Party That Drafted Arbitration Provision Moves To Have Provision Deemed Unenforceable. It Lost.

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

Most cases involving commercial contracts and arbitration provisions follow a similar pattern. They generally involve consumers arguing that they cannot be bound by arbitration clauses found in the fine print of boilerplate contracts that they had no ability to negotiate. But Shah v. T & J Builders, LLC turns this scenario on its head. In Shah, plaintiffs, the consumers, drafted the contract that contained the arbitration clause but later argued that it was unenforceable. To make matters worse (or at least more unusual), plaintiffs took this position after participating in an arbitration proceeding with defendant for two years. Not surprisingly, plaintiffs efforts to have their own arbitration clause deemed unenforceable were unsuccessful.

In Shah, plaintiffs hired defendant to build an extension on their home. The contract, which was "heavily negotiated between the parties," albeit without counsel, was drafted by plaintiffs. It contained an arbitration clause that required the parties to arbitrate "any dispute [ ] relative to the performance of [the] contract that [they could not] satisfactorily resolve." After one such dispute arose, plaintiffs terminated the contract and defendant filed an arbitration demand. Plaintiffs answered the demand and filed a counterclaim, alleging breach of contract and violations of New Jersey Consumer Fraud Act. Nowhere in their answer or counterclaim did plaintiffs address, much less challenge, the arbitration clause.

The parties, through counsel, then pursued their claims in arbitration for almost two years, exchanging discovery and expert reports, participating in a site inspection, and participating in several conferences with the arbitrator. Two weeks before the scheduled arbitration date, the parties submitted their pre-arbitration briefs. This is where the fun began.

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New Jersey Court Answers The Burning Question: Can I Sue The Owner Of An Abandoned Church If I Slip And Fall On The Sidewalk Outside The Church?

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

The facts and legal issues in sidewalk slip and fall cases sometimes read like they are pulled from law school final exams. In New Jersey, the baseline legal rule is clear — owners of commercial properties generally have a duty to maintain, in reasonably good condition, the sidewalks abutting their property, while owners of residential properties do not. But does a property owner have a duty to maintain its sidewalks when:

the property is both residential and commercial, like a multi-family home where one unit is owner occupied and the others are rented (click here for more on that, but the short answer is that it depends on whether the property is primarily residential or primarily commercial ); or
the plaintiff is a tenant and sues the landlord after slipping on a sidewalk outside the rental property (click here for more on that, but usually, yes); or
the property is a commercial property, final judgment of foreclosure has been entered in favor of the lender, but no sheriff's sale has been scheduled (click here for more on that, but if the lender can be considered a mortgagee in possession, then yes); or
the property is owned by a condominium or common-interest community (click here for more, but generally, yes if it's a private sidewalk within the condominium, no if it's a public sidewalk abutting the condominium); or
the property is residential and the fall is caused by sweetgum spikey seed pods that fell from a tree on the defendant's property (click here, but, no).

And now one more can be added to the list thanks to the Appellate Division's decision is Ellis v. Hilton United Methodist Church, where the question presented was whether "sidewalk liability applies to an owner of a vacant church."

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Litigation Privilege Protects Client’s Statement That His Former Lawyer Was a Liar, Thief, and “No Good Drunk”

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

Anyone who has practiced law for any period of time likely has a story about a misdirected email. You know, the one you meant to send to a client or a colleague, but it went to your adversary or your supervising partner instead. These situations often just result in mild to moderate awkwardness around the office, but they sometimes create bigger problems. MacNaughton v. Harmelech, a recent decision from the Appellate Division, involved the latter. But it also involved the litigation privilege, something I wrote about just a few weeks back. (What Do eBay, The "40 Year Old Virgin," And The Litigation Privilege Have In Common?). And, fortunately for defendant, the statements in his misdirected email were protected by that privilege.

In MacNaughton, plaintiff, a New Jersey lawyer, represented defendant in a lawsuit involving defendant's company. Defendant disputed plaintiff's bill and plaintiff eventually sued defendant over the bill. At some point during the litigation, the trial court asked the parties whether they were interested in mediation. Around the same time, however, plaintiff was "in contact with another of defendant's creditors about banding together to force defendant into involuntary bankruptcy." As you might expect, when defendant learned about plaintiff's efforts, it colored his decision about whether to agree to mediation. In fact, defendant sent the following email, reprinted exactly as it appeared in the Appellate Division's decision, to his lawyers on the subject:

Please I Am asking you to file a paper in the state court there WILL NOT BE AGREE NOT TO BE A MEDIATION MACNAUGHTON CALL TODAY AND ASK HIM TO TRY TO POT ME IN IN VALENTRY BANKRUPTCY AS YOU SEE HE IS A. LIAR THIEF AND NO GOOD DRUNK

NO TO BE TRUSTED THANKS

Unfortunately, defendant also copied plaintiff on this email. Upon receiving it, plaintiff filed a one-count complaint for defamation. The trial court held a hearing on whether the statements were protected under the litigation privilege. After taking testimony from defendant and his current counsel, the court applied the four-factor test from Hawkins v. Harris, and held that they were. As a result, plaintiff's claim was dismissed. 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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New York Court: “Happy Wife, Happy Life” Will Not Shield You From A Wrongful Termination Lawsuit

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

I do not have these mugs at home, but I should. Most married men will tell you that the easiest way to avoid trouble at home is to remember that your wife is always right (even on those rare occasions when she is obviously wrong). Sometimes this policy of gratuitous appeasement fails, however, as was the case in a recent decision, Edwards v. Nicolai, from the New York Appellate Division (First Department).

In Edwards, defendants were husband and wife, and co-owners of Wall Street Chiropractic and Wellness. The husband was head chiropractor, while the wife was the chief operating officer. The husband hired defendant as a "yoga and massage therapist," and was her direct supervisor. According to plaintiff, her relationship with the husband was entirely professional and he "regularly praised" her work performance.

A little more than one year after hiring plaintiff, the husband allegedly "informed Plaintiff that his wife might become jealous of Plaintiff, because Plaintiff was too cute." This apparently proved to be a prescient statement. Approximately four months later, at 1:30 in the morning, plaintiff received a text from the wife, stating that plaintiff was not "welcome any longer" at the office, that plaintiff should "NOT ever step foot in [the office] again," and that plaintiff should "stay the [expletive] away from [the wife's] husband." A few hours later, at around 8:30 am, plaintiff received a text from the husband notifying her that she was "fired and no longer welcome in [the] office," and that if she called or tried to come back, defendants would call the police.

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