NJ: Lawyer's Vicarious Liability for Independent Contractors?

Toth v. Vazquez, 3 N.J. Super. 379 (Ch. Div. 1949) (PDF with permission of Thomson West)

Student Contributor: Anthony J. Forzano

NJ Underlying Real Estate Transaction

Facts: Plaintiff, a potential land buyer, brought an action for legal malpractice against the defendant-attorney, Arthur A. Wolpin, who had been engaged by the plaintiff to examine the title and procure a survey of the premises prior to closing.  Plaintiff alleged that Wolpin failed and neglected to obtain an accurate survey.

Issue: Can an attorney be held liable for malpractice for failing to find a deficiency in the work of another professional, even though he acted in a prudent manner in selecting that professional on behalf of his client?

Ruling: No. Although it is the duty of an attorney who is retained to examine the title to real estate to make a reasonably diligent and zealous investigation of the public records, and to impart to his client all of the observable defects, deficiencies, and imperfections of the title, he is required only to exercise ordinary care, skill and diligence.

Given that Wolpin inspected all pertinent records and rendered an accurate report of record title, he had satisfied the standard of “ordinary care, skill, and knowledge”. The Court further noted:

“Nor is it evident that this defendant in acting for the plaintiffs failed to exercise reasonable care and precaution in the selection of a competent surveyor, even assuming a duty so to do. Assuredly, this defendant did not expressly agree to warrant the precision and accuracy of the survey”.

Lesson: An attorney must act in a reasonably diligent fashion in terms of his investigation of the pertinent issues and retention of other professionals, and cannot be held liable for malpractice as a result of damage incurred by his client owing to the negligence of others involved in the transaction.

Editor's Note: What if the attorney had engaged a process server who negligently failed to properly serve a complaint and the statute of limitations ran?  The lawyer's immunity for the negligence of an independent contractor hired to aid in the representation of a client is not so clear. See, e.g., Kleeman v. Rheingold, 81 N.Y.2d 270 (1993):

As plaintiff's attorneys, defendants had a non-delegable duty to her and, accordingly, they cannot evade legal responsibility for the negligent performance of that duty by assigning the task of serving process to an "independent contractor."

No Indemnification under N.J.S.A. 18A:16-6 for Defense Costs Incurred by Attorneys in Malpractice Actions

Sahli v. Woodbine Board of Education, 386 N.J.Super. 533, 902 A.2d 296 (App. Div. 2006)
NJ Underlying Subrogation Action

Student Contributor:  Jason Klein

Facts: The Woodbine Board of Education entered into a contractual agreement with Ronald Sahli, an attorney licensed to practice in the State of New Jersey, to hire him as its attorney. Pursuant to the agreement, Sahli’s duties included attending Board meetings, providing counsel and advice to board members and carrying out the Board’s specific instructions as related to legal matters involving the district.

Toy, an Administrative Assistant in the Special Education Department of the Woodbine School District, appeared at a meeting of the Board to discuss her complaints regarding the district’s failure to comply with federal and state laws governing special education programs. Because of confidentiality concerns at the meeting, the Board designated Sahli, rather than the Board’s usual secretary, as secretary pro tem, responsible for providing minutes of the session, as well as performing his usual duties as attorney.

Following Toy’s presentation, Sahli recommended to the Board that Toy be removed from her position and explained that if the Board felt it was necessary, they could subject Toy to a physical and/or psychiatric examination. Toy declined to undergo the requested examination and left the employment of the Woodbine School District. Toy sought damages from Sahli for violating her civil free speech rights, Law Against Discrimination rights, and due process and equal protection rights. Sahli sought indemnification under New Jersey Statute 18A:16-6 which provides that "the board shall defray from all costs of defending [a civil action]...any person holding office, position or employment under the jurisdiction of any board of education".

Issue: Whether an attorney has a right to indemnification for legal fees incurred in the defense of a suit against him under the indemnification provisions of N.J.S.A. 18A:16-6.

Ruling: The Court, in reversing a motion for summary judgment, found that a third party independent contractor operating as a board attorney is not entitled to indemnification under N.J.S.A. 18A:16-6.

Lesson: The intent of the legislature in passing N.J.S.A. 18A:16-6 was “to confine indemnification to Board members, employees, and students preparing for teaching careers.” None of the statute’s various amendments since its enactment in 1937 have referenced school board attorneys, or otherwise suggested coverage for legal fees incurred in the defense of malpractice actions.