New Jersey Appellate Division Affirms Dismissal of Legal Malpractice Suit, Citing Collateral Estoppel and Inadmissible Expert Testimony

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. 

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 New Jersey 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 the defendant’s motion for involuntary dismissal, dismissing the entire legal malpractice action. 

On appeal, the Appellate Division held that the plaintiff was required to establish that 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. 

The Appellate Division affirmed the trial court’s order that barred the expert’s testimony of causation and damages regarding the legal malpractice claims arising out of the settlement of the equitable distribution claim. 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. 

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