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Firm Sued for Offering Job to Judge While He Sat on One of Its Cases
New Jersey Law Journal
November 12, 2008
Lawyers who engaged a retiring judge in discussions about a future business relationship while he was ruling in one of their cases have been sued for damages -- specifically, the other party's attorney fees.
The suit, just filed in Morris County, N.J., is the aftermath of the New Jersey Supreme Court's September ruling in Denike v. Cupo, A-61-07, which upended a commercial suit judgment based on a perceived appearance of impropriety.
The justices found Gerald Escala, a Bergen County Superior Court judge nearing retirement, created an appearance of impropriety by talking about a job offer with a Hackensack, N.J., law firm while winding up the dispute, in which the firm represented one of the parties.
Now the other party, Michael Cupo, is suing Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz and partner Thomas Herten, claiming the firm's actions amounted to professional negligence and have injured him in the pocketbook.
"Cupo spent over $250,000 to have his case against Lawrence Denike tried to conclusion and now as a direct result of the actions of Thomas J. Herten, Esq., and the Defendant law firm of Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz, LLC, he must spend additional funds for the retrial," reads the complaint in Cupo v. Herten.
The suit advances a third-party legal malpractice cause of action, for which Cupo's lawyer says there is ample precedent. "Cupo is a third-party beneficiary to the contract between Denike and Herten," says his attorney, Jeffrey Pocaro, a Fanwood, N.J., solo. "Herten's got an obligation not to injure my client."
Herten's job offer came in the final chapter of a contentious, three-year dispute between Cupo and Denike, founders of a mortgage company who decided to go their separate ways.
According to court papers, Escala issued a final decision in the underlying case on Jan. 23, 2006, ordering Denike to pay Cupo the $731,682. The next day, Herten visited the judge's chambers, inquired about his retirement plans and asked whether he would consider joining Herten Berstein in some capacity. Escala outlined the type of firm relationship he was contemplating. Herten discussed the proposed relationship with his partners on Jan. 25 and told Escala they would need a few days to analyze it.
On Jan. 30, Herten received from Escala by mail an order with terms that seemed inconsistent with the judge's prior decision. Herten submitted an alternate form of order, which the judge signed on Feb. 1. The same day, Herten told Escala the firm's analysis of the proposed relationship was not yet completed.
On Feb. 3, Herten visited Escala in chambers and the two agreed to a relationship in principle, with the financial terms to be worked out later. That night, Escala announced at a retirement dinner, attended by his former law clerks and staff, that he was joining the firm. He came aboard Feb. 27.
The Appellate Division said the episode did not amount to reversible error. But the Supreme Court ordered a new trial, finding that the job negotiations between a judge and an attorney appearing before that judge cast doubt on the integrity of the judicial process. Judges may not talk about jobs with parties or attorneys in a matter in which they are participating, and, if offered a job by parties in a matter before them, should halt the conversation immediately and disclose on the record what happened, the court said.
The new suit is seeking compensatory and punitive damages, including reimbursement for legal bills from the original trial. "It's wasted money now," says Pocaro.
The suit also seeks legal fees for the appeals process just completed and for the prospective retrial. What's more, if Cupo's recovery at retrial for his share of the business is less than the $731,682 he was awarded in the first trial, he will seek compensation from Herten's firm for the difference.
Cupo's suit includes counts of malpractice, deprivation of right to fair trial and tortious interference with business advantage. Pocaro says there is a common law right to bring a malpractice claim against an adversary's lawyer based on the Supreme Court's holding in Petrillo v. Bachenburg, 139 N.J. 472 (1995). There, the buyer in a real estate transaction sought damages from the seller's attorney for providing incomplete information about percolation tests on the property. The Petrillo court held that the seller's attorney had a fiduciary duty of care to the buyer and that such duty may exist "when the attorney knew, or should know, that nonclients will rely on the attorney's representations."
Pocaro says, "It's a question of foreseeability. Could Herten foresee his offering the judge a job before the judge signed the final orders would result in a retrial? The answer is yes."
Pocaro also intends to rely on the Appellate Division holding in Finderne Management Co. v. Barrett, 355 N.J. Super. 197 (2002), that "generally, to recover for an economic loss resulting from negligence by one furnishing a service, a "direct contractual relationship between the parties" must exist or the injured party must be a known "beneficiary of the defendant's undertaking."
