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COLLIERS LANARD & AXILBUND v. LLOYDS OF LONDON

June 8, 2005.

COLLIERS LANARD & AXILBUND, Plaintiff,
v.
LLOYDS OF LONDON, Defendant.



The opinion of the court was delivered by: JOSEPH RODRIGUEZ, Senior District Judge

MEMORANDUM AND ORDER

After holding a one day bench trial, the Court requested counsel to submit proposed findings of fact/conclusions of law, or similar memoranda once counsel received the transcript of the proceedings. In order to arrive at a decision, the Court was required to review numerous documents and in-court testimony. As a result, the Court had to carefully consider the credibility of the witnesses, all of the evidence and legitimate inferences therefrom, and the arguments of counsel for the parties. Presently, before the court are the post-trial submissions of the parties. This Memorandum and Order shall constitute the Court's findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52(a). For the reasons that follow, judgment shall be entered against Lloyds of London in favor of Colliers Lanard & Axilbund in the total amount of $247,352.89, less the applicable deductibles under Professional Liability Insurance Policy No. A2000MP00001930, apportioned as follows: $112,062.09 for legal fees and 135,290.80 in settlement fees. FINDINGS OF FACT

These findings incorporate those facts stated in the Court's Summary Judgment Opinion dated March 10, 2004.

  1. West Jersey Medical and Professional Plaza, LLC, ("West Jersey") owner of West Jersey Medical and Professional Plaza located in Voorhees, New Jersey ("Plaza"), hired Plaintiff Colliers Lanard & Axilbund ("CL&A") to act as West Jersey's real estate leasing broker. (Trial Transcript at 20, 75).*fn1

  2. CL&A's primary duty was to market the Plaza to obtain tenants for the space. (TT at 20.)

  3. CL&A received a commission for each tenant it obtained, and, as an additional no-charge service CL&A drafted lease agreements between West Jersey and the tenants it secured on West Jersey's behalf. (TT at 51, 165-167.)

  4. At all relevant times, West Jersey dealt solely with Jason Wolf ("Wolf"), a salesman for CL&A, in drafting these lease agreements. (TT at 19-20.)

  5. Wolf has a Bachelor of Business Administration degree with a concentration in real estate and business law. (TT at 19.) Wolf had training in commercial real estate leases. (Id.)

  6. On December 7, 1998 and September 14, 1999, Wolf obtained Schaffer Medical Associates ("Dr. Schaffer") and Albert R. Franciscan, M.D. ("Dr. Franciscan") as tenants for the Plaza. (TT at 75.)

  7. CL&A prepared the leases on forms provided by West Jersey, but unknown to all parties, essential financial terms were entered incorrectly. (TT at 23.)

  8. Wolf prepared a "request sheet" that contained the improper terms, and these improper terms. Specifically, the lease term was intended to be a triple net lease, which meant that the tenant was responsible for paying the operating expenses, or $8.84 per square foot. The request sheet, however, listed the operating expense at $0.00. (TT at 21-22.)

  9. Wolf reviewed the leases after they were completed, but did not notice the mistakes. George Gordon ("Gordon"), vice-president and general counsel of CL&A, also reviewed the leases without noticing the mistakes. (TT at 22.)

  10. Steven Shapiro ("Shapiro"), the managing member of West Jersey, did not notice mistakes when he reviewed and signed the leases. (TT at 22-23.)

  11. At some point prior to July, 2000, Shapiro became aware that incorrect terms had been entered into the two leases and discussed the situation with Wolf. Wolf acknowledged the mistakes. (TT at 23-24.)

  12. On July 14, 2000, and after consulting with Gordon, Wolf drafted a letter to both tenants to inform them that a "mutual mistake" had been made in the drafting of the leases and to propose a possible remedy. (TT at 24.)

  13. On July 24, 2000 and August 25, 2000, Dr. Shafer and Dr. Franciscan, respectively, both denied that there was a mutual mistake and rejected the remedy proposed by CL&A. (TT at 24-25.)

  14. Upon reviewing Dr. Shafer's July 14, 2000 letter, Gordon stated, "I see [letters] that all the time, it's typically an invitation to negotiate." (TT at 53-54).

  15. Gordon stated that he "didn't calculate the numbers out [loss rents to West Jersey]" and that litigation was a rare occurrence. (TT at 53.) Gordon testified that, "Most landlords and tenants most always settle their disputes." (Id.)

  16. Gordon testified that he believed that the landlord [West Jersey] would be suing the tenants. (TT at 56.) Gordon testified that he "didn't think there was any claims against our company." (TT at 58.)

  17. On August 29, 2000, Gordon signed a "Real Estate Errors and Omissions Liability Application" for a professional liability insurance policy to be issued by Defendant Lloyds of London ("Lloyds"). It was a "claims made" policy with an effective date of November 4, 2000 and a retroactive date of November 4, 1992. (See Pl. Exh. 6.)

  18. The claims made application, Question 20 asked, "Is the applicant aware of any act, error, omission or other circumstance which might reasonably be expected to be the basis of a claim or suit against the applicant or anyone indicated in question 9 [CL&A staff] or 10 [CL&A's principal, partner, director and officers]?" Gordon marked the box for "No." (Pl. Exh. 6; TT at 43-44.) 19. Mr. Gordon, was CL&A's in house counsel since 1981, and has been a real estate attorney since 1973. (TT at 37-38.)

  20. Gordon testified that as of the time he answered "no" he did not expect a claim to be made by West Jersey. (TT at 43-44.)

  21. Wolf testified that he and Mr. Shapiro [West Jersey] were "clearly on one side . . . almost acting as a `team' to handle this issue." (TT at 25-26.) 22. Gordon testified that he did not believe that CL&A had legal ...


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