Where Fraud and Legal Malpractice Intersect with New Jersey Estate Planning

The New Jersey Appellate Division affirmed the lower court’s decision which granted the defendants’ Pre-Answer Motion to Dismiss the plaintiff’s amended complaint, pursuant to R. 4:6-2(e), for professional negligence, legal malpractice, breach of fiduciary duty, fraud, and other causes of action. See Dreher v. Ross et al., No. A-3805-19, 2022 N.J. Super. Unpub. LEXIS (App. Div. April 22, 2022). Specifically, the Appellate Court, affirming for substantially the same reasons stated by the lower court, adds that the plaintiff failed to specify a misrepresentation fraud claim against the defendants and failed to properly brief and assert a claim for legal malpractice from the drafting of plaintiff’s mother’s estate planning documents as well as the eventual administration of plaintiff’s mother’s estate.

In Dreher, the plaintiff filed suit against the attorney and his firm for fraud and legal malpractice in the drafting of her mother’s estate planning documents (a Will and Power of Attorney), advice provided to her brother who was listed as the plaintiff’s mother’s Executor and Attorney-in-Fact, as well as the overall administration of her mother’s estate; this litigation followed a settlement in or about March of 2018 of plaintiff’s Will Contest Litigation in the Chancery, Probate Part.  The estate planning documents drafted by defendants did not specifically name the plaintiff in the Power of Attorney and plaintiff’s mother’s Will only devised twenty percent of her mother’s estate to plaintiff while plaintiff’s brother was devised the remaining eighty percent.  Plaintiff’s amended complaint included an amended fraud claim as well as allegations for professional negligence, legal malpractice, and breach of fiduciary duty, which were previously dismissed with prejudice.  Further, the lower court dismissed plaintiff’s amended complaint as several claims were disallowed by prior order, therefore dismissed with prejudice, but the lower court again dismissed the fraud claim without prejudice for lack of specificity.

In New Jersey, fraud—specifically fraudulent misrepresentation— allegations must be pled with specificity and particularity, whereby the plaintiff failed to establish in her amended complaint how the defendants made a material representation to the plaintiff and how the plaintiff relied upon said representations.  Plaintiff only alleged that her mother’s attorney failed to disclose the attorney or his firm’s representation of plaintiff’s mother; the defendants had no duty to disclose their representation of the plaintiff’s mother.  Moreover, the Appellate Division, arguing the alternative, that even if the defendants made a material misrepresentation, the plaintiff failed to specifically state the effect of the misrepresentation on her. 

The Appellate Division also addressed the plaintiff’s claims for legal malpractice.  Plaintiff did not maintain an attorney-client relationship with the defendants, so the Appellate Division addresses the claims as a non-client suing the defendants.  The Appellate Division notes that “a duty to a non-client third party depends on balancing the attorney’s duty to represent clients vigorously, with the duty not to provide misleading information on which third parties foreseeably will rely.”  The Appellate Division and the lower court found the defendants only represented the plaintiff’s mother and brother and owed no duty to the plaintiff.  Moreover, the Appellate Division also found that plaintiff failed to allege that defendants rendered any negligent advice regarding the mother’s estate planning documents or the mother’s estate administration.

From a defense perspective, Dreher teaches us the importance of being aware of a client’s desires when drafting an estate plan as the language of the drafted documents will confer duties, obligations, and rights upon an Attorney-in-Fact and an Executor of a Will to avoid any material misrepresentations upon a potential non-client.  Additionally, awareness of the documents will prevent any potential legal malpractice for advice given directly to the client, their family members named in the drafted documents, or the administration of an estate. Therefore, it is important to have an estate plan drafted by a professional, like those at Callahan & Fusco, LLC, familiar with New Jersey Estate Practice to avoid legal malpractice in the drafting of such important documents to protect one’s family from future frustrations and litigation.

Connecticut Passes Law Instilling New Requirements Upon Pedestrians and Motorists

On October 1, 2021, Connecticut Governor, Ned Lamont, signed into law Public Act 21-28 (the “Act”), extending the language concerning pedestrian actions when utilizing a marked, uncontrolled cross walk (a crosswalk without a traffic signal to indicate a safe pedestrian crossing or one monitored by a traffic control officer).  The Act defines a pedestrian crossing the roadway with a crosswalk as “when the pedestrian (1) is within any portion of the crosswalk, (2) steps to the curb at the entrance to the crosswalk and indicates his or her intent to cross the roadway by raising his or her hand and arm towards oncoming traffic, or (3) indicates his or her intent to cross the roadway by moving any part of his or her body or an extension thereof, including, but not limited to, a wheelchair, cane, walking stick, crutch, bicycle, stroller, carriage, cart or leashed or harnessed dog, into the crosswalk at the entrance to the crosswalk”

This new Act puts the onus of crossing the roadway on the pedestrian.  The pedestrian must signal his intent to cross the roadway in a manner that is clear and obvious to drivers already established on the roadway.  Motorists as a result, appear to be required to be on the lookout for pedestrians and their body language when approaching intersections with uncontrolled crosswalks.  Further, a violation of this law will result in a possible infraction issued to the pedestrian.

In a recent matter, a commercial vehicle approached an uncontrolled crosswalk that connected two sides of a pedestrian/bike trail.  The commercial vehicle allegedly yielded at the crosswalk and the driver looked several times both ways to see if there were any pedestrians either already established in the crosswalk or demonstrating an intent to cross.  When the driver did not see anyone, the driver proceeded to enter the crosswalk.  As he began to proceed, a jogger appeared to dart in front of his vehicle and was knocked over and injured.  The vehicle was equipped with a dash camera that recorded the whole incident.  The video was provided to the police for their investigation.  Upon reviewing the footage, the police determined that the jogger had made no indication to the driver that he intended to cross the roadway.  Nor would the driver exercising ordinary care have been able to have noticed the jogger prior to proceeding through the crosswalk.  The jogger was issued a citation for violating the Act and found at fault for the accident.

The interpretation of the Act has not yet been settled by the courts.  Given that the language proposed by the legislature presents a potentially subjective interpretation, it will be an exercise in judicial discretion to see how the courts will interpret what may be the standard for a pedestrian in an uncontrolled crosswalk that he or she made a sufficient indication to motorists of their intent to cross the roadway via a crosswalk.  Will the courts interpret the Act as indicating a higher burden on pedestrians to signal motorists?  Or will the courts see this Act as placing another requirement on motorists to divine the intent of a pedestrian as to whether the pedestrian is signaling an intention to cross the roadway?  As with any recent law, it will take time before the courts take up the issue.  If the courts see this as putting a higher burden on the pedestrian, we may be able to shift liability onto the pedestrian in future civil litigation or at least lead a jury to place a higher contribution for any associated injuries resulting from a motor vehicle accident with pedestrians.

Florida’s Supreme Court Decides that Plaintiffs Can Only Admit at Trial the Discounted Amounts of their Medical Bills Paid by Medicare

It has long been a hotly contested issue in Florida personal injury cases whether a plaintiff who is Medicare eligible and has had the benefit of Medicare paying part or all of his medical expenses can board the full or “gross” amount of the expenses at trial, even if Medicare paid for them. The leading Florida cases were Thyssenkrupp Elevator Corp. v. Lasky, 868 So. 2d 547 (Fla. 4th DCA 2003) and Cooperative Leasing, Inc. v Johnson, 872 So. 2d 956, 960 (Fla. 2d DCA 2004), out of Florida’s Fourth and Second District Courts of Appeal, respectively. The Thyssenkrupp court held that, “when a provider charges for medical service or products and later accepts a lesser sum in full satisfaction by Medicare, the original charge becomes irrelevant because it does not tend to prove that the claimant has suffered any loss by reason of the charge.” Less than a year later, the Second District Court held similarly in Johnson. See Cooperative Leasing, 872 So. 2d at 960. “[T]he appropriate measure of compensatory damages for past medical expenses when Plaintiff has received Medicare benefits does not include the difference between the amount that the Medicare providers agreed to accept and the total amount of the Plaintiff’s medical bills.”).

However, other districts and circuit judges within those districts would routinely disagree with the Thyssenkrupp/Johnson rationale. Often, trial court judges ruled that plaintiffs could board the full amount of expenses, even if they were paid at significantly lower amounts before trial by Medicare.

On April 28, 2022, The Florida Supreme Court handed down a significant opinion in Dial v. Calusa Palms Master Ass'n, Inc., 47 Fla. L. Weekly S115b (Fla. Apr. 28, 2022). The Supreme Court reviewed the Second District Court of Appeals decision in Dial v. Calusa Palms Master Ass’n, Inc., 308 So. 3d 690 (Fla. 2d DCA 2020), in which the Second District Court certified the following question of great public importance:

Does the Holding in Joerg v. State Farm Mutual Automobile Insurance Co., 176 So. 3d 1247 (Fla. 2015), prohibiting the introduction of evidence of Medicare benefits in a personal injury case for purposes of a jury’s consideration of future medical expenses also apply to past medical expenses?

Id. at 692

The Dial case arose from a negligence action, in which Elaine Dial sought to recover past medical expenses due to injuries she sustained when she tripped and fell on property owned by Calusa Palms Master Association, Inc. Prior to trial, the trial court granted the Association’s motion in limine and ordered that Dial was precluded from introducing as evidence at trial the gross amount of her past medical expenses and limited her to introducing only the discounted amounts paid by Medicare. After the jury awarded Dial $34,641.69 in past medical expenses, Dial appealed the ruling and argued that the Florida Supreme Court’s holding in Joerg v. State Farm Mutual Automobile Insurance Co., 176 So. 3d 1247 (Fla. 2015) allowed her to admit into the evidence the full amount of her past medical expenses.

In 2015, the Florida Supreme Court in Joerg specifically addressed whether the exception to the collateral source rule applied to future benefits provided by social legislation, such of Medicare. The Court further concluded that future Medicare benefits are both uncertain and a liability, due to the right of reimbursement that Medicare retains.

Now, in deciding Dial, the Supreme Court has distinguished future Medicare benefits and held that they are to be treated differently from past expenses paid by Medicare. The Florida Supreme Court answered the Second District Court’s certified question in the negative and approved the Second District’s approach of precluding evidence of gross medical expenses and limiting plaintiffs to introducing only the discounted amounts paid by Medicare. Dial v. Calusa Palms Master Ass'n, Inc., 47 Fla. L. Weekly S115b (Fla. Apr. 28, 2022).

Following this ruling, the practical approach is for the defendant to move in limine before trial to preclude the plaintiff “from introducing as evidence the gross amount of her past medical expenses and limit her to introducing only the discounted amounts paid by Medicare.” Dial v. Calusa Palms Master Ass'n, Inc., 47 Fla. L. Weekly S115b (Fla. Apr. 28, 2022).

A few things of note. First, often a Medicare-eligible plaintiff will have a health insurance supplement. In those cases, the supplement is paid for and, therefore, not an unearned benefit or a benefit “to all,” like Medicare is. In those cases, the Medicare-paid expenses will be treated differently from those covered by the supplement and, potentially, can be admitted in their gross amount.

Second, the Dial opinion specifically concerns Medicare. However, its rationale may and, in the proper circumstances, should apply to other unearned benefits, such as Medicaid and worker’s compensation benefits.

Dial is another win for the defense side in Florida, following previous victories in the legislature’s adoption of the Daubert standard and the Supreme Court’s adoption of the federal standard for summary judgment.

Honesty is the Best Policy

The United States Court of Appeals recently addressed an appeal from a grant of Summary Judgment in favor of an insurance carrier on the issue of the homeowners association’s nondisclosure of potential claims resulting in concealment under Cal. Ins. Code § 331. See Atain Specialty Ins. Co. v. Lake Lindero HOA, No. 21-55319, 2022 U.S. App. LEXIS 3313, at *1 (9th Cir. Feb. 7, 2022). The Court determined that the insurance carrier was entitled to rescind the policy and had no duty to defend or indemnify the homeowners association in litigation.

In Atain, the California homeowners association, Lake Lindero Homeowners Association obtained liability insurance from Atain Specialty Insurance Company.  During the application process, the Association was required to complete an application that asked the Association to disclosure any fact, circumstance, or situation that may result in an action or claim against the corporation, or any of its directors or officers. The application specifically asked (1) “within the last five (5) years, has any inquiry, complaint, notice of hearing, claim or suit been made…against the organization, or any person proposed for Insurance in the capacity of etither Director, Officer, Trustee, Employee or Volunteer organization?” and (2) “Is any person proposed for this insurance aware of any fact, circumstance or situation, which may result in a claim against the organization, or any of its Directors…?”. The Association answered “No.” to both questions. The Association was later sued and sought to file a claim with Atain to defend the Association in suit.

The Insurance Carrier filed Motion for Summary Judgment and argued that, as a matter of law, it is entitled to rescind the policy due to material misrepresentations and concealments made by the Association in the application. The Trial Court determined that a material misrepresentation or concealment in an insurance application, whether it be intentional or unintentional, entitles the insurer to rescind the insurance policy. However, the Trial Court also asserts that if an application had no present knowledge of the facts sought, or failed to appreciate the significance of information related to him, the incorrect or incomplete responses would not be grounds for rescission. Ultimately, the Trial Court concluded that the Association concealed or misrepresented a material fact, that a claim would likely be brought against them, and consequently, the Insurance Carrier was entitled to rescind their policy and granted Summary Judgment in favor of Atain.

On Appeal, the Appeals Court upheld the Trial Court’s grant of Summary Judgment in favor of Atain. The Appeals Court determined that the Association had knowledge of potential claims against it, despite the fact that they had yet to develop into a pending claim, and that such information clearly presented a risk that Atain needed to assess in its underwriting process in the application process.

From a defense perspective, Atain teaches us that even mere knowledge of circumstances that may lead to litigation could lead to an insurer’s right to rescind their policy and end their duty to defend and indemnify. Atain shows the importance of an honesty during the application process for an insurance policy because a dishonest or incorrect answer may have lead the insurance company to deny coverage or later disclaim coverage.  Further, even an unintentional failure to disclose could lead to the insurer’s right to rescind coverage. Thus, it is best practice to disclose all material information and provide an honest and accurate representation.

NO IME, No Problem: How to Fight Claimant’s Permanency Opinions When You Do Not Have Your Own in New York Workers’ Compensation Matters

A New York State Supreme Court, Appellate Division, Third Department decision recently came out reversing a Workers’ Compensation Board (“WCB”) Decision based on the fact that Dr. David Capiola did not review all of the claimant’s medical records, his medical opinion did not comply with the Workers’ Compensation Guidelines, and his medical findings were inconsistent with Plaintiff’s complaints of pain and physical abilities.  See Matter of Ippolito v. NYC Transit Auth., 2022 NY Slip Op 01493 (App. Div.)

In this case, the self-insured employer was precluded from producing an independent medical examination (“IME”), so the only permanency opinion was from the claimant’s treating physician, Dr. Capiola. Id. at 2. Following Dr. Capiola’s deposition, the employer filed a written summation challenging Dr. Capiola’s permanency report, arguing that the finding of permanency was premature as the claimant did not exhaust conservative treatment, the doctor did not review all of the claimant's medical records, the schedule loss of use (“SLU”) opinion did not comply with the 2018 Workers' Compensation Guidelines (“Guidelines”) and the medical findings were inconsistent with the claimant's complaints of pain and physical abilities. Id. The Workers' Compensation Law Judge (“WCLJ”) found that the claimant had reached maximum medical improvement and was entitled to lump-sum awards based upon Dr. Capiola’s SLU opinions, with the exception of each hand, which the WCLJ reduced to 10% based on the special considerations set forth in the Guidelines as well as the mild limitations in claimant's range of motion. Id. Upon administrative review, the WCB affirmed, which led to this Third Department appeal in which the employer contended that the WCB “erred in not addressing the issues raised in its application for administrative review,” which the Third Department agreed with. Id.

The Third Department found that the decisions of the WCB and WCLJ did not address the substantive issues raised by the employer. Id. at 3. The Third Department reasoned that, “[a]lthough there was no opposing medical opinion and the Board ‘may not reject an uncontradicted opinion that is properly rendered,’ the issues raised by the employer in its application for review challenged the propriety and reliability of Capiola's permanency findings.” Id. (quoting Matter of Taylor v Buffalo Psychiatric Ctr., 199 AD3d 1110, 1112 [2021]). The Third Department further explained that the WCB’s failure to address the claims raised by the employer deprived the employer of the opportunity to have the WCB consider the merits of issues that were properly preserved. As such, the matter was remitted to the WCB for resolution of those issues. 

This decision stresses the importance of continuing to fight medical opinions when you have lost the ability to obtain your own. However, confronting claimant’s doctors’ range of motion findings, reported physical abilities, and exhausted treatment courses opinions with the Guidelines is a tool that carriers and self-insured employers should utilize in defending workers’ compensation claims whether or not they have an IME. Furthermore, this decision solidifies the importance in raising and maintaining these issues at hearings and preserving your right to appeal WCLJ and WCB decisions.

Callahan & Fusco Obtains a Dismissal for Sub-Contractor in Pennsylvania

The Court of Common Pleas of York County, Pennsylvania recently granted the Motion for Summary Judgment brought by Callahan & Fusco on behalf of their client, one of the defendant contractors, dismissing the plaintiffs’ action against the client. See Tully, Declan, et al. v. Durazo Construction Specialties, LLC, et al.

The underlying suit arises from an accident that took place on April 6, 2019, when a minor fell into a below ground pool still under construction, outside his parents’ property. As a result of the accident, the minor struck his head, face, and other body parts sustaining injuries therein. On July 25, 2019, the minor’s parents filed suit against the general contractor and the various sub-contractors involved in their pool’s construction alleging claims of negligence resulting from the defendants’ failure to fence off the in-ground pool under construction at the plaintiffs’ home, a claim for negligent infliction of emotional distress alleging that the parents witnessed their child fall into the unfinished pool, and a claim for breach of contract against all defendants for their respective failure to perform the work they were contracted to do on the plaintiffs’ pool adequately and completely and for reasons unrelated to the April 6 incident.

After the conclusion of the plaintiffs’ depositions and the concrete subcontractor co-defendant’s deposition, the moving party, a pool liner sub-contractor co-defendant, filed their Motion for Summary Judgment, requesting the court to dismiss them from the underlying matter. In support of their motion, the moving party argued that even if plaintiffs’ alleged facts are accepted as true, at no point did they breach a duty owed to the plaintiffs in the course of their work on the premises nor did they materially breach any contract between them and the plaintiffs. Specifically, the co-defendant argued they never undertook a duty to maintain, erect, or inspect the safety fence installed at the construction site. The moving co-defendants addressed plaintiffs’ contention of contractual breach, by pointing out that they never entered a contract with the plaintiffs, instead the only contract they entered into was with the general contractor, as such there was no prima facie case to support plaintiffs’ allegations of a material breach of contract.  Regarding plaintiffs’ negligent infliction of emotional distress, co-defendants argued at no point did plaintiffs witness nor observe their child’s accident.

The record supported the moving party’s argument as it contained testimony of the concrete subcontractor co-defendant, affirming that the subcontractor removed the plastic safety fence installed during the construction of the plaintiffs’ pools upon receiving permission by the plaintiffs. The testimony also provided that not only did plaintiffs approve the removal of the safety fence, but plaintiffs were also going to put the safety fence back up. The record contained testimony of the plaintiff, revealing that she did not see her child fall into the pool and only witnessed her child after the accident. These admissions proved to be key in granting the co-defendants’ Motion for Summary Judgment.

From a defense perspective, Tully teaches us the importance of discovery and how every stage provides a new opportunity to continually improve existing strategies. Therefore, prior to engaging in litigation, it is crucial to select an experienced defense counsel with a keen eye to details who can adapt to revelations brought forth through discovery in the best interest of the client.