HKMP E-Letter

February 2022
Hardin Kundla McKeon & Poletto is settling into the New Year and we hope you are too. We are pleased to report three decisions dismissing claims against HKMP’s clients: Sunway Equity v. Suburban Propane with the New Jersey Appellate Division affirming dismissal of claims against an environmental consultant; Bianchi v. DeTrolio, with the Superior Court of New Jersey dismissing a complaint against the insurance carrier of an alleged tortfeasor; and Rodriguez v. Echevarria / Excalibur Title Agency LLC with the Supreme Court of New York dismissing claims against a title agency in a tax payment dispute. 
HKMP OBTAINS AFFIRMANCE OF DISMISSAL OF CLAIM
AGAINST ENVIRONMENTAL CONTRACTOR
HKMP recently secured a victory on behalf of an environmental contractor in the Appellate Division in the matter of Sunway Equity v. Suburban Propane, A-4360-19. HKMP’s client was a remediation company retained by a property owner in 1991 to remove three underground storage tanks and provide limited remediation near the area of the underground tanks. In 1998, the State issued a No-Further Action Letter. In 2000, plaintiffs entered into an agreement to purchase the property. Plaintiffs elected to purchase the property “as is” and did not complete any environmental testing. Plaintiffs chose to rely solely upon the limited documentation provided by the property owner which included several documents prepared by HKMP’s client. Approximately 16 years later, during construction of a new convenience store on the property, contamination was discovered. Plaintiffs filed suit alleging that HKMP’s client failed to adequately remediate the property when it removed the underground storage tanks. HKMP filed a motion on behalf of the contractor to dismiss the complaint due to the statute of limitations and the absence of any duty of care owed by the contractor to the plaintiffs. The motion judge granted the motion and plaintiffs appealed.
 
The Appellate Division affirmed the dismissal, concluding that the clock started to run on plaintiffs’ claim when they purchased the property in 2000 and failed to undertake their own due diligence. The Court found no basis to toll the statute of limitations. The Court went on to hold that HKMP’s client owed no duty to the plaintiffs, noting there was no fairness or public policy interest in imposing a duty of care on the contractor as "[a] buyer who purchases a property with a known history of contamination ‘as is’ and without any independent investigation, in reliance on a facially incomplete record of remediation and an NFA letter that applies only to a portion of a property, does so at his or her own risk.”

HKMP attorneys Patrick McCormick and Jenna Clemente represented the environmental contractor. 
HKMP OBTAINS DISMISSAL OF COMPLAINT AGAINST
INSURANCE CARRIER OF ALLEGED TORTFEASOR
HKMP recently obtained an Order dismissing a claim for declaratory judgment against an insurer of an alleged tortfeasor arising out of the sale of residential premises in a matter captioned Bianchi v. DeTrolio, MRS-L-2425-19. The plaintiffs purchased a home from the co-defendant seller who allegedly did not disclose a number of defects with the house. Discovery revealed that the defendant seller used one or more of his corporations to undertake renovations and improvements to the house prior to sale. Following the seller's deposition where he identified the name of the insurance carrier he thought insured one of his companies, the plaintiffs amended their complaint to name the liability insurer as a defendant. The plaintiffs sought declaratory relief that they were entitled to insurance coverage under the policies issued to the defendant seller's corporation during the relevant time frames.

The plaintiffs were not named insureds on any of the insurance policies at issue, so HKMP filed a motion to dismiss the declaratory judgment action on the basis that the plaintiffs lacked standing to bring a direct claim against the insurer of an alleged tortfeasor. HKMP relied on well-established precedent in New Jersey that a direct claim against an insurer is not permitted absent a judgment against the tortfeasor. HKMP also argued that federal case law similarly prohibited direct suits against insurance carriers prior to the plaintiff obtaining a judgment against an alleged tortfeasor.

The court agreed with the position asserted by HKMP and dismissed the declaratory judgment action against the insurance carrier with prejudice.

HKMP attorneys Patrick McCormick and Michael Cifelli represented the insurance carrier.
HKMP OBTAINS SUMMARY JUDGMENT DISMISSAL OF
 TITLE AGENT IN TAX PAYMENT DISPUTE
HKMP recently obtained an order granting summary judgment dismissing a multi-million dollar claim against its client, a title agent, for an alleged failure to make tax payments pursuant to an escrow agreement for commercial real estate closings in a matter entitled Rodriguez v. Echevarria/Excalibur Title Agency LLC, Index No. 63721/2018.
 
The plaintiffs were commercial entities and their principal, who negotiated an agreement to obtain loan proceeds during the course of bankruptcy proceedings. The written loan agreement stated that past-due taxes were to be paid from the proceeds of the loan, while tax obligations following the closing would remain the obligation of the borrowers. HKMP’s client served as the escrow agent, with the borrowers sending funds to the client for payment of tax obligations set forth in the written escrow agreement. The escrow agent made the specified payments, and returned remaining escrow funds to the borrowers as per instructions of the borrowers’ counsel.

The borrowers failed to make payments toward tax obligations after the closing. They re-entered bankruptcy, and the properties they owned were sold to the lender through a bankruptcy sale process. The borrowers and their principal sued the escrow agent. They alleged that the escrow agent had verbally agreed at the closing that the escrow agent would pay the borrowers’ tax obligations that came due after the closing, and that because this was not done, the borrowers defaulted on their loan and lost their properties.

The court determined that there was no genuine issue that the borrowers and the escrow agent mutually intended that the escrow proceeds were being used to pay only tax obligations due as of the closing date. Thus, the court granted summary judgment even though no deposition or expert discovery had taken place.

HKMP attorneys James McBarron and Arthur Povelones represented the title/escrow agent.
As always, if you have any questions regarding any of the cases in this E-Letter, or if HKMP can be of service to you, then please contact us at info@hkmpp.com or 973-912-5222.
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