FINK v. KIRCHNER et al

Filing 15

OPINION FILED. Signed by Judge Noel L. Hillman on 5/8/13. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JOHN W. FINK,

Civil Action No. 12-4125
(NLH)(KMW)

Plaintiff,
v.

OPINION

J. PHILIP KIRCHNER, and
FLASTER/GREENBERG P.C.,
Defendants.

EDWARD ROBERT GROSSI
Law Office of Edward R. Grossi, LLC
8 Hillside Avenue
Suite 201
Montclair, NJ 07042
On behalf of plaintiff
ANTHONY LONGO
PATRICK B. MINTER
CHRISTOPHER J. CAREY
Graham Curtin, PA
4 Headquarters Plaza
Po Box 1991
Morristown, NJ 07962
On behalf of defendants
HILLMAN, District Judge
I.

BACKGROUND
This case is related to two other actions previously pending

before this Court, all arising out of plaintiff John Fink’s loan to
Advanced Logic Systems, Inc. (“ALSI”).

In 2001, Fink had been a

financial consultant for ALSI, but he eventually entered into a
series of credit agreements with ALSI to provide working capital to
the company’s operations.

Fink provided over $500,000 to ALSI, and

in return, he received rights to purchase a certain amount of stock

in ALSI.

The financial condition of ALSI deteriorated, litigation

between Fink and ALSI ensued in March 2003, and eventually the
parties settled in March 2006.

After paying only half of the

million dollar settlement to Fink, ALSI filed for bankruptcy in
2008.

In order to recoup the $60 million Fink believes he is owed,

Fink attempted to collect the debt from EdgeLink, Inc., an entity
Fink claimed was a successor-in-interest to ALSI.1

Fink also sought

to reopen ALSI’s bankruptcy in order to allow the trustee to
investigate what Fink contended was a theft of ALSI’s missing
assets.2
In this lawsuit, Fink has brought claims against the lawyer, J.
Phillip Kirchner, and his law firm, Flaster/Greenberg, P.C., that
represented Fink in his attempts to complete his settlement
agreement with ALSI, and in Fink’s efforts to enforce his rights
under a warrant agreement to purchase shares of ALSI stock.3

In

defendants’ efforts to assist Fink with his legal matters, Fink
claims that Kirchner altered an email submitted to the arbitrator
presiding over an arbitration between Fink and ALSI.

Fink claims

1

Judgment was entered in EdgeLink’s favor on summary judgment.
That case is on appeal. (See Fink v. EdgeLink, Civ. A. No. 09-5078
(D.N.J.).)
2

This Court denied Fink’s appeal of the bankruptcy court’s
order denying his request to reopen ALSI’s bankruptcy. That
decision is on appeal. (See In re Advanced Logic Systems, Inc.,
Civ. A. No. 12-4479 (D.N.J.).)
3

Fink also claims that defendants assisted in his appeal of the
summary judgment entered in favor of AFFLINK, which was an entity
Fink sued along with ALSI in his 2003 lawsuit.
2

that the arbitrator’s decision was affected, to Fink’s detriment, by
the issues concerning the altered email.

The altered email incident

also lead to a still-pending New Jersey Disciplinary Review Board
ethics complaint against Kirchner, in which Fink participated.
Fink also claims that the arbitrator’s decision revealed to him
that defendants were not working in Fink’s best interests, but
instead defendants were acting in the interests of the firm to
maximize billing.

Relatedly, Fink claims that in defendants’

attempts to collect payment for their legal fees - totaling over
$650,000 - Kirchner tried to extort money from Fink.

Fink claims

that when Kirchner was subpoenaed to testify in a case involving
Fink and another law firm, Kirchner stated that he would only
testify on Fink’s behalf if Fink paid his outstanding bill to the
firm.4
Based on these allegations, Fink claims that defendants have
committed legal malpractice and fraud, breached their fiduciary
duty, and inflicted intentional emotional distress on him.5
Defendants moved to dismiss all of Fink’s claims, but during
briefing, defendants withdrew their motion to dismiss Fink’s legal

4

Fink’s complaint contains passages of what Fink claims are
transcriptions of secretly recorded conversations between Fink and
Kirchner.
5

Fink also asserted a claim for unjust enrichment, but he has
withdrawn that claim.
3

malpractice claim.6
II.

Fink has opposed defendants’ motion.

DISCUSSION
A.

Jurisdiction

This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1332 because there is complete diversity of citizenship
between the parties and the amount in controversy exceeds $75,000.
B.

Standard for Motion to Dismiss

When considering a motion to dismiss a complaint for failure to
state a claim upon which relief can be granted pursuant to Federal
Rule of Civil Procedure 12(b)(6), a court must accept all wellpleaded allegations in the complaint as true and view them in the
light most favorable to the plaintiff.
347, 351 (3d Cir. 2005).

Evancho v. Fisher, 423 F.3d

It is well settled that a pleading is

sufficient if it contains “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
8(a)(2).

Fed. R. Civ. P.

Under the liberal federal pleading rules, it is not

necessary to plead evidence, and it is not necessary to plead all
the facts that serve as a basis for the claim.
Corp., 562 F.2d 434, 446 (3d Cir. 1977).

Bogosian v. Gulf Oil

However, “[a]lthough the

Federal Rules of Civil Procedure do not require a claimant to set
forth an intricately detailed description of the asserted basis for
6

Defendants explain that they withdrew that portion of their
motion because of the pending DRB ethics complaint proceedings.
Defendants also state that they vigorously dispute Fink’s
allegations and reserve the right to contest the veracity of Fink’s
contentions.
4

relief, they do require that the pleadings give defendant fair
notice of what the plaintiff’s claim is and the grounds upon which
it rests.”

Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S. 147, 149-

50 n.3 (1984) (quotation and citation omitted).
A district court, in weighing a motion to dismiss, asks “‘not
whether a plaintiff will ultimately prevail but whether the claimant
is entitled to offer evidence to support the claim.’”

Bell Atlantic

v. Twombly, 550 U.S. 544, 563 n.8 (2007) (quoting Scheuer v.
Rhoades, 416 U.S. 232, 236 (1974)); see also Ashcroft v. Iqbal, 556
U.S. 662, 684 (2009) (“Our decision in Twombly expounded the
pleading standard for ‘all civil actions’ . . . .”); Fowler v. UPMC
Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (“Iqbal . . . provides
the final nail-in-the-coffin for the ‘no set of facts’ standard that
applied to federal complaints before Twombly.”).
Following the Twombly/Iqbal standard, the Third Circuit has
instructed a two-part analysis in reviewing a complaint under Rule
12(b)(6).

First, the factual and legal elements of a claim should

be separated; a district court must accept all of the complaint's
well-pleaded facts as true, but may disregard any legal conclusions.
Fowler, 578 F.3d at 210 (citing Iqbal, 129 S. Ct. at 1950).

Second,

a district court must then determine whether the facts alleged in
the complaint are sufficient to show that the plaintiff has a
“‘plausible claim for relief.’”
1950).

Id. (quoting Iqbal, 129 S. Ct. at

A complaint must do more than allege the plaintiff's

5

entitlement to relief.

Id.; see also Phillips v. Cnty. of

Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (stating that the
“Supreme Court's Twombly formulation of the pleading standard can be
summed up thus: ‘stating . . . a claim requires a complaint with
enough factual matter (taken as true) to suggest’ the required
element.

This ‘does not impose a probability requirement at the

pleading stage,’ but instead ‘simply calls for enough facts to raise
a reasonable expectation that discovery will reveal evidence of’ the
necessary element”). A court need not credit either “bald
assertions” or “legal conclusions” in a complaint when deciding a
motion to dismiss.

In re Burlington Coat Factory Sec. Litig., 114

F.3d 1410, 1429-30 (3d Cir. 1997).

The defendant bears the burden

of showing that no claim has been presented.

Hedges v. U.S., 404

F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v.
Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).
Finally, a court in reviewing a Rule 12(b)(6) motion must only
consider the facts alleged in the pleadings, the documents attached
thereto as exhibits, and matters of judicial notice.

S. Cross

Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd., 181 F.3d 410,
426 (3d Cir. 1999).

A court may consider, however, “an undisputedly

authentic document that a defendant attaches as an exhibit to a
motion to dismiss if the plaintiff’s claims are based on the
document.”

Pension Benefit Guar. Corp. v. White Consol. Indus.,

Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
6

If any other matters

outside the pleadings are presented to the court, and the court does
not exclude those matters, a Rule 12(b)(6) motion will be treated as
a summary judgment motion pursuant to Rule 56.

Fed. R. Civ. P.

12(b).
C.

Analysis

Defendants argue that Fink’s fraud and breach of fiduciary duty
claims are duplicative of his legal malpractice claim and must be
dismissed.

Defendants also argue that Fink’s alleged facts to not

support an intentional infliction of emotional distress claim.

Fink

argues that both of defendants’ arguments must be rejected.
With regard to defendants’ first argument, even though some
allegations may overlap, if the facts to support claims of fraud and
breach of fiduciary duty are pleaded properly, they may state
separate, non-duplicative claims from a legal malpractice claim.
“Legal-malpractice suits are grounded in the tort of negligence,”
and at “the most fundamental level, the legal-malpractice action
provides a remedy for negligent professional performance.”

McGrogan

v. Till, 771 A.2d 1187, 1193 (N.J. 2001) (citations omitted).7

7

In

The elements of a cause of action for legal malpractice are
(1) the existence of an attorney-client relationship creating a duty
of care by the defendant attorney, (2) the breach of that duty by
the defendant, and (3) proximate causation of the damages claimed by
the plaintiff. McGrogan v. Till, 771 A.2d 1187, 1193 (N.J. 2001)
(citation omitted).
7

contrast, claims that a lawyer committed fraud8 or knowingly
violated a fiduciary duty9 are intentional torts, separate from
allegations concerning the lawyer’s negligent deviation from the
professional standard of care.

See Gennari v. Weichert Co.

Realtors, 691 A.2d 350, 367 (N.J. 1997); Stoecker v. Echevarria, 975
A.2d 975, 988 (N.J. Super. Ct. App. Div. 2009) (rejecting
defendant’s argument that plaintiff’s fraud claim is substantially
indistinguishable from the legal malpractice claim because, “[t]o
prevail on her fraud claim, plaintiff need not present proof that
[defendant] deviated from the professional standard of care
applicable to attorneys”).

“Stated plainly, an attorney who

intentionally violates the duty of loyalty owed to a client commits
a more egregious offense than one who negligently breaches the duty
of care.”

Packard-Bamberger & Co., Inc. v. Collier, 771 A.2d 1194,

8

The five elements of common-law fraud are: (1) a material
misrepresentation of a presently existing or past fact; (2)
knowledge or belief by the defendant of its falsity; (3) an
intention that the other person rely on it; (4) reasonable reliance
thereon by the other person; and (5) resulting damages. Gennari v.
Weichert Co. Realtors, 691 A.2d 350, 367 (N.J. 1997).
9

The essence of a fiduciary relationship is that one party
places trust and confidence in another who is in a dominant or
superior position. A fiduciary relationship arises between two
persons when one person is under a duty to act for or give advice
for the benefit of another on matters within the scope of their
relationship. The fiduciary's obligations to the dependent party
include a duty of loyalty and a duty to exercise reasonable skill
and care. Accordingly, the fiduciary is liable for harm resulting
from a breach of the duties imposed by the existence of such a
relationship. McKelvey v. Pierce, 800 A.2d 840, 859 (N.J. 2002)
(citations omitted).
8

1203 (N.J. 2001) (explaining that a “client’s claim concerning the
defendant-attorney’s breach of a fiduciary duty may arise in the
legal malpractice context”).
In this case, Fink has lodged extensive and detailed
allegations against Kirchner and his law firm.

Some of his

allegations concern Kirchner’s deviation from the professional
standard of care for attorneys.

For example, Fink alleges that

Kirchner failed to take certain depositions, fruitlessly pursued
sanctions against ALSI, did legal work not approved by Fink,
provided poor legal advice with regard to the arbitration, and
submitted an altered document to the arbitrator.

Other allegations

relate to Kirchner’s and the firm’s alleged intentional conduct to
defraud Fink and breach their fiduciary duty to Fink.

For example,

Fink alleges that, having paid $500,000 in legal fees and costs, and
still owing over $150,000, Kirchner and the firm had a considerable
financial incentive to continue Fink’s litigation, rather than to
work to prove that ALSI breached the settlement agreement or to make
real efforts to consummate the settlement with ALSI.

Fink also

alleges that Kirchner attempted to extort money from Fink by
threatening not to testify in a subpoenaed deposition in a separate
matter between Fink and another law firm.

Accepting these

allegations, as well as all the other allegations in the detailed
complaint, as true, Fink has pleaded separate claims for legal
malpractice, fraud, and breach of fiduciary duty, and all three may
9

proceed.
With regard to defendants’ second argument, that Fink’s
intentional infliction of emotional distress claim is not
maintainable under Fink’s alleged facts, the Court finds that Fink’s
factual allegations in the complaint are not sufficient to show that
he has a “‘plausible claim for relief.’”

Fowler, 578 F.3d at 210

Id. (quoting Iqbal, 129 S. Ct. at 1950).
The elements of the common law cause of action for intentional
infliction of emotional distress were set forth in Buckley v.
Trenton Saving Fund Society, 111 N.J. 355 (1988):
First, plaintiff must prove that defendant acted
intentionally or recklessly. Defendant must intend both
to do the act and to produce emotional distress, or he
must act recklessly in deliberate disregard of a high
degree of probability that emotional distress will follow.
Second, defendant's conduct must be so outrageous in
character, and so extreme in degree, as to go beyond all
possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized
community. Third, plaintiff must prove defendant's
conduct was a proximate cause of plaintiff's emotional
distress. Fourth, the emotional distress suffered by
plaintiff must be so severe that no reasonable person
could be expected to endure it.
DiClemente v. Jennings, 2012 WL 5629659, *8 (N.J. Super. Ct. App.
Div. Nov. 16, 2012) (quoting Buckley) (internal citations and
quotations omitted).
Here, Fink alleges that Kirchner’s altering of legal documents
submitted to the court, his questioning of Fink’s character before

10

the court, and his threatening to not testify truthfully at a
deposition in a separate matter in an attempt to extort payment from
Fink, all caused him severe mental anguish and emotional distress.
If accepted as true, these claims may perhaps satisfy the first and
second elements of an IIED claim.

What is lacking, however, are

facts to support Fink’s conclusion that he suffered “severe mental
anguish and emotional distress.”
To prove a claim for intentional infliction of emotional
distress, a plaintiff’s burden of proof must meet an “elevated
threshold” that is satisfied only in extreme cases.

Griffin v. Tops

Appliance City, Inc., 766 A.2d 292, 296 (N.J. Super. Ct. App. Div.
2001), cert. denied, 209 N.J. 100 (2012).

Moreover, the severity of

the emotional distress raises questions of both law and fact, where
the court decides as a matter of law whether such emotional distress
can be found, and the jury decides whether it has in fact been
proved.

Buckley, 544 A.2d at 864.

As to the nature of what constitutes emotional distress “so
severe that no reasonable person could be expected to endure it,”
courts have found that being embarrassed, a “nervous wreck,”
disappointed, stressed, and suffering from headaches, resentment,
loss of sleep, and anxiety, to not be sufficiently severe.
(citing cases).

See id.

Additionally, if a person cannot show treatment for

emotional distress or an impact on the ability to function in daily
life, that also weighs against a finding of severe emotional
11

distress.

See, e.g., Turner v. Wong, 832 A.2d 340, 348 (N.J. Super.

Ct. App. Div. 2003) (citing Aly v. Garcia, 754 A.2d 1232 (App. Div.
2000), cert. denied, 167 N.J. 87 (2001)) (explaining that the
“emotional distress must be sufficiently substantial to result in
either physical illness or serious psychological sequelae”).
Fink has failed to plead in his complaint any facts to describe
the nature of the emotional distress he has allegedly suffered.
Without such facts to differentiate from his legal conclusion that
he has suffered from severe emotional distress, the Court cannot
assess whether he has properly stated the fourth element of a claim
for IIED.

See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d

Cir. 2008) (explaining that stating a claim requires a complaint
with enough factual matter (taken as true) to suggest the required
element).
IV.

Accordingly, Fink’s IIED claim must be dismissed.10

CONCLUSION
For the reasons expressed above, defendants’ motion to dismiss

shall be granted as to Fink’s intentional infliction of emotional
distress claim, and denied on all other bases.

An appropriate

Order will be entered.
Date: May 8, 2013
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

10

The Court notes that beyond a cause of action for emotional
distress, New Jersey courts have long recognized emotional distress
damages as a component of various intentional torts and breach of
contract claims. Tarr v. Ciasulli, 853 A.2d 921, 925 (N.J. 2004).
12