Lawyer Loses Challenge To Rule Limiting The Amount Of Time He Could Speak At City Council Meeting

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

There is a lawyer joke in here somewhere about lawyers suing to get more time to speak or how someone should sue to force lawyers to talk less. Potential jokes aside, the issue in Feld v. City of Orange was an interesting one. In Feld, plaintiff challenged a municipal ordinance that reduced, from ten minutes to five minutes, the time members of the public could speak on certain matters at city council hearings. Plaintiff claimed that this ordinance violated his First Amendment right to free speech. Spoiler Alert: He lost. But the issue and the decision are nonetheless interesting.

Feld was the latest chapter in litigation that has been raging between plaintiff, a lawyer, acting on behalf of himself and his parents' business, and the City of Orange for years. (In a prior decision, the Appellate Division noted that plaintiff considered himself a "zealous gadfly" and a "radical barrister.") At some point during this long-running battle, the city adopted an ordinance "that reduced the time from ten minutes to five that individual members of the public could speak at City Council meetings on general issues, agenda items or second readings of ordinances before adoption." The city council claimed the change was necessary because "council meetings can extend late into the evening or early into the next day" and this "discourages, if not precludes[,] a fair opportunity to be heard by other members of the public." The city council further claimed that, "without appropriate and rational limitations, the rights of all public speakers [would be] curtailed and undermined." The city council also noted that other municipalities limited the time for speaking during public meetings to five minutes.

The underlying issue in Feld involved plaintiff's objection to the city council's adoption of a resolution that allowed the mayor to sign a lease and option to buy a building owned by the YWCA of Orange, which was in bankruptcy. He challenged the resolution when it was before the city council, and, after it passed, filed a 257 paragraph complaint in lieu of prerogative writs seeking to have it invalidated. As part of this complaint, he also challenged the rule reducing the amount of time members of the public could speak at city council hearings. After filing his complaint, plaintiff filed an order to show seeking, among other things, to restrain the city from enforcing the five-minute rule while the lawsuit was pending. The trial court heard oral argument on the order to show cause, and took testimony from a witness on behalf of the city, who testified that the rule was necessary to "administer the Council meetings more efficiently," and that it was an attempt to "make sure that all of the comments are heard and that everyone gets a chance to talk."

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In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip

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

The running battle between the Borgata and world renowned poker player Phil Ivey (among others) continues, and, fortunately, continues to be interesting. As I wrote about here and here, the Borgata sued Ivey and an associate, Cheng Yin Sun, after the two men won more than $9.6 million playing Baccarat at the casino. The Borgata claimed that the two men used an impermissible "edge sorting" scheme to win the money, and therefore breached their implicit contract with the casino to abide by the terms of the Casino Control Act. The scheme relied, in part on an alleged defect in the playing cards, which Ivey and Sun knew about and exploited. The Third Circuit described it as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successfully moved for summary judgment against Ivey and Sun, and was awarded more than $10 million in damages.

In addition to suing the players, the casino also sued the manufacturer of the cards that were used in the edge-sorting scheme. Both moved for summary judgment, and both motions were initially denied without prejudice. After the district court's decision on the casino's summary judgment motion against Ivey and Sun, both renewed their motions. The district court again denied both, but in doing so, threw cold water on the casino's claims against the manufacturer, including holding that the most the casino could recover against the manufacturer was $26.88, the cost of the allegedly defective cards.

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Appellate Division Quotes Lucinda Williams, Orders Trial Court To Take Closer Look At Whether Debt Was Fully Satisfied

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

Add this to the list of things you never want to hear a court say about your performance during a case: "defendants' presentation of evidence certainly gave voice to the song lyric, 'when nothing makes any sense, you have a reason to cry.'" (It is a lyric from a Lucinda Williams song if you were curious.) But this was the Appellate Division's conclusion in Brunswick Bank & Trust v. Heln Management, LLC, a case that was making its second appearance before the Appellate Division (after an earlier remand) and was sent back to the trial court for a third round.

The issue in Brunswick Bank was relatively straightforward. Plaintiff and defendants entered into five loans. The loans were secured by mortgages on several properties owned by defendants. After defendants defaulted on the loans, plaintiff sued and obtained a judgment against defendants. Plaintiff then filed foreclosure actions against defendants, seeking to foreclose on the mortgages it held against defendants' properties. It received final judgments of foreclosure in these cases as well. Some of these properties were then sold, which "provided rolling compensation for [plaintiff] against all defendants' obligations."

At some point during this "rolling" sale of mortgaged properties, defendants moved to stay all pending foreclosure proceedings, arguing that plaintiff was "over-capitalized" – i.e., it was going to collect more than it was entitled to collect under its judgment. Defendants then moved to have the judgment deemed satisfied, arguing that plaintiff had already recovered — through its collection efforts — the full amount of the judgment. The trial court granted the motion but held that two pending foreclosures could proceed. The trial court further acknowledged that it had the power to "prevent a windfall" to plaintiff, but that the record was "too muddled" to decide whether this was the case.

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Setting Priorities: When You Refinance A First Mortgage, Is It Still A FIRST Mortgage?

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

It is a question I have been asked a number of times over the past few years: If a lender refinances an existing mortgage, does the new lender step into the shoes of the old lender in terms of priority? In other words, if you refinance a first mortgage, does it remain a FIRST mortgage or is it a new mortgage that is junior to other mortgages that may have been recorded after the first mortgage? Granted this is not a question as weighty as, say, "what is the meaning of life?" but if you are a lender, it is an important one. I have written about this topic before, but the Appellate Division's recent decision in Ocwen Loan Services, Inc. v. Quinn, added a new wrinkle. In that case, the question was whether a refinanced first mortgage retains its first status over a life estate, as opposed to another mortgage or lien, that was recorded prior to the original mortgage.

In Ocwen, defendants conveyed their residential property to their daughter but retained a life estate in the property. (In other words, the daughter owned the property, but defendants could live there until they died.) One year later, defendants, their daughter, and her husband acquired a loan from plaintiff that was secured by a mortgage on the property. Two years after that, the daughter refinanced the mortgage for a higher amount. The title commitment that plaintiff obtained did not disclose the recorded life estates, so defendants were not required to sign the mortgage. Through the refinancing, the daughter, among other things, paid off the prior mortgage, which defendants had signed.

Two years later, the daughter defaulted on the refinanced mortgage and plaintiff foreclosed. The parties cross-moved for clarification on the status of defendants' life estate. Plaintiff argued that the life estate was subordinate to the refinanced mortgage, meaning defendants could not rely on it to stop the foreclosure. Defendants argued that the foreclosure had to be dismissed because "they did not sign the [refinanced] mortgage nor pledge their life estates in connection with the [ ] loan refinancing."

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NJ Supreme Court: If Borrower Abides By Terms Of Settlement Agreement, Lender Must Modify Mortgage

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

Lawsuits arising out of foreclosures and mortgage modifications are common. (Even more common than lawsuits about gyms or health clubs if you can believe that.) Nearly every day there is a decision from the Appellate Division arising out of a residential foreclosure. Most of these fall into the same category — borrower defaults and loses home through foreclosure then challenges lender's standing to foreclose after the fact — but some are more interesting. That was the case with GMAC Mortgage, LLC v. Willoughby, a decision released yesterday by the New Jersey Supreme Court involving a mortgage modification agreement entered into to settle a foreclosure lawsuit.

Almost two years ago, I wrote a post about Arias v. Elite Mortgage, a lawsuit over the alleged breach of a mortgage modification agreements. In that case, borrowers entered into a mortgage modification agreement with their lenders that included a Trial Period Plan ("TPP"). As the name suggests, a TPP requires borrowers to make reduced monthly payments in a timely manner for a trial period, after which, if they make the payments, the lender agrees to modify their mortgage. In Arias, the Appellate Division held, as a matter of first impression, that if a borrower makes the trial payments under the TPP, the lender must modify the mortgage, and if it doesn't, the borrower can sue for breach. However, the holding was purely academic because the borrower in that case failed to make one of the trial payments in a timely manner so it could not sue.

In GMAC Mortgage, the New Jersey Supreme Court faced a similar situation with a much less academic result.

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