Appellate Division Remands Case for Determination of the Application of the Entire Controversy Doctrine to Claims of Breach of Fiduciary Duties
Ventre v. Balsamo, 2024 WL 4749519, (N.J. Super. App. Div. Nov. 12, 2024)
This matter came before the Appellate Division because the trial court found the plaintiff’s legal malpractice against claim against Arthur Balsamo, Esquire (“Attorney”) barred under the entire controversy doctrine and the doctrine of collateral estoppel. The Appellate Division affirmed the Law Division’s ruling on collateral estoppel, but reversed and remanded the issue of the entire controversy doctrine.
Anthony Ventre (“Anthony”) purchased a property in Ridgefield (the “Property”) from borrowed funds of his father, Francesco Ventre (“Francesco”). Sometime thereafter the Attorney prepared a note on the Property which was due on demand or in the event the Property was sold or Anthony would get a divorce. The note was signed by Anthony and his wife, Carol. Roughly a year later Francesco met with the Attorney to draft a will because he was diagnosed with a life-threatening condition. Francesco did not read or write English well, so Anthony and a third-party translator helped in the preparation of the will. In article third of the will Francesco stated:
THIRD: I do give, devise and bequeath the unpaid principal balance and accrued interest, if any, in and to a certain mortgage lien which I hold on the property known and as by the street address … Ridgefield, NJ unto my son Anthony Ventre. It is my wish and I direct that such debt be forgiven and the mortgage lien cancelled of record by my executor.
Ventre v. Balsamo, 2024 WL 4749519, at *1 (N.J. Super. App. Div. Nov. 12, 2024).
Francesco’s will was admitted to probate on October 13, 2015. Carol commenced a divorce action in 2018, which required the estate to file a complaint in the Probate Part for advice and direction regarding the Article Third language in the will. The probate court ruled that the language of the article forgave the mortgage in its entirety as to both Anthony and Carol. The court determined the language was ambiguous but from the Attorney’s testimony it was more likely than not that Francesco wanted the entire debt forgiven.
Anthony then filed a legal malpractice complaint in the Law Division alleging the Attorney negligently drafted the will contrary to the Francesco’s intent, which resulted in a loss to the estate. The Appellate Division found that although the parties did not litigate the Attorney’s negligence in the probate proceeding, the resolution of Francesco’s intent in Article Third of the will was the core issue presented and the primary focus of the legal malpractice claim. In sum, Anthony was precluded from relitigating the issues of probable intent and damages related to the Probate Part’s determination to forgive the loan as to Carol.
However, when analyzing the entire controversy doctrine, the Appellate Division disagreed with the trial court because the Appellate Division found Anthony had a distinct claim against the Attorney for breaching the standard of care, by drafting an ambiguous provision. The question then was whether Anthony’s failure to certify in the probate action that the Attorney was a potential liable non-party barred the remaining malpractice claim under the entire controversy doctrine.
The Appellate Court noted that generally a legal malpractice claim that arises during an attorney’s representation is not barred under the entire controversy doctrine. That does not, however, dictate that a known legal malpractice claim against a non-party to an action, in which the attorney does not or has not represented the plaintiff, is exempt from R. 4:5-1(b)(2)’s disclosure requirements. Therefore, the Appellate Court reversed and remanded to the Law Division to determine whether Anthony complied with R 4:5-1(b)(2) regarding the claim that the Attorney breached his standard of care.