Words Matter: Language In Retainer Agreement Bars Recovery Of Fees Incurred In Fee Arbitration Proceeding

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

Words (pd)One of my favorite quotes from a judicial decision comes from the New Jersey Supreme Court in Atlantic Northern Airlines v. Schwimmer: "Litigation proceeding from the poverty of language is constant." I have never understood this to be a knock on the drafter. Rather, I understood it to mean that no matter how carefully you choose your words you can never make a contract, agreement, or other document litigation-proof. You see examples of this nearly every day in the daily decisions, including in the Appellate Division's recent decision in The Law Offices of Bruce E. Baldinger, LLC v. Rosen.

Baldinger involved a dispute between a law firm and its former client over attorney's fees. Defendant retained plaintiff to represent him in connection with a dispute with a contractor over work performed at defendant's home. Plaintiff and defendant entered into a retainer agreement that included an initial flat fee of $1,200 followed by hourly billing. The retainer agreement also dictated that interest at the rate of 1% per month would be charged on any unpaid balances after 30 days. The retainer agreement also contained the following provision, which is most important to our story: "If collection and enforcement efforts are required, you agree to pay counsel fees along with costs of suit." This would become important later on.

After about a month, defendant "became dissatisfied with plaintiff's representation and terminated plaintiff's services." Defendant had already paid the $1,200 flat fee, but plaintiff demanded that he also pay an addition $4,308 for work performed by plaintiff up to that point. Defendant refused to pay.

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Enforcement Action Against Rating Agency Allowed To Proceed

        by: Peter J. Gallagher (@pjsgallagher)

In an interesting decision issued today, Judge Katz (Essex County) denied a motion to dismiss filed by the ratings agency Standard & Poor's ("S&P") in an enforcement action brought against S&P by the New Jersey Attorney General. In Hoffman v. McGraw-Hill Financial, Inc., the Attorney General alleged that S&P violated the Consumer Fraud Act ("CFA") by misrepresenting to New Jersey consumers that S&P's analysis and rating of structured finance securities was independent and objective. The opinion contains decisions on both procedural personal jurisdiction issues and substantive CFA issues that all litigators should find interesting.

[Lawsuits against ratings agencies are nothing new. Several years ago, I wrote an article about these lawsuits and, at the time, the relative success the rating agencies had defending against them. (If you did not save your copy of the article, click here for another copy.) Historically, the rating agencies argued that their ratings were proetced under the First Amendment, but at least one court rejected this argument in the context of a motion to dismiss in a lawsuit that eventually settled.]


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HUD Is A Dud According To Washington Post Investigative Report

by:  Peter J. Gallagher

According to a recently concluded, year long study by the Washington Post, HUD is dysfunctional.  The paper — which reported its findings in an article last week entitled "A Trail Of Stalled Or Abandoned HUD Projects" — " looked at "every major project currently funded under the [HOME Investment Partnerships Program], analyzing a database of 5,100 projects worth $3.2 billion, studying more than 600 satellite images and collecting information from 165 housing agencies nationwide." The study concluded that HUD "delivers billions of dollars to local housing agencies with few rules, safeguards or even a reliable way to track projects."   This, in turn, has led to "widespread misspending and delays" in the program, which was developed more  than 20 years ago to deliver decent housing to the working poor. 

While the article focuses primarily on the conditions in Washington D.C., it also discusses more systemic problems, and uses an example from Newark, New Jersey in this regard.  The article notes that two partially completed duplexes sit empty in a Newark neighborhood "blighted by boarded-up homes lost to foreclosure."  While the city paid nearly $400,000 to build the houses, the developer delayed for more than 10 years, and ultimately folded and never finished the project.  The money has not been repaid.  In response to the Post's investigation, HUD claimed that it did not need a a more robust enforcement effort to correct problems like these, and indicated that it is "focused more than ever on delayed projects and recouping money," and that the situation "will get cleaned up.”