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1 février, 2008 10:02

Mary Pat Gallagher

New Jersey Law Journal

01-31-2008

The New Jersey Supreme Court has agreed to review a case that could determine whether a lawyer is liable for furthering a client's illegitimate purpose in pursuing litigation.

The resolution will have implications for lawyers involved in what a court may deem a SLAPP suit -- a strategic lawsuit against public participation -- which can invite "SLAPP-back" counterclaims for malicious use of process.

The case, LoBiondo v. Schwartz, C-462/463-07, also raises the question of what a client must show in order to rely on the advice-of-counsel defense where a claim is found to be baseless.

The suit accuses a Middletown, N.J., law firm, Giordano, Halleran & Ciesla, and two lawyers of pursuing a case on behalf of a client who prevailed at trial but was later found to have filed a meritless action.

The firm represented James LoBiondo Jr., the owner of the Surfrider Beach Club in Sea Bright, N.J., who sued neighbor Grace Schwartz and her daughters in 1991 over their use of leaflets, meetings and legal process to block the club's expansion. The Schwartzes had brought a successful court challenge to a planning board decision approving the expansion plans.

The Monmouth County, N.J., suit alleged defamation, intentional infliction of emotional distress and tortious interference with business advantage. LoBiondo won a $96,300 jury verdict against Grace Schwartz, though the trial judge reduced it to $3,000.

An appeals court reversed in 1999, finding the Schwartzes had engaged in protected speech, were essentially accurate in their statements and had made a prima facie showing that LoBiondo had filed a SLAPP suit. The case was remanded for the trial court to consider the Schwartzes' "SLAPP-back" counterclaims for malicious use of process and intentional infliction of emotional distress.

On remand, the Schwartzes also filed a third-party complaint for malicious use of process against Giordano Halleran and two of its lawyers, Steven Berlin and Michele Querques. They alleged the lawyers intentionally brought the case in bad faith, continued it even after they knew there was no reasonable basis for it and acted in concert with LoBiondo to abuse the litigation process.

Superior Court Judge Robert O'Hagan granted summary judgment dismissing the Schwartzes' claims against LoBiondo and Giordano Halleran.

Last Aug. 1, an appeals court affirmed per curium the dismissal of Giordano Halleran but reversed the dismissal of LoBiondo. LoBiondo v. Schwartz, A-4325-04.

Noting the absence of reported cases on the issue of what constitutes malicious use of process by a lawyer as opposed to a litigant, Judges Jack Lintner, George Seltzer and Christine Miniman looked to the Restatement (Third) of the Law Governing Lawyers, § 57(2), which conditions lawyer liability on lack of probable cause and an improper purpose.

The panel refused to impute the client's improper motive to the attorney.

"Even assuming Giordano could have been found to know that LoBiondo was litigating for an improper purpose -- a doubtful proposition -- no reasonable fact finder could determine that Giordano pursued this litigation with the intent to further its own illegitimate purpose or that it had adopted an illegitimate purpose of the client," the court said.

However, the panel was not convinced that LoBiondo's defense that he acted on his lawyers' advice could defeat the malicious-use-of-process claim against him as a matter of law.

To invoke the advice-of-counsel defense, the court said, a client must have acted in good-faith reliance on the advice after disclosing all the facts.

Though LoBiondo gave Giordano Halleran the Schwartz leaflets on which it based its suit, nothing suggested he affirmatively disclosed that Schwartz's statements were truthful, resulting in a complaint that falsely said Schwartz defamed LoBiondo, said the court.

"Nor was there any evidence that LoBiondo advised counsel that the purpose of the litigation was to inhibit Schwartz's exercise of her expressive rights, raising a factual question of whether the advice of counsel was sought and relied upon in good faith."

Thus, whether LoBiondo could rely on the advice of counsel was a question for the jury, said the court.

The Schwartzes and LoBiondo filed petitions for certification and both were granted on Jan. 24.

The Schwartzes' lawyer, Montclair, N.J., solo Joan Pransky, says the case raises the question whether a lawyer can hide behind a client's bad motive and the client can then hide behind the lawyer's advice.

Her co-counsel Ira Karasick says, "It's the lawyer's job to be the gatekeeper. You have to tell people they don't have a case."

David Bauman, who represents Giordano Halleran and the two attorneys, points out that lawyers are required to provide zealous representation and "have to be able to do that without fear of being held liable as insurers for the quality of their clients' cases." Bauman, with Bressler Amery & Ross in Florham Park, N.J., warns of a chilling effect on lawyers if the court reverses on the issue.

LoBiondo's lawyer, Ocean Township, N.J., solo Thomas Hirsch, is hoping for reversal on the advice-of-counsel issue. Failing that, he at least wants clarification of the standard articulated by the Appellate Division, which he sees as ambiguous.

"At what point is a layperson responsible for malicious prosecution" in a case that resulted in a jury verdict and was sustained by the trial judge, he asks.

He points out that Giordano Halleran admits LoBiondo gave the lawyers all the facts, even though LoBiondo has a cross-claim against its former lawyers and it would be in Giordano Halleran's best interest to deny it was told everything.

Berlin, now with Martin Clearwater & Bell in Newark, declines to comment. Querques, also no longer with Giordano Halleran, could not be reached for comment.