Are Exceptions Starting To Swallow The “American Rule” In New Jersey?

Constitution (pd)The answer to that question would appear to be: it depends who you ask. In a pair of decisions released on April 26, 2016, Innes v. Marzano-Lesnevich and In Re Estate of Folcher, the New Jersey Supreme Court addressed the “American Rule” — the idea that each party to a lawsuit is responsible for its own attorney’s fees — and specifically whether to narrow or expand certain common-law exceptions to that rule. At the center of the two decisions was Justice LaVecchia, who authored the majority opinion in Folcher and the dissent in Innes. These decisions leave little doubt that this is not the last we have heard from the Supreme Court on the parameters of the American Rule.

First, a brief history of the American Rule in New Jersey. In 1948, New Jersey adopted a new Constitution and re-organized its court system. As part of this re-organization, and as it relates to the awarding of prevailing party attorney’s fees, New Jersey could have adopted either the English Rule, which allows for the liberal awarding of such fees, or the American Rule, which does not. New Jersey chose the latter. This decision is currently embodied in Rule 4:42-9, which only allows for eight exceptions to the general rule.

Over the years, however, New Jersey courts have created common law exceptions to the American Rule. These cases have followed two, independent tracks, one arising in the context of the attorney-client relationship and one arising in the context of estate administration.

 

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Ain’t No Stoppin’ Us Now . . . Third Circuit Affirms Arbitrators’ Ruling In Favor of Song Writing Duo

Aint no stoppin us now (pd)"Singer-songwriters John Whitehead and Gene McFadden were an integral part of the Philadelphia music scene in the 1970s." So begins the decision by the U.S. Court of Appeals for the Third Circuit in Whitehead v. The Pullman Group, LLC. (For the uninitiated, click here for a summary of the "Philadelphia Sound" to which this sentence refers and of which plaintiffs Whitehead and McFadden were a part.)

At issue in that case was Whitehead and McFadden's song catalog, which includes, among other things, the publishing rights to their biggest hit, "Ain't No Stoppin' Us Now." In 2002, defendant entered  into a contract with Whitehead and McFadden that gave him the exclusive right to purchase the catalog following a 180-day due diligence period. After this period, defendant had the right to terminate the contract upon written notice to Whitehead and McFadden. Defendant claimed that his due diligence revealed several tax liens that  diminished the value of the catalog. He claimed that he communicated this to Whitehead and McFadden over the phone. They responded that they would get back to him with more information, but instead contacted him and told him that they did not want to consummate the transaction, which defendant claimed was a breach of the agreement.

Several years later, after both Whitehead and McFadden died, their estates received an offer from Warner Chappell Music to purchase Whitehead and McFadden's song catalog. Shortly before the deal was completed, however, defendant wrote the estates and notified them of the existence of the 2002 agreement. (The estates were unaware of the deal with defendant prior to receiving this letter.) Shortly thereafter, Warner Chappell Music withdrew its offer. The estates then sued in state court seeking (1) a declaratory judgment that the 2002 contract was void, and (2) damages for defendant's alleged tortious interference with their deal with Warner Chappell Music. Defendant removed the lawsuit to federal court and counterclaimed for his own declaratory judgment and damages for the alleged breach of the 2002 contract. Both sides eventually agreed to arbitrate their disputes. 

 

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Jury Instructions Deemed Ambiguous “and/or” Erroneous “and/or” a “Mongrel Expression”

Question mark (pd)
When I used to teach Legal Research and Writing, one of the phrases I encouraged my students to avoid was "and/or." Like a lot of legalese, I think lawyers believe that using "and/or" leads to greater clarity in their writing when in fact the opposite is true. I suspect that, like much of what I taught them, my students avoided "and/or" in the writing they submitted to me and then quickly went back to using it as soon as they got out of my class. They may have thought that my opposition to "and/or" — like my opposition to "any and all," "heretofore," and any number of other phrases — was personal preference not generally accepted advice. If they did, however, they would have been wrong, and the Appellate Division has now confirmed as much.

In State v. Gonzalez, the Appellate Division reversed defendant's conviction and ordered a new trial because the trial court's repeated use of "and/or" in its jury charges rendered the instructions "hopelessly ambiguous and erroneous in important respects." In that case, defendant was convicted of, among other things, robbery and aggravated assault. (The emphasis on "and" will become clear later.)  He was accused of conspiring with two other individuals to rob and then assault another individual. As might be expected, the prosecution and defense presented different versions of the underlying events to the jury. The problem for the Appellate Division was not the evidence that each side presented, but rather the repeated use of "and/or" by the trial judge when he instructed the jury on how to evaluate that evidence.

The Appellate Division began by observing that "[t]he imprecision of the phrase 'and/or' and criticism for its use [in New Jersey] and in other jurisdictions has been well documented." New Jersey's highest court previously described it as an expression that "has never been accredited in this state as good pleading or proper to form part of a judgment record." Courts in other states were less kind, calling it: a "verbal monstrosity, neither word nor phrase;" "an inexcusable barbarism" that was "sired by indolence;" a "mongrel expression" that was "an equivocal connective, being neither positively conjunctive nor positively disjunctive;" and an "abominable invention." The Appellate Division further observed that "[w]henever found in the decisions of [New Jersey] courts, 'and/or' has been recognized as creating ambiguity."

 

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

Telegram (PD)
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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“Send me dead flowers to my wedding, and I won’t forget to put roses on your grave”

by:  Peter J. Gallagher (@pjsgallagher)

I don't handle any family law cases, mostly because I do not think I could deal with the emotional issues that are often involved in them. But every now and again a family law decision piques my interest. The recent unpublished Appellate Division decision in Taffaro v. Taffaro was one of those cases. In that case, plaintiff was estranged from his half-sister after a dispute over their mother's estate. After the dispute, he began "attaching paper items" to her gravestone, "frequently directed at [his half sister] and referencing the dispute." When some of these items were removed, plaintiff assumed his half-sister did it, so he pursued criminal charges against her and, when these proved unsuccessful, sued her for conversion, invasion of privacy, intentional infliction of emotional distress, and negligent infliction of emotional distress.

The court dismissed the invasion of privacy and intentional and negligent infliction of emotional distress counts on statute of limitations grounds. Even assuming that defendant took the items from the gravestone, which there was no evidence to support, they were taken more than two years before plaintiff sued and plaintiff's claims were thus untimely. The trial court then held a bench trial on the conversion claim and eventually dismissed it as well, holding that plaintiff had abandoned the items. Plaintiff appealed.

The Appellate Division affirmed. It held that conversion is the "unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another . . . ." But, abandonment, which is the relinquishment of "all right, title, claim and possession" of property "with the intention of not reclaiming it," is a complete defense to conversion. In Taffaro, the Appellate Division held that the "necessary overt act" demonstrating abandonment occurred when plaintiff placed the items at his mother's grave. The Appellate Division held that the "ephemeral nature of the cards and decorative items, which were made of paper and left outside" demonstrated plaintiff's "intent to abandon." And, the Appellate Division noted that the purpose of the items was to harass defendant, not honor the memory of plaintiff's mother. Therefore, for all of these reasons, the court held that plaintiff had abandoned the items and could not maintain a cause of action for conversion.

[Fun little fact about the title of this post, which obviously is a portion of the lyrics from one of my favorite Rolling Stones songs, "Dead Flowers." My friend and I went to see Steve Earle at Tradewinds in 1998 when he was touring in support of his El Corazon album. Great show. But then, for the encore, he came walking out with Bruce Springsteen. Now, in the interest of full disclosure, my friend and I went to the show mostly because we were big Steve Earle fans, but partly because of the chance that Bruce might show up. Lucky for us, he did, and they played a couple of Stones songs, including Dead Flowers. They also played Everybody's Trying To Be My Baby" for Carl Perkins who had died a few days before the show. Anyway, click here for the full audio from the encore.]