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Litigation Privilege Protects Lawyers From Suit Over Their Conduct of Suit
New Jersey Law Journal
November 10, 2009
The litigation privilege that protects parties and their lawyers from liability for statements in court applies equally well to actions that lawyers take in furtherance of a case, a New Jersey appeals court says.
Monday's ruling, in Wallach v. Gowing, A-3869-08, is a victory for Kenneth Goodkind and his firm, Flaster Greenberg of Cherry Hill, N.J., who sued the opposing lawyer in a mold-contamination case and were sued by him in return.
The original litigation was filed by more than 50 homeowners suing builder Quaker Group shortly after plaintiffs lawyer Brad Krupnick settled his own suit against Quaker for mold damage to his home.
Quaker, represented by Goodkind, tried to get Krupnick disqualified, claiming he used information from his own case in breach of the settlement's confidentiality clause. When Superior Court Judge Ronald Freeman denied the motion, Quaker filed a third-party complaint against Krupnick.
Krupnick responded with a fourth-party complaint against Goodkind and Flaster Greenberg, alleging tortious interference with contract and prospective economic advantage. Freeman denied without prejudice a motion by Goodkind and his firm to dismiss the claims, and he refused reconsideration, but the Appellate Division granted leave to appeal.
On Monday, in a per curiam opinion, Judges Stephen Skillman and William Gilroy tossed the fourth-party complaint, holding Goodkind and Flaster Greenberg were protected by the litigation privilege.
The panel said the controlling precedent is Loigman v. Middletown, 185 N.J. 566 (2006), which applied the litigation privilege in dismissing a First Amendment claim against a lawyer who tried to use a sequestration motion to exclude the plaintiff from an administrative hearing. The Court held the motion was a "communication" within a proceeding and thus was covered by the privilege.
"There is no support in Loigman for the trial court's view that the litigation privilege applies only to 'statements' and not to 'actions' relating to the litigation," Skillman and Gilroy wrote. "Goodkind and Flaster/Greenberg's litigation activities on behalf of their clients are indistinguishable from the sequestration motion that the attorney involved in Loigman filed on behalf of his client."
Quaker's claim against Krupnick, on the other hand, continues to move forward, though it has been severed from the main case, allowing Krupnick to keep representing the Wallach plaintiffs.
Krupnick, of Josel & Feenane in Philadelphia, has developed a niche in the burgeoning realm of toxic mold litigation, starting with his own suit against Quaker, where he also represented four other plaintiffs.
There was no flashing or caulking around the windows of his home, which allowed water to get in around the frames and mold to develop in the insulation and drywall, says Krupnick.
Remediating the problem can require taking down the whole front of the house, he says.
When he settled his case in July 2007, he and his co-plaintiffs signed a release form with a confidentiality provision that he says barred them from disclosing the settlement amount but did not preclude him from bringing new mold suits on behalf of other clients.
Quaker contends that the release covers the cases Krupnick has filed on behalf of other plaintiffs and prohibits him from "utilizing any knowledge and experience [he] obtained in the prior disputes."
Its complaint alleges Krupnick violated the terms of the release by talking up his own experience in suing Quaker to solicit clients. Krupnick also allegedly disclosed confidential information related to other homeowners' settlements.
Quaker has claimed breach of contract and of the implied covenant of good faith and fair dealing against Krupnick and his wife Tami. It also asserted those claims against a Voorhees, N.J., couple, Stacy and Neil Scholnick, who allegedly signed confidential releases in February 2008 but discussed the settlement amount with the Wallach plaintiffs and other Quaker homeowners.
Krupnick denies any violation of confidentiality and calls Quaker's suit against him "a strong-arm tactic to try to put me out of business" and stop him from bringing cases.
"Nowhere does it say you can't help other people, you can't make a living," he says of the release.
"They want to muzzle me," he adds.
In his view, Quaker's goal in suing him was to get him thrown off the case, "to pry me away from these plaintiffs." He moved to sever the claim so he could stay in the case.
Freeman granted the motion, and Quaker's breach of contract case is now pending before Judge Michele Fox.
Though the litigation privilege barred Krupnick's tortious interference claim against the lawyers, it did not shield Quaker. Krupnick's claim against the company was also severed from the main case and is also pending before Fox, says Krupnick.
Goodkind says he believes Krupnick "used information that he obtained from Quaker in connection with his settlement to further the claims of his clients in the litigation."
The appeals court was correct in applying the litigation privilege because "we wouldn't want to be in a world where every time a lawyer files something in litigation, they become embroiled in the litigation as a party."
"Lawyers should not be sued for just doing their job," says Mitchell Kizner, also of Flaster Greenberg, who handled the appeal, adding the ruling "preserved the integrity of the adversarial system."
Quaker Group, which is based in Voorhees, stopped building houses in 2002. According to its Web site, it owns and manages more than 750 residential apartment homes and several commercial buildings in suburban Philadelphia and southern New Jersey.
