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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When Was The Last Time You Sent A Letter Via Telegram?

I have never sent a telegram and would not know how to send one even if I wanted to. But, if you are so inclined, there is a somewhat quirky provision of New Jersey real estate law that would allow you to dust off your telegram machine and send one. This provision was the subject of a recent Appellate Division decision, Conley v. Guerrero, that attracted significant attention from the real estate community and may end up before the New Jersey Supreme Court.

Anyone who has bought or sold real estate in New Jersey is familiar with "attorney review." When you buy or sell a house, you sign a contract that is almost always prepared by a broker. The contract must contain a standard provision stating that the buyer and seller have the right to have an attorney review the contract. This "attorney review" period lasts three days. The contract becomes legally binding if, at the end of that three-day period, neither the buyer's nor the seller's attorney disapproves of the contract. If either side disapproves, their attorney must notify the other side's broker by "certified mail, telegram or by delivering it personally." The attorney must also notify the other attorney (or the party itself if they are not represented), but the law does not specify the manner in which this notice must be delivered. (Stay tuned for more on this later!)

In Conley, plaintiffs signed a form contract to purchase a condominium unit from sellers. It contained the standard "attorney review" provision. After signing the contract, but during the attorney review period, sellers received competing offers to purchase the property and eventually entered into a new contract to sell it to a new buyer for a higher price. Sellers' attorney therefore sent a disapproval of plaintiffs' contract to both plaintiffs' counsel and the broker (who was a duel agent represented both plaintiffs and seller). He sent the notice of disapproval via email, which plaintiffs' counsel and the agent acknowledged receiving within the attorney review period. Nonetheless, plaintiffs argued that the notice was ineffective because it was not sent in the proscribed manner — by certified mail, telegram, or hand delivery.

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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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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.

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