Jack Slimm and Jeremy Zacharias Successfully Defend Appeal of Equitable Distribution Legal Malpractice Action in New Jersey
Jack Slimm and Jeremy Zacharias successfully defended the appeal of an equitable distribution legal malpractice action in New Jersey where they had also prevailed at the trial court level. In Pennetti v. Zeigler, A-1680-23 (App. Div. May 15, 2025), after a Rule 104 hearing, the judge barred the plaintiff’s expert’s opinions as being net and inadmissible. In addition, the court found that the rulings of the trial court in the underlying matrimonial case barred the alimony malpractice claims under the doctrine of collateral estoppel.
In Pennetti, the plaintiff, the owner of a multi-million-dollar ultrasound company, filed a legal malpractice action against the attorneys who represented her in her divorce settlement. She claimed that she received bad advice by agreeing to an anti-Lepis clause, which put her in a position where she could not move to modify her equitable distribution and alimony obligations to her ex-husband if the company performed badly. The trial court dismissed the alimony claims in the legal malpractice action based upon the doctrine of collateral estoppel.
In a significant ruling, the Appellate Division upheld the trial court’s decision, reinforcing an important principle in legal malpractice defense: the doctrine of collateral estoppel can be used to prevent re-litigation of issues that were already decided in the underlying case. Therefore, the malpractice claims arising out of the anti-Lepis clause were barred under the doctrine of collateral estoppel, leaving only the claims in connection with the settlement of the major equitable distribution claims. Here, the plaintiff’s expert opined that the attorneys were negligent by not obtaining an up-to-date valuation of the ultrasound company prior to settlement. The trial court rejected that opinion and granted Jack’s and Jeremy’s motion for involuntary dismissal, dismissing the entire legal malpractice action.
On appeal, the Appellate Division held that the plaintiff was required to establish she would have paid her ex-husband less than she agreed to, had the attorneys obtained a lower valuation of the business. It also ruled that the plaintiff must prove these damages with certainty under which the jury can make a fair and reasonable estimate. The court reiterated in this case that damage awards may not be based on mere speculation.
Jack’s and Jeremy’s defense focused on the fact that the plaintiff’s expert failed to conduct a comparison of similar property settlement agreements in the venue in question, or in surrounding counties. The expert could not rationalize how the parties reached the settlement figures in the first place, and his testimony failed to address how the correct valuation would have affected the settlement or the plaintiff’s payment obligations. He acknowledged that the settlement agreement itself lacked any indication as to how the parties arrived at the settlement numbers. He also failed to testify and give a professional standard in similar matters. As a result of that and other factors, the Appellate Division affirmed the trial court’s order which barred the expert’s testimony of causation and damages regarding the legal malpractice claims arising out of the settlement of the equitable distribution claim.
Jack and Jeremy were also able to submit into evidence the amount the divorce case settled for which was important because the plaintiff alleged the purportedly heightened value of her company led to a settlement that required her to pay more than she would, or should have, but for the attorneys’ negligence. In doing so, the Appellate Division confirmed that the trial court correctly applied the framework for expert opinions when the case was dismissed at trial.
Should you have any questions regarding this key Appellate Division decision in connection with the defense of legal malpractice actions, please do not hesitate to contact Jack (JLSlimm@mdwcg.com) or Jeremy (JJZacharias@mdwcg.com).
Legal Update for Lawyers' Professional Liability - June 17, 2025, has been prepared for our readers by Marshall Dennehey. It is solely intended to provide information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note tamontemuro@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2025 Marshall Dennehey. All Rights Reserved.