No. A-3542-08T3.


Superior Court of New Jersey, Appellate Division.

Decided February 4, 2010.

Attorney(s) appearing for the Case

Glenn A. Bergenfield argued the cause for appellant (Glenn A. Bergenfield, P.C., attorneys; Mr. Bergenfield, on the brief).

Thomas F. Quinn argued the cause for respondents David C. Dreifuss and Nagel Rice, LLP (Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, attorneys; Mr. Quinn, of counsel; Joanna Piorek, on the brief).

Andrew C. Sayles argued the cause for respondent Wells, Jaworski & Liebman, LLP (Connell Foley, LLP, attorneys; Karen Painter Randall, of counsel and Mr. Sayles, on the brief).

David Dreifuss argued the cause for pro se respondent Dreifuss Bonacci & Parker, LLP (Paul H. Mandal, on the brief).

Before Judges Parrillo and Ashrafi.


Plaintiff, Contel Global Marketing, Inc. (Contel or plaintiff), appeals from an order of the Law Division dismissing with prejudice plaintiff's legal malpractice complaint against defendants1 for failure to state a claim under Rule 4:6-2(e) in that plaintiff could not prove defendants' alleged negligent conduct was the proximate cause of the damages suffered. We affirm.

According to the complaint, Contel is a New Jersey business that imports fruit from Chile during the winter months via jumbo jets. Contel believed its participants in a joint venture in Chile were overcharging it by approximately $10 million and hired Dreifuss and Nagel to bring an action against Aldo Pesce Cotera (Cotera), Clear River Corporation (Clear River), Nova Agencia DeCarga S.A. (DeCarga), and Agricola Punta Arenas Lida (Agricola) (collectively the joint venturers or Cotera defendants) for fraud, interference with contract, and RICO violations (hereinafter Cotera litigation). Dreifuss filed the complaint in federal district court on January 17, 2001. The Cotera defendants, however, were not served until one to two years later between April and November 2002. None of the joint venturers filed a responsive pleading within a year.

Service on the Chilean joint venturers was to be made pursuant to the Inter-American Convention of Letters Rogatory. Agricola was served on April 20, 2002 and DeCarga was served on August 2, 2002. Defendants Dreifuss and Nagel received notice from the United States Department of Justice (DOJ) advising them of the service on Argicola on July 15, 2002 and of completed service on DeCarga on September 18, 2002, and then filed proof of service as to both DeCarga and Agricola on October 21, 2002. Cotera was served on October 22, 2002; DOJ notice was received by defendants on November 25, 2002; and proof of Cotera's service was filed with the court on December 23, 2002. The final joint venturer, Clear River, was served on November 13, 2002; defendants received notice on December 19, 2002 from the DOJ and filed proof of service with the court on December 31, 2002.

Meanwhile, on December 18, 2002, the magistrate judge ordered Contel to show cause why Cotera and Clear River were not served and "why the Complaint should not be dismissed as to these defendants for failure to effect service." In the same order, the magistrate judge "directed [Contel] to move for entry of default and default judgment" as to Agricola and DeCarga who had been served, but failed to appear in the action at that time.

However, two days later, on December 20, 2002, counsel for the Cotera defendants appeared in the case and requested a case management conference to address what counsel contended was lack of personal jurisdiction and improper service. In other correspondence to the court two weeks later — on January 2, 2003, counsel also requested that plaintiff not be permitted to default the Cotera defendants until all jurisdictional and service of process issues were addressed at the scheduled January 29, 2003 conference. The magistrate judge granted counsel's request and in a January 30, 2003 order following the conference discharged the prior order to show cause and established a briefing schedule. Accordingly, the joint venturers filed their motion to dismiss on jurisdictional grounds pursuant to Fed. R. Civ. P. 12(b), and shortly thereafter, on June 2, 2003, Contel, through defendants Dreifuss and Nagel, cross-moved for entry of default.

On December 2, 2003, the federal district court judge, in denying both parties' motions, commented with respect to Contel's, that had Dreifuss and Nagel Rice moved for default earlier, the Court may have granted relief, setting the stage for the possible eventual execution of a final judgment of default in Chile. Specifically, in denying Contel's motion, the judge remarked:

Had Plaintiff filed its cross-motion for default in 2002 (when it says service was effective) and had the Court granted it (as it might have absent objections from then nonparticipating Defendants), Plaintiff could have carried a subsequent federal court judgment to Chile for enforcement. This would have allowed a Chilean court — with expertise — to determine the propriety of service of process under their own law. Additionally, by bringing its cross-motion seeking default after Defendant filed its motion seeking dismissal under Rule 12(b), Defendants entertained significant legal costs relating to arguments wholly unrelated to default. Had Plaintiff brought its default motion in 2002, Defendants would have been spared these costs. In these circumstances, granting default supplies all the wrong incentives- it would lead dilatory litigants to remain dilatory. This court does not wish to make light of the timing requirements within the federal rules. Nor is this Court suggesting that an exception to those timing requirements exists for foreign-based defendants otherwise served properly. But in this posture, where the Defendants have begun to actively litigate in this forum and have participated in all pre-trial proceedings as ordered by the Court, the Court squarely favors trial on the merits, rather than by default. See Hutton v. Fisher, 359 F.2d 913, 916 (3d Cir. 1966); 10A Federal Practice and Procedure: Civil ¶2681 ("A defendant who has participated throughout the pretrial process and has filed a responsive pleading, placing the case at issue, had not conceded liability."). This is especially true when a substantial amount of money is involved. See Hutton v. Fisher, 359 F.2d 913, 916 (3d Cir. 1966); 10A Federal Practice And Procedure: Civil ¶2681.

In the same decision, the court declined to decide the propriety of service of process on the joint venturers. Thereafter, Contel fired Dreifuss and Nagel and hired the Sills Cummis law firm to take over its representation in the Cotera litigation. Subsequently, in 2006, a consent order was entered to submit the Cotera litigation to arbitration.

On October 6, 2008, plaintiff filed a legal malpractice action against defendants alleging that their failure to timely seek default caused plaintiff to incur $2 million in legal fees for the remainder of the Cotera litigation, from the point in time default should have and would have been entered. On January 9, 2009, defendants Dreifuss and Nagel filed a joint motion to dismiss the complaint in lieu of answer pursuant to Rule 4:6-2(e), in which defendants DBP and Wells later joined. Following argument, the Law Division judge granted the motion to all defendants with prejudice, finding that "the [c]omplaint, as a matter of law, fails to state a claim for legal malpractice[,]" because "Contel cannot properly allege that the breach of any duty on the part of defendants proximately caused Contel damages." In her February 23, 2009 letter opinion, Judge Chrystal found:

Given [the district court judge's] opinion, to properly plead proximate cause on its legal malpractice claim, Contel would have to plead that (1) default could have been entered as to the joint venturers before the joint venturers began to actively litigate, (2) the federal court would have entered default against the joint venturers, (3) if default had been entered, that any potential motion to vacate default would have been denied, (4) if default had been entered, that the court would have entered default judgment, (5) any potential default judgment would not have been vacated, and (6) any potential default judgment would have been enforceable in Chile. Given the legal ruling in [the district court judge's] opinion, his reliance on Hutton v. Fisher, and the general reluctance of courts to enter default and the liberal standard for motions to vacate default, the Court finds that, as a matter of law, Contel cannot meet, as a matter of law, the proximate causation element of a legal malpractice claim. Therefore as to defendants David C. Dreifuss, Esq. and Nagel Rice, LLP, the motion to dismiss the Complaint is GRANTED. With respect to defendant Wells, Jaworski & Liebman, LLP, the Complaint merely states that David C. Dreifuss, Esq. left Nagel Rice and joined Wells, Jaworski & Liebman, LLP in April 2003. The Complaint states that Mr. Dreifuss then left Wells, Jaworski & Liebman, LLP in December 2003 and became a partner at Dreifuss Bonacci & Parker, LLP. However, the defendant law firms Wells, Jaworski & Liebman, LLP and Dreifuss Bonacci & Parker, LLP did not represent Contel during the relevant time periods. Therefore, as to defendants Wells, Jaworski & Liebman, LLP and Dreifuss Bonacci & Parker, LLP, the motion to dismiss the Complaint is GRANTED.

On appeal, plaintiff contends:


We have considered each of these issues in light of the record, the applicable law, and the arguments of counsel, and we are satisfied that they do not warrant reversal of the dismissal order. Accordingly, we affirm substantially for the reasons stated in Judge Chrystal's comprehensive letter opinion of February 23, 2009. We add only the following comments.

"In reviewing a complaint dismissed under Rule 4:6-2(e) our inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint." Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989). "However, a reviewing court `searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary.'" Id. (quoting Di Cristofaro v. Laurel Grove Memorial Park, 43 N.J.Super. 344, 252 (App. Div. 1957)). "Every reasonable inference is therefore accorded the plaintiff[.]" Pressler, Current N.J. Court Rules, comment 4.1.1 on R. 4:6-2(e) (2010); see also New Jersey Sports Productions, Inc. v. Bobby Bostick Promotions, LLC., 405 N.J.Super. 173, 177 (Ch. Div. 2007).

In Banco Popular N. Am. v. Gandi, 184 N.J. 161 (2005), the Court expressed the standard on such motions:

At this preliminary stage of the litigation [a] [c]ourt [should not be] concerned with the ability of the plaintiffs to prove the allegation contained in the complaint . . . [P]laintiffs are entitled to every reasonable inference of fact. The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach. [Id. at 165 (internal citations omitted).]

Thus, such motions are granted "only in the rarest of instances." Printing Mart-Morristown, supra, 116 N.J. at 772. "The plaintiff's obligation in order to defeat a motion to dismiss is `not to prove the case but only to make allegations, which, if proven, would constitute a valid cause of action.'" Shulman v. Wolff & Samson, P.C., 401 N.J.Super. 467, 473-74 (App. Div.) (quoting Leon v. Rite Aid Corp., 340 N.J.Super. 462, 472 (App. Div. 2001)), certif. denied, 196 N.J. 600 (2008).

By the same token, however, "[a] complaint may be dismissed for failure to state a claim if it fails `to articulate a legal basis entitling plaintiff to relief.'" Hoffman v. Hampshire Labs, Inc., 405 N.J.Super. 105, 112 (App. Div. 2009)(quoting Sickles v. Cabot Corp., 379 N.J.Super. 100, 106 (App. Div.) (internal citations omitted), certif. denied, 185 N.J. 297 (2005)). Obviously, "if the complaint states no basis of relief and discovery would not provide one, dismissal is the appropriate remedy." Banco Popular, supra, 184 N.J. at 166. Specifically, "[a] motion to dismiss `may not be denied based on the possibility that discovery may establish the requisite claim; rather, the legal requisites for plaintiff's claim must be apparent from the complaint itself." New Jersey Sports Productions, Inc., supra, 405 N.J. Super. at 178 (quoting Edwards v. Prudential Prop. & Cas. Co., 357 N.J.Super. 196, 202 (App. Div.), certif. denied, 176 N.J. 278 (2003)).

"The requisite elements of a cause of action for legal malpractice are: (1) the existence of an attorney-client relationship creating a duty of care upon the attorney; (2) the breach of that duty; and (3) proximate causation." Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996)(internal citations omitted). Proximate cause has been defined "as being any cause which in the natural and continuous sequence, unbroken by an efficient intervening cause, produces the result complained of and without which the result would not have occurred." Fernandez v. Baruch, 96 N.J.Super. 125, 140 (App. Div. 1967), rev'd on other grounds, 52 N.J. 127 (1968) (internal citations omitted). "`A mere possibility of such causation is not enough; and when the matter remains one of pure speculation or conjecture, or the probabilities are at best evenly balanced, it becomes the duty of the court to direct a verdict for the defendant.'" Reynolds v. Gonzalez, 172 N.J. 266, 284 (2002)(quoting W. Page Keeton, et. al., Prosser & Keeton on the Law of Torts, §41, at 259 (5th ed. 1984)).

Plaintiff's essential argument on appeal is that when read liberally, its complaint alleges sufficient causal linkage between defendants' alleged negligent conduct, in failing to timely serve and default the Cotera defendants, and the damages incurred by Contel, in terms of extra legal expenses, and that the motion court erred in holding otherwise as a matter of law. Defendants, on the other hand, maintain that the necessary causal nexus is based entirely on speculation and the singular remark by the federal district court judge about what `might' have happened "does not create proximate causation." In particular, defendants contend that because plaintiff alleged joint liability against the joint venturers, defendants could not have moved for default judgment against any one of them until all the Cotera defendants were served and noticed of a proof hearing. Frow v. de La Vega, 82 U.S. 552, 554 (1872); 10 James W. Moore, et al., Moore's Federal Practice, §55.25 (3d ed. 1997). Since the last of the Cotera defendants — Clear River — was not served until November 13, 2002, and defendant Dreifuss and Nagel were not notified until December 19, 2002, there was only a minimal window of time to default all Cotera defendants and thereafter obtain default judgment against them.

We agree with the motion judge that plaintiff's complaint fails to allege the requisite foundation for proximate causation. Nothing in the pleading's factual content permits even an inference of a causal connection between defendants' alleged legal malpractice and any damages suffered by plaintiff. In other words, plaintiff has failed to plead facts establishing how defendant's alleged untimely service of process and failure to seek default caused it to incur $2 million in added legal costs.

The district judge's hypothetical reference affords plaintiff no basis on this score given the actual circumstances of this case. Indeed, once they were all served, the Cotera defendants vigorously defended the underlying matter, as evidenced by plaintiff's own claim of expending $2 million in subsequent litigation costs. As the motion judge cogently observed:

[H]ow can any Court really assume that if default has been entered and even assuming arguendo that a default judgment had been entered, which I think is another leap that the Court would have to take in order to accept plaintiff's damage argument in this case, that the outcome would have been any different. I just can't believe that . . . the Chilean defendants . . . who ultimately did defend the case vigorously would have just rolled over and accepted a default judgment against them.

In this regard, there is no allegation in plaintiff's legal malpractice complaint suggesting that had all the Cotera defendants been served in 2001, and a timely motion for default been made, that they would not have retained counsel and vigorously litigated the case, as they did beginning in late 2002.

Adding to the speculative nature of plaintiff's proximate cause allegation is well-settled law disfavoring the very result which plaintiff and the federal district court hypothesize. In this regard, a default occurs when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend against a claim within the time allowed by the Federal Rules of Civil Procedure. 10 James W. Moore, et al., Moore's Federal Practice §55.10[2] (3d ed. 1997). Courts have traditionally disfavored default judgments consistent with the strong policy in favor of resolution of disputes on the merits rather than through the application of pleading rules or penalties. Ibid. at §55.20[2][c]. The decision whether to enter a default judgment is within the court's sound discretion and even where a defendant is technically in default, a plaintiff is not entitled to default judgment as a matter of right. Ibid. at §55.20[2][b]. In Hutton, supra, the Third Circuit noted:

[T]his court has clearly stated its reluctance to permit the final disposition of substantial controversies by default. Matters involving large sums should not be determined by default judgments if it can reasonably be avoided. Any doubt should be resolved in favor of the petition to set aside the judgment so that cases may be decided on their merits. [359 F.2d at 916 (internal quotations omitted).]

In reversing the denial to vacate a default judgment in Farnese v. Bagnasco, 687 F.2d 761 (3d Cir. 1982), the court noted that courts do "not favor defaults, and that in a close case doubts should be resolved in favor of setting aside the default and obtaining a decision on the merits." Id. at 764; Zawadski De Bueno v. Bueno Castro, 822 F.2d 416, 420 (3d Cir. 1987) (same).

For these reasons, the motion judge held "as a matter of law, Contel cannot meet . . . the proximate causation element of a legal malpractice claim." (emphasis added). Plaintiff now argues that the issue of proximate causation was one for the jury to decide as a matter of fact, and not for the court, as a matter of law. We disagree.

To be sure, issues of proximate cause are generally considered jury questions. Garrison v. Twp. of Middletown, 154 N.J. 282, 308 (1998) (Stein, J., concurring); Scafidi v. Seiler, 119 N.J. 93, 101 (1990). Nevertheless, the issue of a defendant's liability cannot be presented to the jury simply because there is some evidence of negligence; the plaintiff must introduce evidence that affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a cause in fact of the plaintiff's injury. Davidson v. Slater, 189 N.J. 166, 187-88 (2007). Thus, courts may resolve the issue where reasonable minds could not differ on whether proximate cause was established. Id. at 188 (trial court was capable of being the arbiter of "whether a genuine issue of proximate cause had been presented"); Fleuhr v. City of Cape May, 159 N.J. 532, 543 (1999) (noting that proximate cause "may be removed from the fact-finder in the highly extraordinary case in which reasonable minds could not differ on whether that issue has been established" and "conclud[ing] that as a matter of law, any negligence [there] . . . did not proximately cause plaintiff's injuries"); Vega by Muniz v. Piedilato, 154 N.J. 496, 509 (1998) (summary judgment is appropriate where "no reasonable jury could find that the plaintiff's injuries [have been] proximately caused" by the defendant's conduct); Lerner v. Laufer, 359 N.J.Super. 201, 222 (App. Div.) (concluding that the plaintiff was unable to demonstrate as a matter of law that proximate cause exists between any malpractice on [defendant's] part in the 1994 proceedings resulting in damage to her"), certif. denied, 177 N.J. 223 (2003); Johnson v. Schragger, Lavine, Nagy & Krasny, 340 N.J.Super. 84, 91 (App. Div. 2001).

Here, we have already determined that plaintiff's complaint does not properly allege the proximate cause element of a legal malpractice claim. A fortiori, no reasonable jury could find the requisite nexus between defendants' alleged negligent conduct and plaintiff's claimed damages. As such, the court did not err in concluding the same as a matter of law.

Nor did the court err in dismissing plaintiff's complaint with prejudice or failing to afford plaintiff an opportunity to amend its pleadings. While a motion to dismiss is ordinarily granted without prejudice, Hoffman, supra, 405 N.J. Super. at 116, a court has discretion whether to permit an amendment to a complaint to allege additional facts in an effort to state a cause of action. Ibid.; see also Kernan v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 457 (1998). In Johnson v. Glassman, we found that the trial court did not abuse its discretion by dismissing the complaint with prejudice where "plaintiffs [had] not offered either a certification or a proposed amended pleading that would suggest their ability to cure the defects that we have noted with respect to the . . . present amended complaint" and that "provision of a further opportunity to amend would not be fruitful." 401 N.J.Super. 222, 246-47 (App. Div. 2008).

This same reasoning applies here. Plaintiff never offered to replead its case by articulating facts or a legal theory that presented a viable proximate cause claim. For example, plaintiff never claimed that during the time it took for defendants to serve the Cotera defendants, critical evidence or documents were lost that altered the strength of its underlying case. Moreover, plaintiff points to nothing that discovery might offer, other than further speculation, to maintain the necessary causal nexus element of its legal malpractice claim against defendants. As the motion judge said in considering plaintiff's offer to amend the complaint:

Well, I have considered that. I actually have considered that but what would you allege at this point other than — I mean, when you say you're going to present expert testimony, I think the problem with that is that the experts would have to speculate that assuming the default had been entered timely, there would not have been a motion to vacate that would not have been successful, and there would not have been subsequent litigation. . . . . How can one assume that just because a default was entered, they would not have come in and defended, they would not have come in and made a motion to vacate default or when the application for default was pending they wouldn't have filed an answer at that point, or when an application to enter judgment was entered they wouldn't have come in and filed? They ultimately came in and answered. . . . . So given the facts that the Chilean defendants ultimately came in and defended, wouldn't it be a leap for a Court to assume that if a default had been entered a few days earlier, or a month earlier, or two months earlier, that under those circumstances the Chilean defendants that came in and defended ultimately would not have come in. . . . . They would have essentially `thrown in the towel.' They would have said well a default was entered against us, nothing we could do now. . . . . I've pondered the question of whether or not any additional discovery or any additional testimony at trial would prove that. And I think, you know, candidly I think it would be guesswork. I mean, I have to decide whether it would be guesswork and speculation or whether it would be a credibility issue.

We are in accord with this view.

Plaintiff also complains that the motion judge erred by considering other evidence outside the pleadings in granting defendants' motion to dismiss. We disagree.

Rule 4:6-2 provides in pertinent part that, if, on a motion to dismiss: matters outside of the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46, and all parties shall be given reasonable opportunity to present all material pertinent to such a motion.

A motion to dismiss "is based upon the content of the pleading in and of itself." New Jersey Sports Productions, Inc., supra, 405 N.J. Super. at 178. An exception to this "general rule is that a document integral to or explicitly relied upon in the complaint may be considered without converting the motion [to dismiss] into one for summary judgment." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (internal quotations omitted). The Third Circuit thus reasoned:

The rationale underlying this exception is that the primary problem raised by looking to documents outside the complaint — lack of notice to the plaint[iff] is dissipated where plaintiff has actual notice . . . and has relied upon these documents in framing the complaint. What the rule seeks to prevent in the situation in which a plaintiff is able to maintain a claim of fraud by extracting an isolated statement from a document and placing it in the complaint, even though if the statement were examined in the full context of the document, it would be clear that the statement was not fraudulent. [Ibid.]

Thus, in E. Dickerson & Sons, Inc. v. Ernst & Young, LLP, 361 N.J.Super. 362 (App. Div. 2003), aff'd, 179 N.J. 500 (2004), we found that consideration of documents specifically referenced in the complaint would not convert the motion to dismiss into a summary judgment motion. Id. at 365 n.1. Further, in New Jersey Sports Productions, Inc., supra, the Chancery Division similarly held that a letter expressly referred to in the plaintiff's pleading may properly be considered without converting the motion to dismiss into one for summary judgment. 405 N.J. Super. at 178.

Even more recently, in Banco Popular, supra, the Court cited to the federal standard and stated "[i]n evaluating motions to dismiss, courts consider `allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.'" 184 N.J. at 183 (quoting Lum v. Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir.), cert. denied, 543 U.S. 918, 125 S.Ct. 271, 160 L. Ed. 2d 203 (2004)).

Here, the motion judge considered only matters referenced in the complaint. As the judge noted:

Nevertheless, the court has refrained from considering matters outside the pleadings in deciding this motion to dismiss. The Complaint at paragraph seven indicated that the underlying federal court, in December 2002, ordered Contel to show cause as to why default had not been entered. The Complaint at paragraph nine noted that on December 2, 2003, the federal court denied Contel's motion to enter default. Therefore, because the December 20, 2002 Order to Show Cause and the December 2, 2003 Opinion by [the district court judge] are referenced in the Complaint, the Court may consider the substance of those documents in deciding the present motion to dismiss. Those decisions are likewise matters of public record.

Plaintiff has offered nothing to the contrary and therefore we discern no error in the motion judge's dismissal decision.

We have considered plaintiff's remaining arguments and deem them without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E).



1. There are four defendants in this action: (1) David Dreifuss, Esq., who was the attorney for plaintiff and employed by (2) Nagel, Rice, Dreifuss, & Mazie, now known as Nagel Rice, LLP (Nagel), during the time of the alleged malpractice by plaintiff; (3) Dreifuss, Bonacci & Parker, LLP (DBP); and (4) Wells, Dreifuss, Jaworski, Liebman & Paton, LLP, now known as Wells, Jaworski & Liebman, LLP (Wells) (collectively defendants). In April 2003, Dreifuss left Nagel for employment with Wells until December 2003, at which time he joined DBP, which came into existence on December 1, 2003. As will be discussed infra, plaintiff's contentions on appeal are directed primarily against Dreifuss and Nagel, Dreifuss' law firm, during the alleged negligent conduct.


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