Lease “Signed Under Protest” Not Binding (And Have You Ever Heard Of “Grumbling Acceptance”?)

Sign contract(Pd)
What happens if a tenant signs a lease but writes "signed under protest" under the signature? According to the Appellate Division, it means the lease is not binding. More importantly, perhaps, the Appellate Division has never heard of the contract theory known as "grumbling acceptance." If this is one that you did not cover in law school, join the club.

In Bergenline Property Group, LLC v. Coto, defendant was a longtime tenant of premises owned by plaintiff. There was an oral lease between the parties for most of the tenancy. But, in 2013, plaintiff served a notice to quit on defendant, requiring defendant to sign a written lease and pay a security deposit or vacate the property. Defendant refused and plaintiff served another notice to quit, requiring defendant to vacate the property for refusing to agree to reasonable changes to the terms of the lease. Defendant did not vacate and plaintiff filed an eviction complaint.

At the hearing on plaintiff's eviction complaint, the parties agreed to allow the court to determine the reasonableness of several provisions in the proposed lease and modify the lease as necessary. The court did just that, issuing a written opinion that modified some of the terms of the lease. Despite defendant's prior agreement to be bound by the court-modified lease, defendant refused to sign it. Plaintiff then moved for a judgment of possession. At the hearing on that request, the court gave defendant another chance to sign the lease. In response, Defendant first delivered a lease with a signature that was not witnessed and a post-dated check for the security deposit. Plaintiff refused to accept both. Defendant then delivered a lease, signed by defendant and witnessed by defendant's counsel, and a money order for the security deposit. However, directly below defendant's signature on the lease appeared the words "signed under protest." Plaintiff refused to accept this lease as well, but gave defendant one more chance to come to plaintiff's counsel's office and sign the lease. Defendant was apparently driven to plaintiff's counsel's office, but refused to leave the car or execute a new lease.

Plaintiff then renewed its request for a judgment of possession. Defendant opposed the motion, arguing, among other things, that the "signing under protest" language did not change the document, and stating, "parenthetically," that if plaintiff was "offended" by that language, plaintiff could strike it. The court entered the judgment of possession, finding that, by placing the "signing under protest" language on the lease, there was no meeting of the minds, and therefore no binding contract. As a result, defendant failed to sign the lease and violated the court's order requiring her to do so.

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JPMorgan Settles With The SEC

by:  Peter J. Gallagher

The SEC announced yesterday that JPMorgan Securities LLC agreed to pay $153.6 million to settle SEC charges that the company "misled investors in a complex mortgage securities transaction just as the housing market was starting to plummet."  Pursuant to the settlement, "harmed investors will receive all of their money back.”  Just like it did with Goldman Sachs and its now infamous ABACUS 2007-1 deal, the SEC alleged that JPMorgan allowed a hedge fund manager to pick the assets that went into its (equally obscurely named) Squared CDO 2007-1 deal without disclosing that the hedge fund chose the worst assets it could find because it planned to short the offering.  You know how this story ended – investors lost their shirts, the hedge fund got rich(er).     

The settlement has been widely reported in the media, with some interesting takes on the meaning of the settlement to the overall prosecution (by the SEC, private investors, attorneys general, and the DOJ) of the banks for their role in the crisis.  Among the more interesting pieces:

"Is JPMorgan's Settlement The End Of Subprime Claims?" (Reuters) (arguing that that the settlement was a win for JPMorgan but that it does not mark the end of the pain for the bank or its competitors who all face dozens of pending investor lawsuits)

"JPMorgan Settlement Suggests More Pain Ahead For Wall Street" (WSJ – Law Blog) (predicting increased pressure by the SEC on other banks for similar settlements and including the most bizarre and disturbing quote from an email that the JPMorgan employee in charge of selling the Squared CDO 2007-1 deal wrote to his sales team: “We are soooo pregnant with this deal, we need a wheel-barrow to move around . . . Let’s schedule the Cesarean please!”)

"JPMorgan Settlement With SEC Recalls Case Against Goldman Sachs" (providing more detailed reporting on the story and less commentary than the others)