A New Jersey appeals court, in partially reinstating a suit over an attorney's alleged failure to sound the alarm on a multimillion-dollar Ponzi scheme, has nevertheless declined to find a viable claim of third-party legal malpractice in the defendant's drawing-up of documents.

The Appellate Division on Oct. 20 largely affirmed dismissal of the claims set forth in Goodman v. Merlino, which accuses Staten Island attorney John Merlino Jr. of neglecting to warn investors who handed millions to a huckster client.

“We do not interpret our Supreme Court's pronouncements as extending attorneys' malpractice liability to non-client third parties when the attorneys have done nothing more than draft documents containing representations or warranties, without reason to believe the representations are false,” Judge William Nugent wrote for the three-judge panel in an unpublished decision.