Defense Prevails in Legal Malpractice Action Over Real Estate Closing

Obtained a defense jury verdict in a legal malpractice action tried in the Superior Court of New Jersey, Morris County. The plaintiffs alleged that our defendant clients, an attorney and his law firm, committed legal malpractice during a real estate closing whereby the plaintiffs sold a fitness facility and at the same time also entered into a five-year lease for that facility with the purchasers of the business. The tenant defaulted at the end of the first year, and the plaintiffs retained possession of the premises and terminated the lease. It was at that time, the plaintiffs alleged, that they first learned that no personal guarantees had been procured and that a UCC-1 had not been filed as a lien against the gym equipment. The plaintiffs never procured another tenant, and the property went into foreclosure. The plaintiffs insisted that they would not have gone through with the transaction without the protection of the personal guarantees and the UCC-1, and they brought claims for $1.5 M for loss of the facility. The defense demonstrated that the plaintiffs had signed a series of agreements at closing that waived such requirements and the attorney had, indeed, reviewed the closing documents with the plaintiffs. The court dismissed the $1.5 M claim, and the jury found no liability on the part of the insured.