Actual Copies of the Letter

Dear Tom:

I am writing as a follow up to my meeting of January 28, 1997 with you, Carmen E. Mendiola, Esq., Louann Wonski, Esq. of Ms. Mendiola's office, and the entire Township Council. Councilwoman Joan Pappen, who is recovering from recent surgery, participated in the meeting via telephone.

Mr. Thomas E. Atkins
January 31, 1997
Page 2

The meeting, attended by all five (5) members of Council, dealt solely with the issue of whether the Township Attorney, Donald T. DiFrancesco, Esq., should continue as Township Attorney in light of the Certification he filed with the Court in support of the Order to Show Cause filed on behalf of 2435 Plainfield Avenue, Inc., Difrancesco Development Company, Inc., Market One, Inc., Susan Dirancesco and the Estate of Clara DiFrancesco to reopen the Final In Rem Tax Foreclosure Judgment.

The second part of the meeting took place without Mayor Irene Schmidt and Councilman William McClintock present. The merits of the case and the application were discussed. I had previously ruled that Mayor Schmidt and Councilman McClintock have a conflict regarding the matter and therefore may not participate in, or discuss in any manner, the subject property.

On or about May 31, 1995, I was appointed Special Counsel to the Township Council of the Township of Scotch Plains with respect to the subject property, as well as Lots 9, 10, and 11 in Block 4303. I was specifically appointed because of the interest of various members of the DiFrancesco family in the property.

After I reviewed the files with Lawrence A. Woodruff, Es1., the Township Planning Board Attorney, I contacted the owners of the four

Mr. Thomas E. Atkins
January 31, 1997
Page 3

(4) lots, advised them of my representation and directed that all submissions and information regarding the property be directed to the Township Council through me. Part of my initial letter directed the owners to refrain from contacting the Township Attorney. Carmen E. Mendiola, Esq., whom I was advised was handling tax foreclosure matters for the Township, was provided with a copy of my letter.

It is apparent that I was retained because the Township Attorney was clearly and unequivocally not permitted to deal with the property which was owned by entities involving various members of his family.

On June 19, 1995, Lawrence Woodruff and I met with Donald DiFrancesco. To avoid any misunderstanding and any appearance of conflict or impropriety in Mr. DiFrancesco's part, I advised that all communications concerning the property from anyone with an interest therein were to be submitted through me. I further advised that Mr. DiFrancesco and Councilwoman (now Mayor) Schmidt were to refrain from any involvement with the properties. (Mayor Schmidt is, and has been, Mr. DiFrancesco's legislative aide). I further advised that Mauro Checchio, a former Mayor of Scotch Plains, Mr. DiFrancesco's uncle and mortgage holder, should have no communications regarding the property with anyone other than me. I further advised Mr. DiFrancesco that, in my opinion, the property owners should immediately pay the outstanding taxes on the properties. Finally,

Mr. Thomas E. Atkins
January 31, 1997
Page 4

I advised him that any proposal for the properties should be submitted through me to the proper municipal bodies for appropriate review.

Since that time, I have reviewed a title search which revealed that George W. Scott held a mortgage on the property. Mr. Scott secured a judgment against Donald T. DiFrancesco, apparently on the underlying note, for $553,359.56 on January 26, 1995. Mr. DiFrancesco has advised me (and, I understand, the Council) that he borrowed money to satisfy the judgment in April 1996. Council and I have been further advised that K. Hovnanian companies of North Jersey (the purchaser under contract of the subject property) has purchased the lien from Mr. Dirancesco and has therefore paid him most of the money that he paid to Mr. Scott. Accordingly, the judgment of foreclosure has a substantial financial impact of Mr. DiFrancesco.

On August 30, 1996, and In Rem Tax Foreclosure Judgment was entered in favor of the Township of Scotch Plains on the subject property. The judgment was recorded with the Register of Union County on October 16, 1996 vesting title in and to the property to the Township of Scotch Plains. I understand that the outstanding taxes approximate $85,000 and the value of the property is well in excess of $500,000.

Mr. Thomas E. Atkins
January 31, 1997
Page 5

On January 16, 1997, Robert H. Kraus, Esq., on behalf of the above-named defendants, filed an Order to Show Cause seeking to overturn the aforesaid in Rem Tax Foreclosure Judgment. In support of the Order to Show Cause, Mr. Kraus filed the Certifications of Ernest DiFrancesco, Donald T. DiFrancesco and himself. The defendants raise three (3) issues in their attempt to overturn the judgment. They are as follows:

1. Has the Township of Scotch Plains violated its duty of good faith and fair dealing with respect to the defendants and K. Hovnanian Companies of North Jersey, Inc.?
2. Has the Township violated the due process rights of the Estate of Clara DiFrancesco by failing to effect proper notice of the action?
3. Has the Township violated the due process rights of all of the defendants by effecting service out of time?

The Rules of Professional Conduct governing attorneys provides in part as follows:

Mr. DiFrancesco, in his Certification, has questioned his client's good faith and fair dealing. This, in my opinion, is a per se conflict necessitating his resignation. Simply, in my opinion, there is both an actual conflict as well as an egregious appearance

Mr. Thomas E. Atkins
January 31, 1997
Page 9

of impropriety if Mr. DiFrancesco continues as Township Attorney. The citizens of the Township of Scotch Plains are entitled to undivided loyalty by all of their elected and appointed officials. The elected and appointed officials can serve only one master - the citizens of the Township. It is unfair to the citizens and to Mr. DiFrancesco to create divided loyalties and to in any way give the appearance of impropriety or undue influence.

Mayor Schmidt has requested that Council secure a second opinion regarding this issue. As I told her, this is certainly fine with me. I do understand that Council will meet for the purpose of passing a resolution to retain an attorney to research this issue on Tuesday, February 4, 1997. I am confident that Council will disseminate all of the information on this most troublesome piece of property to the attorney it retains for this opinion.

Kindly distribute a copy of this letter to Mayor Schmidt and the other four (4) members of the Council.

Thank you.

Very truly yours,
(signed) Lewis M. Markowitz

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