Attorneys Can Still Be Sued After Settlement Is Reached With a Third-Party

Gorjuice Wrap, Inc. v. Okin, Hollander & De Luca, LLP, N.J. Super. A.D., (2011) is leg al malpractice claim that challenges the Puder Doctrine. The Puder doctrine prevents a plaintiff from suing past council for damages because the plaintiff took a settlement that was less than the actual damages were worth. 

Here, the Plaintiffs started a new business and they leased property owned by the Talmos, their landlords. After an unfortunate sequence of events comprised of zoning restrictions and miscommunication, Plaintiffs became behind in their rent. Plaintiffs testified that the rent in arrears was due to the poor condition of the leased property. Regardless, the Talmos exercised a forcible detainer, where they removed Plaintiffs from the property and indirectly the Talmos took control of Plaintiffs' personal property. Plainitffs were unable to obtain their personals because they were no longer allowed on the property. Due to the Plaintiffs' dilemma they retained the Defendants as council. While the Defendants were the Plaintiffs' council, the Talmos re-sold the property to someone else. The Plaintiffs' explicit instructions for the Defendants were to secure the return of their personal property. However, despite the Defendants' knowledge that the Plaintiffs could enter their property and retrieve their personal property, the Plaintiffs weren't made aware of such knowledge until many months later; and at that point, all the personal property was gone. Due to these events, Plaintiffs sued Defendants, Talmos, and Talmos' attorney, who use to be Plaintiff's attorney before Defendants. However, the claims against Defendants were barred and Plaintiffs proceeded with their case against Talmos and Talmos' attorney. Plaintiffs settled for $250,000.

However, after that, Plaintiffs pursued their case against Defendants, where alleged lost profits were sought because Plaintiffs were unable to retrieve their personal property. The trial court found this case very similar to the Puder Doctrine, however the New Jersey Superior Court did not agree with the trial court's ruling. First, the trial court sided with the Defendant's account of the events about when knowledge was given to Plaintiffs that they were awarded access to their building. This is an incorrect ruling because when deciding summary judgment the Judge must construe facts most favorable to the party opposing the judgment. Therefore, the Superior Court reversed this ruling in favor of Plaintiffs. Next, the Superior Court found that the Pudor standard didn't apply either because the Plaintiffs never stated that the settlement they took with the Talmos and Talmos' attorney was "fair" or "adequate."

Although the Plaintiffs survived Summary judgment, it is just the first step. Proving a case for malpractice becomes much more difficult at trial. Further, it is more than simply showing that an attorney or firm acted negligently; plaintiffs must show that the attorneys were proximate cause of injury and damages are not too speculative. Here, the Plaintiffs were able to survive summary judgment, but they would have obstacles that would need to be overcome to win the case.

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