Fee Dispute Between Counsel Inspires Court To Bemoan The Death Of The Practice Of Law As A Profession

In the final scene of the movie Scent of a Woman, Al Pacino’s character defends Chris O’Donnell’s character, who is about to be expelled from the (fictional) prestigious Baird School. Among many other things, Pacino’s character exclaims: “I don’t know who went to this place. William Howard Taft. William Jennings Bryant. William Tell, whoever. Their spirit is dead, if they ever had one.” Similarly, although slightly less dramatically, a fee dispute between counsel in Meister v. Verizon New Jersey Inc. led the trial court to eulogize the law as a profession:

This unfortunate fee dispute, coming as it does in the midst of seemingly final negotiations of a settlement, should resolve, with certainty, any lingering doubt that the practice of law, that storied profession of Marshall and Jefferson and Lincoln, is really now just another capitalist enterprise.

The court walked these comments back, slightly, by acknowledging that “[t]he practice of law is not a hobby” and “[h]ard working and industrious counsel who take risks to advance a client’s case and to maximize a client’s recovery should be rewarded.” But it then immediately returned to its original thesis:

However, while lawyers may indeed make a client’s life better through their advocacy and vigilant protection of that client’s interests, they are uniquely able to make it seem as though they are not doing so when quarreling, as they are here, over who gets to spell out how much they should be paid from their paralyzed client’s recovery and why one is more entitled to do so than another.

This is probably not how the lawyers in the case hoped the court would start its opinion.

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Third Circuit Answers The Question: Can a Texan Living In Georgia Sue Two Dozen Florida Defendants In New Jersey Federal Court?

by: Peter J. Gallagher (LinkedIn)

I don’t usually write about personal jurisdiction because it is . . . well . . . a little boring. But I do enjoy creative legal arguments (including creative arguments about jurisdiction), so I am going to make an exception here.

The Third Circuit recently issued its decision in in Robinson v. Section 23 Property Owner’s Association, Inc., which is the latest in what appears to be a running battle between plaintiff and more than two dozen defendants arising out of the foreclosure of defendant’s mother’s home. The district court described the various lawsuits plaintiff filed as follows:

The subject of all of [plaintiff’s] cases, including this case, arises out of his residence at his mother’s home in Florida. Beginning with disputes over the enforcement of deed restrictions, such as parking and property maintenance, Plaintiff’s cases have evolved into claims against essentially every person or entity that has been involved either directly or indirectly in the ultimate foreclosure of the . . . house and his resulting eviction from the property. The main thrust of Plaintiff’s claims is that all the Defendants have conspired to illegally purchase his mother’s home and steal all of his personal and intellectual property inside. Plaintiff alleges that Defendants have done so to quash his investigation of their international money laundering and fraud scheme.

If this sounds like a Florida-centric dispute, it is. None of the defendants had any meaningful connection to New Jersey, so they all moved to dismiss plaintiff’s lawsuit for lack of jurisdiction. In response, plaintiff made several, traditional jurisdictional arguments, including that defendants were subject to jurisdiction in New Jersey because his mother currently lived in New Jersey and because she had filed for Chapter 7 bankruptcy in New Jersey and listed the Florida property as an asset in her bankruptcy petition.

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Third Circuit Has “The Talk” With Parties About Whether They “Consummated” Their Relationship

by: Peter J. Gallagher (LinkedIn)

If you thought this would be a salacious post, prepare to be underwhelmed. It is about what it means to “consummate” a contract.

In Fed Cetera, LLC v. National Credit Services, Inc., defendant was a debt collection agency seeking opportunities to contract with the federal government. To do so, defendant had to follow a “convoluted but – within the industry – well-known path.” Defendant first had to work as a subcontractor to a current federal contractor. If that sub-contracting arrangement worked out, then defendant could bid on federal contracts directly.

Plaintiff was “in the business of offering networking relationships to its clients.” Defendant hired plaintiff to introduce it to federal contractors. Defendant’s contract with plaintiff required defendant to pay plaintiff a finder’s fee for any contract defendant “consummated” during the contract term. Defendant eventually signed two contracts with federal contractors. One of them proceeded without incident. The other was signed during the contract term, but did not require defendant to perform until after the term ended. Defendant refused to pay plaintiff a finder’s fee for this contract, arguing that it was not consummated until defendant began performance, which occurred after the contract expired. Plaintiff disagreed, and sued.

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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.

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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.

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“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.

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