A legal malpractice suit against Trenk DiPasquale Della Fera & Sodono and two of its former lawyers should be dismissed, the firm said in recently filed court papers, because the trustee board of the Newark Watershed Conservation and Development Corp. had a vacant seat when it filed the complaint.
West Orange-based Trenk DiPasquale and the two former attorneys for the firm, Elnardo Webster II and Jodi Luciani, filed the motion to dismiss Monday in connection with Newark Watershed’s Chapter 11 case before U.S. Bankruptcy Judge Vincent Papalia of the District of New Jersey.
When the Newark Watershed filed a complaint for malpractice and breach of fiduciary duty against Trenk DiPasquale, Webster and Luciani—in June 2016—one of its three trustees had recently resigned, leaving the board with a vacant seat, the firm said in its motion.
Therefore, the motion argued, the board lacked authority to assert the malpractice claims because having a vacancy on the board violated a 2014 Superior Court order mandating that the board have three members.
The motion alternatively asks Papalia for summary judgment on Newark Watershed’s claims that its former legal counsel allowed the agency’s board to take actions without a proper quorum and allowed it to consider converting the agency to a municipal utilities authority, even though its governing documents provided no such authority.
Newark Watershed incurred millions of dollars in fees to consultants and professionals in the “misguided and improper” effort to convert to a municipal utilities authority, the suit claims.
The malpractice complaint stems from a stint by Webster and Luciani, and the Trenk DiPasquale firm, as counsel to the Newark Watershed from 2007 to 2012. Webster and Luciani continued to represent the agency after they left Trenk DiPasquale to join Newark firm Genova Burns in 2012.
The claims against Trenk DiPasquale and the attorneys are part of a larger effort to recoup damages from a period of lax oversight at the agency. The agency, during bankruptcy, had filed a wide range of adversary claims against employees, contractors and advisers.
The Newark Watershed brought claims against both Genova Burns and Trenk DiPasquale after mediation efforts failed. In 2016 Genova Burns paid $1 million to the Newark Watershed to settle claims over representation of the agency by Webster and Luciani, while they were affiliated with that firm in 2012 and 2013.
In its motion to dismiss, Trenk DiPasquale cites a state statute requiring a nonprofit corporation to have no fewer than three trustees. The firm also cited In re Machne Menachem Inc., a 2012 case where the U.S. Court of Appeals for the Third Circuit affirmed a ruling invalidating prior actions of a nonprofit corporation when its board lacked the requisite number of members.
The Newark Watershed’s previous board voted to dissolve itself in 2012. In June 2013, Superior Court Judge Dennis Carey III appointed a provisional board of three members to oversee the agency: former Supreme Court Chief Justice James Zazzali, former Presiding Appellate Division Judge Dorothea Wefing and former Associate Justice James Coleman Jr. Coleman later stepped down and was replaced by ex-federal and state prosecutor Edwin Stier.
Zazzali resigned from the board in early 2016, and was not replaced, leaving Wefing and Stier.
The watershed filed its first adversary proceeding in November 2015, and in June 2016, after Zazzali’s departure, it filed an amended complaint, raising claims against Webster, Luciani and Trenk DiPasquale for the first time.
Trenk DiPasquale said in the dismissal motion Monday about the Newark Watershed’s claims that Webster and Luciani failed to properly advise the agency’s board on conversion to a municipal utilities authority, that they breached no duty to their client.
“They were directed to explore the establishment of an MUA by the Newark Watershed, and that’s what they did. They followed the directives of their client. No cause of action for breach of any duty may lie against them under these circumstances,” the motion said.
Trenk DiPasquale, Webster and Luciani are represented by William O’Connor of McElroy, Deutsch, Mulvaney & Carpenter in Morristown, who did not return a call about the case.
James Scarpone of Scarpone & Vargo in Newark, representing the watershed, also did not return a call.