NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-0770-19
LYNN HOUGHTON, and HELPING SENIORS OF THE VALLEY, LLC,
Plaintiffs-Appellants,
v.
HILL WALLACK, LLP, and EVAN M. GOLDMAN, ESQ.,
Defendants-Respondents,
and
CHIPMAN BROWN CICERO & COLE, LLP, JOSEPH B. CICERO, ESQ., and STEPHANIE HABELOW, ESQ.,
Defendants. ____________________________
Argued May 20, 2021 – Decided June 24, 2021
Before Judges Yannotti, Haas, and Natali.
On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1081-18. Terry E. Thornton argued the cause for appellants (O'Brien Thornton, LLC, attorneys; Merrill M. O'Brien and Terry E. Thornton, on the briefs).
James G. O'Donohue argued the cause for respondents (Hill Wallack, LLP, attorneys; Victoria J. Airgood and James G. O'Donohue, on the brief).
PER CURIAM
In this appeal, plaintiffs Lynn Houghton and Helping Seniors of the
Valley, LLC, challenge an October 9, 2019 Law Division order dismissing their
legal malpractice claims against defendants Evan Goldman and Hill Wallack,
LLP. For the following reasons, we vacate the October 9, 2019 order and
remand for further proceedings.
I.
To provide context for our opinion, we detail the salient facts and
procedural history. Houghton is the sole owner of Helping Seniors, a
Pennsylvania business dedicated to providing non-medical support services to
the elderly. The business is a franchisee of Seniors Helping Seniors, LLC,
(SHS), a company incorporated in Delaware and headquartered in Pennsylvania.
Houghton executed an initial ten-year franchise agreement with SHS in
November 2006.
A-0770-19 2 Under the terms of the agreement, plaintiffs agreed not to compete with
SHS for two years after termination of the agreement for any reason and agreed
to pay attorney's fees to SHS "in connection with the enforcement of the
[agreement's] covenants." Plaintiffs had the option to renew the agreement,
which they did by sending a notice of renewal to SHS for an additional term of
ten years commencing on November 18, 2016. On December 8, 2016, plaintiffs
executed a new franchise agreement "similar to the 2006 agreement," and which
contained a Delaware choice-of-law and forum clause.
In 2017, Houghton sought legal counsel to review severing her franchise
relationship with SHS so she could operate her business independently.
Houghton received Goldman's name from a colleague who described him as "a
successful New Jersey franchise attorney." After researching Goldman online,
she learned from Hill Wallack's website that he was "[c]ounsel in the Princeton,
[New Jersey] office" and chair of the firm's franchise law practice. At the time,
Goldman was admitted to practice law in New Jersey and the District of
Columbia and claimed to have litigated matters in at least seventeen different
states.
Houghton contacted Goldman on March 27, 2017 by calling the firm's
New Jersey phone number and leaving a voicemail on his office phone, which
A-0770-19 3 Goldman returned from his New York cell phone number. For the duration of
their relationship, Houghton and Goldman communicated exclusively through
telephone and email, primarily while Goldman was located outside New Jersey.
Houghton never went to Goldman's Princeton office.
During their initial call, Houghton told Goldman she "couldn't risk [her]
business in any way," and Goldman responded he would recommend against
action if he did not find a "winnable" way out of the franchise agreement. After
reviewing the agreement and relevant federal franchise law, Goldman believed
he found a "loophole" supporting termination of the agreement and sent
Houghton a March 29, 2017 engagement letter limiting the scope of their initial
engagement to "consult[ing] . . . regarding concerns with the . . . franchise
agreement."
Goldman sent the retainer letter to Houghton electronically on Hill
Wallack letterhead that listed its Princeton address and New Jersey telephone
number. Houghton returned the signed letter by mail to Goldman's Princeton
office where Houghton sent all future checks for his legal services.
On April 4, 2017, Goldman sent SHS a notice of rescission to its
Pennsylvania headquarters declaring the 2016 franchise agreement "void ab
initio." Two days later, Goldman notified SHS that Houghton intended to
A-0770-19 4 withhold franchise royalty payments. SHS's attorney responded in a letter
addressed to Goldman's Princeton office disputing the allegations and seeking
to resolve the dispute amicably.
In an April 22, 2017 email, Goldman advised Houghton that SHS would
"try to get an injunction potentially shutting [her] down." Alarmed, Houghton
responded that it was of "great concern that they could shut [her] down!" In a
May 2, 2017 email, Houghton told Goldman that she was "completely stressed
out over [her] business and career potential."
After settlement negotiations failed, Goldman sent Houghton a second
engagement letter on May 15, 2017, again on Hill Wallack letterhead, expanding
the scope of his and Hill Wallack's representation to include "litigation
commenced by, or against, [SHS]." The letter also indicated that Houghton
would have to "retain separate, local counsel who is licensed to practice in the
[S]tate of Delaware," which plaintiffs did in an agreement with Chipman Brown
Cicero & Cole, LLP, and its lawyers Joseph B. Cicero and Stephanie Habelow
(CBCC defendants).
Neither of plaintiffs' engagement letters with Goldman and Hill Wallack
included forum selection, arbitration, or choice-of-law provisions. Conversely,
plaintiffs' engagement letter with CBCC included a provision in which the
A-0770-19 5 parties agreed to resolve "any dispute arising out of or relating to [the
engagement] . . . including but not limited to any alleged claims for legal
malpractice . . . [through] binding arbitration in Wilmington, Delaware."
Plaintiffs filed a five-count complaint against SHS in Delaware state court
on June 27, 2017, later amended on September 25, 2017, alleging in part that
SHS breached the agreement by failing to provide plaintiffs with necessary
inspections, training, and support. Plaintiffs also contended that SHS
committed fraud by omission by failing to provide them with a franchise
disclosure document prior to entering the 2016 franchise agreement. The
complaint identified Goldman as plaintiffs' counsel along with the CBCC
defendants.
SHS moved to dismiss plaintiffs' complaint. On December 6, 2017, the
court reserved decision until briefing was completed on jurisdictional issues but
noted it was "not yet impressed by the [federal disclosure document] argument
because when [it] read the code [and] federal regulations, [it] read it as [not]
apply[ing] to renewal whether or not there has been an [i]nterruption in the
business." Houghton terminated Goldman and Hill Wallack's services on
December 28, 2017. On January 4, 2018, plaintiffs voluntarily dismissed the
amended complaint against SHS.
A-0770-19 6 SHS thereafter filed an application seeking attorneys' fees based on the
2016 agreement and local Delaware rules, including that the Delaware action
was filed and prosecuted in bad faith. During arguments, the Delaware judge
noted the "wackiness of the complaint . . . was not something . . . plaintiff[s]
did. It's something that [Goldman] did." The judge noted he would "hate to
punish the plaintiff[s] for [this] when the [culpable party] . . . [was] the author
of this complaint." Plaintiffs contend that during negotiations, SHS's attorney
told the CBCC defendants that SHS would "shut [Houghton] down" if litigation
continued. Plaintiffs ultimately agreed to reimburse SHS for $120,000 in
attorneys' fees incurred in defending the litigation.
On May 17, 2018, plaintiffs filed a complaint against Goldman, Hill
Wallack, and the CBCC defendants in the Law Division in Mercer County
alleging legal malpractice in connection with their advice in the SHS litigation.
Plaintiffs contended venue was proper in Mercer County because Goldman and
Hill Wallack's Princeton office is where "the majority of the acts which
constitute legal malpractice occurred."
On November 27, 2018, the CBCC defendants moved to dismiss plaintiffs'
complaint contending New Jersey courts lacked in personam jurisdiction over
them. They also argued the arbitration agreement contained in their retainer
A-0770-19 7 agreement mandated dismissal. Neither Goldman nor Hill Wallack joined
CBCC's application.
Plaintiffs opposed CBCC's motion and, on December 5, 2018, filed a
separate application solely against Goldman and Hill Wallack. In that motion,
plaintiffs sought a determination that New Jersey law applied to their
malpractice claims. They specifically argued that Goldman and Hill Wallack
bore responsibility for the costs and attorneys' fees caused by their malpractice
under the fee shifting principles espoused in Saffer v. Willoughby, 143 N.J. 256
(1996).
On February 19, 2019, the court held oral arguments on both applications
and reserved its decisions. The court resolved the outstanding motions by
issuing four separate orders with accompanying written statements of reasons:
three on September 19, 2019, and a fourth, "[f]inal" order on October 9, 2019.
All three of the September 19, 2019 orders were captioned "order
dismissing plaintiffs' complaint for lack of in personam jurisdiction and
compelling arbitration in Wilmington, Delaware." Notably, in those orders, the
court explicitly granted relief only to plaintiffs' claims against the CBCC
defendants, and in the analysis section of the appended statements of reasons
focused primarily on the claims and arguments against those defendants. For
A-0770-19 8 example, without addressing Goldman or Hill Wallack's contacts with New
Jersey, or New Jersey's possible interest in resolving plaintiffs' malpractice
action, the court summarily concluded that "Delaware [is] the [S]tate with the
first and foremost interest in adjudicating this matter" because CBCC and its
attorneys "created the malpractice injury against [p]laintiff[s]," did the work,
and filed the complaint in Delaware.
The court also commented that CBCC "sponsored . . . Goldman['s] pro
hac vice [application] in a Delaware court." The court therefore found Delaware
had a "primary interest in adjudicating this matter because its residents/resident
business created an injury against [plaintiffs] in the State of Delaware ," and
denied plaintiffs' motion to apply New Jersey law.
In a third "amended" order, also issued on September 19, 2019, the court
dismissed plaintiffs' complaint against the CBCC defendants based on
jurisdictional grounds and the arbitration provision contained in their
engagement letter. The statement of reasons appended to that order was
substantially different than the statements of reasons appended to the two other
orders issued on September 19, 2019 discussed above.
Confused regarding the effect of the three orders on their choice-of-law
application in light of the court's reliance on the CBCC defendants' contacts to
A-0770-19 9 support its decisions, plaintiffs' counsel sought clarification from the court. In
response, the court issued a fourth order on October 9, 2019, which it
characterized as "[f]inal" and "amended." That order explicitly denied plaintiffs'
choice-of-law motion and dismissed the claims against Goldman and Hill
Wallack. The court held:
1. For the reasons in the [s]tatement of [r]easons annexed to the prior orders entered on September 19, 2019 . . . , the [c]ourt denies [p]laintiffs' motion to determine that New Jersey law under Saffer v[.] Willoughby applies to plaintiffs' malpractice claim against defendants Evan Goldman and Hill Wallack[,] LLP; and
2. The [c]ourt having determined that "Delaware appears to be the most appropriate forum to address the injury to plaintiff[s]," plaintiffs' claims against Hill Wallack and Evan Goldman are dismissed without prejudice, because [the court] make[s] no determination of Delaware [l]aw as to the [a]rbitration [c]lause, and referred to litigation and or arbitration in Delaware; and
3. This constitutes the [f]inal [o]rder of the [c]ourt dismissing all of [p]laintiffs' claims and referring those claims to litigation and or arbitration in Delaware.
This appeal followed in which plaintiffs challenge only the October 9, 2019
order dismissing the claims against Goldman and Hill Wallack.
Before us, plaintiffs first argue that the court's sua sponte dismissal of
their complaint, relief which was never requested by Goldman or Hill Wallack,
A-0770-19 10 was without notice and violated their due process rights. Second, plaintiffs
contend that the court's choice-of-law decision was procedurally improper and
substantively erroneous.
As to the merits of the court's choice-of-law decision, plaintiffs maintain:
1) as a New Jersey attorney, the court had no basis to exclude Goldman and Hill
Wallack from the Saffer rule, as it is intrinsic to the attorney-client relationship,
and within the Supreme Court's exclusive rulemaking authority; 2) Goldman and
Hill Wallack are subject to the Saffer rule because the recoverability of
attorney's fees is a procedural remedy subject to the law of the forum; 3) the
court failed to conduct properly a New Jersey choice-of-law analysis and
seemingly gave insufficient weight to New Jersey's interests in the litigation;
and 4) the matter should be reassigned to a different judge in the event of a
remand.
Defendants argue that the court properly dismissed plaintiffs' claims under
the doctrine of forum non conveniens, and that the court did not otherwise
violate plaintiffs' due process rights. On the choice-of-law issue, defendants
maintain Delaware, not New Jersey, has the most significant interest in resolving
plaintiffs' alleged malpractice claims because that is where the relevant tortious
conduct and alleged injury occurred.
A-0770-19 11 We agree, in part, with plaintiffs' first point and accordingly vacate the
October 9, 2019 order and remand for further proceedings. The court improperly
dismissed plaintiffs' complaint in response to a routine application seeking a
choice-of-law determination, and without Goldman or Hill Wallack ever filing
a motion seeking affirmative relief, let alone a dismissal of plaintiffs' case. That
dispositive decision was taken by the court without appropriate notice to
plaintiffs and the opportunity to respond. In any event, the court's application
of a foreign state's substantive law would not support dismissal of the complaint
on the record before the court.
Further, we cannot determine from the court's multiple orders if its
decision to dismiss plaintiffs' complaint was based on forum non conveniens
grounds. To the extent that the court's orders could be reasonably interpreted to
have granted such relief, we conclude the court failed to make appropriate
factual findings as to Goldman and Hill Wallack's contacts with New Jersey and
the unfairness, if any, in requiring a New Jersey-licensed lawyer and law firm
to respond to claims of malpractice which, according to plaintiffs, occurred in
New Jersey. The court appeared to conflate the dearth of connections between
New Jersey and the CBCC defendants with those among plaintiffs, Goldman,
and Hill Wallack.
A-0770-19 12 The court's choice-of-law decision suffered from similar infirmities. The
October 9, 2019 order and statement of reasons failed to correlate applicable and
well-settled New Jersey choice-of-law principles to the facts in the motion
record as they related to Goldman and Hill Wallack, rather than to the CBCC
defendants, including the parties' relationship and the locus of the underlying
malpractice. Finally, we decline to reassign the matter to a different judge on
II.
"Due process is not a fixed concept . . . but a flexible one that depends on
the particular circumstances." Doe v. Poritz, 142 N.J. 1, 106 (1995) (citations
omitted). "The minimum requirements of [procedural] due process of law are
notice and an opportunity to be heard[,] . . . mean[ing] an opportunity to be he ard
at a meaningful time and in a meaningful manner." Klier v. Sordoni Skanska
Constr. Co., 337 N.J. Super. 76, 84 (App. Div. 2001). Consistent with these
principles a trial court has no authority to dismiss an action, on its own motion,
without giving the parties notice and an opportunity to be heard. Mullane v.
Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314-15 (1950); Feuchtbaum v.
Constantini, 59 N.J. 167, 175 (1971); see also Curzi v. Raub, 415 N.J. Super. 1,
28 (App. Div. 2010) (holding that due process required the trial judge to give
A-0770-19 13 the parties notice and an opportunity to be heard prior to reviewing a punitive
damage award).
In addition, our Rules require that when resolving dispositive
applications, a trial judge "by an opinion or memorandum decision, either
written or oral, find the facts and state [his or her] conclusions of law thereon in
all actions tried without a jury." The Supreme Court has stated "[n]aked
conclusions do not satisfy the purpose of [Rule] 1:7-4. Rather, the trial court
must state clearly its factual findings and correlate them with the relevant legal
conclusions." Curtis v. Finneran, 83 N.J. 563, 570 (1980). The "[f]ailure to
perform that duty 'constitutes a disservice to the litigants, the attorneys and the
appellate court.'" Id. at 569-70 (citation omitted).
Here, the court's sua sponte dismissal of plaintiffs' complaint contravened
these principles. The only applications before the court, and to which the parties
had ample notice and opportunity to be heard, were the CBCC defendants'
motion to dismiss plaintiffs' complaint based on the lack of in personam
jurisdiction and their retainer agreement's arbitration clause, and plaintiffs'
application for a choice-of-law determination as to Goldman and Hill Wallack.
Neither Goldman nor Hill Wallack sought a dismissal of plaintiffs' malpractice
A-0770-19 14 claims, based on forum non conveniens, lack of personal jurisdiction, or the
existence of a mandatory arbitration provision in their engagement letter.
Further, in its decision on the choice-of-law motion and the motion to
dismiss, the court failed to comply with Rule 1:7-4, which requires the court to
clearly state its "factual findings and correlate them with the relevant legal
conclusions." Curtis, 83 N.J. at 570. Rather, in its September 19, 2019
statements of reasons, which it incorporated into the October 9, 2019 final order,
the court exclusively referred to CBCC and its attorneys' contacts, except for a
brief mention of CBCC's work to admit Goldman pro hac vice.
When a civil action is brought in New Jersey, our courts apply New
Jersey's choice-of-law rules in deciding whether this State's or another state's
law governs. McCarrell v. Hoffmann-La Roche, Inc., 227 N.J. 569, 583 (2017)
(citation omitted). "The first step in a conflicts analysis is to decide whether
there is an actual conflict between the laws of the states with interests in the
litigation." Cont'l Ins. v. Honeywell Int'l, Inc., 234 N.J. 23, 46 (2018) (citing
P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132, 143 (2008)). We are to take a
"defendant-by-defendant approach to choice of law" when performing this
analysis. See Ginsberg ex rel. Ginsberg v. Quest Diagnostics, Inc., 441 N.J.
Super. 198, 230 (App. Div. 2015), aff'd, 227 N.J. 7 (2016).
A-0770-19 15 "If there is no actual conflict, then the choice-of-law question is
inconsequential, and the forum state applies its own law to resolve the disputed
issue." Rowe v. Hoffmann-La Roche, Inc., 189 N.J. 615, 621 (2007). "A
conflict of law requires a 'substantive difference' between the laws of the
interested states." Cont'l Ins., 234 N.J. at 46 (quoting DeMarco v. Stoddard, 223
N.J. 363, 383 (2015)). "A 'substantive difference' is one that 'is offensive or
repugnant to the public policy of this State.'" Ibid. (quoting DeMarco, 223 N.J.
at 383).
New Jersey employs the most significant relationship test in resolving
choice-of-law questions in tort actions. See In re Accutane Litig., 235 N.J. 229,
260 (2018). In Calabotta v. Philbro Animal Health Corp., 460 N.J. Super. 38,
57 (App. Div. 2019), we analyzed which state "has the most significant
relationship to the occurrence and the parties under the principles stated in § 6 "
of the Restatement (Second) Conflict of Law. Those contacts include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil[e], residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
A-0770-19 16 [Id. at 57 (alteration in original) (quoting Restatement (Second) of Conflict of Law § 145(2) (Am. Law Inst. 1971)).]
Here, the trial court failed to provide a defendant-by-defendant analysis
in its choice-of-law discussion, relying primarily on facts related to the CBCC
defendants instead of those related to Goldman and Hill Wallack. Second, the
court's choice-of-law analysis failed to address whether there was a conflict
between the substantive laws of New Jersey and Delaware, or which state had
the most significant relationship to the occurrence and the parties. On remand,
the court must determine whether there is such a conflict, and if so, address
which state has the most "significant relationship" under the applicable
Restatement principles.
Finally, we note that even if the court concludes Delaware law should
apply to defendants' alleged tortious conduct, any such decision would not settle
issues of the appropriate forum. See Ginsberg, 441 N.J. Super. at 246, 250
(finding New York law applied to defendants but remanding for continuation of
proceedings in New Jersey). As such, this was not a situation in where the court
properly exercised its discretionary authority to dismiss an action as resolution
of the application before it resolved all remaining issues between the moving
parties. See Sheild v. Welch, 4 N.J. 563, 567 (1950) (holding a court has broad
A-0770-19 17 authority to settle questions of law prior to trial and "[if] no issue remains[,]
judgment must necessarily follow for one or the other party").
III.
Defendants also contend that the court correctly dismissed plaintiffs'
complaint under the doctrine of forum non conveniens. In making this
argument, defendants appear to request that we discern from the court's
September 19, 2019 and October 9, 2019 orders its intention to dismiss the case
based on the principles detailed in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-
09 (1947). We decline to do so.
The doctrine of forum non conveniens "is equitable in nature and,
therefore, decisions concerning its application ordinarily are left to the sound
discretion of the trial court." Kurzke v. Nissan Motor Corp. in U.S.A., 164 N.J.
159, 165 (2000) (citations omitted). An "appellate court should not substitute
its judgment for that of the trial judge unless there is a showing of clear abuse
of that discretion." Ibid. When a court granting a forum non conveniens
dismissal "misconceives the applicable law, however, de novo review is required
because the [trial court's] exercise of the legal discretion lacks a foundation and
becomes an arbitrary act." Paradise Enters. Ltd. v. Sapir, 356 N.J. Super. 96,
A-0770-19 18 102 (App. Div. 2002) (alteration in original) (citations and internal quotation
marks omitted).
In exercising its discretion in granting dismissal for forum non
conveniens, the court is guided by: (1) preferential consideration to plaintiff's
chosen forum; (2) the adequacy of the chosen forum, and that defendant be
"amenable to process" there; and (3) the private- and public-interest factors set
forth in Gulf Oil Corp., 330 U.S. at 508-09. Yousef v. Gen. Dynamics Corp.,
205 N.J. 543, 557-58 (2011). The private-interest factors are:
[1] the relative ease of access to sources of proof; [2] the availability of compulsory process; [3] the cost of obtaining the attendance of witnesses; [4] the ability to view an accident scene, if that would be beneficial to the factfinder; [5] the enforceability of a judgment; and [6] all other practical problems that make trial of a case easy, expeditious and inexpensive.
[Ibid. (citations and internal quotation marks omitted).]
The public-interest factors are:
[1] consideration of trial delays that may occur because of backlogs in a jurisdiction; [2] whether jurors should be compelled to hear a case that has no or little relationship to their community; [3] the benefit to a community of having localized controversies decided at home; and [4] whether the law governing the case will be the law of the forum where the case is tried.
A-0770-19 19 A court should not dismiss based on forum non conveniens unless the
choice of forum is "demonstrably inappropriate." Ibid. (citing Kurzke, 164 N.J.
at 171-72). In addition, "[a]s a general rule, a motion for dismissal due to forum
non conveniens should not be heard unless the movant has made a good faith
effort to obtain discovery and can provide the court with a record verifying that
discovery is unreasonably inadequate for litigating in the forum chosen by the
plaintiff." Kurzke, 164 N.J. at 168.
Here, the court did not evaluate the Gulf Oil factors as it related to
Goldman or Hill Wallack, or if plaintiffs' choice of a New Jersey forum, even as
non-residents, was "demonstrably inappropriate." See Chubb Custom Ins. v.
Prudential Ins. of Am., 394 N.J. Super. 71, 81-82 (App. Div. 2007) (reversing
trial court's forum non conveniens dismissal as abuse of discretion because
balance of factors did not favor defendant, discovery had not begun, and New
Jersey-resident plaintiffs were entitled to deference in choice of forum ), aff'd,
195 N.J. 231 (2008). Because the court did not properly consider the Gulf Oil
factors, we reject defendants' contention that the court's dismissal was supported
under the doctrine of forum non conveniens.
A-0770-19 20 IV.
Finally, we have considered plaintiffs' arguments that the matter be
reassigned to a different judge on remand and conclude they are of insufficient
merit to warrant discussion in this opinion. See R. 2:11-3(e)(1)(E).
In sum, we vacate the October 9, 2019 order dismissing plaintiffs' claims
against Goldman and Hill Wallack and remand for the court to issue
supplemental findings of fact and conclusions of law consistent with Rule 1:7-
4(a) as to plaintiffs' choice-of-law motion. Nothing in our opinion should be
interpreted as an expression of our views as to the substantive law to be applied
to plaintiffs' malpractice claims against Goldman and Hill Wallack, or the
propriety of the matter proceeding in a New Jersey court.
Vacated and remanded for further proceedings consistent with this
opinion. We do not retain jurisdiction.
A-0770-19 21