When Is Possession Not Really Possession? (And By “Possession” I Mean In The “Mortgagee In Possession” Sense Of The Word)

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

Lenders are often faced with a dilemma when dealing with property that is in foreclosure and has been abandoned by the borrower. A lender must, under New Jersey law, maintain the property "to such standard or specification as may be required by state law or municipal ordinance." Also, the lender has an obvious interest in protecting the value of its collateral. But the lender does not want to take "possession" of the property and be deemed a "mortgagee in possession," because that would impose upon the lender the duty of a "provident owner," which includes the duty to manage and preserve the property, and which subjects the lender to liability for damages to the property and damages arising out of torts that occur on the property. Unfortunately, the point at which a lender takes "possession" of property is not entirely clear. I have written about this before, and the Appellate Division's recent opinion in Woodlands Community Association, Inc. v. Mitchell provides some additional guidance, which should be helpful to lenders.

In Woodlands, defendant was the assignee of a note and mortgage related to a unit in plaintiff's condominium development. The unit owner defaulted on the loan and vacated the unit. At the time, the unit owner was not only delinquent on his loan payments, but also owed "substantial sums" to the association for "unpaid monthly fees and other condominium assessments." After the unit owner vacated the unit, defendant changed the locks and winterized the property. (As the Appellate Division noted, "[w]interizing entails draining the  pipes, turning off the water and setting the thermostat for heat to protect the pipes.") After the unite owner vacated the unit, plaintiff sued him to recover the delinquent fees. It later amended its complaint to include the lender, "alleging that [[the lender] was responsible for the association fees as it was in possession of the property."

Both parties moved for summary judgment. The trial court granted plaintiff's motion, holding that defendant was a mortgagee in possession and therefore was liable for the maintenance fees. On the key of issue of what it meant to be in "possession" of the unit, the trial court held as follows: "[D]efendant held the keys, and no one else [could] gain possession of the property without [defendant's] consent. This constitutes exclusive control, which indicates the status of mortgagee in possession." Defendant appealed. 

Continue reading “When Is Possession Not Really Possession? (And By “Possession” I Mean In The “Mortgagee In Possession” Sense Of The Word)”

Game Over! Video Game Legend’s Lawsuit Against Cartoon Network Dismissed

Donkey kong (pd)
When I was a kid, cartoons and video games were far simpler than they are now. We watched Tom and Jerry and played Donkey Kong. The cartoons my kids watch today are often bizarre and the video games they play are way too complicated. A recent lawsuit in federal court, Mitchell v. The Cartoon Network, brought the old and new together, however, as a man who once held world records in Pac Man and Donkey Kong sued because his likeness was allegedly misappropriated in one of those new cartoons my kids like, "The Regular Show." (Incidentally, before you think I am just turning into a curmudgeonly old man, check out "The Regular Show" some time. It is hardly "regular".)

Plaintiff in Mitchell was a "well-known figure in the video gaming community." In addition to holding world records in both Pac Man and Donkey Kong at various times, he also competed in international gaming competitions, and even had his own trading card. But, he is perhaps most famous for his role in a documentary called "The King of Kong: A Fistful of Quarters," which "chronicles another gamer's attempt to surpass Plaintiff's world record for the game Donkey Kong." The district court described plaintiff's appearance in that film as follows:

In the film, Plaintiff is portrayed as succesful but arrogant, beloved by fans, and at times, willing to do whatever it takes to maintain his world record. In particular, the film shows Plaintiff attempting to maintain his world record by questioning his opponent's equipment and the authenticity of his opponent's submission of a filmed high score.

Plaintiff claims that defendants misappropriated his image for use in several episodes of "The Regular Show," which the district court noted is a show that "revolves around the adventures of two anthropomorphic animals, a blue jay named Mordecai and a raccoon named Rigby." One episode in the series included a villain named Garrett Bobby Ferguson, who appeared as a "giant floating head from outer space, with long black hair and a black beard, but no body." In the episode, Mordecai and Rigby are trying to break Ferguson's world record in a game called Broken Bonez that they play at their local coffee shop. (Yes, kids, we used to have to leave the house to play our favorite video games.) After they break the world record, the disembodied Ferguson appears to brag that he still holds the "universe record." Mordecai and Rigby then challenge Ferguson to play for that record. They almost beat his record, but then "throw the match when [Ferguson] begs them to let him win, claiming that he [ ] devoted his entire life to the game, that he played so much his wife left him, and that the universe record is all he has." After Mordecai and Rigby lose, however, Ferguson reveals that he was lying about it all. Mordecai and Rigby then go back and beat Ferguson's "universe record," at which point, the "enraged [Ferguson] explodes into goo." (When asked at breakfast if they ever saw this episode, two of my kids said they had, and they loved it.)

 

Continue reading “Game Over! Video Game Legend’s Lawsuit Against Cartoon Network Dismissed”

Condo Association Not Immune From Liability For Slip-And-Fall On Its Private Sidewalk

Shovel (PD)The latest chapter in the "can I be sued if someone slips and falls on the sidewalk in front of my house after it snows" saga has been written. In Qian v. Toll Brothers Inc., the New Jersey Supreme Court held that a condominium association was responsible for clearing snow and ice from the private sidewalks that it controlled, and therefore could be liable for injuries caused by its failure to do so. 

The general law on this issue is well-settled. Historically, no property owners had a duty to maintain the sidewalks on property that abutted public streets, but this changed in the early 1980’s, when the New Jersey Supreme Court imposed such a duty on commercial property owners, but not residential property owners. Therefore, commercial property owners are required to remove snow and/or ice from the sidewalks abutting their property, but residential property owners are not.

In practice, however, the law has proven easier to state than apply. What about situations involving property that is both residential and commercial (click here for more on that)? Or, situations where the injured party is a tenant who is injured on the landlord's property (click here for more on that)? Or, situations where the property is in foreclosure (click here for more on that)? Or, the issue in Qian, situations where the property is a condominium or common-interest community?

Continue reading “Condo Association Not Immune From Liability For Slip-And-Fall On Its Private Sidewalk”

Fishing Hole Fight Fails To State Claim For Harassment And Discrimination

FishingA morning out fishing on the lake ended up in a lawsuit between two residents of a gated community. In Chrzanowski v. Harriz, plaintiff and defendant were both members of the Smoke Rise Club, which the court described as "essentially a homeowners association" for residents of a gated community known as Smoke Rise. One of the privileges of membership in the Smoke Rise Club is access to a lake and an adjacent beach and dock. One morning, plaintiff and his nine-year-old son were attempting to fish from the dock at the same time as Harriz when "a dispute occurred between [them] over fishing locations." Harriz told plaintiff that he did not want plaintiff fishing near him, "directed coarse and offensive language" at plaintiff and his son, and told plaintiff that plaintiff did not belong in the Smoke Rise Club.  Then, after Harris overhead plaintiff talking to his son in Polish, Harriz allegedly called plaintiff "an ignorant foreigner who could not speak English." As the dispute escalated, Plaintiff saw Harriz get on his phone and heard Harriz request that plaintiff be removed from the facilities. Feeling threatened, plaintiff called Smoke Rise security and the police. When the police arrived, they spoke to both parties and sent them both on their ways without filing any charges.

Plaintiff later sued Harriz and Smoke Rise, alleging (1) that both defendants discriminated against him by depriving him of his right to use a place of public accommodation and (2) that Harriz harassed him. Both defendants moved for summary judgment and the trial court granted both motions. The Appellate Division did not indicate the basis for the trial court's decision on the harassment claim, but it noted that the trial court dismissed the discrimination claim because the Smoke Rise Club and its amenities were private, and thus not places of public accommodation. Plaintiff appealed and the Appellate Division affirmed, albeit for slightly different reasons.

 

Continue reading “Fishing Hole Fight Fails To State Claim For Harassment And Discrimination”

Free Speech In Condos and Co-Ops: Round III Goes To The Resident

by:  Peter J. Gallagher (@pjsgallagher)       

It is not quite Ali-Frazier or even Gatti-Ward, but the New Jersey Supreme Court just delivered its third opinion in the past seven years regarding the free speech rights of residents in common interest communities (condos and co-ops). In Dublirer v. 2000 Linwood Avenue, Owners, Inc., the Court ruled that a resident who was a regular critic of the co-op's board of directors had the right to distribute leaflets under apartment doors throughout the building. (We previously wrote about the Appellate Division decision that the Supreme Court reviewed on appeal – look here.) The Court held that the co-op's "House Rule" purportedly banning all soliciting and distributing of written materials, including the resident's leaflets, was an unconstitutional abridgment of his free speech rights. In doing so, the Court clarified the standard that should generally be applied when evaluating similar issues — which arise frequently in common-interest communities — and described the types of restrictions that could be adopted without infringing on the free speech rights of residents.

Continue reading “Free Speech In Condos and Co-Ops: Round III Goes To The Resident”

Eminent Domain Reform Advances In The Garden State

by:  Peter J. Gallagher

New Jersey is one step closer to updating its eminent domain laws for the first time since the U.S. Supreme Court handed downs its landmark Kelo v. City of New London decision in 2005. On March 4, 2013, the Senate Community and Urban Affairs Committee voted unanimously to approve a bill (S-2447) that would, according to a press release from Senate Democrats, “create a two-track system for redevelopment, establishing separate requirements for redevelopment projects that would involve condemnation and for those that would not.” The two tracks would protect homeowners whose properties might otherwise be subject to condemnation, while also creating a more streamlined process for municipalities undertaking redevelopment projects that do not involve condemnation.

According to the press release:

The legislation would require municipalities to advise property owners within a proposed redevelopment area of the municipality’s intent to use or not use eminent domain to facilitate a redevelopment plan at the outset of the redevelopment study as well as to provide specific notice of such designation. Unless a municipality notifies owners of property located in a proposed redevelopment area that the designation will allow the municipality to take property located in the area by eminent domain – or that the proposed area is a Condemnation Redevelopment Area – the “Local Redevelopment Housing Law” would not authorize the use of eminent domain.

The bill would also authorize municipalities that intend to implement redevelopment initiatives without using eminent domain to do so but to still take advantage of the other tools available under the LRHL that encourage and facilitate economic development activities, create job opportunities, increase commerce, and enhance ratable values within their communities during these difficult economic times. This process would require designating the proposed area as a Non-Condemnation Redevelopment Area.

Having made it out of the Senate Community and Urban Affairs Committee, the bill now heads to the Senate Budget and Appropriations Committee. Stay tuned for more updates.

“Signs, Signs, Everywhere Signs:” New Jersey Supreme Court Holds That Homeowners’ Associations Cannot Ban Political Signs

by:  Peter J. Gallagher 

It is an issue we have reported on before (here), but yesterday the New Jersey Supreme Court ruled that homeowners’ associations may not entirely ban homeowners from displaying political signs.  In Mazdabrook Commons Homeowners' Association v. Khan, the New Jersey Supreme Court held that homeowners' associations are allowed to impose reasonable content-neutral rules (e.g., regulating the size, number, and location) of signs, but cannot ban them outright and cannot, even under the guise of reasonable content-neutral rules, “distinguish among different types of political signs.”  This decision is obviously important to community associations, but also has a broader impact because it reiterates the New Jersey Supreme Court’s belief that individual rights identified in the New Jersey Constitution are protected, not against abridgment by the government, but also by certain conduct from private entities. 

 Jude Wefing, sitting by assignment from the Appellate Division, was the lone dissenter.  She criticized the majority for both reaching the constitutional issue in the first place, and for its decision on that issue.  In connection with the former, Judge Wefing noted that the dispute between the parties centered primarily on fines related to the homeowners’ growing of a “rose vine” over the homeowners’ association’s objections about the size and placement of the “vine.”  (In a footnote, Judge Wefing noted that she referred to the offending plant as a “rose vine” only because the majority did so, even though “[a] rose is a shrub, not a vine,” and thus “the plant in question must have been a climbing rose.”)  As a result, the record regarding the issue with the political signs was too sparse, in Judge Wefing’s opinion, to justify reaching the broader constitutional issue. 

When it came to the substantive issue, Judge Wefing parted with her colleagues on a more fundamental level:

My colleagues rightly note our nation’s and our state’s commitment to a free and vigorous debate of public questions. I have no quarrel with that commitment; I embrace it. In my judgment, however, individuals are equally entitled to seek shelter from political debate and division. If a group of individuals wish to live in a common-interest community that precludes the posting of signs, political or otherwise, and have agreed freely to do so, and there is no showing of overreaching or coercion, I would adopt the principles enunciated in [the] dissent in the Appellate Division, that these mutually-agreed upon covenants ran with the land, were reasonable, and were enforceable.

Based on these principles, Judge Wefing concluded: “Some may question the choice to avoid political controversy; I simply recognize the right to make that choice.”