St. Louis, LLC v. Nagel Rice, LLC, DOCKET NO. A-5409-18

ST. LOUIS, LLC, and JOHN BOULTON, Plaintiffs-Appellants, v. NAGEL RICE, LLC, BRUCE H. NAGEL, ESQ., ELLIOTT L. PELL, ESQ.,GREENBAUM ROWE SMITH & DAVIS, LLP, DENNIS ESTIS, ESQ.,ECKERT SEAMANS, attorneys at law, MICHAEL SPERO,and NEIL DAY, ESQ., Defendants-Respondents.

DOCKET NO. A-5409-18

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Argued March 8, 2021

May 25, 2021

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 Currier, Gooden Brown and DeAlmeida.

On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-0389-16.

Kenneth S. Thyne argued the cause for appellants (Roper & Thyne, LLC, attorneys; Kenneth S. Thyne, of counsel and on the briefs).

Thomas F. Quinn argued the cause for respondents Nagel Rice, LLC, and Bruce H. Nagel, Esq. (Wilson Elser Moskowitz, LLP, attorneys; Thomas F. Quinn, of counsel; Joanna Piorek and Susan Karlovich, on the brief).

Elliott Louis Pell, Esq., respondent, argued the cause pro se.

William D. Grand argued the cause for respondents Greenbaum Rowe Smith & Davis, LLP, and Dennis Estis, Esq. (Greenbaum Rowe Smith & Davis, LLP, attorneys; William D. Grand and Robert J. Flanagan, III, on the brief).

Marshall D. Bilder argued the cause for respondents Eckert Seamans, Michael Spero, and Neil Day, Esq. (Eckert Seamans Cherin & Mellott, LLC, attorneys; Marshall D. Bilder and Jason S. Feinstein, of counsel and on the brief).

PER CURIAM

This convoluted malpractice action arises out of plaintiffs' attempts to construct a two-story, 36,000 square-foot building with glass walls. On this nine million dollar project, John Boulton acted as general contractor. He established St. Louis, LLC to purchase the property and manage the construction. Boulton and his wife intended to use the building as a residence and office space for their charitable foundation. The project was never completed and plaintiffs eventually sold the property for $2.5 million.

I.The Construction Litigation

Plaintiffs retained counsel - James Mackevich - to represent St. Louis, LLC in three separate construction defect lawsuits: (1) St. Louis, LLC v. Anthony & Sylvan Pools Corp. (Sylvan Pools); (2) St. Louis, LLC v. Final Touch Glass & Mirror, Inc. (Final Touch); and (3) St. Louis, LLC v. Bomanite of New Jersey (Bomanite). Our published opinion in the Final Touch lawsuit provides background information about the unique nature of the construction project underlying the three lawsuits. See generally St. Louis, LLC v. Final Touch Glass & Mirror, Inc., 386 N.J. Super. 177, 179-85 (App. Div. 2006).

All three lawsuits proceeded to a jury trial. In Sylvan Pools, the jury awarded plaintiffs approximately $35,000 in compensatory damages for their breach of contract claim and $750,000 for a violation of the Consumer Fraud Act,¹ which was trebled to $2,250,000. The court awarded $117,453.85 in attorney's fees. The defendant appealed from the final judgment; plaintiffs cross-appealed from a portion of the counsel fee award and the court's denial of prejudgment interest. We affirmed. St. Louis, LLC v. Anthony & Sylvan PoolsCorp., No. A-3754-04 (App. Div. June 12, 2006) (slip op. at 3-4).

In Final Touch, the jury found defendant Final Touch forty percent negligent and third-party defendant Wolf, plaintiffs' construction manager, sixty percent negligent.² 386 N.J. Super. at 179-80. Plaintiffs collected $400,000. We affirmed. Id. at 181.

In Bomanite, the third lawsuit relating to the construction, the jury found plaintiffs were seventy-five percent responsible for the alleged damages, leaving Bomanite twenty-five percent liable for the damage to the property's custom HVAC unit. The court ordered plaintiffs to pay Bomanite $100,000 for its trial expenses. Plaintiffs only recovered about $100. Plaintiffs did not appeal from the verdict.

The Malpractice Action against Mackevich

Dissatisfied with the outcome of the three lawsuits, plaintiffs retained Nagel Rice, LLP³ to represent them in a legal malpractice action against Mackevich and his firm. Pell was the primary attorney working on the case, supervised by Nagel. Boulton prepared a forty-two-page memorandum for hisnew counsel detailing the history of the three construction defect lawsuits and Mackevich's alleged acts of malpractice.

Nagel Rice, in turn, retained defendant Dennis Estis of Greenbaum, Rowe, Smith & Davis LLP to serve as plaintiffs' expert in evaluating the merits of their claims against Mackevich. Estis sent Boulton an engagement letter and a retainer agreement that Boulton signed, agreeing to pay Estis a retainer and hourly rate.

The letter explained that Nagel Rice had retained Estis to evaluate the merits of the malpractice action against Mackevich, author an affidavit of merit, if appropriate, and serve as an expert witness on plaintiffs' behalf if Estis found a deviation from the standard of care required of an attorney in a construction defect case. The retainer agreement stated that "[t]he scope of the work is limited to that stated in our engagement letter and any enlargement of the scope authorized by the client(s) in writing or orally."

In November 2009, Estis met with Pell and Boulton and reviewed case-related documents, including a memo from the Nagel Rice defendants summarizing the malpractice claims. The following month, Pell forwarded Estis a draft affidavit of merit for all three construction defect lawsuits. Estis replied that he could not "opine with regard to the Bomanite matter" and revised theaffidavit to address Mackevich's malpractice only in the Sylvan Pools and Final Touch cases. Later in the litigation, Estis also prepared expert reports opining on the professional negligence claims in the two lawsuits. The affidavit of merit was filed on December 14, 2009.

During this litigation, Pell stated in a certification that Estis advised he could not provide an affidavit of merit in the Bomanite case without reviewing the trial transcripts. Pell stated that he asked Boulton for the transcripts and advised him of the time requirements to submit an affidavit of merit.

Estis confirmed he told Pell he could not sign an affidavit of merit without reviewing the Bomanite trial transcripts. In his certification, Boulton denied that Pell ever told him about the need for the transcripts or requested his "permission" to order the transcripts prior to the due date for the affidavit of merit.

Estis never received the transcripts or any additional information about the Bomanite lawsuit. The Nagel Rice defendants did not ask Estis to issue an affidavit of merit for that matter after he advised he could not do so. According to the first amended complaint, the deadline to file the affidavit of merit was March 18, 2010.

In July 2009, while still represented by the Nagel Rice defendants, Boulton retained Michael Spero, who then worked at Sterns & Weinroth, P.C., for "confidential consultations" regarding the Mackevich case because Boulton "started to distrust the Nagel firm and wanted to get . . . a reality check from another attorney."

A year later, in July 2010, Spero substituted in for Pell and Nagel Rice as counsel for plaintiffs and took over the Mackevich case. Under the retainer agreement, Spero and other attorneys would bill on an hourly rate, however, the legal fees were discounted by fifteen percent. The agreement also stated that the firm "bill[s] for out-of-pocket disbursements and certain other expenses and service charges" including photocopying and filing fees. Boulton "agree[d] to be personally responsible for the payment of legal fees and disbursements" and acknowledged that payment of same "is in no way contingent upon the outcome of a matter."

In 2013, Sterns & Weinroth merged its practice with Eckert Seamans Cherin & Melliott, LLC and Spero continued to work as a partner in the newfirm.⁴ In January 2014, Spero agreed to a reduction of his hourly rate with the continuation of the fifteen percent discount.

Spero described the Mackevich case as "enormously complex and extremely time-consuming." He was required to familiarize himself with the three construction defect lawsuits and to review and organize more than thirty boxes of documents obtained from the Nagel Rice defendants. Discovery involved "the exchange of thousands of pages of written discovery and [fourteen] days of depositions." Because Boulton had "discarded" documents pertaining to the construction project, Spero stated he had to "reconstruct[]" the costs, which took him over a year to do.

Spero consulted with various experts regarding construction issues and kept Estis on board as plaintiffs' legal malpractice expert. He spoke with Boulton weekly about the case, and billed for more than 200 telephone calls with him.⁵

While the Nagel Rice defendants were still representing plaintiffs, Mackevich moved to dismiss the Bomanite-related malpractice claim forplaintiffs' failure to file an affidavit of merit. Spero opposed the motion. The court granted the motion, dismissing the Bomanite case.

Spero continued to prosecute the Sylvan Pools- and Final Touch-related malpractice claims on plaintiffs' behalf. He participated in "extensive motion practice" on the case and attended two mediation sessions.

By the time trial took place in January 2015, Boulton and Spero had agreed to drop the "marginal" Sylvan Pools malpractice case and to only pursue the Final Touch malpractice claim. The parties agreed to a bench trial.

After five days of trial, the court concluded that plaintiffs had not established that "Mackevich and his firm deviated in any way from acceptable standards of practice by an attorney." In a lengthy written opinion, the court made findings and explained its conclusions. The judge stated:

Every bit of evidence that I heard and

...