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Judge Who Scoffed at Dispute Between Former Law Partners Is Reversed
New Jersey Law Journal
September 09, 2008
A trial judge had an obligation to hold a plenary hearing on disputed issues in a suit between two former law firm partners, even if he thought the matter petty and unworthy of the lawyers involved, an appeals court ruled last week.
The panel reversed Monmouth County, N.J., Superior Court Judge Alexander Lehrer, who decided motions to enforce litigants' rights based on conflicting certifications, after calling the dispute "the most ridiculous thing I've ever seen" and questioning whether the amount at issue justified the cost of a hearing.
Appellate Division Judges Edwin Stern and Christine Miniman said that although they had "great respect for [Lehrer's] belief that the litigation might be more costly than the amount in dispute ... , the court has an obligation to decide the dispute when one exists."
The case, Goldman v. Rubin, A-0297-07, arose from the dissolution of Hayt, Hayt & Landau more than five years ago. Russell Goldman and Martin Rubin were partners at the Eatontown, N.J., collections firm for more than 10 years. They were the only equity partners when Goldman left around 2003. They were also co-owners of First National Acceptance Co., or FNAC, which bought up delinquent consumer accounts for collection.
Goldman sued Rubin, the firm and FNAC on Oct. 31, 2003, over his share of the practice and business. They resolved the FNAC claims on May 28, 2004, by agreeing to split FNAC into two entities: Sycamore Financial Services, owned by Goldman, and First American Acceptance Co., owned by Rubin. Sycamore was to pay the cost for the hundreds of substitutions of counsel needed.
On Oct. 6, 2004, Goldman and Rubin struck a deal on the claims over the firm's dissolution. Rubin was to pay Goldman $57,000 by Jan. 5, 2005, and another $120,000 in five equal installments, starting Nov. 1, 2005. Rubin missed the $57,000 payment and the first installment but paid after Goldman obtained court orders.
On Nov. 1, 2006, an installment of $24,000 plus $5,280 in interest was due, but Rubin paid only $6,025.31. He arrived at that amount by deducting $10,000 for half the deductible in connection with two malpractice claims; $826.73 for fees advanced by the firm to out-of-state counsel; $8,090.63 for half the alleged cost of transferring the FNAC accounts; and $3,125 for preparing 297 substitutions of counsel. Rubin deducted $7,012.50 for exporting and converting file data to Excel format and reduced the interest to $4,067.
Goldman again asked the court to enforce the settlement, though he and Rubin resolved some differences by the time the motion was argued on March 16, 2007. On that date, Goldman asked Lehrer for the rest of the money, copies of the substitutions of attorney, a certification that Rubin had not removed documents from files transferred to Sycamore and a three-day deadline for Rubin to turn over payments on transferred files.
Rubin cross-moved for a ruling that he had complied with the settlement and Goldman was in breach and a declaration that all data had been transfered.
During oral argument, Lehrer expressed frustration over "two very good, very competent professionals, engaged in a divorce that never ends." He remarked about the cross-motion that it "makes me sick even to read this" and threatened to appoint a receiver.
He was skeptical about whether the parties really wanted an evidentiary hearing: "Let's spend $60,000 in legal fees for me to determine whether or not one lawyer owes another lawyer $24,000." He also referred sarcastically to "the magnificent issue of whether or not one is entitled to copies of files or the originals of files."
On July 6, 2007, without a hearing, Lehrer found Rubin in compliance with the settlement and the deductions proper, and denied Goldman's requests. Saying the only amount in dispute was $826.73, Lehrer called it "bizarre that these lawyers would spend tens of thousands of dollars to argue" over so little.
On appeal, Goldman argued that it was not just the $826 that was in dispute. He also contended that Lehrer should not have resolved contested factual issues based on conflicting certifications.
The appeals panel agreed. The setoffs claimed by Rubin required Lehrer to construe the agreement and if it was ambiguous, to consider parol evidence of the parties' intent, the panel said. There also must be a detailed line item bill for the legal services deducted by Rubin and a finding of reasonableness.
On remand, the case should be assigned to another judge "out of an excess of caution" because Lehrer's cracks about the lawsuit could be construed as expressing an opinion on credibility, the panel said.
That issue is moot as Lehrer has retired. Now the chief risk officer for Meridian Health in Neptune, N.J., he says, "I felt that it was my obligation to make the best decision I could on the papers to spare them further acrimony, loss of time in court and legal expenses."
Goldman's lawyer, Michael DiCicco of Bathgate Wegener & Wolf in Lakewood, N.J., says Rubin still owes about $70,000, with the final installment due Nov. 1, 2009.
Rubin's lawyer, Robert Feinberg of Giordano Halleran & Ciesla in Middletown, N.J., calls the case "typical hard-core litigation between former partners."
