In a decision that offers some clarity on what is required of fee-collecting lawyers, the Appellate Division has said that a law firm’s mailing of pre-suit collection letters to a recipient’s last known address isn’t enough to satisfy the notice requirement if it’s learned that the mailings never got there.

Because New Jersey firm Helmer, Conley & Kasselman had “actual knowledge that defendant did not have notice of her right to request fee arbitration before it filed suit, we conclude Helmer did not satisfy Rule 1:20A-6, requiring dismissal of the complaint,” Appellate Division Judges Carmen Messano and Karen Suter said Wednesday.

The panel was careful to note that it didn’t intend to expand the rule’s requirements.

“The focus of our decision is narrow. We are not incorporating a general due diligence requirement into the Rule,” which “is an issue more appropriately left for the Supreme Court’s consideration,” Suter wrote for the panel. “We simply hold that where counsel has actual knowledge that the client or responsible third party did not receive the pre-action notice because both mailings were returned, the presumption of receipt has been rebutted.”

If mailings are returned, “counsel then should make a genuine effort to obtain a current address and resend the notice,” Suter continued. “To do otherwise undercuts the purpose of the Rule because it pays lip service to the client’s ‘right’ to request arbitration without giving any meaningful opportunity to the client to exercise it.”

According to Wednesday’s decision in Helmer, Conley & Kasselman v. Montalvo, which was unpublished, Helmer Conley, with offices in Haddon Heights and elsewhere throughout the state, represented Vincent Montalvo beginning in 2007, when Vincent’s sister-in-law, Barbara Montalvo, signed a guarantee promising to pay legal fees. The court didn’t reveal the nature of the representation. After Vincent failed to pay the outstanding fees, the firm in March 2013 sent a pre-action notice by regular and certified mail to Barbara’s last known address in Mays Landing. Both mailings were returned as not deliverable at that address, and unable to be forwarded.

Helmer Conley filed suit in January 2014 seeking $26,769, and attempted to serve the complaint on Barbara at a different address in Mays Landing, though default judgment ultimately was entered. Barbara claimed she only learned of the suit when her wages were garnished, and moved to vacate default, which was granted.

A mediator determined that Helmer Conley failed to give her sufficient notice under Rule 1:20A-6, according to the decision. The rule requires the pre-action notice to notify the recipient of the availability of fee arbitration, and requires that the notice “be sent … to the last known address” of the client or the third party responsible for payment of the legal fees.

Both Helmer Conley and Barbara moved for summary judgment. The firm contended that it substantially complied with the rule by sending the pre-action notice to Barbara’s last known address in Mays Landing.

Barbara was pro se in the case, and wrote the summary judgment brief herself, though she hired an attorney, Gary Marek, to argue the motion before the trial court, Marek told the Law Journal.

Atlantic County Superior Court Judge Joseph Marczyk granted Montalvo’s summary judgment motion. According to an excerpt included in the Appellate Division’s decision, Marczyk said Helmer Conley’s position on substantial compliance with the rule “‘would defeat the purpose of the rule if attorneys only had to send to the last known address without regard to whether or not plaintiff knows it’s the wrong address or finds out.’”

Helmer Conley appealed, contending that the judge below failed to apply the rule’s plain meaning—that sending notices by regular and certified mail to the recipient’s last known address is all that’s required.

The Appellate Division disagreed. “The problem is that both of the mailings were returned to Helmer with notations that defendant did not receive either one,” Suter wrote.

The recognized presumption that mail properly addressed, stamped and posted was received by the intended recipient “has been rebutted here because both the regular and certified mail were returned to Helmer,” Suter said.

The court said the rule’s purpose is to allow clients a short, 30-day window to avoid fee litigation in favor of fee arbitration, and noted that “the sanction for having not given this opportunity is severe, namely the dismissal of the complaint.”

The panel changed the dismissal from with prejudice to without prejudice, because the merits of the case were never reached. Helmer Conley contended that the statute of limitations should be equitably tolled, but the court declined to address that point, saying it’s unclear from the record whether that issue was raised below.

Marek, a Mount Laurel solo, handled appellate briefing and argument. He said he expects that Helmer Conley would now be considered beyond the statute of limitations, but said any effort to refile the fee suit would be opposed.

Rebecca McDowell of the Saldutti Law Group in Cherry Hill, who argued for Helmer Conley, declined to comment. A call to Helmer Conley was not answered.

Marek said the decision is an instructive one, because returned mail resulting from a pre-action notice is likely a regular occurrence.

He noted that oral arguments at the Appellate Division turned academic, including a specific discussion of what defines a “last known address.”

“Maybe the rule needs to be changed,” Marek said.