A family court judge properly refused to sign a consent order for ex-spouses he found were trying, with their lawyers, to erase substantial fees owed to prior counsel, a state appeals court held on Wednesday.
The Appellate Division, in Clemente v. Clemente, A-0487-11, agreed with Monmouth County Superior Court Judge Terence Flynn that signing the order would have constituted a "gross dereliction of his judicial responsibilities."
Flynn had held that John and Linda Clemente had conspired with their lawyers to violate court rules and to circumvent precedent barring assignment of malpractice claims. He also found the lawyers at fault and vowed to lodge an ethics grievance against them.
The ruling is a victory for the prior counsel, Ansell Grimm & Aaron of Ocean Township, which was awarded $288,820 in fees for representing Linda in divorce litigation, and for WithumSmith+Brown, a Princeton accounting firm that was awarded $122,800 for its valuation of John’s medical practice.
The case was filed in 2003 and the divorce granted in 2006, but litigation continued for years, leading eventually to John filing for bankruptcy and trying unsuccessfully to discharge his debts to Linda, Ansell Grimm and WithumSmith.
The law firm filed a separate state court action to enforce the fee awards and in December 2010, got a receiver appointed to oversee John’s medical practice and make sure he paid the fees.
John’s appeal in that case was still pending in May 2011 when his lawyer, Gary Fox of Fox & Melofchik in Ocean, sent Flynn the consent order, signed by both parties. Linda was then pro se but was getting legal advice informally from her cousin, Bloomfield solo Anthony Coviello.
The consent order effectively vacated all prior orders regarding John’s obligations to pay Linda alimony, equitable distribution and child support, as well as the legal and expert fees.
Flynn, in a Sept. 1, 2011, opinion said that despite pressure from Fox to sign the order, he instead contacted Ansell Grimm and WithumSmith to see if they knew about it. They said they did not, so he sent them copies and scheduled briefing and oral argument.
Fox then informed Flynn that he had sent the consent order to the Appellate Division based on his view that it had jurisdiction. The appeals court, however, dismissed the appeal without prejudice and remanded.
Flynn then rejected arguments that he had no power to evaluate the contents of the order or to consider the impact on Ansell Grimm and WithumSmith because they were not parties.
He held he was obligated to make sure it was "fair and just" and cited case law recognizing that legal fees awarded to litigants properly belong to lawyers, making them parties in interest.
Flynn disagreed that a civil suit to collect the fees would suffice as a remedy, saying the issue had been litigated and a separate action was not needed.
"This is not a case where the attorney is applying for anything new," Flynn wrote. "Here the Ansell firm is simply seeking to keep what they have already been given and to prevent [Linda Clemente] from giving it away."
Flynn said the version of the consent order sent to the appeals court was "sanitized" in that it omitted references in the original to vacating the fee orders and to a side agreement executed the same day that said it was to be deemed part of the settlement between the Clementes.
Flynn called the side agreement a "smoking gun." He ordered the parties to disclose it after they resisted his request for it, with Coviello asserting it contained nothing relevant.
What Flynn deemed most significant was a provision in which Linda agreed to be named as plaintiff in a malpractice case she filed against Ansell Grimm in June 2011, with John paying for the suit and keeping 95 percent of any recovery. Flynn termed Linda’s 5 percent share a "fig leaf to make it look like she is the real party in interest."
Flynn said the order "would have abrogated counsel and expert fee awards reduced to judgment and deemed nondischargeable in bankruptcy without notice to those in whose favor the judgments had been entered."
Flynn also faulted Fox and Coviello for their role in negotiating the deal and their lack of candor in trying to conceal it. He said it amounted to attempted fraud on the court and he would report them to the Office of Attorney Ethics.
Appellate Division Judges Jane Grall and Allison Accurso acknowledged that Flynn’s opinion was "strongly worded" but found no evidence of bias because his conclusions were accurate and his comments "amply justified."
Stephen Pascarella of Red Bank, who represented John Clemente on appeal, says Flynn "crossed the line" and abused his discretion in not approving what amounted to a postjudgment settlement, expressing more concern for the attorneys than for the parties.
Pascarella adds that his client might seek review.
Ansell Grimm’s James Aaron says the malpractice case was thrown out and the firm was awarded $318,000 on its counterclaim, a sum that overlaps earlier fee awards.
In addition, Judge Dennis O’Brien, who replaced the retired Flynn, recently ordered Clemente to pay $5,000 a week toward the fees, with two-thirds going to Ansell Grimm and one-third to WithumSmith.
Aaron calls the case a 10-year "lawyer’s nightmare."
To date, the OAE has not brought charges against Fox or Coviello, and Fox says he believes there will be none.
He points out that Flynn made his decision without an evidentiary hearing at which he could have inquired whether the clients came up with the agreement themselves and whether they directed the attorneys not to reveal it, "which is what occurred."
He also says the parties did not see their agreement as an assignment of the malpractice suit, only a financing arrangement.
Coviello declines comment.