New Jersey Appeals Court Upholds Dismissal of Legal Malpractice Lawsuit
Earlier this month, the Superior Court of New Jersey Appellate Division upheld the dismissal of a malpractice lawsuit in a long-running dispute between a former corporate CEO and his attorneys. The case began when Allstates Worldcargo, Inc., a shipping company based in Bayville, underwent a merger. Allstates’ former president and CEO, Joseph Guido, while still a majority shareholder and chairman of the board, quickly became at odds with the new President and eventually sued Allstates and several officers and directors over corporate governance issues.
In the midst of litigation, Guido entered into settlement talks with the new president without any lawyers present. A deal was later struck in mediation, the terms of which restricted Guido’s ability to transfer stock without board consent. As this term would negatively impact the value of Guido’s stock, it was repeatedly advised against by Guido’s lawyers, Duane Morris, LLP. Guido nevertheless took the deal and verbally acknowledged in court that he understood and accepted the terms of the settlement.
Guido later sued his lawyers, claiming that the ramifications of the settlement were never properly explained. Duane Morris presented evidence to the contrary, showing where they had advised Guido in writing against accepting a settlement on those terms.
The trial judge first dismissed the case based on earlier case law that said Guido could not sue for legal malpractice based on the settlement since he had clearly stated in court that he understood and accepted the terms. However, the judge then reinstated the lawsuit three days later based on another case decided by the Appellate Division which said Guido’s case could go forward. The Supreme Court of New Jersey affirmed that decision and allowed the case to proceed.
On remand to the Ocean County Superior Court In 2012, the judge ruled in favor of the defendant law firm, holding that the plaintiff didn’t offer any specific proof of his contentions that he received bad advice from Duane Morris. This decision was later affirmed by the Superior court of New Jersey Appellate Division on August 1st.
