The Entire Controversy Doctrine Resurfaces Yet Again in New Jersey

The Entire Controversy Doctrine is alive and well again in the District of New Jersey. On December 13, 2017, Jack Slimm obtained a dismissal in the United States District Court for the District of New Jersey in the matter of Jonathan Ehrlich v. Dennis P. McInerney, Esq., et al., 1:17-cv-879 (D.N.J. December 13, 2017), a complex multi-party legal malpractice action arising out of two estate litigations filed in State Probate Court. Jack's client was the attorney for the decedent and also the Temporary Administrator. The plaintiff was the nephew of the decedent, who filed a breach of fiduciary duty claim against our client in the United States District Court after the probate cases went against the nephew in state court. The probate judge approved the accountings, overruling the nephew's exceptions when he alleged in the probate case that our client breached a fiduciary duty in several instances in handling the probate, failing to preserve documents, failing to locate the Will, selling assets, failing to investigate properties in the Bahamas, and obtaining orders through fraud and deception. 

In a 40-page opinion, the District Court granted Jack's motion to dismiss all claims, citing one of Jack's prior cases, which he argued in the New Jersey Supreme Court, Mystic Isle Development Corp. v. Perskie & Nehmad, 142 N.J. 310 (1995), in which the Supreme Court applied the Entire Controversy Doctrine and dismissed a complex legal malpractice action. After Mystic was decided, the Appellate Division began watering down the Entire Controversy Doctrine to the point where, in Higgins v. Thurber, 413 N.J. Super. 1 (App. Div. 2010), the Appellate Division held that the Doctrine did not apply to legal malpractice actions that arise out of underlying probate cases where the attorney is not joined in that litigation. The Appellate Division in Higgins ruled that suits by executors in probate are limited and, therefore, it would not be necessary for an attorney to be joined in that case.

However, in Ehrlich, the District Court found that the Doctrine is equitable and that it can be used and applied in defense of legal malpractice actions, even if they arise out of a probate litigation. Jack was able to convince the District Court that in this particular case, given its unusual facts, and based upon the allegations made in the probate case, the Entire Controversy Doctrine still applies, notwithstanding recent decisions from the Appellate Division holding otherwise. The District Court found that the Thurber case does not stand for the proposition that the Entire Controversy Doctrine is wholly inapplicable to probate proceedings. The court found that the Doctrine may be appropriate when probate proceedings are expanded beyond summary review of an executor's accounting, as they were here. The plaintiff in the probate case made various exceptions, actually asking for damages based upon the attorney's alleged breach of fiduciary duty, and for the removal of the attorney as Temporary Administrator. Therefore, the District Court found that the failure to join our client in the probate case was a bar to the District Court action under the Entire Controversy Doctrine.

For a copy of this opinion or for more information, please contact Jack Slimm at jlslimm@mdwcg.com or 856.414.6021.