Gastelu v. Martin, DOCKET NO. A-3780-16T1

RON GASTELU, JR., Plaintiff-Appellant/Cross-Respondent, v. ANDREW M. MARTIN, ESQ., GARY MATTOLA, MADISON MARQUETTE,MADISON ASBURY RETAIL, LLC, MADISON ASBURY INVESTMENT,INC., ASBURY PARTNERS, LLC, MADISON MARQUETTE RETAIL SERVICES, LLC,MADISON ASBURY INVESTMENTS II, LLC,and MADISON ASBURY OPERATING, LLC, Defendants,andRICHARDS KIBBE & ORBE, LLP, Defendant-Respondent/Cross-Appellant.

DOCKET NO. A-3780-16T1

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Submitted November 4, 2019

April 7, 2020

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

Before Judges Rothstadt and Moynihan.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4067-14.

Piekarsky & Associates, attorneys for appellant/cross-respondent (Scott B. Piekarsky, of counsel; Justin Jerome Walker, on the briefs).

Baldassare & Mara, LLC, attorneys for respondent/cross-appellant (Jennifer Mara and George Tenreiro, on the briefs).

PER CURIAM

In this professional negligence action filed by plaintiff Ron Gastelu, Jr. against a New York attorney, defendant Andrew M. Martin, and his former employer, defendant Richards Kibbe & Orbe, LLP (RK&O), plaintiff appeals from the Law Division's November 20, 2015 order under Rule 4:6-2(e), dismissing with prejudice plaintiff's amended complaint against RK&O.¹RK&O cross-appeals from an April 28, 2015 order denying its summary judgment motion and motion to dismiss plaintiff's complaint for failure to submit an affidavit of merit as required by N.J.S.A. 2A:53A-27.

As we previously observed in our earlier opinion addressing this dispute, "[a]ll of the claims arose from plaintiff's entry into an operating agreement . . . for the formation of a limited liability company . . . through which plaintiff, his cousin and [Martin] owned and operated a bar" that ultimately failed. Gastelu I, slip op. at 2. In the present matter, the motion judge denied RK&O's motion seeking summary judgment after concluding it was premature and that the requirement for an affidavit of merit was inapplicable to plaintiff's claim, but even if it was, the one he filed met the statute's requirements.

The judge later granted RK&O's second motion to dismiss under Rule 4:6-2(e), after denying an earlier motion for the same relief and permitting plaintiff to amend his complaint. The judge granted the second motion to dismiss after he concluded that the amended complaint insufficiently pled a cause of actionfor legal malpractice against Martin. We affirm the dismissal of plaintiff's complaint. For that reason, we do not reach RK&O's contentions on its cross-appeal.

We need not recite here the details of plaintiff's allegations, as set forth in Gastelu I, relative to the formation of the subject business venture, his and Martin's roles in its operations, and Martin's conduct that injured plaintiff. See Gastelu I slip op. at 3-6. Suffice it to say for our purposes, plaintiff's complaint asserted that Martin's actions, which included his practicing law without being admitted in New Jersey, not advising plaintiff to seek independent counsel or provide him with a retainer agreement, violated New Jersey's Rules of Professional Conduct (RPC), "deviated from accepted standards of legal practice, breached his contract and breached a fiduciary duty to [p]laintiff all of which are . . . substantial factor[s] causing [p]laintiffs economic losses." Id. at 5-6 (alterations in original).

As noted, after our remand, the motion judge permitted plaintiff to file an amended complaint. In the second count of the amended complaint,² plaintiff again asserted that RK&O was "vicariously liable" for Martin's actions as he"held himself [out] as an attorney who was representing the [p]laintiff and the business," and in doing so, acted as RK&O's agent when he failed to comply with the RPCs and "deviated from accepted standards of legal practice, breached RPC's, violated New Jersey liquor laws, violated the unlawful practice of law statute, breached his contract and breached his fiduciary duty to [p]laintiff."

The actions for which plaintiff alleged RK&O was responsible were stated in the first count. There, plaintiff initially claimed that an attorney-client relationship was formed when Martin told plaintiff that he and his firm would represent the parties and plaintiff would not have to pay for their legal services. But, allegedly contrary to RPC 1.5, no retainer agreement was ever executed by plaintiff and Martin. According to plaintiff's allegations, "[p]laintiff ha[d] been prejudiced by the lack of this document, as set forth hereinafter."

The pleading also alleged that Martin prepared an operating agreement for the business, but excluded "certain pages that he added later without advising plaintiff." Martin also represented that RK&O would be handling negotiations with a third party and the firm would "get [the] deal done." The allegations then described how Martin and the other non-lawyer defendants mishandled the business operations or attempted to interfere with plaintiff's interest in the same,including his right to be compensated for services he rendered to the business or to receive profits.

Plaintiff then asserted that Martin, as RK&O's agent, misrepresented that he was a New Jersey attorney and violated RPC 1.8 by not advising plaintiff to secure independent counsel relating to the business venture with Martin and not refraining from "engag[ing] in activities giving rise to a clear conflict of interest." According to plaintiff, if he had been properly advised, he would have obtained his own attorney, which would have prevented his losses. Plaintiff concluded by reasserting his allegation from his earlier complaint about Martin, and therefore RK&O, deviating "from accepted standards."

Martin filed a motion to dismiss the fourth count of the amended complaint and to refer the claim made therein to arbitration in accordance with our opinion Gastelu I, and to dismiss the remaining counts under Rule 4:6-2(e). The following day, RK&O filed its motion seeking the dismissal of the complaint under the same Rule. On November 20, 2015, the motion judge granted Martin's motion. The judge set forth his reasons in a rider to the order.³

In the rider, the motion judge explained his obligation under Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739 (1989) when "determining the adequacy of a pleading." He then identified the elements of a cause of action for legal malpractice. Citing to McGrogan v. Till, 167 N.J. 414, 425 (2011), he explained that the claim required proof of (1) an attorney-client relationship; (2) a duty created by that relationship; (3) a breach of that duty; and (4) proximate causation. Relying on Baxt v. Liloia, 155 N.J. 190, 199-202 (1998), the judge reviewed the relationship between an allegation that an attorney violated an RPC to a claim of professional negligence. The judge stated that evidence of a violation supports a claim of legal malpractice, but the violation alone does not "per se give rise to tortious claims."

Turning to plaintiff's claims against RK&O, the judge addressed the law firm's alleged vicarious liability for Martin's actions under the doctrine of respondeat superior, noting that an employer can be liable "if the employee was acting within the scope of his or her employment." Relying on Carter v. Reynolds, 175 N.J. 402 (2003), the motion judge explained that "[i]n order for an employee's conduct to fall within the scope of employment, the conduct must: (1) be of the kind he or she is employed to perform, (2) occur substantially withinthe authorized time and space limits, and (3) [be] actuated, at least in part, by a purpose to serve the master."

Applying those legal principles, the judge found plaintiff sufficiently pled the existence of an attorney-client relationship between plaintiff and Martin because Martin referenced his firm when he and plaintiff were discussing the venture. Despite the existence of the attorney-client relationship, the judge found malpractice was not sufficiently pled because the first amended complaint merely alleged ethical violations "which alone [were] not sufficient to establish a cause of action for legal malpractice."⁴

The judge also rejected plaintiff's attempt to establish professional negligence by alleging Martin violated New Jersey liquor laws in his operation of the bar and the statute barring the unauthorized practice of law. The judge concluded that "[s]uch allegations [were] insufficient to defeat Martin's [m]otion [and] without a claim for legal malpractice against Martin, there [was] no claim for vicarious liability against RK&O." The judge stated that "both motions[were] granted [and the first amended complaint was] dismissed, with prejudice."

After plaintiff dismissed his claims against the other defendants, he filed this appeal, but later withdrew it as it pertained to Martin. RK&O cross-appealed from the earlier order denying its summary judgment and affidavit of merit motions.

On appeal, plaintiff asserts that the motion judge erred by concluding that the first amended complaint relied solely upon plaintiff's allegations about Martin violating the RPC's. According to plaintiff, his pleading "set[] forth numerous facts that are not reliant upon or concern ethical violations." While we agree that the pleading contains numerous allegations unrelated to the RPC's, we disagree with plaintiff that they were sufficient to state a cause of action for professional negligence.

At the outset, we determine that since plaintiff withdrew his appeal from the motion judge's order dismissing with prejudice the malpractice claims against Martin, the appeal arguing that RK&O is still liable is without any merit. Where all claims...