Negligent referral is not a recognized cause of action in New Jersey, an appeals court has ruled, rejecting a legal malpractice claim lodged against a lawyer who referred a personal injury client to a colleague.
The Appellate Division affirmed a Cape May County Superior Court judge’s dismissal of an auto accident plaintiff’s malpractice claim against attorney M. Daniel Perskie and his firm, Perskie & Fendt of Northfield.
A conflict that prompted Perskie to refer out Trevor Sheppard’s case also prevented him from supervising the handling of the case by the attorney who took it over, Frank Lentz, the appeals court said June 26 in Sheppard v. Lentz.
According to the decision, the underlying litigation stemmed from a motor vehicle crash in which Sheppard and two other men were injured after having drinks at the Borgata Hotel and Casino in Atlantic City.
Sheppard, represented by Lentz, filed suit against Kevin Farrell, one of the other occupants of the truck. His suit was consolidated for trial along with suits by Farrell and the third occupant, Scott Knoedler. The jury found that Knoedler was the driver. Sheppard’s dram shop claim against the Borgata was filed after the two-year statute of limitations. Because Sheppard did not bring any claims against Knoedler or bring a negligent entrustment claim against Farrell, he did not recover any damages, the court said.
Sheppard later filed a malpractice claim against Lentz, Perskie and their firms, later reaching a settlement with Lentz and his firm, according to the decision.
In his claim against Perskie, Sheppard contended that Perskie failed to follow up after the referral to ensure Lentz was conforming to the profession’s standard of care.
In July 2016, Superior Court Judge Christopher Gibson granted a motion for summary judgment by Perskie, finding he had no involvement in the case after introducing the client to Lentz. The judge also found Perskie had no reason to think Lentz would handle the case negligently.
On appeal before Judges Carmen Alvarez and Richard Geiger, Sheppard relied on a 1975 federal case from the District of New Jersey, Tormo v. Yormark, to argue that New Jersey recognizes a cause of action for the negligent transfer or referral of cases.
But the court said, “we are aware of no New Jersey case law recognizing a cause of action for negligent referral.” It also said Tormo was easily distinguishable, and added that the interpretation of New Jersey law by a federal judge was not binding on it.
In Tormo, the court denied a summary judgment motion in a case involving a New York attorney’s alleged liability in transferring his client’s personal injury case to a New Jersey lawyer who was under criminal indictment and who subsequently embezzled the client’s funds.
In the present case, there is no evidence that Lentz had committed any unethical behavior or committed any crimes at the time the case was transferred to him, the Appellate Division panel said.
After transferring the case to Lentz, Perskie continued to represent Sheppard in a PIP claim against his insurer for medical expenses related to the accident. In doing so, he may have shared discovery of medical bills or records with Lentz, but the insurance matter didn’t involve the issue of who was at fault for causing the accident, the panel said.
“In this case, we decline to recognize a new cause of action for negligent referral. Even if we were inclined to do so, the undisputed facts do not support a claim for negligent referral,” Alvarez and Geiger said in the unsigned ruling.
Thomas Duffy, an Absecon lawyer who represents Sheppard in the malpractice case, said he intends to seek certification from the Supreme Court. He said Perskie is liable because his retainer contract with Sheppard was never canceled and therefore was still in effect when Lentz took over the case.
Because of the way Perskie “walks down the hallway” along with Sheppard to refer the case, in the client’s eyes, Lentz “was indistinguishable from an associate” in Perskie’s firm, Duffy said.
Perskie and his firm were represented by Matthew Marrone of Goldberg Segalla in Philadelphia.
Marrone said the case is significant because the Appellate Division “specifically declined to recognize the cause of action of negligent referral.”
What’s more, he said, “in order for a legal malpractice claim to be maintained, there has to be an attorney-client relationship with respect to the matter at issue. In this case, Mr. Sheppard acknowledged that the attorney-client relationship [with Perskie] regarding the [automotive injury] lawsuit was terminated before the complaint was even filed.”