Wait. This Is Arbitration? I Thought It Was Mediation.

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

Early in the movie, My Cousin Vinny, Joe Pesci's character, Vincent Gambini, tells the judge that he has significant experience trying cases in New York. The judge does some research and learns that there is no record of anyone named Vincent Gambini trying any cases in New York. Gambini then does what one should never do, he lies to the judge. He tells the judge that he tried cases under the name Jerry Gallo. Gambini thinks this is a brilliant move because Jerry Gallo is a notable New York lawyer who Gambini has read about in the papers. Unfortunately for Gambini, however, he never read the articles about Jerry Gallo's death. Naturally, the judge finds out that Jerry Gallo is dead, and confronts Gambini, which leads to the following exchange:

I imagine this may have been similar to what the defendant in Marano v. The Hills Highlands Master Association, Inc. said when it received an unfavorable arbitration award. "Did you say binding arbitration? No. We were participating in non-binding mediation. Not arbitration." Things worked out for Vincent Gambini in the movie, they did not work out so well for defendant in Marano.

In Marano, plaintiffs owned a unit in a condominium development. The relationship between unit owners, like plaintiffs, and the association was governed by the association's bylaws, which "arguably include[d] an arbitration provision." So, after a dispute developed between plaintiffs and the condominium association over a "flooding condition" in their backyard, plaintiffs' attorney wrote to the association's attorney to demand arbitration. He received no response, so he wrote again and stated that unless the association's attorney confirmed that he was "in the process of arranging for the arbitration proceeding," plaintiffs would sue to compel arbitration. The association's attorney responded by disputing some of the claims in plaintiffs' letter but agreeing to participate in "ADR" (alternative dispute resolution). Several weeks later, plaintiffs' attorney again wrote to the association's attorney asking for confirmation that the parties would proceed to an "arbitration hearing," with a hearing officer who would serve "as an arbitrator." In response, the association's counsel contacted a retired judge to determine his availability and willingness to serve as "the arbitrator."

Up to this point, it appears clear that the parties were discussing arbitration, not mediation. What happened next created the confusion that sent the case down the path that would eventually land it before the Appellate Division.

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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.

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Of Parking Spots and Snow Blowers

One of the things I like about the law, and litigation in particular, is the "just when you think you've seen it all . . . " aspect of it. In a recent decision, Sevinc v. Fulton House, the Appellate Division resolved a dispute that reminds us that we have not seen it all, and probably never will. At its core, the case was about the alleged breach of a contract between plaintiff and defendant. What made it interesting was the subject matter of the alleged breach — plaintiff accused defendant, a residential co-op corporation, of improperly appropriating a portion of his parking space and using it to store a snow blower.

In Sevinc, plaintiff purchased both a unit in the co-op and a parking space in the co-op's parking lot. The lease for the parking space did not describe the space's size, shape, or dimensions, but the size and shape were depicted on the architectural plans that the co-op included in its Public Offering Statement. There was no standard sizes for the parking spaces in the co-op's lot, and some spaces, including plaintiff's space, were larger than others because of where they were situated in the irregularly shaped lot. The size of his space was important to plaintiff because he was a limousine driver and needed extra room to park his Lincoln Town Car.

For almost two years, plaintiff parked in his space without incident. One day in the spring of 2011, however, he pulled in and found that a "metal box" had been placed in the left front corner of his space. A few days later, he saw the building's superintendent installing metal strips to hold the box in place. The superintendent told plaintiff that the co-op was relocating a snow blower to the front of his space and that the metal box would be used to store gas cans for the snowblower. Shortly thereafter, the co-op had white and yellow lines painted on the left side of his space, "all the way from the rear of his space to the front, where the snow blower and gas can container were now located." The newly-configured space was ten-feet wide, the same size as other spaces in the lot but one-third smaller than plaintiff's original space. Plaintiff's car still fit in the space, but pulling in and out was more difficult.

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

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?

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Fishing Hole Fight Fails To State Claim For Harassment And Discrimination

A 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.

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