REAL ESTATE – FORECLOSURE: DOCTRINE OF LACHES UTILIZED TO PREVENT HOMEOWNER FROM VACATING DEFAULT JUDGMENT

The doctrine of laches is an interesting concept.  Although pled with a fair amount of regularity, it is a defense to a claim that is employed sparingly.  The doctrine of laches can be defined as a bar to any delay in enforcing a known right which cannot be explained or excused and, as a result, the other party has been prejudiced because of such delay.  In this foreclosure action, PHH Mortgage Corp. v. Krowicki, laches is used to prevent a homeowner from vacating a default judgment of foreclosure entered in 2007 and well after the sale of the property to an innocent third party.  According to the Court, with all of Defendant’s posturing, motion practice, bankruptcies and attempts at mediation regarding the foreclosure, it never once challenged the default judgment until Defendant was out of options.  Unfortunately, Defendant waited too long to enforce a right which it was clearly aware of.  Similarly, the doctrine of equitable estoppel also barred relief for the same reason.  The court also rejected Defendant’s argument, raised for the first time on appeal (see the common thread running through the Defendant’s prosecution of this case), that the Plaintiff bank lacked standing because it did not possess the 1998 note when it filed the complaint, because the judgment and sale were entered and accomplished in 2007 and 2010, well before the Supreme Court adopted substantial amendments to the rules governing foreclosure actions.

Bottom line, DO NOT WAIT and hope for the best when it comes to a foreclosure action.  Contact competent legal counsel to find out your rights.

Click on PHH Mortgage Corp. v. Krowicki for the entire opinion.  http://www.judiciary.state.nj.us/opinions/a1654-11.pdf

For more information, or if you have other legal concerns, email Gavin Handwerker, Esq. at gih@beinlaw.com. 

CONTRACTS – LANDSCAPER NOT REQUIRED TO INDEMNIFY ASSOCIATION FOR LITIGATION COSTS BECAUSE IT DID NOT ASSUME RESPONSIBILITY FOR ASSOCIATION’S OWN NEGLIGENT ACTS

If you are involved in a service oriented business, you may very well have a contractual obligation to indemnify some of your customers for negligent acts.  Therefore, it is critical that you hire competent legal counsel who can identify pitfalls in an indemnity agreement and fight to protect you and your business from financial disaster when that provision comes into play.  A good example is the Franchini case.  In her complaint, Plaintiff Franchini claimed she injured herself when she slipped and fell on ice on property owned by Defendant Beverly Hills Terrace Condominium Association (the “Association”).  The complaint further alleged separate acts of negligence by the Association and Greenview Landscaping, the entity hired to maintain the grounds and provide snow and ice removal for the Association.  Following a jury trial on all issues, a verdict was rendered in favor of Greenview and the Association.  The Association thereafter filed an application with the trial court for attorney’s fees from Greenview, arguing that Greenview was required to indemnify it for defending against Franchini’s lawsuit.  Over the objections of Greenview the trial court awarded the Association approximately $39,000 in counsel fees.

In reversing the lower court’s ruling, the Appellate Division provided a thorough review of indemnity clauses and the N.J. Supreme Court’s decision in Mantilla v. NC Mall Associates, 167 N.J. 262 (2001).  In Mantilla, the N.J. Supreme Court held that absent explicit contractual language to the contrary, an indemnitee may not recover the costs of its defense from an indemnitor where the indemnitee has defended against allegations of its own independent fault.  With that backdrop, the Appellate Division reviewed the contract between the Association and Greenview, including the indemnification provision language, and held that the indemnification clause in the contract was confined to liability for Greenview’s performance of its work, not third party acts.  The Appellate Division rejected the Association’s contention that Greenview assumed indemnification responsibility for the Association’s acts of negligence because of the absence of the explicit contractual language required by Mantilla, and reversed the lower court’s award of counsel fees.

Click on Franchini v. Beverly Hills Terrace Condominium Ass’n for the entire opinion.  http://www.judiciary.state.nj.us/opinions/a6221-10.pdf

For more information, or if you have other legal concerns, email Gavin Handwerker, Esq. at:  gih@beinlaw.com.

CONSUMER FRAUD- SCHOOL’S FALSE PROMISE OF EMPLOYMENT WITH LACK OF ACCREDITATION TANTAMOUNT TO CONSUMER FRAUD

After an admissions representative told her that on graduation, she would be able to perform ultrasounds on patients in hospitals and clinics and earn $65,000 per year, Plaintiff Suarez enrolled in the diagnostic medical ultrasound technician program of Defendant Eastern International College, formerly known as Micro Tech, a for-profit school.  According to the complaint, Plaintiff alleged that in order to obtain employment in this field, it was necessary to obtain certification from the American Registry for Diagnostic Medical Sonography (“ARDMS”).  Because Micro Tech lacked the necessary accreditation, Plaintiff was ineligible on graduation to take the examination administered by ARDMS to obtain the certification required by potential employers. Plaintiff further alleged that, as a practical matter, she could not either attain the credentials necessary to be eligible to take the ARDMS examination or obtain employment as an entry-level sonographer.  Plaintiff’s expert supported her version of the facts by explaining that major insurance companies would not reimburse a provider for any service performed by an ultrasound technician not certified by ARDMS; and the inability to obtain reimbursement and the risk of sanctions provided ample reason for employers to decline to employ any ultrasound technologist who was not certified by ARDMS.  As a result, Plaintiff sued Defendant alleging violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195, and common-law fraud, and contended that the Defendant’s representations were false. 

Plaintiff appealed from an order granting summary judgment to Defendant and dismissing her complaint.  In an opinion dated August 23, 2012, the Appellate Division held that because a jury could find that Defendant’s statements were so misleading as to a material fact as to deprive the Plaintiff of the ability to make an intelligent decision as a consumer, the statements were actionable under the CFA and summary judgment was inappropriate.  The Appellate Division did affirm dismissal of Plaintiff’s common-law fraud claim on the basis that Defendant’s statements regarding Plaintiff’s potential employment and earning capacity were not statements of present or previously existing facts and therefore cannot provide the basis for a claim based on common law fraud.

Defendant also cross-appealed from the lower court’s decision, arguing that plaintiff's CFA claim should have been dismissed as barred under a “learned professional” exemption.   That exception, an exception created by the courts, provides that certain transactions are excluded from the purview of the CFA “because they involve services provided by learned professionals in their professional capacity.”  The reasoning for this exception is that such professionals are subject to regulation specifically applicable to their profession, which might conflict with the regulation of activities under the CFA.  The Appellate Division rejected Defendant’s argument that it was entitled to the “learned professional” exception because it provided post-high school educational and vocational training.  In support of its holding, the Appellate Division found that Defendant identified no regulatory body that defined uniform standards for the services Defendant provide or its activities as a for-profit training school, such that it would present a “patent and sharp” conflict with the application of the CFA.  Accordingly, the learned professional exemption was inapplicable to this particular case.

Click on Suarez v. Eastern International College for the entire opinion.  http://www.judiciary.state.nj.us/opinions/a2705-10.pdf

Have you been the victim of unscrupulous business practices?  Call us.  The BeinhakerMiller Law Firm, LLC can help.  Written by Gavin I. Handwerker, Esq.  Questions for Gavin?  Email him at gih@beinlaw.com. 

New York Commercial Tenant’s Failure to Give Required Notice of Renewal is Insufficient as Grounds to Excuse Conduct Required by Lease

Whether you are a commercial landlord or tenant, read your lease, read your lease, read your lease! Lease review is not just for when you are negotiating and executing it, only to be put away and forgotten once the ink has dried; but it is an exercise to be carried out through the entire course of the commercial lease tenancy. If you don’t, you run the risk of making a serious mistake that may leave you scrambling for new space. Take the case of Baygold Assocs., Inc. v. Congregation Yetev Lev of Monsey, Inc., 19 N.Y.3d 223 (May 3, 2012). In Baygold Landlord and Tenant entered into a lease on August 2, 1976 for premises used by Landlord as a nursing home. The term was 10 years with four additional 10-year renewal options available to Tenant. In order to exercise an option period, Tenant was required to provide the Landlord with no less than 270 days’ notice before the expiration of each term. The lease further required that the renewal notice be sent “by certified mail with return receipt requested”.

Thereafter, Tenant subleased the space to Monsey Park. Monsey Park ran the nursing home between 1976 and 1985, during which time it made a number of improvements to the leased space. In January 1985, Monsey Park subleased the space to Orzel, who continued to run the premises as a nursing home. During Orzel’s tenancy, only Orzel made improvements to the premises. Renewals were made extending the lease until 2005. The 2005 renewal became the issue. Baygold’s attorney testified that he sent a timely renewal letter to cover the remaining two option terms, but could produce no mail receipt or return card, as required by the lease. In 2007, the Landlord arranged to sell the property to Congregation Yetev Lev of Monsey. Baygold thereafter sued to declare the rights of the parties with respect to the lease renewal.

The Court of Appeals rejected Baygold’s claim to declare the lease properly renewed. In its 1977 decision in J.N.A. Realty Corp. v. Cross Bay Chelsea, 42 N.Y.2d 392 (1977), the Court of Appeals held that equity would relieve a commercial tenant of its untimely failure to exercise an option to renew a lease where (1) such failure was the result of “inadvertence,” “negligence” or “honest mistake”; (2) the non-renewal would result in a “forfeiture” by the tenant; and (3) the landlord would not be prejudiced by the tenant’s failure to send, or its delay in sending, the renewal notice. J.N.A. Realty Corp. v. Cross Bay Chelsea, 42 N.Y.2d 398-400. Here, the Court found Baygold was not entitled to such equitable relief because it could not prove the second element of forfeiture, defined by the Court as where the tenant “‘has in good faith made improvements of a substantial character, intending to renew the lease’ and the tenant ‘would sustain a substantial loss in case the lease were not renewed.’” Id. at 397-398. Baygold did make substantial improvements, but did so some 20 years earlier; and the more recent improvements to the property were made by Baygold’s subtenants, not by Baygold. Thus, Baygold could not take advantage of what the Court of Appeals deemed to be a “narrow” equitable doctrine.

N.B. Judge Smith filed a dissenting opinion, joined by Judge Grafeo, which sees the majority’s opinion as basically a distinction without a difference from the original J.N.A. decision. In Judge Smith’s opinion, the majority opinion made no effort to explain why a subtenant must forfeit all of its improvements because of the mistake of the tenant in failing to provide timely notice. For the entire opinion of Baygold Assocs., Inc. v. Congregation Yetev Lev of Monsey, Inc., click: http://www.nycourts.gov/ctapps/Decisions/2012/May12/66opn12.pdf

 At the BeinhakerMiller Law Firm, LLC, we specialize in commercial leasing for both landlords and tenants. Call us today at 908-272-2232 for appointment to see how we can help.

Drivers, Babysitters and Caregivers BEWARE!

New case law from the Appellate Division places everyone on notice that there are serious consequences for anyone who does not use a seatbelt for anyone under the age of 18. In the case of State v. Lenihan, the Court issued an opinion on August 13 that the failure of a driver to ensure that a minor passenger is using a seatbelt can be used to support a prosecution for the crime of knowingly failing to perform a duty imposed by law intended to protect public safety pursuant to N.J.S.A. 2C:40-18(b). In Lenihan, the defendant operated a motor vehicle with a 16-year old passenger in the front seat. Neither the defendant nor the passenger was wearing a seat belt and, as it was later discovered, both the driver and the passenger were under the influence of inhalants from a practice known as "huffing". Not surprisingly, the vehicle was involved in an accident and both she and her 16-year old passenger sustained major injuries, culminating in the unfortunate death of the passenger. The defendant was indicted and subsequently pled guilty to violation of N.J.S.A. 2C:40-18(b). The Appellate Division went through an exhaustive examination of the N.J.S.A. 39:3-76.2, also known as the Passenger Automobile Seat Belt Usage Act of 1984 (the seatbelt statute). That statute, according to the court, clearly and unambiguously makes the driver responsible for seeing to it that all passengers are properly using a vehicle’s seatbelts. Based upon this mandate, the Appellate Division held that the seatbelt law in New Jersey is broadly intended to protect not only individual people in motor vehicles but the public safety in a general sense. As such, the failure of the driver to ensure that her minor passenger was using the vehicle's seat belt properly and that passenger later sustains (at a minimum) significant bodily injury as a result of an accident can be prosecuted for violating N.J.S.A. 2C:40-18. Click on State v. Lenihan for the entire opinion. By: Gavin Handwerker, Esq. For more information or to reach Mr. Handwerker for other legal matters, email him at gih@beinlaw.com.