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Sunday, September 15, 2013

BRUCE KAYE, ET AL. VS. ALAN P. ROSEFIELDE, ET AL. VS. DEBORAH KAYE, ET AL. A-1120-07T1


 BRUCE KAYE, ET AL. VS. ALAN P. ROSEFIELDE, ET AL. VS. 
DEBORAH KAYE, ET AL. 
A-1120-07T1 
This civil dispute originated in the Chancery Division where plaintiff filed a complaint against defendant alleging, inter alia, unfaithful servant, civil fraud, and legal malpractice. Although monetary damages were potentially available, plaintiff sought primarily equitable relief. Defendant answered and filed a counterclaim alleging, in part, violations of the protections afforded whistleblowers under the Conscientious Employee Protection Act (CEPA) and common law breach of contract. 
We hold that the trial court did not misuse its discretionary authority when it invoked the doctrine of ancillary jurisdiction to adjudicate the entire controversy, including trying, without a jury, the claims raised by defendant in his counterclaim. We also hold that attorneys hired to serve as in-house counsel are bound by the conflict of interests proscription in RPC 1.8(a), including specifically providing the client/employer with written notice of potential conflicts. 
On the question of damages, we hold that the Chancery Division has the authority to award punitive damages, provided such damages are warranted under the Punitive Damages Act. In a legal malpractice action, if punitive damages are based on defendant's "actual malice" as defined in N.J.S.A. 2A:15-5.10, counsel fees awarded to the plaintiff constitute "compensatory damages" as defined in N.J.S.A. 2A:15-5.10. 
Finally, under the facts of this case, we hold that defendant, who was hired to be the chief operating officer and general counsel of plaintiff's varied businesses, was not an "employee" entitled to the protections afforded under CEPA, pursuant to standards established by the Court in D'Annunzio v. Prudential Insurance Co. of America, 192 N.J. 110 (2007), and Stomel v. City of Camden, 192 N.J. 137 (2007). 08-16-13