The Appellate Division upheld dismissal of a legal malpractice action against Margulies Wind by a former client involved in estate litigation, but in the process the panel remanded an award of $353,683 to the New Jersey firm for further proceedings.
“At the heart of this case is plaintiff’s assertion [that] defendants failed to properly trace the assets of the estate,” the court said Tuesday in Warnock v. Margulies Wind.
The panel found nothing on which to base that assertion, but it nevertheless reversed the award of $229,591 in unpaid fees and $124.092 in interest to Jersey City-based Margulies Wind.
“Here, defendants offered no evidence to support a finding that their fees were reasonable and fair,” the court said in the per curiam decision. “Although a certification asserting such fees were reasonable and fair is sufficient to prevail on a motion for summary judgment, defendants neither testified at trial nor offered a certification to this effect.”
According to the decision, the firm’s representation of plaintiff Loretta Warnock dates back to December 2009, when she hired the firm via a $20,000 retainer that: provided for the firm to be paid 10 percent of any recovery greater than $400,000, established hourly rates of $450 and $400 for legal work, and imposed a 12 percent annual interest rate on unpaid bills.
By the time she hired the firm, Warnock already had hired and fired prior counsel in the dispute over the estate of her father, Willard Jacobs Sr., who had seven children and died in 2003.
Margulies Wind hired an appraiser as an expert, Rufino Fernandez, who ultimately determined there was no questionable activity with the estate’s accounts, and so he was not called by Margulies Wind as a witness at the probate trial, the decision noted.
The probate court said Warnock’s claims led to an amended accounting that turned up $282,489 in potentially “secreted” assets, but also held that she failed to prove that assets had been hidden by a sibling. The probate court still awarded fees based on the amended accounting, though only $40,000 of the more than $300,000 in fees sought, according to the decision.
In mid-2011, Warnock declined to participate in settlement talks in the estate litigation, and fired Margulies Wind, which later sought fee arbitration on $192,656 in legal fees and Fernandez’s $36,935 fee, but to no avail. Warnock then filed a legal malpractice action in Morris County, claiming negligent representation and overbilling, and the firm lodged counterclaims for the fees it sought.
After several years, the matter went to trial, at which Warnock’s expert—claiming her losses at $506,000 in money withdrawn from the estate, as well as $1.8 million in deposits that had been redacted from the accounting in probate court—was not allowed to testify based on net opinion. The judge, identified in electronic court records as Morris County Superior Court Judge W. Hunt Dumont, dismissed the legal malpractice claim, and awarded $229,591 in fees and $124,092 in fees to Margulies Wind on the counterclaim, which Warnock didn’t contest, according to the decision.
On appeal, Appellate Division Judges Marie Simonelli, Amy O’Connor and Mary Gibbons Whipple affirmed Dumont’s ruling barring testimony from Warnock’s expert, who “ignored defendants’ and Fernandez’s efforts, as well as their inability to find questionable entries in the [bank] records,” the appeals court said, also rejecting as unproven claims that Margulies Wind failed by neglecting to seek unredacted bank records in probate court.
Warnock “failed to establish she suffered a loss caused by defendants’ conduct,” the court said.
She also “could not support her legal malpractice claim without expert testimony on liability and damages and, therefore, her complaint was properly dismissed” once the expert testimony was excluded, the panel added.
Warnock got a friendlier reception on the fee award, which the Appellate Division said was issued without Margulies Wind meeting the burden of proving the reasonableness of its fees.
“Here, the court entered judgment on defendants’ counterclaim before plaintiff rested,” the court said.
The error was “harmless based on all the circumstances,” but “without evidence regarding the reasonableness and necessity of the work performed, the trial court’s entry of judgment constituted plain error because, absent evidence defendants’ fees were reasonable and fair, a factfinder could have found in plaintiff’s favor,” the court said.
“Such error is capable of producing an unjust result as judgment was entered in defendants’ favor, notwithstanding their failure to carry their burden of proof,” the panel said, remanding on that issue.
Neither Jason Rindosh of Bedi Rindosh in Fort Lee, the attorney for Warnock, nor Patrick McCormick of Hardin, Kundla, McKeon & Poletto in Springfield, for Margulies Wind, returned a call about the ruling.
Robert Margulies, managing partner of Margulies Wind, also didn’t return a call seeking comment.