MTK Food Services, Inc. v. Sirius America Ins. Co., 455 N.J. Super. 307 (App. Div. 2018). In McCarrell v. Hoffman-LaRoche, Inc., 227 N.J. 569 (2017), discussed here, the Supreme Court adopted section 142 of the Restatement (Second) of Conflicts of Laws. That section calls for the use of a “substantial interest” test to resolve conflict of laws questions involving statutes of limitations. At the time, at least in the mass tort context in which McCarrell was decided, defense interests worried that the new rule would inevitably favor plaintiffs who sough to apply New Jersey law, while the plaintiffs there (McCarrell was part of the Accutane Multi-County Litigation, a long-running mass tort matter) stated that the result would sometimes favor plaintiffs and sometimes defendants. This opinion, in a legal malpractice matter, applied McCarrell in favor of defendants and against the application of New Jersey law.
The conflict of laws in this case was between New Jersey’s six-year statute of limitations for legal malpractice and Pennsylvania’s two-year statute for such claims. The case arose out of a fire that destroyed plaintiff’s restaurant in Bethlehem, PA. Plaintiff retained a series of New Jersey attorneys, several of whom it named as defendants here.
One of those attorneys, Richard Grungo, Jr., then a member of the firm of Archer & Greiner, P.C., who was admitted to both the New Jersey and Pennsylvania Bars, was asked by another of the attorneys, Spencer Robbins, to file a writ in Pennsylvania as a “placeholder” to toll the statute of limitations. Grungo did that. Later, however, he advised the first attorney that he could not remain as counsel in the placeholder case due to a conflict. The placeholder case was eventually dismissed, and the two-year Pennsylvania statute of limitations ran out by the time that plaintiff learned of the dismissal. The six-year New Jersey statute, however, had not expired.
Plaintiff sued Grungo, his firm, and other New Jersey lawyers for legal malpractice in New Jersey state court. Grungo and Archer moved to dismiss, asserting that the case was barred because the Pennsylvania statute of limitations governed and had expired. The Law Division, ruling under sections 6 and 145 of the Restatement (Second) of Conflicts of Law prior to the Supreme Court’s decision in McCarrell, agreed and granted dismissal. After the McCarrell opinion, however, plaintiff sought reconsideration, and the Law Division, this time applying Restatement (Second) section 142, reversed itself and reinstated the malpractice claim.
Grungo and Archer sought leave to appeal, which the Appellate Division granted. Applying de novo review to the pure legal issue presented (the same standard also applies to review of decisions on motions to dismiss, as Judge Hoffman observed), the Appellate Division reversed.
Section 142 provides that the forum state will apply its own limitations law permitting a claim “unless (a) maintenance of the claim would serve no substantial interest of the forum; and (b) the claim would be barred under the statute of limitations of a state having a more significant relationship to the parties and the occurrence.” The Law Division here based its ruling on the idea that New Jersey had an interest in regulating the conduct of attorneys.
But after analyzing McCarrell and several of the cases that it cited, Judge Hoffman agreed with Grungo and Archer that there was no “causal nexus” between Grungo’s New Jersey law license and plaintiff’s damages. New Jersey had no “substantial interest” in the case, where the only New Jersey connection was that Grungo was licensed here. “All other relevant facts point to Pennsylvania: the fire and resulting loss occurred in Pennsylvania; plaintiff is incorporated in Pennsylvania; Robbins enlisted Grungo because he is licensed in Pennsylvania; and Grungo filed the underlying complaint in Pennsylvania.” Unlike in products liability cases where the defective product was manufactured in New Jersey, “appellants allegedly acted negligently in Pennsylvania by allowing a Pennsylvania court to dismiss a case concerning a loss sustained by a Pennsylvania corporation to its Pennsylvania restaurant.”
Moreover, plaintiff’s view of McCarrell “would frustrate the purpose of adopting the substantial-interest test and defy public policy.” McCarrell noted that its rule “places both this State’s and out-of-state’s citizens on an equal playing field.” Judge Hoffman noted that if plaintiff had retained an attorney based in Pennsylvania instead of Grungo, Pennsylvania’s statute of limitations would have applied “without question.” The fact that Grungo is licensed in New Jersey and works in New Jersey “should not change the outcome here. To hold otherwise would subject New Jersey attorneys also practicing in other states to disparate, unfair treatment.” Accordingly, the panel reversed the Law Division and entered judgment for Grungo and Archer.