Justia Real Estate & Property Law Opinion Summaries

In 1995, Jazz Photo Corp., one of several commercial entities (collectively referred to as the Jazz Entities), entered into a factoring agreement with Rosenthal & Rosenthal, Inc. Jazz Photo sold Rosenthal its accounts receivable in return for cash. Five years later, Vanessa Benun, the daughter of Jack Benun, a principal of the Jazz Entities, guaranteed Jazz Photo's obligations under that agreement. At that time, Benun also executed a mortgage on real property she owned in Monmouth County as security for her personal guaranty. In March 2005, another of the Jazz Entities, Ribi Tech Products, LLC entered into a factoring agreement with Rosenthal. Benun personally guaranteed Ribi Tech's obligations to Rosenthal. In March 2007, Riker, Danzig, Scherer, Hyland & Perretti, L.L.P. (Riker), a law firm providing legal services to Jack Benun and the Jazz Entities, obtained a third mortgage from Benun on the same real property. This mortgage was executed in favor of Riker to secure Jack Benun's personal debt under a letter agreement. When Benun executed the mortgage, Jack Benun owed Riker $1,679,701.33 in unpaid legal fees, and the letter agreement reflected his obligations to Riker and Riker's promise to provide continuing legal representation. Riker's mortgage was recorded on April 13, 2007. Rosenthal received actual notice of the Riker mortgage in August 2007. Despite notice of the Riker mortgage, Rosenthal continued to make advances to the Jazz Entities that totaled millions of dollars. In September 2009, Jazz Products filed for bankruptcy. The Jazz Entities defaulted on their obligations to Rosenthal, owing Rosenthal close to $4 million. Benun, in turn, defaulted on her personal guaranty to secure the debt. After Riker recorded its mortgage on the Monmouth County property, it continued to perform legal services for Jack Benun, and his unpaid legal fees ballooned to over $3 million. Jack Benun, and the Jazz Entities defaulted on their obligation to Riker and Benun defaulted on her guaranty. Rosenthal filed a foreclosure complaint against Benun, her husband, and Riker. Benun and her husband did not respond, and Rosenthal requested that a default judgment be entered against them. Riker answered, disputing the priority of Rosenthal's mortgages. Later, both Rosenthal and Riker filed cross-motions for summary judgment regarding the priority of their respective mortgages. The trial court granted Rosenthal's motion, determining that the dragnet clauses in the Rosenthal mortgages were fully enforceable. With regard to priority, the trial court held that Riker's argument that its mortgage displaced the two Rosenthal mortgages was legally flawed because the firm accepted a mortgage on the property with knowledge of two prior mortgages, each securing an obligation of up to $1 million, and with knowledge of the anti-subordination clauses. The court concluded that there was no convincing justification for rewarding Riker a superior priority. Riker appealed, and the Appellate Division reversed. The Supreme Court affirmed the Appellate Division, finding that Rosenthal had advance notice of the law firm's intervening lien but nonetheless proceeded to make optional advances to the commercial entities. "Having done so, its mortgages securing those optional future advances were subordinated to the law firm's intervening lien." View "Rosenthal & Rosenthal, Inc. v. Benun" on Justia Law

In this appeal, the issue presented for the Supreme Court's review centered on the standard governing revocation of direct access from a state highway to property used for commercial purposes pursuant to the State Highway Access Management Act (the Act), N.J.S.A. 27:7-89 to -98, and the State Highway Access Management Code (Access Code), N.J.A.C. 16:47-3.5(e)(11) and -3.8(k)(2). Arielle Realty, L.L.C. was the owner of a three-tenant commercial property located on the northbound side of Route 166 in Toms River. The DOT informed Arielle that access to its property from Route 166 would be eliminated because the DOT intended to construct an additional northbound travel lane. The DOT also advised Arielle that it intended to construct a median to separate northbound and southbound traffic on Route 166. This design would eliminate the eight parking spaces in the front of the building. The plan would also prevent direct access to Arielle s property for motorists traveling south on Route 166 because a motorist would no longer be able to make a left-hand turn onto West Gateway. According to the DOT design plan, a southbound motorist on Route 166, who intends to access Arielle s property, would be required to drive past the property, turn right onto a local road, turn right onto another local road, turn left onto Route 166 at an intersection controlled by a traffic signal, and turn right onto West Gateway. This alternative route traversed approximately three-quarters of a mile. In affirming the DOT Commissioner's decision, the Appellate Division determined that the DOT met its burden of proof that the alternative access plan was not only reasonable but also provided a convenient, direct, and well-marked means to enter the business and to return to the state road. Accordingly, the Appellate Division determined that the property owner failed to overcome the presumption of validity accorded to the DOT design. The Supreme Court affirmed: "the Commissioner's analysis is ultimately aimed at selecting the plan that will best achieve the overarching goal of providing reasonable access to the state's system of highways rather than maximizing the business interests of a particular property owner." View "In re Revocation of the Access of Block #613" on Justia Law