONCLUSION
For the reasons stated herein, Defendant's motion for relief from judgment, pursuant to Fed.R.Civ.P. 60(b), will be granted, and the Judgment of October 31, 2002 will be vacated as to defendant Edwin B. Barnett only; this disposition does not affect the validity of the Judgment as to co-defendants Peter P. Barnett and Barnett Barnett, P.C. Plaintiff's claim against Edwin B. Barnett will be restored to the active docket for further proceedings, upon defendant Edwin B. Barnett's payment of plaintiff's reasonable fees and costs to be determined under the procedure described above. The accompanying Order will be entered.
ORDER
THIS MATTER having come before the Court upon defendant Edwin B. Barnett's motion for relief from judgment pursuant to Fed.R.Civ.P. 60(b); and the Court having considered the parties submissions; and this Court having heard oral argument on November 13, 2003; and for the reasons stated in the Opinion of today's date; and for good cause shown;
IT IS on this day of December, 2003, hereby
ORDERED that defendant Edwin B. Barnett's motion for relief from judgment [Docket Item No. 16-1] be, and hereby is GRANTED upon condition that defendant first reimburse plaintiff's reasonable attorney's fees and costs in connection with this motion; plaintiff shall submit and serve his affidavit of costs and fees within 14 days of today's date, and defendant's opposition, if any, is due within 10 days thereafter, and the Court will determine the amount without further proceedings; and
IT IS ORDERED and ADJUDGED that the Judgment entered October 31, 2002, shall be, and it hereby is, VACATED IN PART as to defendant Edwin B. Barnett only, and that the Judgment remains valid as to defendants Barnett Barnett, P.C. and Peter P. Barnett; and
IT IS FURTHER ORDERED that plaintiff's Complaint against defendant Edwin B. Barnett be restored to the active docket for further proceedings, upon Edwin Barnett's payment of the above fees in the amount to be determined.