The New Jersey Supreme Court has agreed to take up whether the entire controversy doctrine requires a plaintiff to pursue a malpractice action as a defense or counterclaim when its former law firm sues to collect legal fees.

The justices announced earlier this month that certification was granted in Dimitrakopoulos v. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, a legal malpractice case filed by former clients of a law firm three years after resolution of the firm's collection suit related to its representation of the same clients. A trial court dismissed the malpractice suit as barred by the entire controversy doctrine, and the Appellate Division affirmed. But the plaintiff appealed, and the Supreme Court agreed to hear the case.

The case starts in 2009, when Evangelos and Matilde Dimitrakopoulos retained Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl to represent them in litigation against a former business partner who had allegedly diverted funds from the company. Matilde owned 51 percent of the company, Integrated Construction and Utilities. Her husband, Evangelos, held no ownership interest but acted as her agent, performing ownership duties on her behalf.

In December 2010, the partnership dispute was submitted to binding arbitration, and Borrus Goldin was allowed to withdraw as counsel. In September 2011, that case ended with a settlement.

Meanwhile, in March 2011, Borrus Goldin sued the Dimitrakopouloses to collect unpaid legal fees from the business dispute. But Evangelos, who was pro se, did not completely answer interrogatories, and Borrus Goldin was granted a default judgment for $121,947 in July 2012.

Then, three years later, in September 2015, the Dimitrakopouloses filed their own legal malpractice suit against Borrus Goldin and partners Steven Fox and Anthony Vignuolo, claiming they issued excessive bills and agreed to binding arbitration without the clients' consent in the Integrated Construction and Utilities case.

But the trial judge dismissed that case under the entire controversy doctrine. The trial judge pointed out that the Dimitrakopouloses knew on or around December 2010 that their alleged damages were attributed to the attorneys' professional negligence. They then had a 10-month period before the settlement and final judgment to file amended pleadings asserting malpractice. In response to questioning from the trial judge, the plaintiffs' counsel conceded that plaintiffs' damages were ascertained as of September 2011.

But the plaintiffs waited three years to file suit, the trial judge said.

The Appellate Division agreed. The panel noted that in 1997, the Supreme Court ruled in Olds v. Donnelly that “the entire controversy doctrine no longer compels the assertion of a legal malpractice claim in an underlying action that gives rise to a claim.” Central to the court's analysis, then, “is the interpretation of the phrase 'underlying action that gives rise to the [malpractice] claim,'” the appeals court said.

Legal malpractice claims are not subject to the entire controversy doctrine to the extent that they need not be asserted in the underlying action that gives rise to the claim, the court said. But in the present case, the plaintiffs erroneously conflated that the collection action was the underlying claim, and concluded that they did not need to assert malpractice during such a dispute. However, the business dispute was the underlying case that gave rise to the malpractice claims, the appeals court said.

Defendant Vignuolo said he was surprised that the Supreme Court agreed to take the case.

“It's my serious concern that there's nothing in this case that will advance our jurisprudence on the issues in the case and that the Supreme Court is going to use this as a vehicle to expand the ability to make claims against lawyers,” Vignuolo said.

New Brunswick attorney Jae Cho, who represented the plaintiffs at the Appellate Division, did not respond to calls about the case.