Monday, July 21, 2008

Claims Reinstated

In an opinion issued today, the New Jersey Appellate Division held that breach of contract and fraud claims against law firms and individual lawyers were improperly dismissed based on a motion judge's mistaken reliance on earlier precedent. Plaintiffs had also sued the lawyers on a theory of legal malpractice although they had never been represented by the lawyers-defendants. Plaintiffs were minority shareholders who had sued the corporation's counsel. The court held:

Plaintiffs cite no New Jersey authority for the proposition that defendants owed a separate, independent fiduciary duty to them as individual minority shareholders, and we have found no such authority. Therefore, plaintiffs' individual claims againdt defendants for breach of any fiduciary duty are also dismissed with prejudice.

The court reinstated  the complaint "limiting the claims made for legal malpractice and breach of fiduciary duty to derivative shareholder causes of action." The court "express[es] no opinion about the relative merits" of the claims. (Mike Frisch)

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