No Pay, No Play: Defendant’s Failure To Advance Arbitration Fees Is A Material Breach Of Arbitration Agreement And Precludes Enforcement Of Agreement

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

Arbitration (pd)One of the more vexing procedural issues in arbitration arises when the other side refuses to pay its share of the arbitration fees. The arbitrator won't work for free so you are faced with a dilemma, advance the fees for the other side and try to recover them through the arbitration or have your arbitration dismissed. And, if you opt for the latter approach, can you then sue in court notwithstanding the admittedly valid and binding agreement to arbitrate? The New Jersey Supreme answered one aspect of this question in Roach v. BM Motoring, LLC, holding that defendant's refusal to advance arbitration fees as it was required to do under an arbitration agreement with plaintiffs was a material breach of the contract that precluded defendant from later trying to enforce the agreement.

In Roach, plaintiffs each purchased used cars, at separate times, from defendant. As part of their purchases, each signed a Dispute Resolution Agreement, which provided that "any and all claims, disputes or issues" would be resolved through arbitration. It further required that the arbitration be conducted "in accordance with the rules of the American Arbitration Association before a single arbitrator who shall be a retired judge or attorney," and that defendant would "advance both party's [sic] filing, service, administration, arbitrator, hearing, or other fees, subject to reimbursement by decision of the arbitrator."

After purchasing her car, Plaintiff Jackson filed an arbitration demand against defendant, alleging that defendant violated the Consumer Fraud Act. The AAA advised defendant that it was required to pay the applicable filing fees and arbitrator compensation, but defendant never did. Accordingly, the AAA declined to administer the claim and further advised (1) that it would not administer "any other consumer disputes" involving defendant as a result of defendant's failure to comply with the AAA's rules, and (2) that defendant should remove the AAA name from its arbitration agreement. Jackson never received a response from defendant's to her arbitration demand.

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As If You Needed Reminding: Don’t Violate Protective Orders!

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

Gavel (pd)The Appellate Division recently reminded all lawyers of the importance of complying with protective orders. In Rotondi v. Dibre Auto Group, LLC, the Appellate Division affirmed a trial court's decision to disqualify plaintiff's counsel from continuing to represent plaintiff because she violated such an order.

In Rotondi, plaintiff purchased a new car from defendant car dealership. One year later, she attempted to refinance the car with the dealer, but ended up filing a class action lawsuit against the dealer and various other entities involved in the refinancing for alleged improprieties in the refinancing process. She alleged violations of the New Jersey Consumer Fraud Act and various other statutory and common law causes of action. Although filed as a putative class action, plaintiff's attempt to certify the class were eventually denied and the case, in the words of the trial court, "ultimately became simply a claim by [plaintiff] against the dealer."

As part of that lawsuit, the trial court entered a protective order that allowed the parties to designate materials as "Confidential" or "Attorneys' Eyes Only." Under the order, documents designated as "Confidential" could only be used by the "receiving party for purposes of the prosecution or defense of [the] action," and could not be used "by the receiving party for any business, commercial, competitive, or other purpose." Documents designated as "Attorneys' Eyes Only" could only be "disclosed [ ] to outside counsel for the receiving party and to such other persons as counsel for the producing party agrees in advance or as ordered by the court."

Continue reading “As If You Needed Reminding: Don’t Violate Protective Orders!”

When, If Ever, Is A Residential Mortgage Not “Residential” For The Purpose of Foreclosure?

     by:  Peter J. Gallagher (@pjsgallagher)

Believe it or not, this question comes up from time to time in my practice (exciting life, I know). In recent years I have prosecuted many foreclosure actions, but only commercial foreclosures. So the first question I usually ask a colleague who comes to me with a foreclosure  question is: "Is it a commercial or residential property?" When the answer starts with something like, "Well, that is actually an interesting question . . . " then I can almost guess what is coming next. Usually it is some variation of: "It is a home, but they mortgaged it to get money to start a commercial enterprise, so I want to argue that its commercial property." Unfortunately, you usually can't make that argument (at least not successfully), and the Appellate Division's recent decision in City National Bank of New Jersey v. Hodge reminded us all of that fact again.

To begin with, the differences between commercial and residential foreclosures in New Jersey are significant. Most importantly, commercial foreclosures are not subject to the Fair Foreclosure Act, including the various notice requirements that are required for residential foreclosures under the Act. Simply put, New Jersey law provides greater protections for residential owners who are about to lose their homes than they do for commercial owners who are about to lose their place of business. This means that the burdens on lenders seeking to foreclose on a residential mortgage are more demanding, if not entirely onerous.

 

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New Jersey Reaches Settlement With Six Large Residential Lenders Over Foreclosure Proceedings

by:  Michael L. Rich

The State of New Jersey and six of the country’s biggest residential mortgage lenders reached a settlement agreement announced on March 18, 2011 concerning foreclosure practices.  The financial institutions and their home loan servicing divisions are Bank of America, CitiBank, GMAC, JP Morgan Chase, One-West Bank and Wells Fargo Bank.

The settlement comes four months after New Jersey Supreme Court Chief Justice Stuart Rabner issued a three-part Order to address rogue foreclosure filings and procedures, including apparent instances of “robo-signing” of certifications in support of foreclosure filings.  In the December 2010 Order, Justice Rabner cited a staggering increase in residential foreclosure cases and concerns that had been raised that foreclosures were being “rubber stamped” based on inadequate or incorrect paperwork.  The six financial institutions were ordered to show cause why their residential foreclosure filings should not be halted pending further review.  In response, the banks maintained that they had already begun making changes and were being unfairly targeted by the State.

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