A New Jersey appeals court has ruled that a disbarred attorney cannot sue the law firm that once represented him for malpractice or breach of fiduciary duty in connection with a fee dispute.
Appellate Division Judges Richard Hoffman and Karen Suter, in an unpublished opinion, upheld a decision from the Essex County Superior Court dismissing the lawsuit filed by the disbarred lawyer, Andrew Schildiner, against the firm he hired, the Toscano Law Firm in Caldwell, and its head partner, Patrick Toscano Jr.
“Defendants did not commit malpractice,” the panel said. “Because this is merely a fee dispute, defendants did not breach a fiduciary duty.”
The retainer dispute stems from Toscano’s representation of Schildiner, who was disbarred by consent in January 2013 after a random audit by the Office of Attorney Ethics concluded he had knowingly misappropriated trust account funds, according to the Office of Attorney Ethics’ 2013 annual report.
After Schildiner was disbarred, the case was referred to the Bergen County Prosecutor’s Office, and he retained Toscano as his defense lawyer in March 2013, paying a flat-fee retainer of $100,000, according to court documents. But when no charges were brought, Schildiner asked Toscano for his money back. Toscano refused, prompting Schildiner to file a suit in Essex County Superior Court.
Schildiner discharged Toscano in July 2013, by which point Toscano had generated a file of fewer than 30 pages, according to court documents.
The case, which was the subject of multiple motions, was heard by three separate judges.
The first judge ordered the Toscano firm to provide an audit detailing how the fees were accrued. The firm said it performed 110 hours of work and, billing at a rate of $505 an hour, was entitled to keep $55,550, according to the court. The firm also said it paid $30,000 to a former associate, Arthur Margeotes, who had worked on the case but whose employment had been terminated.
Toscano agreed to repay Schildiner $14,450, but Schildiner objected, and the judge, after examining the audit, ordered Toscano to deposit $44,450 with the court.
A second judge on the case then said Toscano should repay $60,094 to Schildiner.
Schildiner and his new attorney, Kenneth Thyne, then filed a malpractice and breach of fiduciary duty suit against Toscano and his firm, and added a demand for counsel fees.
A third judge affirmed the second judge’s order demanding that the Toscano firm deposit the $60,094 with the court, but dismissed the malpractice and breach of fiduciary duty lawsuit.
The appeals court said there was no evidence of malpractice.
“The alleged malpractice had nothing to do with the fee agreement between the lawyer and the client,” the panel said.
Toscano, who represented his firm on the appeal, welcomed the ruling.
“This was a fee dispute,” he said. “This was never a malpractice case.”
Toscano said a disgruntled client should not use the threat of a malpractice case to resolve a fee dispute.
“We believe 100 percent that this was entirely and wholly unethical,” he said.
Thyne, of Roper & Thyne in Totowa, did not return a call seeking comment.
Margeotes, now with Franzbaum, Cohen & Raia in Warren, said he was not a party to the disputed retainer agreement and that he and Toscano agreed to mutually end their business relationship.