1. Tenant and landlord have lease contract in effect
2. Landlord is about to go through foreclosure and is trying to modify his mortgage
3. Bank doesn’t want landlord to modify because the property is more valuable to them.
4. Bank sends someone to tell the tenants not to pay rent because lanmdlord is losing house.
5. As a result, the tenant stops paying and the landlord no longer makes enough money to qualify for a HAMP mortgage modification.

It seems that there was an existing contract between the landlord and tenant….the bank must have known of this contract…the bank willingly intervened between the contract….and the bank’s intervention caused the tenant to stop paying, causing direct damage to the landlord.

Is there any other information you need about the case?

Thanks, Rob

Here’s a question I’ve been struggling with. I’ve recently come across a case where a landlord is working on a HAMP loan modification (HAMP is a program Obama created to help homeowners modify their mortgage.) The bank, however, does not want the landlord to qualify for a modification. One of the requirements to qualify for a modification is proof of a specific amount of income. The landlord needs the tenants to pay rent in order to earn the satisfactory income requirements. The bank sent someone to the landlords house to speak with the tenants and tell them that the landlord will be losing his house and they therefore do not need to pay rent. This caused the tenants not to pay rent….(which I’m wondering whether that qualifies for tortious interference) which ultimately will result in the landlord losing his home, since he no longer earns the required amount of income.

Is this tortious interference?

-Rob

Another teacher filled a complaint against me that just might cost me my job. The complaint was a lie. There are no witnesses to what she said happened because it never happened. If this costs me my job, can I sue her for tortious interference with contract ?

If a transfer of lease is covered in the lease, and all the requirements are met to allow the transfer, how can a landlord effectively add more requirements (i.e. landlord must know, like and want to do business with new owner)? Wouldn’t that have to be included in the lease? If not, what is the point of putting anything into the lease? Do the landlord’s whims trump a written contract?

BTW, the lease states that consent may not be reasonably withheld if the assignee meets the criteria stated in the lease, which he does (and landlord agreed they were met, orally). For what it’s worth, landlord insists that he must meet with buyer (to discuss and possibly amend terms of the 5 year tenant option at end of 10 year lease). I am in NYC. So is this a breach of contract, or interference?

I realize that this is just a question on a blog, and not a formal review of the facts. Like I said, this is for an attorney, and as my current attorney is only handling the business transfer, I am meeting tomorrow with a tenant/landlord attorney. I’m just very curious and a touch impatient. Thank you again for your time.

Stated differently, landlord may know, like and want to do business with existing tenant A, but has no interest in doing business with new tenant, B. Why should A be permitted to dictate to the landlord with whom he must do business?

Assuming your question is not strictly a hypothetical one, I suggest you have an attorney review the lease and the law in your jurisdiction.

A district court recently reaffirmed a $34 million jury verdict against three subsidiaries of American International Group Inc. ( “AIG”), finding that a claim for fraudulent inducement brought by AXA Versicherung AG (“AXA”), as successor in interest to Albingia Versicherungs AG (“Albingia”), was not subject to the arbitration clauses found in the two reinsurance contracts at issue. This decision is further confirmation that policyholders may be entitled to litigate extra-contractual claims in court despite the presence of an arbitration provision in the insurance policy at issue.

Here, AXA brought suit against AIG alleging that AIG fraudulently induced Albingia, through both affirmative misrepresentations and material nondisclosures, to enter into two reinsurance agreements. The suit proceeded to trial and a jury rendered a verdict in AXA’s favor for $34, 373, 170, including $5,750,000 in punitive damages. AIG appealed the verdict to the U.S. Court of Appeals for the Second Circuit, arguing that the allegations of misrepresentation and nondisclosure sounded in contract and, therefore, should have been arbitrated pursuant to the arbitration clauses contained in the reinsurance contracts, which required that “[a]ll disputes or differences arising out of the interpretation of this Agreement shall be submitted to the decision of two arbitrators . . . .”

The Second Circuit remanded for further proceedings regarding whether the fraudulent inducement claim should have been sent to arbitration pursuant to the contractual arbitration clauses and, if so, whether AIG waived its right to arbitration. Upon remand, the U.S. District Court for the Southern District of New York held that the claims for fraudulent inducement were not arbitrable. First, the Court held that AXA’s fraudulent inducement claim sounded in fraud, rending it outside the scope of the agreements’ arbitration clauses. Second, the Court independently determined that even if the fraudulent inducement claim could be viewed as sounding in contract, it still would fall outside of the scope of the arbitration clauses because “it does not ‘arise[e] out of the interpretation’ of the contracts.” Finally, the Court determined that, even if the claim had been arbitrable, AIG waived its right to arbitration by sitting on its arbitral rights in a “strategic gambit” meant to provide it a second bite at the apple in the event that it lost in court.

In the end, the Court confirmed that extra-contractual claims, such as a claim for fraudulent inducement, may fall outside the scope of the arbitration clauses often found in contracts of insurance. Moreover, as set forth by the U.S. Supreme Court in the recent Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Inc. decision, the Court affirmed that “parties may agree to limit the issues they choose to arbitrate” and a party may not be compelled to arbitrate that to which it has not agreed to arbitrate. Stolt-Nielsen, 559 U.S. __ (2010), slip op. at 17-23. Therefore, if a policyholder desires to litigate an extra-contractual claim against its insurer in court, be it a claim for fraudulent inducement or one for bad faith, careful attention should be paid to the actual language of the policy’s arbitration clause and the nature of the extra-contractual allegations levied against the insurer.

Reposted from Howrey LLP’s Insurance Coverage Monitor blog which features discussion and analysis from leading policyholder insurance attorneys on news and developments relating to insurance recovery law.