A New Jersey appeals court has ruled that the firm of Starr, Gern, Davison & Rubin is not liable for malpractice in a case where an ex-client alleges it failed to provide material information obtained in discovery and misrepresented the underlying claim as meritless.

The Appellate Division affirmed a trial judge's ruling that the plaintiff's malpractice claims failed because he never demonstrated a viable claim under federal procurement law in the underlying case.

The suit was brought by Lawrence Longhi, who retained Starr Gern after encountering problems in a joint venture to build infrastructure projects in Afghanistan, according to the court. Longhi claimed that his joint venture partners failed to pay him what he considered a fair share of a $2 billion contract from the U.S. Army Corps of Engineers to build bases for the Afghan army.

On behalf of Longhi, Starr Gern filed suit in Morris County in September 2005 against two parties—the Michael Baker Corp. and Weidlinger Associates—alleging fraud and breach of contract. In April 2007, Starr Gern reported to Longhi in a memo that the case could yield “substantial” returns but the case would require the law firm to make a substantial investment of its own, according to the decision.

A few days after delivering the memo, on May 3, 2007, Starr Gern notified Longhi it was withdrawing as counsel, the court said. On the same day, counsel for defendant Baker Corp. sent Starr Gern copies of two contracts between Baker Corp. and the Army Corps of Engineers. But, Longhi claims, Starr Gern failed to provide the contracts to Longhi or to his successor counsel in the case.

Starr Gern, for its part, has denied Longhi's allegations.

At the time Starr Gern left, Longhi had a pending discovery motion to compel Baker Corp. to release the contracts pertaining to the underlying suit. After Starr Gern withdrew, a judge, sua sponte, withdrew the discovery motions pending Longhi's retention of a new lawyer, according to the decision.

Longhi retained another lawyer in October 2007, but that firm withdrew in February 2008. Longhi then retained Allan Mordkoff, an attorney who had worked on the case at Starr Gern before leaving the firm. But the discovery motion that would have compelled release of the contracts was never refiled, Longhi claims.

The breach-of-contract suit was dismissed in July 2008. In January 2013, Longhi sued Starr Gern for legal malpractice, claiming it failed to disclose material information obtained in discovery, and wrongly characterizing the case as meritless.

Longhi presented an expert report from Michael Ambrosio, the longtime Seton Hall University law professor, who said the facts of the case “clearly manifest the existence of the required elements to establish defendants' liability for legal malpractice,” according to the decision.

Starr Gern moved for summary judgment, and Morris County Superior Court Judge Dennis Carey granted the motion, finding that Longhi was not party to the contracts between Baker and the Army Corps of Engineers and that the federal procurement statute specifically bars finder fees in connection with those contracts. Carey also dismissed Mordkoff under collateral estoppel grounds, according to the decision.

Carey found that Longhi failed to proffer evidence of a contract awarded to Baker that would entitle the plaintiff to any commission. On appeal, Judges Harry Carroll and George Leone said a jury might conclude that was the result of Starr Gern's alleged failure to disclose the contracts. In addition, Longhi's detailing of efforts he undertook that led to the contracts' procurement, if accepted by a jury, could have led to a finding that Starr Gern's negligence led to dismissal of the underlying case and an award of damages to the plaintiff, Carroll and Leone said.

But Carroll and Leone said that Longhi's malpractice claims failed because he did not show that the underlying action was permitted under federal procurement law. They cited 42 U.S.C.A. §3901, which said any contract awarded using procedures other than a sealed bid shall contain a warranty that no person or agency has been employed or retained to solicit or secure the contract on an agreement or understanding for commission, percentage or contingent fee.

Longhi argued that his closely held companies fall into an exemption to that rule, but he did not address any of the factors that would allow him or his employees to qualify as bona fide employees or agencies, the appeals court said.

Anthony Scordo III, who represented Longhi, said he was “disappointed” that the appeals court found the malpractice claim viable but upheld dismissal based on federal contracts law. That issue should not have been resolved on summary judgment, said Scordo, a solo in Cedar Grove, who hasn't decided what his next move will be.

Starr Gern, represented by the firm's Lisa Geraghty, said in a statement, “Starr Gern is pleased that the Appellate Division affirmed the trial court's decision to dismiss the legal malpractice action on the merits. As to plaintiff's contention that the firm negligently failed to disclose to him the existence of certain government contracts or the federal procurement law and related regulations, Starr Gern has denied categorically those allegations.”

Longhi has pursued separate legal action against his former partner in the Afghan contracting venture, Khaled Monawar, claiming he was denied his share of the proceeds. In 2012, Longhi obtained a default judgment for $8 million in compensatory damages and $42 million in punitives against Monawar. But a few months later the award was vacated after Monawar said he was not properly served.

In October 2014, Longhi sued Monawar for breach of contract in the Northern District of California, which is allegedly where Monawar lives. Monawar again failed to answer the claim, and Longhi has moved for default.

On Sept. 21 of this year, U.S. Magistrate Judge Kandis Westmore, in the Northern District of California, recommended that Longhi's motion for default be granted in part. The magistrate also recommended the award of $2.9 million in compensatory damages, $2.3 million in interest and $6,020 in costs. The magistrate also recommended that Longhi should not be awarded punitive damages. The recommendation is still pending.