Transfer Made On The Morning Of Sheriff’s Sale, For The Purpose Of Delaying The Sheriff’s Sale, Deemed Fraudulent

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

Sometimes you read decisions and you don't understand how the court arrived at its conclusion based on the facts of the case. Then other times, the conclusion just makes sense. These are the decisions you read and think to yourself, "of course you can't do that." The Appellate Division's opinion in 5 Perry Street, LLC v. Southwind Properties, LLC, is one of these cases.

In Perry Street, defendants were a limited liability corporation and the sole member of that corporation. The corporate defendant owned property in Cape May that it operated as a bed and breakfast.Two "non-institutional lenders" held mortgages on the property. After they foreclosed and obtained a final judgment of foreclosure, a sheriff's sale was scheduled. The corporate defendant obtained four adjournments of the sheriff's sale and attempted to refinance the property, but was "unable to consummate a transaction" before the sheriff's sale.

Instead, the day before the sheriff's sale, the individual defendant filed for bankruptcy. She then transferred the underlying property from the corporate defendant to herself. The consideration for the transfer was $1 and the "Balance of outstanding mortgages $80,000.00." The $1 consideration was typed into the deed, but the individual defendant hand wrote the part about the outstanding mortgages. She claimed that her intent was to "assume personal liability for the mortgages," but the Appellate Division noted that the balance of the mortgages at the time was almost $250,000, not $80,000, and that other documents she signed reflected that the only consideration was $1. She "filed the deed the next day, an hour and a half before the Sheriff's sale."

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Let Sleeping Dogs Lie . . . Just Not In A Hallway Where They Might Create A Dangerous Condition?

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

When is a sleeping dog a dangerous condition? This is the burning question that the Appellate Division answered in Parella v. Compeau.

In Parella, plaintiff attended Christmas dinner at a friend's house along with approximately 20 other guests. After the second course, she got up from her chair to put her dish in the kitchen sink and check on her child who was in an another room. To do so, she had to walk behind several seated guests. She did not have to ask anyone to move until she got to the last guest in the row. That guest moved her chair in and plaintiff made a move familiar to anyone who has been to a crowded holiday dinner — she "lifted [her] glass and plate, turned her back to the wall and shuffled her feet to pass behind [the] chair." "As she cleared the chair, plaintiff turned right to enter the hall toward the kitchen, and fell."

What caused her fall was a "tan, fairly large dog" that was "lying in the hallway, past the threshold of the dining room." The dog did not belong to defendants, the owners of the house and the hosts of the party, and was one of two dogs in the house for the party. When plaintiff fell, the wine glass she was holding broke, cutting her finger and severing a tendon. Plaintiff sued, alleging that defendants failed to warn of her of a dangerous condition — the dog — in their home. The trial court granted summary judgment to defendants and plaintiff appealed.

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If You Cancel Your Wedding Reception Can You Get Your Money Back From The Venue? (Or, When Is A Liquidated Damage Clause Enforceable?)

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

In the past, I have written about engagements gone wrong, including a case involving a failed (alleged) engagement and the return of a (purported) engagement ring that the recipient initially claimed to have lost, but later (apparently) found, and marriages gone wrong, including a case asking whether a marriage can be annulled because of a former wife's equitable fraud, but never a marriage reception gone wrong. With the Appellate Division's recent decision in Corona v. Stryker Golf, LLC, I am finally able to fill this gap in my failed relationship scholarship. On a more routine note, Corona also provides a helpful primer on the enforceability of liquidated damages clauses in contracts.

In Corona, plaintiff entered into a contract with defendant to hold her wedding reception at defendant's catering hall. Defendant agreed to provide the venue, food, and beverages for a contract price of approximately $12,012.80. The contract required an initial, non-refundable deposit of $2,500. Plaintiff made this payment and two subsequent payments of $5,166.35 and $1,725.35, for a total of $9,391.70. The contract contained the following provision regarding cancellation:

Cancellation under any circumstances is not acceptable and, in addition to forfeiting all deposits, the Patron will remain responsible for paying the entire balance of the contract price (excluding service charge) for the Event even if the Event does not occur.

Unfortunately, six months before the reception was to be held, plaintiff notified defendant that she was cancelling the wedding. Relying on the cancellation provision in the contract, defendant refused to return any of the money Plaintiff had paid under the contract. Plaintiff sued. Both parties moved for summary judgment. After trying to settle the case, the trial court granted defendant's motion and dismissed the complaint. The trial court held that plaintiff "twice breached the contract," although the decision does not explain how. On the issue of damages, defendant argued that the liquidated damages clause was "grossly disproportionate to [any] actual damages sustained by defendant and thus unenforceable as a penalty." The trial court rejected this argument, holding that the terms of the contract were "clear and unambiguous," therefore the court was required to enforce those terms as written.

Plaintiff appealed and the Appellate Division reversed.

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Havanese Day! Statements on duped dog buyer’s blog not defamatory

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

In Roberts v. Mintz, defendant bought what he believed was a "healthy, nine-month old, purebred Havanese," but what he got was a two-year old dog that was not a purebred Havanese, and was suffering from various health problems. Defendant complained and plaintiffs offered to refund his money in exchange for the dog. Defendant refused. He wanted the refund, but he wanted to keep the dog because he had already incurred $800 in veterinary fees and because he had become fond of the dog, which he named Moose.

One month after buying Moose, defendant began posting about his experience with plaintiffs on his blog. As you probably guessed, the posts were not positive. Eventually, plaintiffs sued in connection with six specific statements defendant made on his blog, which, among other things, accused plaintiffs of being members of a "notorious ring of South Jersey dog grifters," alleged that plaintiffs had been convicted of animal cruelty, claimed that plaintiffs' lived in a "run down farmhouse with 6 children," and described plaintiffs as "despicable human beings" who ran a "fraudulent puppy mill." Defendants also posted that they had heard from others who were "unwittingly scammed" by plaintiffs. Individuals who claimed to be plaintiffs responded to some of the posts in the comments sections of the blog, calling defendant a "liar" and a "jerk," and claiming that he "suffered from 'rage syndrome,' a behavioral condition that afflicts canines."

In lieu of answering plaintiffs' complaint, defendant moved for summary judgment, seeking to have the complaint dismissed. He also served plaintiffs with a frivolous litigation letter. Plaintiffs cross moved for summary judgment and also sought an injunction preventing defendant from defaming them. The trial court granted defendant's motion. It held that plaintiffs were barred from suing in connection with several of the statements because the one-year statute of limitations had expired. In doing so, it rejected plaintiff's claim that the statute of limitations should have been tolled because defendant had committed a continuous tort. The trial court found that the remaining statements were "opinions, epithets, and hyperbole," and were therefore "not sufficiently factual to be actionable."

Defendant then moved for sanctions, and the trial court granted the motion. Although it did no award defendant all of the sanctions he sought, it did award him $25,000 — assessed against both plaintiffs and their counsel — because plaintiffs filed their complaint without sufficient evidentiary support and because several claims were barred by the statute of limitations.

Both sides then appealed — plaintiffs seeking to reverse the trial court's decision dismissing their complaint, and defendant seeking to reverse the trial court's decision to award him less in sanctions than what he requested

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Settlement Stands Even Though Lawyer Allegedly Settled For Less Than Authorized

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

Embarrassing as this is to admit, there was a time when I did not entirely understand the difference between "net" and "gross." I would like to say that time was long ago, but it wasn't that long ago. Rest assured, however, that I know the difference now. The difference between the two was at the heart of Thakkar v. Allers, an unpublished decision from the Appellate Division in which plaintiff claimed that he authorized his attorney to settle for a net recovery of $80,000 but his lawyer settled for the gross amount of $80,000. In other words, plaintiff thought he would receive $80,000 from the settlement but he actually received less than $80,000 after fees and costs were deducted from the gross settlement amount. Plaintiff tried to undo the settlement, but the trial court denied his request and the Appellate Division affirmed.

Thakkar involved a personal injury lawsuit. Plaintiff was awarded $50,000 through mandatory, pre-trial arbitration, but rejected that award and demanded trial de novo. Prior to trial, plaintiff claims that he authorized his attorney to settle the case for "an amount that would yield an $80,000 recovery to [plaintiff], after deductions for fees and costs." He claimed that he gave his attorney these instructions over the telephone and in a letter. Several days after the alleged telephone conversation between plaintiff and plaintiff's counsel, plaintiff's counsel settled the case in a call with defendants' counsel and later confirmed the settlement in an email to defendants' counsel, which read: "As discussed at 5 PM today, [plaintiff] has authorized [plaintiff's counsel] to accept $80,000.00 in settlement."

Four days later, plaintiff's counsel wrote to defendants' counsel to report that plaintiff refused to sign a release because he wanted a settlement yielding a net recovery of $80,000, a fact that plaintiff's counsel indicated was "in no way" communicated to him by plaintiff before plaintiff's counsel advised defendants' counsel that plaintiff's counsel was authorized to settle the case for "the sum of $80,000.00."

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