Opinion
Civil Action No. 99-1582 (JBS)
Filed: May 24, 2000
Alan Rosenberg, Esq., Haddonfield, N.J., Attorney for Plaintiff.
Christopher J. Carey, Esq., Patricia A. Brennan, Esq., Wilson, Elser, Moskowitz, Edelman Dicker LLP, Newark, N.J., Attorneys for Defendants.
OPINION
In this diversity-based legal malpractice case, plaintiff Zurich Reinsurance (London), LTD ("Zurich") sues defendant Ian Stuart ("Stuart"), his firm, and an associate for legal malpractice arising from Stuart's alleged mismanagement of a 1998 subrogation claim. Presently before the Court are the defendants' motions for summary judgment and plaintiff's cross-motion for partial summary judgment pursuant to Rule 56, Fed.R.Civ.P. The primary issue for decision whether is there is a genuine dispute as to whether, rather than Stuart's conduct, Zurich's own legal strategy was the proximate cause of its losses. For reasons discussed below, the Court finds that, as a matter of law, there is no dispute that Stuart breached his duty to plaintiff, and that Zurich did not cause its own loss; it remains to be determined whether Stuart's conduct was the proximate cause of Zurich's alleged losses, in the sense of whether a timely filed suit would have been successful in producing a recovery for plaintiff. Accordingly, the defendants' motions will be denied except to the extent that defendants move to dismiss the complaint as to Stuart's associate John Clark, Esq., and plaintiff's motion for partial summary judgment will be granted.
BACKGROUND
This action arises out of defendant Ian Stuart's alleged legal malpractice committed while representing Zurich in a subrogation action. Zurich retained Stuart in January 1997 to recover $129,000 it paid out after fire damaged an insured's property. (Pl. Br. at 2.) In the underlying fire, which occurred in September 1996, a Louisiana resident's home burned on after a fire started in or around the electrical breaker box in the house's heating/air conditioner ("HVAC") unit. (Id.)
Although the fire occurred in September 1996, and despite Stuart being retained by Zurich in January 1997, no claim was filed in this matter until February 1998. A review of the circumstances leading up to the eventual filing of the underlying action is as follows.
In the months after being retained by Zurich, Stuart attempted to identify the individuals who might have worked on the HVAC unit prior to the fire. (Pl. Br. at 2-3.) By August 1997, Stuart still had not filed a subrogation claim, and on August 18, 1997 Zurich's Louisiana broker wrote to inquire as to the progress of the action. (Pl. Ex. H.) The inquiry was appropriate, because the subject fire occurred in Louisiana and that state has a one-year statute of limitation for negligence actions, which period would run by September 22, 1997. Compare Louisiana Civ. Code, Ch. 4, Art. 3492 (one year statute of limitations for tortious damage to real property), with N.J.S.A. 2A:14-1 (six years). Subsequent to the broker's inquiry, Stuart on September 8, 1997 requested permission from Miller North American Limited ("Miller"), Zurich's London broker, to retain local counsel to prosecute the subrogation suit in Louisiana. Plaintiffs allege that Stuart failed to advise Miller of the urgency of this request, or that the statute of limitations was to run within fourteen days. (Pl. Br. at 3.) On September 22, 1997, the Louisiana statute of limitations expired, facially barring any suit for harm suffered in that state.
Zurich was mindful of the running of the Louisiana statute. In October 28, 1997, Stuart met in London with Zurich personnel who expressed displeasure that a lawsuit had not been timely filed in Louisiana. (Pl. Ex. J.) Stuart advised these individuals not to worry, and that he was instead planning to file suit in New Jersey or Pennsylvania against York International ("York"), whom Stuart believed to be the manufacturer of the subject heating unit. (Id.) Stuart later acknowledged that he did not timely file suit in Louisiana, but asserted that this was because "the one year statute of limitations had run . . . prior to our receipt of this file." (Stuart letter to Miller dated June 1, 1998, Pl. Ex. K.) Plaintiffs challenge Stuart's contention that he only received the file at the thirteenth hour, pointing out that Stuart acknowledged receipt of the file on February 6, 1997, seven months prior to the expiration of the Louisiana statute of limitation. (Pl. Ex. B.) Plaintiff further maintains that this letter shows that Stuart was attempting to "cover up" the fact that he had neglected to timely file suit. (Compl. ¶ 16-17.)
Later discovery revealed that the true manufacturer of the unit was the Goodman Company, not York. ( Id . at 4.)
Stuart eventually did file suit. On February 4, 1998, Stuart filed a complaint in the New Jersey Superior Court against York International, the purported manufacturer of the subject HVAC system, and against several unnamed installers or repair people who worked in the Louisiana homeowner's unit. Allegations were made that the unit was defective and that the installation and repair work also were defective. (Def. Br. at 2.) The case was removed by York from state court to federal court on grounds of diversity of citizenship. Subsequent to removal, however, York moved to transfer the case to U.S. District Court for the Western District of Louisiana for lack of venue in this District.
Stuart, acting as Zurich's attorney, protested York's motion to transfer. Zurich argued that it would be prejudiced if such transfer took place, because certain defendants had not yet been joined. Because the limitations period had already run in Louisiana, Stuart argued, further joinder might be barred.
The Honorable Joseph E. Irenas, U.S.D.J., determined that transfer was appropriate. In his opinion accompanying the transfer Order, Judge Irenas explained that although the period of limitations had run in Louisiana, the District Court in Louisiana "must respect Zurich's choice of New Jersey law and its favorable relation back rules." Zurich v. York International Corp, et al., Civ. No. 98-539 (JEI), Slip Op. at 10 (D.N.J. April 27, 1998), Def. Ex. E (citing Rule 15(c), Fed.R.Civ.P.; Van Dusen v. Barrack, 376 U.S. 612 (1964)). Thus, by Judge Irenas's view, the federal court in Louisiana would be compelled after transfer to allow joinder of additional defendants in the action against York despite the fact that these parties — had they been sued in Louisiana — could not be joined due to the expiration of Louisiana's statute of limitation.
Matters were further complicated once the York suit reached Louisiana. After the case was docketed in the Western District of Louisiana, Zurich retained a different attorney, Mitchell Hoffman, Esq., to prosecute the subrogation suit. Mr. Hoffman amended the complaint against York to include the true identities of the John Doe defendants, adding Jim's Electronics ("Jim's"), the alleged supplier of the unit, and Leonard Banks ("Banks"), a repairman. (Hoffman Cert. at ¶ 6, Pl. Ex. L.) Both Banks and Jim's denied wrongdoing. Furthermore, Hoffman subsequently determined that the Goodman Company, not York, was the true manufacturer of the subject HVAC unit. (Id. at ¶¶ 6-7.)
Apparently, Goodman is a commercial manufacturer of HVAC units with manufacturing plants in Texas and Tennessee, and distributorships in North Carolina, South Carolina, and Virginia. See Goodman Company website at http://www.janitrol.com/AboutGoodman/index.html .
Once it became apparent that York was not a proper defendant to the subrogation suit, Hoffman came under judicial pressure to voluntarily dismiss the case. After Hoffman advised the Honorable Roy Payne, the U.S. Magistrate Judge on the case, that it appeared that York was not in fact the manufacturer of the subject unit, Judge Payne questioned whether Hoffman could in good faith keep York in the case. (Id. at ¶ 8.) According to Hoffman, Judge Payne "warned me that Zurich would be subject to possible penalties for filing suit without sufficient investigation. The bottom line of the discussion was that Judge Payne was of the opinion that if York did not manufacture the unit, then York and the other defendants should be dismissed". (Id. at ¶ 14.)
Judge Payne further questioned the propriety of adding Jim's and Banks as defendants. While Judge Irenas had stated in his transfer opinion that New Jersey law should apply to allow amendment and joinder of additional parties, Hoffman states that Judge Payne disagreed, and clearly thought that Louisiana's one-year statute should apply. (Id. at ¶ 9.) Furthermore, according to Hoffman, Judge Payne was of the impression that, once York was out of the suit, the entire case must be dismissed because under Louisiana law the service on Jim's and Leonard was untimely. (Id. at ¶ 10.) Hoffman apparently agreed with Judge Payne's assessment of Louisiana law on this subject, and states that:
Under Louisiana law, the interruption of prescription against one solidary tortfeasor interrupts prescription against all solidary tortfeasors. If a solidary tortfeasor is timely sued, then the other solidary tortfeasor can be named at a later date. However, if York Corp. was not a correct solidary tortfeasor, then the service on the Louisiana defendants would have to stand by itself. Those defendants, Jim's Heating and Air Conditioning and Leonard Banks, were named as parties defendants and served long after the one year expiration of the applicable Louisiana statute of limitations. Thus, once it was determined that York was not the correct manufacturer of the furnace relating to the fire loss, then York was not a solidary tortfeasor. In that event, prescription had not been interrupted by suing York, so therefore, the other Louisiana defendants were not timely served.
(Id. (emphasis added).) No evidence has been offered by defendants to counter Mr. Hoffman's assertion that suit against York was improper. Moreover, as discussed in further detail below, the Court's independent research supports the conclusion that, under Louisiana law, if York were to be dismissed, the suit against the later-joined defendants would be time-barred.
Beyond Hoffman's own misgivings about the propriety of proceeding against Jim's and Banks, plaintiff alleges that Judge Payne made it clear that the case would be dismissed as against York one way or the other:
Any motion for summary judgment based on prescription, filed by defendants Banks or Jim's Heating and Air Conditioning, should proceed on the assumption that the claims against York International will be dismissed. In opposing any motion for summary judgment by York International, on the issue of whether York manufactured the unit involved in this case, plaintiff should give due regard to the provisions of Rule 11.
(Minute Entry Order Signed by U.S. Magistrate Roy Payne Dated January 20, 1999 (emphasis added).)
Eventually, Mr. Hoffman determined that there was no basis for contesting forthcoming summary judgment motions by York, Jim's and Banks, and voluntarily dismissed the suit. (Id. at ¶ 14.) Hoffman states that he also was motivated by the fact that counsel for York had threatened to file for Rule 11 sanctions if the suit against York was not voluntarily dismissed (see Ltr. of W. James Hill, Esq., Pl. Ex. O), and Judge Payne's suggestion that Rule 11 sanctions would be in order if Hoffman persisted in keeping York as a defendant. (Hoffman Cert. at ¶ 14.)
DISCUSSION
A. Summary Judgment Standard
The standard for granting summary judgment is a stringent one. A court may grant summary judgment only when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In deciding whether there is a disputed issue of material fact the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party. See Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1080-81 (3d Cir. 1996); Kowalski v. L F Prods., 82 F.3d 1283, 1288 (3d Cir. 1996); Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir. 1983), cert. denied, 465 U.S. 1091 (1984). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
Supreme Court decisions mandate that: "[w]hen the nonmoving party bears the burden of persuasion at trial, the moving party may meet its burden on summary judgment by showing that the nonmoving party's evidence is insufficient to carry its burden of persuasion at trial." Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326, 329-330 (3d Cir. 1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1987)). However, "the nonmoving party creates a genuine issue of material fact if it provides sufficient evidence to allow a reasonable jury to find for him at trial." Brewer, 72 F.3d at 330 (citing Anderson, 477 U.S. at 248). Once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts."Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Thus, if the non-movant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment.Anderson, 477 U.S. at 249-50.
The standard by which the court decides a summary judgment motion does not change when the parties file cross-motions. Weissman v. United States Postal Service, 19 F. Supp.2d 254 (D.N.J. 1998). When ruling on cross-motions for summary judgment, the court must consider the motions independently, Williams v. Philadelphia Hous. Auth., 834 F. Supp. 794, 797 (E.D.Pa. 1993), aff'd, 27 F.3d 560 (3d Cir. 1994), and view the evidence on each motion in the light most favorable to the party opposing the motion, see Matsushita, 475 U.S. at 587.
B. Legal Malpractice Standard
As this Court sits in diversity, New Jersey law provides the applicable substantive law. In New Jersey, as in most other jurisdictions, the usual principles of negligence apply to legal malpractice. Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996). "`The requisite elements of a cause of action for legal malpractice are: (1) the existence of an attorney-client relationship creating a duty of care upon the attorney; (2) the breach of that duty; and (3) proximate causation.'" Id. (quoting Lovett v. Estate of Lovett, 250 N.J. Super. 79, 87 (Ch.Div. 1991)).
In this case, plaintiff alleges that Stuart breached his duty as Zurich's attorney when he failed to file the subrogation action within the Louisiana statute of limitations. Although Stuart eventually did file a subrogation suit, plaintiff maintains that Stuart compounded his initial errors by naming the wrong manufacturer as a defendant — York. Because it was inevitable that York would be dismissed from the suit, and because the statute of limitations had already run, plaintiff claims that it was precluded by Stuart's malpractice from maintaining a suit against the true manufacturer of the HVAC unit, Jim's Electronics or Banks.
Defendants counter that this argument is flawed and that he committed no malpractice because in his Opinion and Order transferring the subrogation suit to Louisiana, Judge Irenas specifically ordered that New Jersey's law regarding amendment of pleadings was to apply once the subrogation suit was transferred out of this District. Because New Jersey law was to apply, plaintiff maintains, service of process was valid as against Jim's and Banks even if York was to be dismissed. Accordingly, by defendants' view, Zurich itself was the cause of its own harm when it voluntarily dismissed against these defendants, and thus Stuart as a matter of law cannot be found to be the proximate cause of Zurich's losses.
C. Analysis of Defendants' Summary Judgment Motion
The Court first must decide whether Judge Irenas's Opinion and Order transferring the subrogation suit to Louisiana settled the question of whether New Jersey or Louisiana law was to apply. For reasons now discussed, this Court finds that Judge Irenas's transfer Opinion did not preclude the Western District of Louisiana from applying Louisiana law to the subrogation suit.
A review of Judge Irenas's Opinion makes clear that the case had come before him on York's motion to transfer venue to the Western District of Louisiana, not on Zurich's motion for leave to amend the pleadings.Zurich v. York International, supra, Slip Op. at 1 ("Presently before the Court is the motion of defendant [York] for transfer of venue in this action to the Western District of Louisiana. . . . Because we find the Western District of Louisiana to be a better forum in which to litigate this matter, we will grant York's motion and transfer the case forthwith."). Thus, rather than "Which state's law should apply?", the question before Judge Irenas was "Is the Western District of Louisiana a superior forum to this District for litigating this suit?" Thus Judge Irenas's choice of law remarks were merely one facet of his ruling on venue. See Zurich v. York International Corp, et al., Civ. No. 98-539 (JEI), Slip Op. at 10 (D.N.J. April 27, 1998) (citing Rule 15(c), Fed.R.Civ.P.; Van Dusen v. Barrack, 376 U.S. 612 (1964)). Accordingly, any discussion of the correct choice of law was not a final resolution of the issue, but rather was a discourse on what Judge Irenas anticipated that the Western District of Louisiana would do. The fact that this discussion was not reflected in Judge Irenas's Order in the case further supports this Court's conclusion that his choice of law discussion was non-binding.
Those remarks recognized the distinct possibility that Louisiana law would not permit relation back to the date of filing the original pleading once the John Doe defendants were named, while New Jersey law may do so unless the description of the John Doe defendants in the original complaint was non-specific. Zurich v. York International , supra , Slip Op. at 6-7 n. 3. Nowhere, however, did the discussion recognize that such relation back would not save plaintiff's claims against the John Doe defendants (because the original complaint was filed beyond the one-year Louisiana statute of limitations), if the Louisiana statute were held to be applicable in either New Jersey of Louisiana.
Thus, that discussion observed:
However, we need not concern ourselves with whether or not Louisiana law would permit relation back of an amendment identifying a John Doe party because the Louisiana federal court would be required to apply New Jersey law, thus eliminating any potential prejudice to Zurich and preserving its right to enjoy New Jersey's favorable fictitious pleading and relation back policies. In a diversity action, a federal court must apply the choice of law rules of the state in which it sits. Klaxon v. Stentor Elec. Mfg. Co . , 313 U.S. 487 (1941). However, when a case is transferred for the convenience of the parties, pursuant to 28 U.S.C. § 1404(a), the transferee court must apply the choice of law rules that the transferor court would have applied. Van Dusen v. Barrack , 376 U.S. 612 (1964).
The expectation that the transferee court would apply the transferor court's law was of course reasonable under Van Dusen v. Barrack . The application of New Jersey law only begins the inquiry, however, since such application requires, as Judge Irenas recognized by citing Klaxon , supra , the application of New Jersey's "choice of laws" law.
The application of New Jersey choice of law regarding choice of the statute of limitations to be applied must lead to the conclusion that a New Jersey court would itself have applied Louisiana's statute of limitations. The law of New Jersey is clear on this point.
New Jersey courts apply a flexible "governmental interest" approach to choice of law issues. See Gantes v.Kason , 145 N.J. 478, 484 (1996) (citing Veazey v. Doremus , 103 N.J. 244, 247-49 (1986)). In situations where a court must decide which of two interested states' statute of limitations should apply, the court must first determine whether there is an actual conflict between the competing statutes of limitation. If there is a conflict, the court then must analyze the governmental policies underlying the law of each state and how those policies are affected by each state's contact to the litigation and to the parties. Gantes , 145 N.J. at 485. In Gantes , as in the York case the question was whether, in context, the parties' contacts with the state give rise to a substantial governmental interest that would be served by applying New Jersey's statute of limitations and permitting the action to proceed.
Turning to the circumstances of the York case, it is clear first of all that the statutes conflict (New Jersey allowing filing within six years to Louisiana's one year limitation). Second, it is clear that Louisiana would have a superior governmental interest to New Jersey in resolving the suit. New Jersey would have virtually no interest in resolving a subrogation suit over fire damages occurring in a foreign state, and which involved a foreign plaintiff, foreign defendants, and a machine manufacturer with only minimal contacts with New Jersey. There is simply no nexus with New Jersey that would allow the application of New Jersey law to the suit. Accordingly, even if, as anticipated by Judge Irenas, the transferee Louisiana federal court were to apply New Jersey's choice of laws rules, that court would almost certainly have found that Louisiana has a superior interest to that of New Jersey in resolving the subrogation action at issue in the York filing, and would have applied Louisiana's one year prescription to bar suit against the named and John Doe defendants.
Moreover, even if Judge Irenas's application of New Jersey law as to claims against York was binding upon York as the party seeking transfer (which is itself doubtful), that pronouncement was subject to modification as circumstances changed. Specifically, when it was determined that York was not the proper defendant because it had no connection with the accident, there was no conceivable rationale to apply New Jersey's statute of limitations to a Louisiana fire loss of a Louisiana insured allegedly caused by Lousiana defendants, all under the rights created under the rights conferred by a Louisiana contract of insurance.
For the reasons discussed above, the Court finds that Judge Irenas's choice of law discussion did not bind the Western District of Louisiana or any other court. Because Judge Irenas's Opinion in the subrogation action did not settle the issue of which state's law should apply, the U.S. District Court for the Western District of Louisiana was free to come to its own conclusions as to which state's law should apply. Indeed, this Court finds it entirely reasonable that Judge Payne concluded that Louisiana law should apply when one considers that the underlying fire occurred there, and that all the evidence, the homeowner, and at least two named defendants resided in that state.
Turning to an analysis of the events occurring after transfer, the Court finds that there is no dispute as to the inevitability of York's dismissal from the suit. Magistrate Judge Payne, Zurich's attorney Hoffman, and York's attorney, all agreed that there was no evidence linking York to the subject fire, and that York would have to be dismissed, either voluntarily or by motion. Clearly, any opposition to a motion to dismiss York from the case would have been an exercise in futility, and additionally ran the risk of Rule 11 sanctions from the court. Accordingly, there is no genuine dispute as to whether York would have been dismissed from the underlying subrogation action. For this reason, this Court finds no merit in defendants' argument that Zurich should have maintained its case against York. Whether dismissed voluntarily or by court order, there is no dispute that Mr. Stuart had improperly named York to begin with.
Having determined that there is no doubt that York eventually would have been dismissed from the underlying subrogation action, this Court turns to a discussion of whether Zurich should have maintained its suit against defendants Jim's Electronics and Leonard Banks. As discussed above, Zurich voluntarily dismissed the suit against these defendants at the same time that it withdrew its claims against York. This decision was based on Zurich's understanding of the "relating back" rule in Louisiana that provided that once the original named defendant is dismissed, the later-named defendants must have been served within one year of the fire.
The question here is whether there is a genuine dispute as to whether the decision to voluntarily dismiss the claims against Jim's and Banks could be considered a substantial cause of Zurich's losses. For reasons now discussed, the Court finds that the record is clear that Zurich did not harm its chance of recovery by voluntarily dismissing the case against Jim's and Banks. There was no chance of recovery from the outset.
The record before the Court includes the uncontradicted opinion of Mr. Hoffman that, owing to the inevitable dismissal of York from the subrogation suit, the Louisiana statute of limitations barred suit against Jim's and Banks. Mr. Hoffman is a member of the Louisiana bar and a partner in a New Orleans law firm, and is knowledgeable about the laws of that state. Accordingly, the Court accepts Hoffman's opinion as evidence that the claims against Jim's and Banks would have been dismissed as prescribed by the Louisiana Code. Defendants have offered no evidence to the contrary, and have elected not to retain experts who would further explain the legal issues pertaining to the Louisiana law of prescription, or any other issue. (See Joint Final Pretrial Order at 10.) In other words, defendants offer no evidence, in opposition to plaintiff's summary judgment motion, that a reasonable attorney would not believe that dismissal of the late-named additional defendants was required by Louisiana law.
Further, the Court's independent research into the subject confirms Mr. Hoffman's assertion that the claims against Jim's and Banks would have to be dismissed as prescribed. In a recent decision by the Supreme Court of Louisiana, the court considered whether, once the suit has been dismissed against the first named defendant, the Louisiana statute of limitations barred suit against defendants named well after the period had run. The Court held that the statute was not tolled as to the later-named defendants, explaining that "[f]iling suit against a party who is later determined to be without obligation to the plaintiff does not interrupt prescription against a purported solidary tortfeasor who was not timely sued." Etienne v. National Automobile Ins. Co., ___ So.2d ___, 2000 WL 471515 at *4 (La. 4/25/2000) (citing Williams v. Northgate Hosp., 734 So.2d 1251 (La.App.), writ denied, 747 So.2d 565 (La. 1999)).
Based on the foregoing, the Court rejects defendants' argument that Zurich wrongly dismissed its claims against Jim's and Banks. Plaintiff has adduced evidence that the claims against those defendants would have been dismissed, and that contesting such a dismissal would have been futile. Moreover, the Court is satisfied that Mr. Hoffman's opinion on this subject is consistent with Louisiana law. Defendants have failed to present any evidence to the contrary, and the Court finds no merit in defendants' argument that Zurich was somehow bound to pursue what was clearly a time-barred suit against Jim's and Banks. Based on the foregoing, the Court finds that defendants have failed to establish that any reasonable jury could find, upon this evidence, that Zurich's decision to dismiss as against Jim's, Banks, or York was the proximate cause of Zurich's alleged losses. Accordingly, defendants' motion for summary judgment will be denied as to defendant Ian Stuart, Esq., and Ian Stuart, PC.
D. Plaintiff's Claims Against John Clark, Esq.
Defendants have also moved for summary judgment against all claims as to John Clark, Esq., whom plaintiff alleges worked alongside Mr. Stuart. Both Mr. Clark and Mr. Stuart have filed affidavits stating that Mr. Clark was not working for Mr. Stuart's firm from March 1997 until October 1997, and that Mr. Clark did not work on this case until October 1997, one month after the Louisiana statute of limitations had run. (Def. Ex. H I.) Plaintiff has made no contrary offer of proof, and has thus failed to create a genuine dispute as to whether Mr. Clark was involved with the preparation of the underlying subrogation suit. Accordingly, defendants' motion for summary judgment against plaintiff's complaint as to Clark will be granted, and all claims against Clark will be dismissed.
E. Plaintiff's Motion for Summary Judgment
Turning to a discussion of plaintiff's motion for partial summary judgment, the Court finds that this motion will be granted.
In this case, as explained above, there is no doubt that Stuart and his firm breached their duty to Zurich by failing to timely commence suit against a proper party. Plaintiff has demonstrated that no material fact is in dispute and that it is entitled to a finding that defendants Stuart and Ian Stuart, PC committed legal negligence by breaching a duty of care owed to plaintiff by not filing or having filed on plaintiff's behalf a lawsuit against the alleged responsible parties for the subject fire loss of September 22, 1996 within the one-year statute of limitations under Louisiana law. Further, as discussed above, it is clear upon the factual record that Zurich's voluntary dismissal of the remaining late-named defendants (Goodman, Jim's and Banks) could not have caused the harm itself, because those claims already were time barred under applicable Louisiana law. It remains to be decided whether the claims against these late-named defendants would have been successful had they been timely and appropriately filed.
Under New Jersey law, the concept of cause in fact in attorney malpractice actions is best understood as a case within a case. As explained by the New Jersey Supreme Court, the case within a case model means that "if a lawyer misses a statute of limitations and a complaint is dismissed for that reason, a plaintiff must still establish that had the action been timely filed it would have resulted in a favorable recovery." Conklin, 145 N.J. at 417. The parties have not briefed this aspect of the case, and have advanced no evidence from which a jury could determine whether or not the underlying subrogation suit would have been successful. Accordingly, the case within the case remains unresolved, and it remains to be determined whether plaintiff would have prevailed had Stuart done his duty.
Plaintiff's motion for partial summary judgment will be granted, and the case will be set for trial upon the remaining issue of whether defendants' legal negligence caused damage to plaintiff, i.e., whether if the action had been timely filed it would have resulted in a favorable recovery, and if so, in what amount of damages and at what cost.
CONCLUSION
For the foregoing reasons, defendants' motion for summary judgment will be denied as to defendant Stuart and Ian Stuart, PC, and granted as to defendant Clark. Plaintiff's motion for partial summary judgment will be granted. Although it has been established that Zurich's voluntary dismissal in the Western District of Louisiana of the subrogation suit was not a proximate cause of its losses, plaintiff has yet to establish that it would have prevailed had Stuart adequately carried out his duties, and the case will be set for trial on this issue. The accompanying Order is entered.
ORDER
THIS MATTER having come before the Court on the parties' cross-motions for summary judgment pursuant to Rule 56, Fed.R.Civ.P., and the Court having considered the parties submissions, and for the reasons discussed in the Opinion of today's date;
IT IS this day of May, 2000 ORDERED as follows:
1. Defendants' motion for summary judgment as to defendant Ian Stuart, PC and Ian Stuart, Esq. is DENIED;
2. Defendants' motion for summary judgment as to defendant John Clark, Esq. is GRANTED, and all claims against Clark are DISMISSED with prejudice;
3. Plaintiff's motion for partial summary judgment is GRANTED, and it is ADJUDGED that defendants Ian Stuart, Esq. and Ian Stuart, PC committed legal malpractice by breaching a duty of care owed to plaintiff by not filing or having filed on plaintiff's behalf a lawsuit against the alleged responsible parties for the subject fire loss of September 22, 1996, suffered by Kenneth Vernon, within the one year statute of limitations under Louisiana law; and
4. The case shall be set for trial upon the remaining issues of whether if the action had been timely filed it would have resulted in a favorable recovery, and, if so, in what amount of damages and at what cost.