Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

A division of New Jersey's Department of Treasury purchased $300 million in preferred stock issued by the defendant, which later asked New Jersey to convert its preferred shares to common stock. New Jersey agreed, if the terms of conversion were as favorable as terms governing the exchange of other stockholders' preferred shares. Defendant agreed and in July 2008 the parties entered into a share exchange agreement with a forum selection clause providing that "exclusive jurisdiction . . . shall lie in the appropriate courts of the State [of] New Jersey." The state sued for breach and the defendant sought to remove the case to federal court. The district court held that the agreement waived the right to remove the pending litigation to the federal district courts in New Jersey. The Third Circuit affirmed, stating that federal courts are in the states, but not "of" the states.

The defendants (Connelly firm) represented plaintiff in his divorce until July 2005. In July 2006 plaintiff consulted attorney, Downey, who notified the Connelly firm of a malpractice claim in October. In March 2007 plaintiff signed an agreement to file suit, but Downey did not file. In February 2008 Downey notified the plaintiff that he was terminating representation and stated that the limitations period on the malpractice claim ran out before Downey began representation. In 2009 plaintiff filed a malpractice suit against the Connelly firm, under a contract theory, and against Downey. The district court entered summary judgment in favor of all defendants. The Third Circuit reversed and remanded claims against Downey, applying the "discovery rule" rather than the occurrence rule to negligence by the Connelly firm. Although plaintiff knew that certain witnesses were not called during a 2004 hearing, he claims that he relied on the firm's assurances and did not have constructive notice of negligence until a July 2005 hearing. The question of when the limitations period began to run was for a jury.