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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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.

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Drink Up! TGI Fridays Ducks Class Action Based On Alleged Failure To List Drink Prices On Menu

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

On a ski trip a few years back, a friend of mine decided to spend his day at a local bar instead of on the slopes. He spent the afternoon drinking with a friend and a man they met at the bar. Later in the day, the man, who had been drinking with them the whole time, said he had to go to work. He stood up, walked around to the other side of the bar, and clocked in for his shift as the bartender. He promptly gave my friend one more drink on the house, and then told him he was cut off. That is consumer fraud if you ask me. But, alas, that issue was not before the New Jersey Supreme Court in Dugan v. TGI Friday’s, Inc.

In Dugan, plaintiffs alleged that TGIF violated the New Jersey Consumer Fraud Act (CFA) and the Truth in Consumer Contract Warranty and Notice Act (TCCWNA) by (1) failing to list prices for alcoholic and non-alcoholic drinks on its menus and (2) charging different prices for the same beverage depending upon where in the restaurant the beverage was served (i.e., at the bar as opposed to at a table). Plaintiffs sought to certify a class comprised of "all customers who had purchased items from the menu that did not have a disclosed price."

The first-named plaintiff alleged in the complaint that she only "became aware of the prices [of drinks she purchased at the bar] after she had consumed the beverages and was presented with a check," and that she was "charged $2.00 for a beer at the bar and later charged $3.59 for the same beer at a table in the restaurant." She was later deposed and admitted that she did not review the menu at the bar, or review the price of the beer indicated on her receipt from the bar, or review the beverage section of the menu at the table, or review the final bill before she paid it. Rather, she testified that she reviewed the receipts when she got home and noticed the discrepancies, and also noticed that she paid a "steep" price for a soda.

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Separate And Distinct Signature Required To Enforce Personal Guaranty From Corporate Officer or Director

by: Peter J. Gallagher (@pjsgallagher)

In a recent unpublished decision, the Appellate Division again reminded us that a personal guaranty cannot be enforced unless the person against whom it is being enforced signed the guaranty. This may sound like an obvious reminder, but the issue comes up from time to time, particularly where a contract is entered into with a corporation and purports to contain a personal guaranty on behalf of an individual officer of the corporation. Unless the officer signs the contract in his or her personal capacity — i.e., not just on behalf of the corporation as an officer of the corporation — the guaranty will not be enforceable. I have blogged about this before.

In Herz v. 141 Bloomfield Avenue Corporation, plaintiffs leased property to the corporate defendant. The lease contained a provision whereby the individual defendant, the corporate defendant's president, agreed to be personally liable for all "obligations, rents (past and future), and damages" due under the lease. The individual defendant signed the lease, but did so only on behalf of the corporate defendant — the lease contained a signature block for the corporate defendant, but did not contain a separate signature block for the individual defendant.

After default, plaintiffs sued both the corporate defendant and the individual defendant. The individual defendant moved for summary judgment, arguing that he only signed the lease on behalf of the corporation and therefore could not be held liable under the personal guaranty. The trial court agreed and plaintiffs appealed. The Appellate Division affirmed.

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Thank You, Captain Obvious — It Is Improper To Throw Your Records In A Dumpster In Advance Of A Lawsuit

by: Peter J. Gallagher (@pjsgallagher)

When most litigators hear the term “spoliation” nowadays, they probably think of emails, servers, document retention policies, and back-up tapes. But the Appellate Division recently reminded us that old-fashioned spoliation is still alive and well (and improper).

In Hess Corporation v. American Gardens Management Company, plaintiff sued various single-purpose entities with which plaintiff had contracted to sell oil and gas. Plaintiff also sued the individual owner of all of these entities, which were essentially judgment proof, arguing that it was entitled to pierce the corporate veil and hold him liable because he had co-mingled funds and fraudulently conveyed and diverted assets from the various corporate entities for his personal use.

During discovery, plaintiff served the individual defendant with a document request. The individual defendant failed to respond and his answer was stricken. He later moved to reinstate his answer, first arguing that he could not answer the discovery request without implicating his Fifth Amendment right against self incrimination (which the court rejected) and then claiming that he did not have many of the documents requested. Based on the latter, the court vacated its prior order and reinstated his answer.

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