BUSINESS LAWSUIT BLOG
May a Plaintiff Amend His Claim After Identifying the Incorrect Defendant?
In a world filled with partnerships, subsidiaries, and joint ownerships, identifying a defendant is not as easy as it sounds. However, if a plaintiff fails to name the correct defendant, he may risk dismissal. The question becomes what does a plaintiff need to do to ensure that his claim is not dismissed? Is it reasonable to rely on a party’s representation that they are the defendant? What will be the result if a party deceives another into believing they are defendant, when they are not?
In Dashi Slatina v. D. Construction Corp. and Armored Inc., A-0851-10T2, 2012 WL 3140233 (N. J. Super. Ct., App. Div. Aug. 3, 2012), the plaintiff, Dashi Slatina, suffered serious injuries at work. He was erecting a masonry wall when it toppled on him. He filed suit against Newport Associate Development Company (“Newport”) under the belief that Newport was the owner and/or general contractor. However, the trial court dismissed the complaint with prejudice against the plaintiff because Newport was not the actual owner and/or general contractor.
Thereafter, the plaintiff filed a motion to amend the complaint in order to include the actual owner and general contractor. The basis for the motion was that the plaintiff had been misled into believing that it had named the correct defendant. For example,
Newport initially admitted it owned the property where the plaintiff was injured.
Newport’s interrogatory answers and its counsel’s certification did not expressly deny ownership, nor did it identify the actual owner and or general contractor (to which Newport was actually linked to by common ownership).
The insurance policies that named the actual owner also included Newport as a named insured after the accident occurred.
The trial court denied the plaintiff’s motion. In its holding, the court explained: “that absent a pre-existing complaint, a plaintiff has nothing to amend”. Therefore, the very idea of amending a complaint that had just been dismissed was illogical. In its holding, the trial court mentioned that the only way to restore (and essentially amend) the complaint would be upon reconsideration, or if judgment were vacated after an appeal.
On appeal, the Superior Court considered whether the trial court abused its discretion when it denied the motion for leave to amend. In reversing the trial court’s decision and holding for the plaintiff, the Superior Court explained that although the trial court applied the correct standard for determining reconsideration, it did not construe the standard as liberally as the circumstances warranted. Rule 4:50-1 states,
On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party’s legal representative from a final judgment or order for the following reasons:
(a) mistake, inadvertence, surprise, or excusable neglect;
(b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49;
(c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void;
(e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or
(f) any other reason justifying relief from the operation of the judgment or order.
The Superior Court held that although the circumstances of this case do not fall into subsection (a) through (e) of Rule 4:50 -1, the trial court had the authority to grant the plaintiff’s leave to amend under the catchall, subsection (f). That subsection allowed the trial court to consider whether it was “in the interest of justice” to restore the complaint for the purpose of enabling the plaintiff to add additional parties. Thus, the Court explained that under subsection (f), the trial court had sufficient discretion to grant relief to address exceptional circumstances.
The Court found exceptional circumstances to be present in that case because of the great injustice it would create if it held otherwise. The Court explained that Newport initially admitted to owning the property and throughout its interrogatories never expressly stated that they did not. In fact, Newport was not only named as an insured on the post-accident insurance policy, but it also turned out to be a related entity to the “true owners.”
The Court also recognized that the policy was one promoting decisions on the merits. To hold otherwise would result in the “true owners” being able to avoid responding to the merits of the lawsuit. This would be due to the delayed disclosure by Newport, a related entity. The Court also took into consideration the fact that Newport would suffer no prejudice because the complaint would be restored solely for the purpose of allowing the new amendment and would not subject Newport to potential liability. Finally, the Court noted that plaintiff acted promptly to restore the complaint after the judgment was entered. All of these factors favored allowing the plaintiff to restore it to the active docket.
The lesson of this case is that a party should always thoroughly investigate whether or not it is bringing suit against the correct party. Nevertheless, in the event that the wrong party is named, under the right circumstances, there may be a remedy.
Comments/Questions: gdn@gdnlaw.com
© 2024 Nissenbaum Law Group, LLC
Can a Tenant Recover Attorney’s Fees From a Landlord if the Lease Does Not Provide for That Right?
Landlords are generally the parties that prepare the lease agreements into which their tenants enter. This unequal bargaining power typically allows landlords to insert language that requires tenants to pay the landlord’s attorney’s fees for any legal claims that arise out of their agreement, but does not require the landlord to pay the tenant’s attorneys fees for breach of the lease terms by the landlord. New York law requires there to be either a contractual or statutory basis for a prevailing party to collect attorney’s fees. But if there is no express language in a lease agreement allowing for tenants to demand attorney’s fees from landlords, does that mean tenants will not able to collect them?
This question was at issue in a New York case. Casamento v. Juaregui. Casamento v. Juaregui, 929 N.Y.S.2d 286 (2d. Dept. 2011). In the case, Luis Juaregui (“the tenant”) entered into a lease agreement for a Queens apartment owned by Dominic Casamento (“the landlord”). Paragraph 7 of the agreement required the tenant to receive the prior written consent of the landlord before making any alterations to his apartment. Paragraph 10 held the tenant liable for any damages or expenses incurred by the landlord relating to any neglectful act of the tenant. Additionally, paragraph 16 specifically referred to attorneys’ fees, stating that “[a]ny rent received by Landlord for the re-renting shall be used first to pay Landlord’s expenses” and including “reasonable legal fees” within the definition of “expenses.” Id. at 288.
In March 2007, the landlord alleged that the tenant had violated paragraphs 7 and 10 by making alterations to certain rooms without the landlord’s consent and also claimed the tenant was responsible, per the terms of the lease, for the landlord’s legal fees. He served a notice of termination and commenced a holdover proceeding.
The question for the court in Casamento was whether the lease at issue was covered by Real Property Law (“RPL”) §234. That law governs residential leases and addresses the imbalance resulting from the unequal bargaining power between landlords and tenants. It establishes an implied covenant that addresses when a tenant will be able to recover attorneys’ fees incurred in the successful defense of a summary proceeding to recover possession of a leasehold. If the court determines that the lease is covered by §234, the tenant should be able to collect attorney’s fees from the landlord.
Section 234 states that courts shall construe a lease to include this implied covenant whenever:
1) a lease of residential property shall provide that in any action or summary proceeding the landlord may recover attorneys’ fees and/or expenses incurred as the result of the failure of a tenant to perform any covenant or agreement contained in such lease, or
2) that amounts paid by the landlord therefore shall be paid by the tenant as additional rent
See RPL §234.
The Casamento Court determined that the outcome of any claim pursuant to §234 depends upon an analysis of the specific language of the lease provision at issue. In that case, it held that “Paragraph 16, thus, literally fits within the language of the first prong of section 234, since it does ‘provide that in any action or summary proceeding the landlord may recover attorneys’ fees and/or expenses incurred as the result of a failure of the tenant to perform any covenant or agreement contained in such lease.’” 929 N.Y.S.2d, at 292-93. Additionally, the court found that construing the covenant in favor of the tenant is “consistent with the Legislature’s remedial purpose of effecting mutuality in landlord-tenant litigation and helping to deter frivolous and harassing litigation by landlords who wish to evict tenants.” The court said that RPL §234 helps avoid a situation where a landlord would have nothing to lose by instituting an eviction proceeding with a frivolous factual basis where there was prospect of renting for a higher amount and the lease included a provision enabling the landlord to recover attorney’s fees. Because the Court determined that RPL §234 applied, it held that tenants can recover attorney’s fees from landlords; however, it stressed that its holding was based on the complete lease provision at issue.
Commercial Real Estate Disputes
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© 2024 Nissenbaum Law Group, LLC
Does the New Jersey Declaratory Judgments Act Grant Rights to a Party Affected by a Municipal Ordinance?
May an individual whose rights have been affected by a municipal ordinance seek a declaratory judgment? The Supreme Court of New Jersey has construed the Declaratory Judgments Act in a way that allows such individuals to seek declaratory action. Bell v. Stafford Tp., 110 N.J. 384, 390 (1988). N.J.S.A. 2A:16-53.
In that case, the Township of Stafford, N.J. (“Stafford”) enacted an ordinance that declared that “[b]illboards, signboards, and off-premises advertising signs and devices are prohibited within any zoning district of the Township.” Stafford Ordinance No. 84-35. The plaintiff, Wesley Bell (“Bell”), owned three billboards affected by the ordinance. The trial court found the ordinance to be constitutional, but the Appellate Division reversed. Stafford appealed.
In part of his original complaint, Bell sought a declaratory judgment that the ordinance was unconstitutional on its face. In response, Stafford contended that the Appellate Division erred and should have refrained from making any determination of unconstitutionality.
The Appellate Court found that Stafford’s response invoked the doctrine of “strict necessity”, which holds that courts will adjudicate the constitutionality of legislation only if a constitutional determination is absolutely necessary to resolve a controversy between the parties. Rescue Army v. Municipal Court of Los Angeles, 331 U.S. 549 (1947). This was also applied in New Jersey in Donadio v. Cummingham¸ where it was held that “a court should not reach and determine a constitutional issue unless absolutely imperative in the disposition of litigation.” Donadio v. Cummingham¸ 58 N.J. 309, 325-26 (1971).
The Court also found that Bell had standing to press his constitutional challenge under the Declaratory Judgments Act. The Act “expressly confers standing on a person whose legal rights have been affected by a municipal ordinance.” Bell, 110 N.J. at 390. The Court held that the Act is not to be used to secure court decisions that are merely advisory. Rather, the Act affords “expeditious relief from uncertainty with respect to rights when claims are in genuine conflict.” Id. at 391. The Court concluded that the issue of the constitutionality of the ordinance was properly presented, since Bell had standing to raise the constitutional issue in a context that warranted a decision by the Appellate Division, so as to fairly resolve the legal controversy caused by the application of Stafford’s ordinance. It subsequently affirmed the Appellate Division’s ruling.
Comments/Questions: gdn@gdnlaw.com
© 2024 Nissenbaum Law Group, LLC
Does a New York Contractor Need a License to Sue for Breach of Contract?
New York Contractors who perform work without the requisite license could find themselves lacking the necessary tools to bring legal action against residence owners they contract to do business with.
In a New York case, the parties entered into a written contract that required the plaintiff to renovate the defendant’s residence. This included, among other tasks, building a second-story addition to the master bedroom. Enko Const. Corp. v. Aronshtein, 2011 WL 5222881 (N.Y.A.D. 2 Dept.). The project became larger than originally planned, resulting in the demolition of most of the original structure of the defendant’s residence. After the plaintiff had performed extensive work but before he had completed the project, the defendant terminated his services. The plaintiff sued in New York Supreme Court to recover damages for breach of contract and in quantum meruit (the measure of value) for services performed. The defendant moved to dismiss the complaint, claiming the plaintiff was not a licensed home improvement contractor. The Court granted the defendant’s motion, and the plaintiff appealed.
New York law provides that “no person shall own, maintain, operate, engage in or transact a home improvement business…unless he [or she] is licensed therefore.” Nassau County Administrative Code, § 21–11.2 CPLR 3015(e) states that a complaint that seeks to recover damages for breach of a home improvement contract or to recover quantum meruit for home improvement services is subject to dismissal if it does not allege compliance with the licensing requirement. “An unlicensed contractor may neither enforce a home improvement contract against an owner nor seek recovery in quantum meruit.” J.M. Bldrs. & Assoc., Inc. v. Linder¸ 67 A.D.3d 738, 741 (2d Dept 2009).
The plaintiff conceded that it did not possess the requisite license. Instead, it argued that it did not need a license, due to a statutory exemption to the requirement that applies to the construction of new homes. However, the Appellate Division of the Second Department of the Supreme Court of New York concluded that “[t]he statutory exemption for ‘construction of a new home’ is limited to the creation of a structure, where none previously existed…Even if a dwelling is stripped to the frame and rebuilt, the work constitutes the renovation of an existing home, not the erection of a new one.” J.M. Bldrs. at 740. Because it was undisputed that there was an existing home on the property when the plaintiff began its work, the Court held that the plaintiff was engaged in “home improvement” and thus was required to have the requisite license for such work. Additionally, the Court held that the defendant’s home fell within the Code’s definition of buildings “used as a private residence or dwelling place” even though the homeowners moved out temporarily while the plaintiff performed the renovations.
The Court’s decision highlights the importance that contractors engaged in “home improvement” in New York ensure that they have the requisite license to perform their work before taking on such tasks. Failure to do so might leave them without legal grounds to recover from parties who terminate their services while a project is ongoing.
Comments/Questions: gdn@gdnlaw.com
© 2024 Nissenbaum Law Group, LLC
The Increasing Pace of Digital Change: Why Does Our Culture Always Seem So Blindsided?
However, there is another perspective which most of us who write about these matters have not addressed: why has all of this so blindsided our culture at large? That is also a question worth asking.
Let’s start with the fact that many of my law firm’s clients in the industry, e.g. developers, licensors, IT professionals, have been speaking about this. But why have so many of our political, business and media leaders not been listening? The science fiction writer William Gibson famously said “the future is already here—it’s just not very evenly distributed.” Perhaps we might now add the corollary that the future has arrived, but most are not aware of it.
Articles sounding the alarm about the unintended consequences of such advances as the advent of augmented reality tend to promote knee jerk reactions among the leaders of our cultural institutions. However, that only provides the appearance of addressing the issues—the proverbial “debate by bumper sticker”—but it ignores the complexity of the underlying social impact of the increasing pace of change in our digital world. Setting aside the often-discussed legal challenges engendered by augmented reality apps such as Pokemon Go, here are a few examples of other some digital quandaries that confront us:
- Are the IT best practices that are being implemented to secure the digital information of businesses in America so inadequate that a complete reordering of those protocols nationwide is necessary? In other words, is it possible that our best practices regarding security are not really the best practices available?
- While it is true that there have been almost no deaths nor injury resulting from prototype driverless cars, it is likely that when they are introduced on a larger scale, it will result in at least some such tragedies. As discussed in a recent Newsweek article, will we be more comfortable accepting the high number of deaths caused in whole or in part by human fallibility (approximately 33,000 annually) than we are respecting an even infinitesimally small number of deaths caused by malfunctioning computers?
- If a MOOC (Massive Open Online Course) is relatively free and the equivalent coursework while matriculated at an institution of higher learning is in the $40,000 – $60,000 range, is the difference in cost proportional to the benefit of actually attending that school?
- How can digital technology improve speed and access to our court system, an institution whose rules and traditions are still largely unchanged from the period before the computer age? Setting aside the admitted incremental improvements such as e-filing and internet access in the courtroom, why can’t we go beyond that so that Americans can have access to a digital library of all litigation documents and view streaming video of all hearings and trials in our court system? True, there would need to be certain privacy protections put in place; the access would need reasonable limitations. However, most attorneys would agree that the process of opening up our court system to the public has generally not kept pace with the improvements in our digital world.
The surprised, and to some extent panicked, debate over the advent of augmented reality apps highlights that our cultural institutions are largely incapable of anticipating the increasing pace of technological advancement. Something has to be done to improve the capacity of those sometimes sclerotic cultural institutions to adapt more quickly.
Perhaps one solution is to redouble our efforts to build bridges with receptive politicians, journalists and business leaders in order to educate them about the otherwise obscure cyber-world. I fully acknowledge that many of them are simply not willing (nor sometimes capable) of considering a nuanced treatment of these complicated issues. Nevertheless, our culture needs to find a way to be more open to debating the role of digital technology without sensationalizing it, nor dumbing it down. The more this debate centers on facts rather than fear—a real assessment of what is likely to happen, rather than dwelling on an attenuated prediction of the worst (or best) that might occur—the more productive the discussion will be. Real communication about real issues in an ongoing dialogue is the key. Your thoughts?
Does The New Jersey Civil Rights Act Authorize A Private Cause of Action Against A Person Who Is Not Acting Under “Color Of Law”?
What started as a local town hall debate over a liquor license renewal ended as a state-wide lesson in grammar from the New Jersey Supreme Court.
New Jersey’s highest court ruled last month that the phrase “person acting under color of law” found in N.J.S.A. 10:6-2(c) is not modified or limited by the phrase’s surrounding grammar. Therefore, the phrase applies to both deprivation and interference claims brought by private party plaintiffs. Perez v. Zagami, LLC, Supreme Court of New Jersey (DDS No. 46-1-3947) (Decided May 21, 2014).
Zagami, LLC applied to the Borough of Glassboro for a liquor license renewal. Luis Perez, a Borough resident, opposed the renewal and testified at the renewal hearing. Zagami later used Perez’s testimonial statements as the basis for a defamation suit against Perez. The Appellate Division of the Superior Court of New Jersey ultimately dismissed the defamation case, ruling that Perez’s statements were made during a quasi-judicial proceeding and were entitled to absolute immunity.
Perez then sued Zagami for malicious use of process. The Trial Court granted Zagami’s motion to dismiss and denied Perez’s attempts to amend his complaint to include a Civil Rights Act (CRA) claim. The Trial Court concluded that the CRA only authorizes private suits against persons acting under “color of law.”
The Appellate Division of the Superior Court of New Jersey disagreed with the lower Trial Court and found that Zagami’s defamation suit was largely transparent. The Appellate Division allowed Perez to amend his complaint and include a CRA cause of action against Zagami for a “deprivation” of his civil rights. Citing N.J.S.A. 10:6-2(c), which authorizes a private right of action for deprivations of or interference with protected civil rights by a person acting under color of law, the Appellate Division concluded that the “color of law” language applied only to the clause governing “interference” claims.
The Supreme Court of New Jersey disagreed with both lower courts by holding in Perez that the lack of a comma preceding the phrase “by a person acting under color of law” does not modify the phrase. Instead, the phrase applies to both deprivation and interference claims brought by private party plaintiffs. The Court explained that such an interpretation of the phrase was in alignment with both legislative intent and the federal cause of action governed by § 1983.
© 2014 Nissenbaum Law Group, LLC
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