New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

In another case revolving around property rights and condemnation, the New York Court of Appeals held last week that conservation restrictions on the use of private property do not constitute regulatory takings entitling the owner to compensation, as long as the owner does not lose the right to control access by the general public.

The case arose in Mendon, N.Y., where Janet and Paul Smith own a 9.7-acre lot along Honeoye Creek. Portions of the land are considered environmentally sensitive and are included in four locally designated environmental protection overlay districts, where the use of property is severely limited.

The Mendon Planning Board granted site plan approval for a single-family residence on part of the property outside the protected districts. However, it conditioned the approval on the Smiths' placing a new restriction on the protected parts.

The town would have had heightened police powers permitting the municipality to enter the property in case of a violation.

That restriction was designed, according to the planning board, to "put subsequent buyers on notice that the property contains restraints which may limit development within these environmentally sensitive areas."

The Smiths refused and sued, accusing the town of orchestrating an unconstitutional taking of their property in violation of the Fifth Amendment.

The majority decision in this case called the property right at issue "trifling" while one of the two dissents said the majority was "simply wrong". The Smith's attorney has indicated that he will seek certiorari at the United States Supreme Court.

Currently before the U.S. Supreme Court is another property rights case, Kelo v. City of New London.

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Beginning Jan. 3, oral arguments held before New Jersey's highest court can be viewed online via streaming video, today announced Stephen Townsend, clerk of the New Jersey Supreme Court. Anyone with Internet access can observe the court in action, he added.

Anyone who wants to watch the arguments can log on to njcourtsonline.com and link to the Supreme Court arguments. The arguments will be shown in real time and then archived on the Judiciary's Web site for 30 days.

You can read the New Jersey Judiciary's press release here.

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A. Christopher Florio, Co-Chair of the Firm's Community Associations Group, has been appointed to the Community Association Institute's (CAI) Board of Directors. The CAI's board makes policy for the non-profit organization which represents the interests of hundreds of community associations throughout the state of New Jersey. CAI is very politically active in both its support of and opposition to legislation affecting community associations in New Jersey. Mr. Florio also serves on the CAI's political action committee.

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In an unreported decision on December 16, 2004, the Appellate Division in Hancock, et al. v. Borough of Oaklyn, et al., A-2021-03T3, dismissed an employer's application for counsel fees after successfully dismissing an employees' Conscientious Employee Protection Act ("CEPA") suit even though the lower court determined that the litigation "was without basis and law or in fact." The CEPA statute allows for the successful litigant to make an application for counsel fees. Typically, this provision is relied upon by successful plaintiffs.

The Appellate Division, however, noted that a party's failure to prevail in a lawsuit does not render the suit one in which there is no basis in law or in fact. The Appellate Division cited earlier authority which defined frivolous as "a claim will be deemed frivolous or groundless when no rational argument can be advanced in its support, when it is not supported by any credible evidence, when a reasonable person could not have expected its success, or when it is completely untenable. The Appellate Division stressed that "when the plaintiff's conduct bespeaks an honest attempt to press a perceived, though ill-founded and perhaps misguided, claim, he or she should not be found to have acted in bad faith."

Here, the Appellate Division's reversal of the grant of counsel fees for this successful defendant/employer highlights the difficulty employers have in recouping litigation costs even when defending suits with little merit. It is unclear from the decision with the employer had the proper policies in place to handle whistleblower-type complaints by employees. Stark & Stark attorneys can help your Company to develop policies that satisfy CEPA's statutory requirements.

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The Third Circuit ruled that Pennsylvania employment law, not New Jersey's, governs in diversity action brought in New Jersey. The plaintiff was employed in Pennsylvania, even though she performed some work in New Jersey, lived in New Jersey, and claimed wrongful discharge based on whistle-blowing about alleged fraud committed by a subcontractor in New Jersey.

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In a precedential decision, the Third Circuit panel held that the District Court had jurisdiction, pursuant to 28 U.S.C. sec. 1331 and 42 U.S.C. sec. 11603(a), over the plaintiff-mother's petition under the Hague Convention on the Civil Aspects of Child Abduction for the return to Canada of her daughter, who had been taken by the defendant-father to the U.S. without plaintiff's consent.

After an expedited hearing, the District Court determined that the child's place of habitual residence at the time of her removal was Canada, and ordered that she be returned; the court also granted plaintiff's request for attorney's fees and costs.

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Aaron Buser, a member of the Firm's Securities Compliance & Arbitration Group, was interviewed in the December 20, 2004 edition of Investment News regarding the emerging trend by broker-dealers using U.S. Courts to vacate securities arbitration decisions.

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David Byrne, Co-Chair of the Firm's Community Associations Group will be a presenter at the 18th Annual Cooperators Co-Op and Condo Expo on March 16, 2005.

David's presentation will discuss mediation versus litigation when dealing with construction defects.

The Expo will take place on Wednesday March 16, 2005 at the New York Hilton (53rd St. & Avenue of the Americas) between 9 AM and 5 PM. The event, which is one of the largest in the area, will provide free educational seminars as well as access to over 200 exhibitors.

You can register to attend the Expo by clicking here.

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In a recent appellate court decision, the court has provided further guidance to a litigant seeking to decrease or terminate their alimony obligation. In Storey v. Storey the Appellate Division held that if a supporting spouse is seeking to decrease a previously ordered support obligation so as to reflect the obligor's current - and decreased - earnings the obligor who has selected a new, less lucrative career must establish that the benefits he or she derives from the change substantially outweigh the disadvantages to the supported spouse. If the paying spouse cannot make such a showing, then the court is directed to imopute income to that spouse consistent with his or her prior earnings. This procedure is not to be followed, however, when the paying spouse is seeking the modifcation based upona diminished capacity to earn. If it can be shown that a parties' capacity to earn - as opposed to nothing more than a voluntary redcution of income - then the court is to impute earnings that are consistent with the obligor's capacity to earn in light of his or her background and experience. For either approach, the burden of proof lies with the party seeking the modification. In light of this decision, careful consideration must be given to the underlying reason for seeking the decrease so that the proper proofs can be presented and the proper level of income is imputed if appropriate.

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In the After Hours section of the 12-13-04 edition of the New Jersey Law Journal, Stark & Stark attorney, Gary Forshner, was noted for his seminar on updates in New Jersey Land Use Law. Topics covered were land division regulation, the law of nonconforming uses, land use litigation and ethics in land use law.

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The NASD Anti-Money Laundering (AML) regulations, which are largely based on the United States Department of Treasury regulations constructing AML provisions under the Patriot Act, require each broker/dealer to conduct annual independent reviews/audits of their respective AML compliance programs.

The first of these independent audits were to have been done by all broker/dealers by April 24, 2003 (the one-year anniversary of the stat date of the AML regulations related to broker/dealers). Independent audits are required to be performed at least once a year following the date on which a broker/dealer did its last annual audit.

When the SEC conducts a regular examination of a broker/dealer, it has indicated its intention to focus on confirming that such independent audits are taking place, as and when required, and to ask for a copy of the independent auditor’s report on findings. Additionally, the SEC and NASD have indicated they will also focus on whether the audit was sufficiently independent.

Independent audits can be performed by either broker/dealer personnel or a qualified outside party. However, the NASD has made clear that if a broker/dealer uses internal personnel then sufficient separation of functions should be maintained in order to ensure the independence of the testing personnel. It has also been directed that internal testing personnel should be sufficiently trained in all aspects of the AML rules and regulations to be able to adequately perform the audit.

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The NASD Anti-Money Laundering (AML) regulations, which are largely based on the United States Department of Treasury regulations construing AML provisions under the Patriot Act, require each broker/dealer to conduct annual independent reviews/audits of their respective AML compliance programs.

The first of these independent audits were to have been done by all broker/dealers by April 24, 2003 (the one-year anniversary of the start date of the AML regulations related to broker/dealers). Independent audits are required to be performed at least once a year following the date on which a broker/dealer did its last annual audit.

When the SEC conducts a regular examination of a broker/dealer, it has indicated its intention to focus on confirming that such independent audits are taking place, as and when required, and to ask for a copy of the independent auditor's report on findings. Additionally, the SEC and the NASD have indicated they will also focus on whether the audit was sufficiently independent.

Independent audits can be performed by either broker/dealer personnel or a qualified outside party. However, the NASD has made clear that if a broker/dealer uses internal personnel then sufficient separation of functions should be maintained in order to ensure the independence of the testing personnel. It has also been directed that internal testing personnel should be sufficiently trained in all aspects of the AML rules and regulations to be able to adequately perform the audit.

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In today's Trenton Times, Timothy Duggan, Chair of the Firm's Condemnation Group, comments on the City of Trenton's use of eminent domain.

The Times article discusses the existing irony between urban renewal projects which aim to promote "home ownership" and the displacement of long time residents.

"It may not be the nicest part of town, but you can't just start pulling property from people because you think something better should go there," Duggan said. "That's just flat out not right."

You can read the full article here.

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Most small businesses struggle in their formative years due to difficulties associated with obtaining sufficient working capital. Assuming that you have cleared that hurdle, your business should move forward and begin to grow. Internal control systems generally take time to refine and are usually behind other systems in terms of development. In fact, the faster you are expanding the more likely that internal control systems are neglected. Without dedicated, loyal, and honest employees, you would probably not be able to grow in the first instance.

Statistics have shown that thefts by employees from their employers account for losses of approximately $40 Billion a year. That number is staggering when you consider that it is larger than the Gross National Product of some Third World Nations. No matter what type of business you are in, you are not immune. Professional practices, service companies, banks, and manufacturing companies are all equally susceptible to this universal problem.

Initially, before conducting any internal audit or investigation, you should be mindful of your employees' right to privacy. Courts have shown a great willingness to protect an employee's privacy from invasion by their employer. Therefore any employer must be cautious not to offend the sensibilities of their employees. If an employee suspects that he/she is being placed under scrutiny company moral may be adversely affected, leading to more serious labor troubles.

People that embezzle from their employers do not fit any one mold that can be easily identified. Experience has shown that dishonest employees are as diverse as the schemes that they originate. For example, I have seen acts that involved false bank accounts, false bank records, false billing statements, false receivable records, and even false computer records. However there exist some similarities in these various schemes.

One common theme is that the employee is almost always highly trusted and otherwise dependable. This employee usually has delegated authority and supervisory responsibilities. If it is any consolation, a dishonest employee normally has a great incentive to insure that the business is successful, because the more successful the business, the greater the opportunity to continue a scheme. Often the employee has two reasons for making sure that neither third parties nor other employees gain an advantage in their business dealings. First, the dishonest employee wants to be the only person taking advantage of the company. Second, such aggressive protection of the business' interests usually does not go unnoticed by Management, which can lead to more responsibility and less scrutiny of their activities.

Another common characteristic is that the dishonest employee will generally work long sometimes irregular hours. Typically they will arrive early or stay late when few other employees are present. This permits an opportunity to act without co-workers observing their actions. This employee will frequently not take their vacation or spend long periods away from the business. Extended absences result in a greater chance of detection.

Another popular misconception is that you are protected if your company books are routinely audited or reviewed by your accountant, or bookkeeper. However, an essential part of any embezzlement scheme is a method of preventing detection. No one engages in criminal activity if they think that they will be caught. The initial temptation to embezzle is usually associated with a determination of how easy it would be to accomplish, without being detected. In most business situations, a competent employee can design a scheme that would not likely be noticed. Your accountant may, unwittingly, contribute to the development of a scheme by specifying what records are needed for the audit. A predictable audit, either in terms of timing, or the documents to be reviewed, will not necessarily be a deterrent.

Additionally, the employee very often has supervisory control over the company's payables, receivables, and banking relations. Since this is an area where revenue transfers in and out of the company, special scrutiny is required.

Even employees for whom special allowances have been made are capable of embezzling from their employer. Many employers are shocked to learn the identity of a dishonest employee when an embezzlement is discovered. Often I have heard an employer lament that this was an exceptional individual who received special favors or treatment due to their status as a loyal and trusted employee. In many of these cases, regardless of the size of the loss, employers are more distressed by feelings of betrayal then the actual loss suffered.

The local police while being very helpful may not recover what has been taken. If the money involved is a sizable amount, then jurisdiction probably rests with the county prosecutors office. Due to the fact that a Civil action can be brought against the dishonest employee, authorities may not be as helpful as expected. A far more effective response is to retain either an attorney or accountant that specializes in this area. Note that once funds have been embezzled, the likelihood of recovery diminishes very quickly. The typical dishonest employee does not invest the proceeds in conservative investments. Rather the money may be indulged on luxuries that would not normally be afforded by the employee on their normal salary. For this reason it is imperative that quick action be taken to locate whatever assets can be frozen in order to maximize any recovery.

Other significant issues exist with respect to the termination of the employee. A confrontation should be avoided until sufficient information has been developed, otherwise there is the possibility of a wrongful discharge suit being filed by the employee.

In closing it is important to stress that not all employees are dishonest, and this article is not intended to imply that all companies have a problem but merely to suggest that the company be sensitive to the issue and prepared to deal with the problem should it arise.

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In May 2004 Governor James E. McGreevey signed the Contractors' Registration Act setting forth, for the first time in New Jersey, registration requirements for those engaged in the business of selling or making home improvements. The law required home improvement contractors to register with the Division of Consumer Affairs by November 9, 2004.

On November 8, 2004, the Governor signed a bill extending the deadline for registration. Home improvement contractors engaged in the business of selling or making home improvements must be registered with the Division of Consumer Affairs by December 31, 2005.

Here is a link to the Department of Law and Public Safety's website which has information on filing requirements, deadlines and copies of all necessary forms.

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Several years ago, the New Jersey Administrative Office of the Courts and the New Jersey Supreme Court implemented a very well intended program designed to increase the efficiency of the New Jersey court system and reduce the backlog/waiting time for litigants.

One component of the program fixes dates for the completion of pre trial discovery and requires the trial courts to enforce those discovery deadlines.

Unfortunately, as with any such program, it can work as much inequity as equity dependant upon the facts of a particular case or situation.

In a recent divorce case (Ponden v. Ponden, dec'd and approved for publication on 11/29/2004) the Appellate Division held that "adopting a mechanical approach" to the time limitations set by Best Practices can actually be a disservice to the intended purposes of the program.

The Appellate Court directed that trial judges use discretion and judgment, as opposed to a rigid application of the rules, and in the absence of prejudice to the opposing party or conflict with a trial date, to reasonable extensions as and when necessary.

This is a welcome decision which gives the trial judges the authority to do what they do best---apply judgment to particular situations. It addresses the purpose of Best Practices, but at the same time recognizes the need for "exceptions to every rule".

Best Practices is a sound concept, but care has to be taken that the Court's effort to create equity for litigants does not create inequity.

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A consumer decides to purchase an "on sale" 3' x 6' carpet for $3,000.00. The original sticker price before the "mark down" was $6,000.00. The sticker incorrectly sets forth or misrepresents that the carpet is 3' x 6'. Two weeks later the carpet is delivered. It is damaged and only 2' x 4'. The consumer complains. In response to the same, the store offers to give the consumer a refund or a similar carpet at a larger price

Is this a violation of the New Jersey Consumer Fraud Act? If so, does the trial court treble the sale price or the original price?

The New Jersey Supreme Court in Furst v. Einstein Moonjy, Inc. found that the above-described situation is a violation of the Consumer Fraud Act and held that the consumer is entitled to three times the "replacement cost," plus attorneys' fees and costs. The New Jersey Supreme Court also held that there is a presumption that the original non-sale price is the "replacement cost." The New Jersey Supreme Court set forth this policy in order to prevent businesses from fraudulently marking up and down merchandise to give the appearance of a sale.

The Furst decision is extremely important for both businesses and consumers. Businesses must think twice about making up or inflating the original price of goods. In addition, businesses must be extremely careful when making representations. A representation can easily become an actionable misrepresentation under the Consumer Fraud Act even if the seller does not intend to make a misrepresentation.

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The December 6, 2004 edition of the New Jersey Lawyer has an article on blogs in its Law Office Technology section. In Blogs for Lawyers: The newest kid on the internet block, author Carol L. Schlein mentions the New Jersey Law Blog as one of the "Jersey Bloggers".

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In post September 11th times, we live a society that is increasingly concerned with safety and security. In fact, most people when questioned will reveal that their safety and security is the most important benefit that the Government and/or their job can provide. As a result of this heightened scrutiny of safety and security in the job place, many employers have instituted mandatory background checks for their employees and/or prospective employees. In addition, employees who have held a job for many years without a background check may now find that their employer is seeking mandatory background checks regardless of their tenure and/or time with the company. Moreover, in the highly competitive job market, employers often conduct background checks among their prospective candidates in order to determine their suitability. Fortunately, if there is an indiscretion within your past which has haunted you, there is a process that is available within the State of New Jersey that can help you erase that part of your past.

The process I am referring to is filing for a Petition for Expungement. The expungement process is provided for within the New Jersey Statutes and is available to all individuals who have committed any disorderly persons offense, as well as indictable offenses within the State of New Jersey. The expungement process is available to residents and/or non-residents of the State of New Jersey and an individual may expunge one or more petty disorderly persons offenses and/or indictable offenses from their criminal history. Obviously, there are limitations concerning the eligibility for expungements. In addition, certain offenses, such as murder and/or distributing a narcotic for sale, are not subject to expungement. Nonetheless, the expungement process is a valuable tool which can help many people erase and/or minimize a mistake they made in their past.

Prior to becoming eligible for an expungement, there are mandatory waiting periods after which time a party may be eligible for an expungement. For example, a person may seek an expungement ten (10) years after being discharged from probation or parole for an indictable offense. If a person is convicted a disorderly persons or petty disorderly persons offense, there is a five (5) year eligibility waiting period after discharge from probation and/or payment of the fine in full. If a person is convicted of a Municipal Ordinance, there is a two (2) year waiting period from the time the person is discharged from probation and/or has paid the fine in full. In other instances, the waiting period for an expungement may be shorter. For instance, if a person is arrested and charged with a crime, and thereafter, the charges are dismissed this individual would be eligible for an immediate expungement. Moreover, if a person is accepted into and completes a diversionary program such as Pre-trial Intervention and/or a Conditional Discharge, the waiting period for an expungement would be six (6) months from the date of discharge from probation and/or a successful completion of the program. These time periods are delineated by Statute and may not be waived regardless of the circumstances for which the Petitioner is seeking an expungement. It is also important to note that a person may only seek an expungement once in their life. As such, when a party applies for an expungement should be sure that all events which they could get expunged are covered within the petition.

Once an expungement is granted it is as if the criminal charges, the arrest surrounding the charges, and the disposition of the charges never occurred. In fact, pursuant to the expungement statute if a party is ever questioned whether they have been arrested, convicted and/or charged with a crime, they are to respond that they have not. The expungement statute also states that should any party reveal that a person was granted an expungement that this person can be charged with a criminal offense.

There are times, however, when an expungement can be disclosed. If a person is applying for a job as a law enforcement officer or accepting a position of high security within the State or Federal Government, the fact that an expungement was granted can be revealed. Moreover, should a person be convicted of a subsequent offense, the Court can review the expunged record in considering sentencing the person for the present offense. Despite these limited circumstances, however, the effect of the expungement is to erase the event from an individual's history as though it had never occurred. Once an expungement has been granted any criminal record search will yield no positive results.

In todays day and age there is almost no limit as to the negative effect that a positive criminal record search result could have on a person's present and/or future career. Fortunately, the expungement process is available to help people to erase a mistake of their past so that it will not effect their future. The range of people that can benefit from an expungement varies from the most remedial of laborers to the highest ranking executives within Fortune 500 companies. Each one of these individuals could have their career devastated by a positive criminal record search result. As such, it is suggested that should an individual have doubts regarding whether an incident may appear on their criminal record, regardless of whether the incident resulted in a conviction, it is suggested that this party have a criminal record search performed. Should this search result yield a positive result, this party can consult with an attorney who may be able to prepare an Expungement Petition on their behalf. Although an Expungement Petition may be filed pro se, it is a technical process and must be done properly, otherwise it will be denied by the Court. At one point in our lives, most people have wished that they could go back in time and make a different decision under the circumstances they were faced with. Fortunately, the expungement statute within the State of New Jersey allows you to go back in time and erase that mistake as though it had never occurred.

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The number of creditors who simply avoid dealing with past-due obligations is amazing. Sometimes, it is simple inertia -it takes a lot of effort and time to constantly chase after overdue balances. In other cases, the creditor is simply uncomfortable dealing with the unpleasant task of collecting monies due. More often than needs to be the case, a creditor's only hope is exactly that: hope that a debtor will simply pay up, in full, given enough time. As a matter of experience, exactly the opposite is the case: the more time that goes by before a creditor takes action, the less likely it is that the creditor will ever be able to collect all or even part of what's owed.

Creditors should keep two things in mind with respect to collection of past-due obligations:

1.Creditors can, and should, take specific preventative steps in any debtor/creditor relationship, to protect themselves from future collection problems; and

2.Creditors need not resign themselves to carrying or writing off past-due obligations since numerous legal means exist for collecting what is rightfully due.

Preventative Measures

I advise creditors to establish procedures and policies to maximize both their chances of collecting monies on time, and the likelihood of receiving payment if collection problems do arise. The key tools for this are a thorough credit application; and firm, clear payment guidelines.

Credit Application

Basic information:
It is both reasonable and fair for a creditor to ask its clients to complete a credit application prior to extending credit. The credit application should seek banking information, references, all addresses of the client, as well as the EIN (Employment Identification Number) of the company; if the client is an individual, the Social Security number of the client should be obtained, along with the client's banking information and place of employment. Fellow business people usually understand and appreciate thoroughness in business practices, so requesting a credit application, even from clients you have previously done business with, need not be seen as unreasonable. A properly completed credit application should assist the creditor with gaining a good understanding of the client's assets prior to extending credit. If not, the creditor may want to invest some time and funds to confirm that the client has the means to pay the creditor's invoices, or judgment, if one is ultimately obtained. A creditor simply can't get "blood from a stone". Options available to the creditor include hiring an investigator to perform an asset search at various levels of sophistication and cost, verifying the client's address(es), performing a Secretary of State search, driving by or visiting the client's residence or office, calling the tax assessor/collector's office of the municipality in which the client's residence or office is located, reviewing the client's records, e.g. recent correspondence, cashed checks, and surfing the Web.

Provisions of Credit Application:
A credit application should specify in clear language that should the client not pay the creditor in a timely manner, and as a result the creditor is forced to employ an attorney, the client will be responsible for such costs. Not only does such a provision shift the expense of collection to the client, but such a provision can also provide a great deal of leverage in settlement negotiations. Additionally, the credit application should contain language stating that overdue balances will incur interest at the maximum rate permitted by law. Moreover, whenever possible, the creditor should seek the personal guaranty of at least one corporate officer, where the client is a corporation. I find that collection efforts are generally more successful when the creditor cannot only legitimately seek what is owed by the client, but also by one or more of the client's officers; if the company ceases to operate or files for bankruptcy protection, there is another source from which to seek payment. The creditor should verify the information provided by the client on a periodic basis. Information can be easily gleaned from the debtor's letterhead, envelopes and checks.

Payment Guidelines

The creditor's payment guidelines should be firm and clear, and printed on the creditor's shipping documents, contracts and invoices. Typically, payment is due within 30 days from the date goods are provided or services are rendered by the creditor. If payment is not received within that time, the creditor should immediately write to the client reminding them of the provisions of the credit application, and advising that the client's account will be placed with an attorney if payment is not immediately forthcoming. A follow-up telephone call should also be made by the creditor, so that the client is aware that the correspondence is not merely a form letter. If arrangements acceptable to the creditor cannot be made, the account should be immediately placed with an attorney familiar with the collection process. The attorney who specializes in creditors' rights and collections will have a large data base and may very well have had prior experience with the creditor's client. Additionally, given the choice between placing a matter with an attorney or a collection agency, the creditor will find that its fees and costs will typically be lower and the recovery made more quickly by placing the account directly with a collections attorney.

Timing is critical; the likelihood of successful collection efforts deceases as delays in affirmative efforts increase. Companies cease operations, individuals move, and information that the creditor has obtained from the credit application becomes stale.

The creditor should always be mindful of the following red flags: the client complains about the creditor's use of an attorney's fee and/or interest provision in the credit application or the creditor's invoices, the client uses a post office box or mailing service address, the client's calls are always answered by an answering service, the client is never available when called by the creditor, the name/address on the letterhead and checks used by the client do not match the client's name and address (take good notes of the mismatches), the client pays by money order or bank check, bounced check or post-dated check, the client is out of state, does no other business in the state, and/or has no assets in the state. In this respect, the creditor may want to incorporate a choice of law provision into its credit application, contract, order confirmation, or invoices to reduce the likelihood of jurisdictional issues in the event of litigation.

Litigating the Collection Case

Pre-Filing Considerations

Parties:
The Complaint should correctly identify the debtor who is legally responsible to pay the creditor, as well as all potential defendants who may be liable to the creditor. Failure to name a party in the action may very well preclude the assertion of a claim against that party at a later time by virtue of the Entire Controversy Doctrine. See generally Rule 6:30A and comments thereto. Failure to correctly name the debtor, including all trade names utilized by the debtor, may also hamper post-judgment enforcement efforts, requiring the creditor to amend its judgment. The creditor should assert all claims that it may have against the debtor. If the creditor has obtained a personal guaranty, promissory note or other type of agreement entered into by a related third-party, the Complaint should include them as well.

Prejudgment Interest:
The creditor should always seek an award of prejudgment interest in the Complaint, and interest will generally be allowed by the Clerk of the Court in the event of a default by the debtor. The creditor should clearly set forth the basis for the calculation of interest. Prejudgment interest can be awarded either on the basis of the contract between the parties or in the discretion of the Court. If a provision for interest is part of the contract on which the action is based, any rate specified in the agreement will govern, subject to the limitations of the Usury Statute. If no specific interest provision exits in the agreement, the attorney should nevertheless request an award of interest, since such an award is discretionary with the Court. Prejudgment interest will be awarded in accordance with the principals of equity, and will not be awarded at a rate in excess of the legal post-judgment interest rate set forth in Rule 4:42-11, in the absence of a written agreement between the parties.

Attorneys' Fees:
Attorneys' fees should always be demanded in the Complaint and may be awarded by the Court if authorized by a contract between the parties, an applicable Statute or by a Court Rule. Assuming the agreement between the parties makes reference to an award of attorneys' fees, the amount of the award will be subject to the Court's discretion. If the agreement between the parties calls for a specified percentage of the amount of the claim, Courts will generally permit such an award, providing the percentage is considered reasonable. In those cases, Courts generally will not require an Affidavit of Services Rendered with the information required by Rule 4:42-9. Where the agreement provides for an award of attorneys' fees, but does not mention the manner in which that amount is to be calculated, the attorney is required to submit an Affidavit of Services Rendered. The amount of the fee allowed will usually be limited to a fee deemed reasonable by the Court based upon the services rendered and the attorney's experience through the date of the application for judgment.

Choice of Court:
Most matters involving amounts in controversy of less than $15,000 may be brought in either the Law Division or the Special Civil Part, Law Division of the Superior Court of New Jersey. The Special Civil Part has concurrent jurisdiction with the Law Division in all civil actions where the amount in controversy does not exceed the sum of $15,000, exclusive of court costs and statutory attorneys fee. If the amount in controversy exceeds the sum of $15,000, the moving party must bring the action in the Law Division, or waive recovery of the amount awarded over the jurisdictional limit.

If the jurisdictional limit can be met, it is strongly recommended that actions be commenced in the Special Civil Part whenever possible. Some of the benefits of filing in the Special Civil Part include: the filing fees are considerably lower than in the Law Division, the time period for contested cases to reach trial are considerably shorter, and the rules and time periods pertaining to discovery are streamlined. However, I believe that the best reason for bringing an action in the Special Civil Part is because judgment execution procedures tend to be far more effective in the Special Civil Part than in the Law Division. This effectiveness is as a result of the fact that Officers of the Special Civil Part are compensated on a commission basis from the monies which they collect. They receive 10% of the first $5,000 collected and 5% of any amount collected in excess of $5,000. This creates a great incentive, since these commissions are a taxed cost and are paid by the debtor, resulting in Officers of the Special Civil Part being much more aggressive in their handling of the execution process. The Sheriffs' Officers, who are responsible for execution upon Law Division judgments and typically receive only a nominal fee for mileage when executing upon a debtor's assets, do not have the same monetary incentives.

In the Special Civil Part, a statutory attorneys fee is provided as a taxed cost of suit. The amount of the fee is 5% of the first $500 sought and 2% on any excess. This fee is awarded to the attorney, over and above any other fee and is typically taken from the last monies received from the debtor.

The creditor should consider reducing its claim to meet the jurisdictional limit of the Special Civil Part in those matters where the amount in controversy exceeds the jurisdictional limit.

Filing Suit and Obtaining Judgment

Once the action is filed and served upon the debtor, the debtor will either default, file a responsive pleading or settle the claim. In the Special Civil Part, a default is entered automatically by the Clerk of the Court when a responsive pleading is not timely filed by the debtor. In the Law Division, the creditor must make a formal request for the entry of default by the Clerk. In both the Special Civil Part and the Law Division, a request for final judgment by default must be accompanied by a certification of proof of amount due and of non-military service. The creditor should attach to the certification an itemized statement evidencing the obligation of the debtor and that the creditor's damages are liquidated and thus capable of being permitted by the Clerk. The certification should also set forth to the Clerk the date from which interest is calculated. Should the debtor file a responsive pleading to the Complaint, whether in the Special Civil Part, or Law Division, the creditor should immediately serve interrogatories and a notice to produce documents on the debtor, subject to Rule 6:4-3 which limits discovery to those cases where the amount in controversy exceeds the sum of $3,000.00, the limit of the Small Claims Court. Depending upon the defenses raised by the debtor in the responsive pleading, the creditor should soon thereafter file a Motion for Summary Judgment. Too often, the debtor files a responsive pleading to further delay the creditor's collection efforts. Serving the debtor with limited discovery followed by the filing of a Motion for Summary Judgment forces the debtor to act and often results in the settlement of the action, and payment of the obligation. In some counties, the Clerks of the Special Civil Part are scheduling trial dates within weeks of the filing date of the debtor's responsive pleading. However, the creditor should have at least 100 days from the date the debtor's responsive pleading is filed so that the creditor may complete necessary discovery and, if appropriate, file a motion for summary judgment. Rule 6:4-5. The Courts liberally grant adjournment requests if a trial date is scheduled within the 100 day period.

On occasion, the debtor may file a counterclaim against the creditor. A creditor may consider the remedies under Rule 1:4-8 and the Frivolous Action Statute, N.J.S.A. 2A:15-59.1. Early confirmation letters, telephone notes, and unanswered follow-up letters are your best defense to a frivolous counterclaim. The creditor should call the debtor and write early and often regarding non-payment of bills. The creditor should bill the debtor immediately upon delivery of goods or completion of services. When billing, the creditor should ask the debtor to contact the creditor immediately if the debtor has any questions regarding the creditor's goods or services. The creditor should call the debtor when it doesn't receive payment in the time frame when it would ordinarily receive payment. The creditor should use sound business judgment in deciding when not to pursue "close call" claims, in which the creditor believes that the debtor may assert a meritorious counterclaim.

Judgment Liens

A judgment for money damages entered in the Law Division serves as a lien against any real estate owned by the debtor in the State of New Jersey from the time the judgment is properly recorded. N.J.S.A. 2A:16-1. As such, that lien can also attach to property to which the debtor acquires title subsequent to the entry of judgment. Venetsky v. West Essex Building Supply Co., 28 N.J. Super. 178(A.D. 1953). The judgment debtor is unable to convey clear title to the real estate without addressing the judgment lien. The lien lasts for 20 years, and may be renewed for an additional 20 years upon motion to the Court.

A judgment entered in the Special Civil Part does not constitute an automatic statewide lien on real estate. A creditor, however, can arrange for a transcript of the Special Civil Part judgment to be docketed in the Law Division. Once docketed, the judgment is a docketed judgment, and will constitute a lien against real estate. See N.J.S.A. 2A:16-36. After the judgment is docketed, all subsequent proceedings in the case will be governed by the Rules applicable to the Law Division.

Federal District Court

The Federal Courts have jurisdiction to hear collection matters in cases where there is diversity of citizenship and the dollar amount of the claim, exclusive of interest and costs, exceeds the sum of $75,000.00. The creditor should consider litigating matters in the Federal District Court only when sued in State court by an out-of-state debtor, and when they believe that they will receive a more favorable disposition of the matter if it is removed to Federal District Court. The cost and time factors must also be considered, as Federal Courts do not as a rule give any preference to collection matters. Another reason to avoid Federal Courts as a plaintiff is the limited post judgment relief available. The U.S. Marshal's office, which is responsible for execution upon Federal judgments, is generally under-staffed, over-worked, and primarily interested in serving process, apprehending fugitives and not on enforcing post judgment executions.

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