lawuit – Pete's Take

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

Embarrassing as this is to admit, there was a time when I did not entirely understand the difference between "net" and "gross." I would like to say that time was long ago, but it wasn't that long ago. Rest assured, however, that I know the difference now. The difference between the two was at the heart of Thakkar v. Allers, an unpublished decision from the Appellate Division in which plaintiff claimed that he authorized his attorney to settle for a net recovery of $80,000 but his lawyer settled for the gross amount of $80,000. In other words, plaintiff thought he would receive $80,000 from the settlement but he actually received less than $80,000 after fees and costs were deducted from the gross settlement amount. Plaintiff tried to undo the settlement, but the trial court denied his request and the Appellate Division affirmed.

Thakkar involved a personal injury lawsuit. Plaintiff was awarded $50,000 through mandatory, pre-trial arbitration, but rejected that award and demanded trial de novo. Prior to trial, plaintiff claims that he authorized his attorney to settle the case for "an amount that would yield an $80,000 recovery to [plaintiff], after deductions for fees and costs." He claimed that he gave his attorney these instructions over the telephone and in a letter. Several days after the alleged telephone conversation between plaintiff and plaintiff's counsel, plaintiff's counsel settled the case in a call with defendants' counsel and later confirmed the settlement in an email to defendants' counsel, which read: "As discussed at 5 PM today, [plaintiff] has authorized [plaintiff's counsel] to accept $80,000.00 in settlement."

Four days later, plaintiff's counsel wrote to defendants' counsel to report that plaintiff refused to sign a release because he wanted a settlement yielding a net recovery of $80,000, a fact that plaintiff's counsel indicated was "in no way" communicated to him by plaintiff before plaintiff's counsel advised defendants' counsel that plaintiff's counsel was authorized to settle the case for "the sum of $80,000.00."

Continue reading “Settlement Stands Even Though Lawyer Allegedly Settled For Less Than Authorized” →

by: Peter J. Gallagher

In a recent decision, the Appellate Division restated and clarified the rules regarding when a condominium association has standing to sue a developer. In Belmont Condominium Association v. Geibel, an association sued the sponsor/developer/contractor of the Belmont, a seven-story, thirty-four unit condominium in Hoboken, asserting common law fraud and negligence claims along with statutory claims under both the New Jersey Consumer Fraud Act (“CFA”) and The Planned Real Estate Development Full Disclosure Act (“PREDFDA”). The claims arose out of the allegedly faulty construction of the Belmont, and certain pre-construction statements from the developer, including that it had “overseen the building and renovation of Over 400 Single Family & Condominium Homes.” (Although largely irrelevant to the issues addressed by the Appellate Division, it turned out that the Belmont was actually the first building that the developer’s owner and general manager had ever constructed.) As it relates to the faulty construction, the association alleged that the building was “plagued by water leaks” almost immediately after construction was complete. These leaks impacted both the individual units and the common elements. After years of repairs that did not correct the problem, the association sued the developer. The association argued that construction defects were the cause of the water filtration, while the developer blamed the problems on poor and inadequate maintenance.

Among other things, the developer in Belmont argued that the association lacked standing to bring claims under the CFA. At the outset, the Appellate Division observed that New Jersey courts take a liberal approach to standing, and have historically given wide recognition to suits by condominium associations. It then analyzed the language of the New Jersey Condominium Act (“NJCA”) to determine whether the association had standing. As it related to claims arising out of damage to the common elements, the Appellate Division held that the association had standing to sue because the NJCA vests condominium associations with the “exclusive right”(emphasis in original) to sue a developer for defects pertaining to the common elements, and generally prohibits individual unit owners from doing so.

The Appellate Division rejected the developer’s argument that the association lacked standing because it could not demonstrate reliance by the original purchasers on any of the alleged misstatements. On this point, the Appellate Division noted that reliance is not an element required to sustain a claim under the CFA. The Appellate Division also rejected the developer’s argument that the association could only recover damages for the unit owners who actually sustained damage as a result of the developer’s alleged misrepresentations. The Appellate Division held that because the NJCA allows associations to sue for damages to the common areas sustained by “any or all” of the unit owners, it was entitled to recover all of the damages necessary to repair any damages, not a prorated amount based on the number of unit owners who identified damages.

However, the Appellate Division held that the association lacked standing to sue for damages to the individual units because the NJCA only vests it with authority to sue or be sued in connection with damages to common elements. In Belmont, the damages associated with individual units all related to the windows, which the Appellate Division held were “personal to the unit owners,” and therefore not part of the Belmont’s common elements. On this point, the Appellate Division reviewed the definition of common elements contained in both the NJCA and the master deed for the Belmont, neither of which identified windows as common elements. Once the Appellate Division concluded that the windows were unit elements, not common elements, its decision on standing was a simple one because it had already concluded that an association has standing to sue for damage to common elements, but lacks standing to sue for unit elements.