HELMER, CONLEY & KASSELMAN, PA VS. VINCENT MONTALVO, Â II(L-0289-14, ATLANTIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0806-15T3
HELMER, CONLEY & KASSELMAN,
PA,
Plaintiff-Appellant,
v.
VINCENT MONTALVO, II and
PATRICIA MONTALVO,
Defendants,
and
BARBARA MONTALVO,
Defendant-Respondent.
___________________________________
Argued February 14, 2017 – Decided October 25, 2017
Before Judges Messano and Suter.
On appeal from Superior Court of New Jersey,
Law Division, Atlantic County, Docket No.
L-0289-14.
Rebecca K. McDowell argued the cause for
appellant (Saldutti Law Group, attorneys;
Thomas B. O'Connell and William D. Brown, of
counsel and on the brief).
Gary M. Marek argued the cause for respondent.
The opinion of the court was delivered by
SUTER, J.A.D.
Plaintiff Helmer, Conley & Kasselman, PA (Helmer) appeals the
September 11, 2015 order that granted defendant Barbara Montalvo's
(defendant) cross-motion for summary judgment and dismissed its
complaint with prejudice. We reverse only the "with prejudice"
nature of the dismissal, concluding that dismissal without
prejudice was the appropriate remedy. Because Helmer had actual
knowledge that defendant did not have notice of her right to
request fee arbitration before it filed suit, we conclude Helmer
did not satisfy Rule 1:20A-6, requiring dismissal of the complaint.
Helmer is a law firm. In 2007, defendant signed a "guarantee
of fees and disbursements" (guarantee) in connection with Helmer's
legal representation of her brother-in-law, Vincent Montalvo
(Vincent). Her mother-in law, Patricia Montalvo, also signed the
same guarantee. The guarantee provided that defendant and her
mother-in-law would "be liable and responsible for, and guarantee
the payment of the fees and services for which [Vincent] has
contracted in the [retention agreement], and to promptly pay same
when due . . . ." In the space provided on the guarantee form,
defendant listed her address as 8th Street in Mays Landing1 and
1
We have omitted the actual house numbers throughout this opinion.
2 A-0806-15T3
provided her social security number. Vincent failed to make the
required payments.
On March 26, 2013, Helmer sent a pre-action notice (notice)
under Rule 1:20A-6 about fee arbitration. The content of the
notice is not an issue raised by the parties in this appeal. The
notice was sent both by regular and certified mail to the 8th
Street address that was on the guarantee. The certified mail was
returned with the notation "not deliverable as addressed, unable
to forward." The regular mail also was returned with the notation
"not deliverable as addressed, unable to forward."2 Helmer did
not look for another address for defendant. Defendant did not
notify Helmer that she had a different address.
On January 23, 2014, Helmer, through its counsel, the Saldutti
Law Group (Saldutti), filed suit against defendant on the guarantee
seeking payment of $26,768.85 in attorney's fees, interest and
costs for its legal representation of Vincent. By that time,
Saldutti had information that the best address for defendant was
at a residence on Main Street in Mays Landing. Personal service
of the complaint was made on the mother-in-law and on a "co-
resident" at the mother-in-law's address, also in Mays Landing but
2
It appears to have been returned to Helmer on the 31st of a month
in 2013, but the month is not legible on the copy in the record.
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on a different street, and a default judgment was entered against
defendant.
Defendant claims that the first notice she had that Helmer
sued her on the guarantee was when her wages were garnished. She
successfully moved to vacate the default judgment and filed an
answer and counterclaim. Defendant alleged that she signed the
guarantee under coercion and duress and did not read it before she
signed. She did not raise Rule 1:20A-6 as an affirmative defense
to the complaint, but did claim that Helmer used an incorrect
address for service. She listed her address on the answer as Main
Street in Mays Landing.
The parties attended court ordered mediation. The mediator
concluded that Helmer did not give proper notice to defendant of
the right to fee arbitration and therefore, that it could not file
suit against her. By then, Helmer had filed a motion for summary
judgment based on the guarantee and, following the court mediation,
defendant filed a cross-motion claiming she did not receive proper
notice under Rule 1:20A-6, and requested the dismissal of the
litigation. Helmer contended that they complied with Rule 1:20A-
6 by sending the pre-action notice to defendant's last known
address before filing suit.
On September 4, 2015, the trial court granted defendant's
cross-motion and dismissed Helmer's complaint with prejudice,
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finding that Helmer did not comply with Rule 1:20A-6. The court
reasoned that Helmer's position, if accepted, "would defeat the
purpose of the rule if attorneys only had to send to the last
known address without regard to whether or not plaintiff knows
it's the wrong address or finds out." A revised order was entered
on September 11, 2015, that granted the cross-motion but also
dismissed plaintiff's counterclaims based on the consent of the
parties. Helmer appeals the September 11, 2015 order.
On appeal, Helmer contends that the court erred by failing
to apply the plain, unambiguous, and ordinary meaning of R. 1:20A-
6, to consider the "guiding principles" of Rule 1:1-2 and to
consider defendant's "unclean hands." Helmer argues that the
court overlooked its substantial compliance with Rule 1:20A-6. If
we conclude the dismissal should have been without prejudice, then
Helmer contends we should equitably toll the statute of
limitations. We find no merit in these issues.
We review summary judgment using the same standard that
governs the trial court. Henry v. N.J. Dep't of Human Servs., 204
N.J. 320, 330 (2010). As the parties agreed on the material facts,
our task is limited to determining whether the trial court's ruling
on the law was correct. Prudential Prop. & Cas. Ins. v. Boylan,
307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608(1998). We review issues of law de novo and accord no deference
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to the trial judge's legal conclusions. Nicholas v. Mynster, 213
N.J. 463, 478 (2013); see also Manalapan Realty, L.P. v. Twp.
Comm. of Manalapan, 140 N.J. 366, 378 (1995).
"Under R. 1:20A-3(a)(1), the client has the exclusive right
to submit a fee dispute to the [District Fee Arbitration] committee
for resolution." Kamaratos v. Palias, 360 N.J. Super. 76, 91
(App. Div. 2003) (Fuentes, J., concurring). "The policy underlying
the fee arbitration system is the promotion of public confidence
in the bar and the judicial system." Saffer v. Willoughby, 143
N.J. 256, 263 (1996). "The fee arbitration process is designed
to afford a client a 'swift, fair and inexpensive' method to
resolve fee disputes." Kamaratos, supra, 360 N.J. Super. at 86.
Fee committees have the "jurisdiction to arbitrate fee
disputes between clients and attorneys." Id. at 264 (quoting R.
1:20A-2(a)). The fee committee "shall also have jurisdiction to
arbitrate disputes in which a person other than the client is
legally bound to pay for the legal services" unless that obligation
arises from settlement. R. 1:20A-2(a). The parties do not
question the ability of defendant to have asked for fee arbitration
under these rules.
The Rules provide that "[b]efore an attorney can file suit
against a client to recover a fee, the attorney must notify the
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client of the availability of fee arbitration." Id. at 264. The
procedures are set forth out in Rule 1:20A-6.
No lawsuit to recover a fee may be filed until
the expiration of the 30 day period herein
giving Pre-action Notice to a client . . . .
Pre-action Notice shall be given in writing,
which shall be sent by certified mail and
regular mail to the last known address of the
client, or, alternatively, hand delivered to
the client, and which shall contain the name,
address and telephone number of the current
secretary of the Fee Committee in a district
where the lawyer maintains an office . . . .
The notice shall specifically advise the
client of the right to request fee arbitration
and that the client should immediately call
the secretary to request appropriate forms;
the notice shall also state that if the client
does not promptly communicate with the Fee
Committee secretary and file the approved form
of request for fee arbitration within 30 days
after receiving pre-action notice by the
lawyer, the client shall lose the right to
initiate fee arbitration. The attorney's
complaint shall allege the giving of the
notice required by this rule or it shall be
dismissed.
Helmer contends its case against defendant should not have
been dismissed because it satisfied this Rule. It mailed the pre-
action notice to defendant's last known address as set forth in
the guarantee; it mailed the notice by regular and certified mail;
it made reference to this mailing in the complaint. The problem
is that both of the mailings were returned to Helmer with notations
that defendant did not receive either one.
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"New Jersey cases have recognized a presumption that mail
properly addressed, stamped and posted was received by the party
to whom it was addressed." SSI Med. Servs. v. HHS, Div. of Med.
Assistance & Health Servs., 146 N.J. 614, 621 (1996). That
presumption has been rebutted here because both the regular and
certified mail were returned to Helmer. Helmer does not contend
that defendant was aware of her right to fee arbitration; it only
asserts that it sent the notice to her last known address.
The purpose of the Rule was to give clients and others who
might be responsible to pay legal fees the ability for a short
window of time to request the alternate dispute procedure of
arbitration before being subjected to litigation. That the ability
to so do is important cannot be understated. The ability is
expressed in the Rule as a "right" and the sanction for having not
given this opportunity is severe, namely the dismissal of the
complaint. As we stated in Mateo v. Mateo, 281 N.J. Super. 73,
80 (App. Div. 1995), where no notice was given under Rule 1:20A-
6, "[t]here is no sense in requiring an attorney to inform a client
that litigation over a fee dispute may be avoided by bringing the
matter before the Fee Committee, yet binding the client to the
judgment in such litigation where the attorney failed to give the
required notice."
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Given the purpose of the Rule, we conclude that Helmer did
not comply with it when it knew that the client or responsible
third person was not actually notified of her right to request fee
arbitration. In light of our holding, we find no merit to Helmer's
contention that it substantially complied with the Rule's
requirements. See Galik v. Clara Maass Med. Ctr., 167 N.J. 341,
353 (2001) (requiring a "general compliance with the purpose of
the statute" as an element of finding substantial compliance).
The focus of our decision is narrow. We are not incorporating
a general due diligence requirement into the Rule. That is an
issue more appropriately left for the Supreme Court's
consideration. We simply hold that where counsel has actual
knowledge that the client or responsible third party did not
receive the pre-action notice because both mailings were returned,
the presumption of receipt has been rebutted. Counsel then should
make a genuine effort to obtain a current address and resend the
notice. To do otherwise undercuts the purpose of the Rule because
it pays lip service to the client's "right" to request arbitration
without giving any meaningful opportunity to the client to exercise
it. As the Supreme Court has stated "[t]he ultimate wisdom of the
fee arbitration system depends on its operation in fact." In re
LiVolsi, 85 N.J. 576, 604 (1981).
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The trial court dismissed the complaint with prejudice
because of Helmer's lack of compliance with Rule 1:20A-6. We hold
that the dismissal should have been without prejudice. "As a
general rule, a dismissal on the merits is with prejudice while a
dismissal based on the court's procedural inability to consider a
case is without prejudice." Pressler & Verniero, Current N.J.
Court Rules, comment 4 on R. 4:37-2 (2018) (citing Watkins v.
Resorts Int'l Hotel & Casino, 124 N.J. 398, 415-16 (1991)). In
this case, because there was no adjudication of defendant's
obligations under the guarantee to pay for Vincent's legal fees,
it was error to dismiss the litigation with prejudice.
We briefly address Helmer's contention that the statute of
limitations should be equitably tolled. It is not clear whether
that issue was raised before the trial court, but even if it were,
we have no need to address it where the complaint remains dismissed
and where the record before us is not adequate to resolve it. No
other issues warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
The dismissal is affirmed but it shall be without prejudice;
we reverse the "with prejudice" designation.
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