Winning Bidder At Sheriff’s Sale Entitled To Recoup Some, But Not All, Of His Deposit After Sale Is Vacated

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

Auction (pd)A recent decision from the Appellate Division drives home (1) the duty of sellers at sheriff's sales to announce all material information about the property being sold at the sale, (2) the duty of bidders at sheriff's sales to perform independent due diligence about the property notwithstanding that announcement, and (3) the flexibility of Chancery Division courts to fashion remedies when both fail to fully satisfy their obligations.

In Wells Fargo Bank Bank, N.A. v. Torney, plaintiff foreclosed on property owned by defendant, obtained final judgment against defendant, and proceeded to sheriff's sale. In advance of the sheriff's sale, plaintiff submitted its "sheriff's sale package" to the Camden County Sheriff. Included in the package was a short form property description (required under N.J.S.A. 2A:61-1), which, among other things, disclosed that the property was subject to a $94,000 first mortgage. The existence of this prior mortgage was also disclosed in the conditions of sale attached to the short form property description, and in the Affidavit of Consideration submitted by plaintiff in connection with the foreclosure. Finally, the short form property description also contained the following disclaimer: "all interested parties are to conduct and rely upon their own independent investigation to ascertain whether or not any outstanding interest remain[s] of record and/or have priority over the lien being foreclosed and, if so[,] the correct amount due thereon."

Edward Shuman, who would eventually be the winning bidder at the sheriff' sale,  learned about the sale through the sheriff's website, which did not mention the prior mortgage. Also, at the sheriff's sale, plaintiff did not announce, as part of its "general announcements," that the property was subject to a prior mortgage. And, on the "printed condition of sale, the box next to 'subject to a first mortgage' was not checked." Shuman claims that he did not know about the prior mortgage when he placed his winning bid on the property, and did not learn about it until later that day when he inquired about the existence of any tax liens on the property. Once he learned about the mortgage, he contacted plaintiff and requested that the sale be vacated and his deposit returned. When plaintiff refused, Shuman filed a motion seeking the same relief. 

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New Jersey Supreme Court To Hear Appeal In Case Involving Defense Counsel That “Friended” Plaintiff On Facebook

by:  Peter J. Gallagher (@pjsgallagher)

Earlier this year, I posted about an ethics grievance that was filed against a defense attorney whose paralegal "friended" a plaintiff on Facebook, which allowed the defense to gain access to information that could be used to impeach the plaintiff at trial. (Click here for my original post.) The Appellate Division decision that was the subject of that post had less to do with the substance of the grievance — whether it was unethical to do what the paralegal did — and more about the strange procedural history of the grievance.

The Secretary of the local Ethics Committee originally refused to docket the grievance (which the Secretary is allowed to do if the Secretary, in consultation with a public member of the Ethics Committee, makes an initial determination that no ethics rules were violated), but plaintiff then went to the Director of the Office of Attorney Ethics ("OAE") with more information and convinced the OAE to investigate. Defense counsel argued that this violated the so-called “no appeal” portion of the New Jersey Court Rules, which prohibits appeals from decisions declining to docket ethics grievances. Defense counsel made this argument in a complaint that he filed in the Chancery Division, but the complaint was dismissed for lack of jurisdiction because, according to the trial court and the Appellate Division, the New Jersey Supreme Court has exclusive jurisdiction over matters involving the disciplining of attorneys.

Now the New Jersey Supreme Court has agreed to hear the case to resolve the following question:

Does the Director of the Office of Attorney Ethics have the authority to proceed with a grievance after a District Ethics Committee Secretary (with concurrence by a designated public member) has declined a grievance, pursuant to Rule 1:20-3(e)(3)?

As I mentioned in my prior post, it seems like the more interesting question is whether defense counsel's conduct was unethical, but we will not get an answer to this question until the New Jersey Supreme Court clears up this  procedural issue.And, we will not get an answer at all if the New Jersey Supreme Court agrees with defense counsel and finds that it was improper for the OAE to investigate the grievance after the Secretary of the Ethics Committee refused to docket it.

Stay tuned for more on this case.

Ethics Grievance Against Defense Lawyer Who “Friended” Plaintiff Will Continue

by:  Peter J. Gallagher (@pjsgallagher)

Recent reports have suggested that Facebook is no longer seen as “cool” among teens and other millennials because, among other things, their parents are on Facebook, so how can it possibly be “cool”? Well, with all apologies to Mark Zuckerberg, this post may be the death knell for Facebook’s coolness because this is the second time in the past few months that I am writing about Facebook. (The other article, which discussed the implications of judges being “friends” with attorneys, can be found here.) If parents being on Facebook is reason enough for it not to be “cool,” a lawyer blogging about it somewhat regularly probably removes any last vestiges of coolness.  

With that being said . . . A recent Appellate Division decision, Robertelli v. The New Jersey Office of Attorney Ethics, will allow an ethics investigation involving a law firm employee’s use of Facebook to obtain information about a plaintiff in a pending personal injury lawsuit to continue. The issue faced by the Appellate Division – which is discussed below – did not involve the question of whether using Facebook to investigate another party in a pending lawsuit is unethical. But, since the case will now continue, we might get a decision on this underlying issue soon, so this case is worth watching. Other jurisdictions have dealt with similar issues and have usually found the conduct to be violative of the Rules of Professional Conduct. For example, the Philadelphia Bar Association found, in a similar situation, that the attorney’s conduct violated RPC 8.4 (conduct involving dishonesty, fraud, deceit and misrepresentation) and RPC 4.1 (truthfulness in statements to others). Similarly, the San Diego Bar Association found that an attorney’s use of Facebook to “friend” potentially dissatisfied high-ranking employees at an employer that his client was suing violated RPC 4.2 (communicating with a person represented by counsel). With the grievance in Robertelli, New Jersey’s Disciplinary Review Board and Supreme Court may soon weigh in on the issue as well.

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