Attorney who drafted settlement agreement acts as arbitrator over disputes arising under the agreement. What could possibly go wrong?

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Every now and again I read a decision that leaves me with lots of unanswered, and perhaps unanswerable, questions. Asphalt Paving Systems, Inc. v. Associated Asphalt Partners, LLC is one of those cases.

In Asphalt Paving, plaintiff and defendants settled their lawsuit shortly after plaintiff filed its complaint. They agreed that any disputes over the terms of the settlement agreement would be resolved through arbitration, and further agreed that the attorney who drafted the settlement agreement would be the arbitrator. (Question No. 1: Would you ever agree – as either one of the parties or the attorney – to this set up? I don’t think I would. It seems rife with potential problems.)

As you might have guessed, a dispute arose between the parties and they proceeded to arbitration. At the end of the arbitration, the arbitrator asked the parties, “What would be the result if I determined the agreement is too ambiguous to enforce?” (Question No. 2: Why bring this up even if you thought it might be true?) Plaintiff alleged that, in response, defendants’ attorney “raised his voice, pointed his finger angrily at the arbitrator, and threatened that the arbitrator would be sued for malpractice.” The arbitrator entered an award against plaintiff, and plaintiff sued. It alleged that the award was procured by undue means — defendants’ counsel’s alleged threat to sue the arbitrator.

Continue reading “Attorney who drafted settlement agreement acts as arbitrator over disputes arising under the agreement. What could possibly go wrong?”

You think you had a bad day at work, this guy tried to drive across the Elizabeth River in an excavator.

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

If ever a lawyer should have been awarded points for creativity, Diaco Construction, Inc. v. Ohio Security Ins. Co. is the case where it should have happened. It is an insurance coverage dispute, but don’t stop reading just because of that. The underlying facts are interesting and the insured’s lawyer’s arguments, though ultimately unsuccessful, were creative.

The facts in Diaco were summarized succinctly by the Appellate Division:

Plaintiff . . . lost an excavator in the Elizabeth River in the course of constructing concrete headwalls and outlets for stormwater runoff pursuant to its contract with the City of Elizabeth. [Plaintiff’s] employee was operating the excavator on the riverbank when he sensed it slipping into the river. Trying to avert disaster, the operator turned the machine and tried to drive it across the river. The effort was not a success as the excavator got stuck three-quarters of the way across. Although nothing leaked into the river from the wreck, the excavator was a total loss and it cost [Plaintiff] over $300,000 to remove it a week later following oral demand by the City and the Department of Environmental Protection.

Plaintiff’s insurance company paid $95,000 for loss of the excavator and $28,750 for debris removal. Plaintiff then made a claim with its carrier for the balance. The carrier denied the claim and plaintiff sued. The normal, mind-numbing review of insurance policy language followed.

Continue reading “You think you had a bad day at work, this guy tried to drive across the Elizabeth River in an excavator.”

“But you yada yada’d over the best part!”

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

As any Seinfeld fan knows, you cannot “yada yada” over the best part of a story. But in a recent decision, a New Jersey court did just that.

In Barry v. Melmed Construction Company, Inc., the court spent eleven pages discussing a relatively routine case where defendant waived the right to enforce the arbitration provision in its contract with plaintiffs – defendant waited too long to raise the issue, actively participated in litigation in state court, etc. – but then dropped this bomb at the very end of the decision:

We acknowledge the anomaly of plaintiffs’ assertion that they are not bound by the arbitration clause their counsel drafted and they insisted be included in the contract between the parties, particularly in light of counsel’s apparent admission that he drafted the clause to allow plaintiffs to argue it could not be enforced against them. While not endorsing such conduct, we do not address it in light of defendants’ waiver of an arbitration remedy.

So let me get this straight, plaintiffs demanded that their contract with defendant include an arbitration provision, and then had their counsel draft the provision so that they could later argue that the provision could not be enforced against them?!? And the court waited until the end of the case, in a footnote no less, to bring this up?!? This was the most interesting part of the case! Reducing it to a footnote on the last page, and then not even discussing it substantively, is the judicial equivalent of “yada yada-ing” the best part of the story.

Husband’s Foreclosure Defense? I Had No Idea My Wife Entered Into Those Mortgages (Or Had Those Credit Cards, Or Drained Our Savings . . . )

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Unfortunately, New Jersey still has the highest foreclosure rate in the country. Most weeks, the Appellate Division issues several decisions related to residential foreclosure, and most follow a predictable pattern – a lender forecloses and obtains final judgement of foreclosure, the borrower appeals, claiming that the bank lacked standing to foreclose, and the Appellate Division affirms entry of final judgment of foreclosure. But every now and then a case comes along that breaks that mold. U.S. Bank National Association v. Gallagher is one of those cases. (Note: I am not related to the Gallaghers in this case or the Gallaghers in the Showtime series, Shameless, but the facts of this case might actually fit in that show.)

Gallagher starts off normal enough. Defendants were married in 1986. In 1996 they bought property and built their marital home. Two years later, they used the property as security for a loan. Over the next ten years, they refinanced the mortgage on the property four times. Eventually, however, they were unable to make the monthly payments and the bank foreclosed.

That is when it gets interesting.

Continue reading “Husband’s Foreclosure Defense? I Had No Idea My Wife Entered Into Those Mortgages (Or Had Those Credit Cards, Or Drained Our Savings . . . )”

School Not Liable For Injuries To Student During Student/Teacher Basketball Game

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

My children’s school has a nice tradition for the fifth grade students. Towards the end of the year, the fifth graders play a basketball game against a group of teachers and parents. It is a fun event. I have played in it twice, once against my daughter and once against my oldest son. In each game, I was called for a foul. In each game, best as I can recall, I was the only person called for a foul. (Not to sound too much like Draymond Green, but neither call was warranted. My kids flopped.) But with this history in mind, I read C.H. v. Rahway Board of Education with some interest.

In C.H., plaintiff was an eighth grader and a member of her school’s basketball team. At the end of the school year, she was part of a team of students that played a team of teachers and school personnel. The game was an annual fundraising event, and participation was voluntary. There was at least one referee officiating the game, and five teachers who did not play in the game also attended to help supervise.

During the game, while going up for a rebound, plaintiff came into contact with a teacher, landed awkwardly, and was injured. Plaintiff testified that she and the teacher were close to the basket vying for the rebound. The teacher was between her and the basket with his back to her. When the shot was taken, the teacher jumped up and backwards (towards plaintiff), while plaintiff jumped up and forward (towards the rim, and the teacher). Their upper bodies collided. Plaintiff fell and injured her knee.

Plaintiff sued the teacher involved in the incident, the school, and the town board of education. After discovery, the trial court granted defendants’ summary judgment motion and dismissed plaintiff’s lawsuit. Plaintiff appealed.

Continue reading “School Not Liable For Injuries To Student During Student/Teacher Basketball Game”

Judge Shopping Is Bad

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

That is the take home message from the Appellate Division’s recent decision in Goldfarb v. Solimine.

In Goldfarb, defendant promised to hire plaintiff to manage defendant’s family’s assets. Before getting written confirmation of defendant’s offer, plaintiff quit his job with an investment firm. Defendant then reneged on the promise, and plaintiff sued. At trial, the jury sided with plaintiff and awarded him damages based on the difference between the base salary defendant promised and what plaintiff actually earned at a new job he found after defendant reneged on that promise.

Both sides appealed on a number of issues, the most interesting of which had nothing to do with the underlying facts of the case. Plaintiff appealed the denial of his motion to recuse the trial judge, which plaintiff filed “after learning that a defense attorney, in an ex parte communication, sought the judge’s assignment to the case, and the judge responded by specifically requesting the assignment from the presiding judge.” The Appellate Division agreed with plaintiff and reversed the trial court’s decision on the motion to recuse.

Continue reading “Judge Shopping Is Bad”

“BorgataBabes” Lawsuit Revived As Trial Court Is Chided For Ignoring Appellate Division

Some of the best parts of the movie “My Cousin Vinny” are the interactions between Vinny, played by Joe Pesci, and Judge Haller, played by the late Fred Gwynne. In one scene, Judge Haller admonishes Vinny for failing to dress appropriately for court. When Vinny comes to court the next day wearing exactly the same thing he had on the day before, the following exchange occurs:

Judge Haller: Mr. Gambini, didn’t I tell you that the next time you appear in my court that you dress appropriately?

Vinny: You were serious about that?

Judge Haller was serious, and Vinny spent a night in jail as a result. I was reminded of this scene when I read Schiavo v. Marina District Development Company, LLC d/b/a Borgata Casino Hotel & Spa, where the Appellate Division had to remind the trial court that it was serious about a prior decision.

Schiavo has been pending for more than a decade. Plaintiffs worked as “costumed beverage servers” in the defendant’s “BorgataBabes” program. (Disclaimer: This is the actual name of the program, not my name for it.) They claimed that “defendant’s adoption and application of personal appearance standards (PAS) subjected them to illegal gender stereotyping, sexual harassment, disparate treatment, disparate impact, and . . . resulted in adverse employment actions.”

Continue reading ““BorgataBabes” Lawsuit Revived As Trial Court Is Chided For Ignoring Appellate Division”