The Pipes, The Pipes Are . . . Frozen! (Or, Who Is Liable For Property Damage While Home Buyer And Home Seller Wait For The Final Check To Clear?)

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

Although the temperature today is supposed to reach 90 degrees, this post is about frozen pipes. More specifically, pipes in a house that is under contract for sale that freeze and cause property damage after the scheduled, but not completed, closing, but before the buyer takes possession of the home. In a case like that, who is liable for the damage?

In Bianchi v. Ladjen, plaintiff was under contract to buy a home. It was an all cash sale, no mortgage was involved. The closing was scheduled for New Year's Eve. Plaintiff performed a walk through on the morning of the closing and reported no damage to, or issues with, the home. The closing could not be completed as scheduled, however, because plaintiff did not wire the balance of the purchase price to the title company prior to the closing as he had been instructed to do. Instead, plaintiff brought a certified check to the closing. As a result, the parties entered into an escrow agreement, which provided that the title company would hold "all closing proceeds" and the "Deed & Keys" in escrow until the check cleared.

This is where it gets tricky.

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Clear Arbitration Provision, Negotiated By Sophisticated Party While Represented By Counsel Deemed Enforceable

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

The headline of this post is a little like "Dog bites man." But, given the recent trend in New Jersey of "man bites dog" type cases where courts have invalidated arbitration provisions that once seemed unambiguous (look here, here, and here for examples), the headline should make more sense.

In Columbus Circle NJ LLC v. Island Construction Co., LLC, the Appellate Division enforced an arbitration provision contained in a construction contract. Plaintiff was a single-member LLC that retained defendant to build a $1.9 million home on the bay in Avalon, New Jersey. Plaintiff's representative circulated an initial draft contract for the project that used the standard American Institute of Architects (AIA) forms. These forms contain a provision entitled "BINDING DISPUTE RESOLUTION," which, as the name suggests, requires the parties to choose "the method of binding dispute resolution" for any claims between them that are not resolved by mediation. In the draft it circulated, plaintiff's representative checked off "Arbitration pursuant to Section 15.4 of AIA Document A201-2007," rather than "Litigation in a court of competent jurisdiction." Before it was signed, the attorney for the LLC's sole member reviewed the draft and proposed changes, as did defendant, but none of these changes appear to have altered the dispute resolution provision.

During construction, disagreements arose between the parties regarding the cost of the project, leading both parties to terminate the contract. When mediation apparently failed, defendant filed a demand for arbitration. Three months later, plaintiff sued in state court. Defendant successfully moved to dismiss plaintiff's complaint and compel arbitration, 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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Homeowner not liable for sweetgum spiky seed pod slip and fall

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

In the past, I have written about whether property owners can be liable for slip-and-fall accidents caused by ice and snow on their sidewalks. (Click here, here, and here for examples.) This is the first time I will address the related topic of whether property owners can be liable for accidents caused by "spiky seed pods" that fall from sweetgum trees on their property. Turns out that the source of the slippery sidewalk does not change the law too much for residential property owners.

In Neilson v. Dunn, plaintiff was injured when she slipped on spiky seed pods that fell from a sweetgum tree on defendant's property onto an adjacent sidewalk. The tree had been on defendant's property since she and her husband bought it, and plaintiff knew that there were seed pods on the sidewalk when she began her walk. Defendant also "employ[ed] a lawn maintenance contractor whose services include fall and spring clean ups." The most recent clean up occurred two month's prior to plaintiff's accident.

After plaintiff sued, defendant moved for summary judgment, arguing that she could not be liable for plaintiff's injuries because she had neither created nor exacerbated a dangerous condition on the sidewalk. She argued that the "seed pod accumulation" was a natural condition over which she had no control, and that she acted reasonably in retaining a lawn maintenance service to "periodically clean up any debris, [including the seed pods,] on her lawn and sidewalk." Plaintiff countered that defendant had a duty to ensure that her property was spiky seed pod free and that her failure to do so created a hazardous condition.

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One Minute for Oral Argument? Motion Decided in 60 Seconds Doesn’t Survive Appeal.

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

"We anticipate that the court will engage counsel with more patience on remand."

I assume this is not something a trial court wants to see at the end of an opinion from an appellate court. But, this was precisely how the Appellate Division ended its decision in Midland Funding v. Bordeaux. The case, which involved the enforceability of an arbitration provision, is notable as much for the manner in which it was decided by the trial court as the legal issues at play in the decision.

In Midland Funding, plaintiff sued defendant over $1,018.04 in consumer debt that plaintiff purchased from the original creditor. In response, defendant denied liability and asserted a counterclaim alleging plaintiff violated the Fair Debt Collections Practices Act. During discovery, defendant moved to compel plaintiff to answer interrogatories. Plaintiff responded with a motion to compel arbitration. On the eve of the return date of that motion, defendant moved for summary judgment. Oral argument on these motion was adjourned for approximately 30 days.

When oral argument was eventually held, it did not last long. The Appellate Division noted that the transcript "show[ed] that the oral argument hearing began at 9:10 a.m. and concluded at 9:11 a.m." In the span of a minute, the trial court concluded that defendant's credit card agreement "contain[ed] an arbitration agreement," therefore "[i]t's going to arbitration." The trial court also denied defendant's summary judgment motion without explanation and declared that defendant's motion to compel answers to interrogatories was moot.

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