On Cloaking Devices And Usury: Lender Can Be Sued If It Uses Corporate Shell To Cloak A Personal Loan As A Business Loan

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

Cloaking devices are common in sci-fi movies like Star Trek and Star Wars. They are used to render an object, usually a spaceship, invisible to nearly all forms of detection. Although scientists are apparently working to make real-life cloaking devices, at this point they exist only in the movies and, apparently, in New Jersey courts, at least according to the Appellate Division in Amelio v. Gordon.

In Amelio, plaintiff owed an apartment building in Hoboken. He approached defendants about obtaining a loan to finish renovations on three units in the building, along with the common areas. Plaintiff claimed that defendants instructed him to create a corporate entity to obtain the loan. Plaintiff did as he was instructed, and formed a limited liability company, which obtained the loan from defendants. Plaintiff, who was identified as the managing member of the limited liability company, signed the loan documents on behalf of the company.

Plaintiff later sued, arguing that the fees and interest payments under the loan exceeded the amounts allowable under New Jersey's usury laws. He also claimed that defendants fraudulently convinced him to create a limited liability company and have that entity obtain the loan, just so they could charge him usurious fees and interest. Plaintiff sued in his individual capacity, not on behalf of the limited liability company. On the day of trial, defendants argued that the complaint had to be dismissed because plaintiff lacked standing to sue since the company was the borrower, not plaintiff. With little explanation, the trial court granted the motion and dismissed the complaint. Plaintiff appealed.

Continue reading “On Cloaking Devices And Usury: Lender Can Be Sued If It Uses Corporate Shell To Cloak A Personal Loan As A Business Loan” →

New Jersey Supreme Court Answers Burning Question: When is a converted garage a “building” under New Jersey’s Anti-Eviction Act?

When my wife and I lived in Hoboken, one of our favorite restaurants was Court Street. It is located on the corner of Sixth Avenue and Court Street. We went there at least once a week for most of the time we lived in Hoboken. (Great food, good atmosphere, a little off the beaten path. You should check it out.) Little did I know at the time that we were looking out from the restaurant onto a "building" that was the subject of a long-running landlord-tenant dispute that was only recently resolved by the New Jersey Supreme Court.

I used quotation marks around "building" because the issue in Cashin v. Bello was whether the word "building" as used in the Anti-Eviction Act denotes a single, unattached physical structure or whether it includes all structures owned by an individual that are located on the same parcel of land. This issue was more than just semantics to the parties involved because if the Supreme Court endorsed the former then defendant could be evicted, but if it endorsed the latter, then defendant could stay. Unfortunately for the tenant, the Supreme Court endorsed the former.

Continue reading “New Jersey Supreme Court Answers Burning Question: When is a converted garage a “building” under New Jersey’s Anti-Eviction Act?” →

Slip Sliding Away: NJ Supreme Court Rules That Condominium Has No Duty To Clear Snow And Ice From Public Sidewalks

by: C. John DeSimone, III

It has long been settled common law that commercial landowners have a duty to clear snow and ice from public sidewalks abutting their land, but that residential landowners have no similar duty (Stewart v. 104 Wallace Street). In Luchejko v. City of Hoboken, decided on July 27, 2011, the New Jersey Supreme Court described the commercial/residential dichotomy as a bright-line rule. Commercial landowners have a common law duty to clear snow and ice from abutting public sidewalks, residential landowners do not. The Luchejko Court held that a residential condominium building, because it is residential, does not have a common law duty to clear snow and ice from abutting public sidewalks. The Court found that the form of the property ownership, in this case, a corporate condominium entity, did not subject the Association to the same liability that would have fallen on a commercial landowner. In doing so the Court affirmed the dismissal of the plaintiff's personal injury action at summary judgment. The Court also held that the management company, as the agent of the Association, owed no duty to the plaintiff and affirmed its dismissal.

Residential Condominium Association Not Liable For Slip and Fall Accidents

The New Jersey Appellate Division recently waded into the ever-changing body of law governing if, and when, property owners can be sued if someone is injured on public sidewalks adjoining the property. Although property owners were once immune from such liability, the law has evolved over the past 25 years to allow for liability in certain situations. Despite this trend towards increased property owner liability, on July 12, 2010, a three-judge panel went against this tide, holding that residential condominium associations cannot be sued for injuries suffered by individuals on public sidewalks adjoining their property. (Luchejko v. City of Hoboken(A-5702-07) decision) As noted above, this decision is the latest episode in the evolution of the law governing "sidewalk liability." Prior to 1981, all property owners were immune from liability for injuries occurring on sidewalks adjourning their property. However, almost 30 years ago, in Stewart v. 104 Wallace St., Inc., 87 N.J. 146 (1981), the New Jersey Supreme Court created an exception to this long-standing rule, and held that commercial property owners could be liable. Since then, New Jersey courts have expanded upon this exception to impose liability on a variety of commercial and non-owner occupied residential properties. In Luchejko, however, the Appellate Division held that a non-profit condominium association in an owner-occupied building could not be held liable because, unlike commercial tenants, it had no “ability to pass along the cost of liability.” It is important to note that the property in question was completely residential, and it will be curious to see where New Jersey courts draw the line with hybrid residential and commercial properties, such as condominiums that lease out some or all street-level space to businesses.