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

This decision reinforces the power of the channeling injunction provided by Bankruptcy Code 524(g), as well as the role of the legal representative for present and future claimants (the "Legal Representative") in non-bankruptcy related proceedings. The Court held that parties to asbestos-related bankruptcy litigation cannot bypass the channeling injunction of Bankruptcy Code 524(g) to bind future claimants because it would deny the claimants due process rights.

The Debtor, G-I Holding, Inc., and it's non-bankruptcy subsidiaries (the "Plaintiffs"), sought declaratory judgment that the subsidiaries were not successors to the liabilities of the Debtor, and that the subsidiaries were not an alter ego of the Debtor. In the initial complaint, the Plaintiffs named six individual asbestos claimants. The Plaintiff's amended the complaint to add the Bankruptcy Court appointed Legal Representative as a defendant. Subsequently, the Legal Representative filed a motion for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c), alleging that Bankruptcy Code 524(g) already provided for the specific relief requested.

In it's decision, the Court granted the Legal Representative's motion, holding that the declaratory judgment sought by the Plaintiffs was an attempt to avoid the provisions of Bankruptcy Code 524(g) by hoping to bind future claimants to the declaratory judgment. If this were allowed, the Court held that claimants due process rights ensured by Bankruptcy Code 524(g) would be violated. Further, the Court held that the Plaintiffs could have solved this due process problem by pursuing a class action, via Federal Rule of Civil Procedure 23. The Court noted that although a class action was begun, the Plaintiffs withdrew the class action law suit to add the Legal Representative so that it might bind future claimants in the bankruptcy proceeding. The Court held that this approach was essentially trying to by-pass the safeguards of Federal Rule of Civil Procedure Rule 23 and Bankruptcy Code 524(g), which protects the due process rights of future claimants.

The importance of this decision is that bankruptcy asbestos claimants due process rights trump any efficiencies or savings that potential parties to a Bankruptcy Code 524(g) channeling injunction may seek. Further, the Legal Representative may not be forced to participate in ceratin non-bankruptcy actions. The Court noted that the Legal Representative may be named as a party in other bankruptcy-related actions where the Legal Representative acts for the benefit of the estate, such as in fraudulent transfer actions. However, the Court distinguished these types of actions, citing that the matter at bar was primarily a non-bankruptcy issue.

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Courts have long held that a condominium association may inform its members of lawsuits pending against that condominium. Last week, Stark & Stark Community Association attorneys David Byrne and Richard Linderman won a summary judgment motion on behalf of a Northern New Jersey condominium association which affirmed this practice and clarified what information is permissible to include in notices sent to association members.

At issue in this matter was the decision by the condominium association to prohibit two owners from using its recreational amenities as a result of persistent rule violations. Those owners filed a several count lawsuit against the condominium, its board members individually and management. After court-ordered mediation proved unsuccessful, the condominium issued a notice to each owner in the community, stating the name of the lawsuit, the owners' names, the facts as alleged by the condominium and the financial demands having been made by the owners during mediation. The two owners thereafter sued the condominium, individual board members and management for defamation. The trial court dismissed the owners' defamation claim, finding that the condominium's notice to its owners regarding the ongoing litigation was "privileged" and thus could not be the subject of any defamation suit.

This decision shows yet again that a condominium is generally free to notify its owners of pending lawsuits, with such notice even including the owners' names and the specific facts of the dispute.

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This week's New Jersey Legal Update will discuss recent decisions that will impact human resource professionals, commercial entities including those involved in the leisure industry as well as property owners. The decisions discussed include:

Singer v. Beach Trading Co., Inc. (N.J. App. Div. 2005)
Deas v. St. Mary Hospital, et al. (N.J. App. Div. 2005)
Dimatties , et vir. v. Incollingo's Market, Inc. (N.J. App. Div. 2005)
Dilemmo-Tammero, et vir. v. Dempsey, etc., et al. (N.J. App. Div. 2005)
Murphy v. Township of Green (N.J. App. Div. 2005)

This week's New Jersey Legal Update is presented by Thomas Onder a member of the Firm's Litigation group.

You can download the New Jersey Legal Update Podcast # 4 here.(9.2MB)

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If you're paying child support in New Jersey, you might expect those payments to automatically terminate on your child's eighteenth birthday. Depending upon the circumstances, that expectation could be wrong.

Child support terminates when the Court finds that a child is emancipated. The Court's decision of whether or not to emancipate a child depends upon its analysis of the unique facts presented in each case. Since there is no specific age in New Jersey when a child will be deemed emancipated, there is no specific age that automatically terminates a parent's obligation to pay child support.

Parents often agree about when to emancipate a child well in advance of the child's eighteenth birthday. When the parents are formally divorced, the divorce judgment or settlement agreement usually address the issue in detail. However, some parents may disagree about how the wording of such documents apply to their child's circumstances. Worse still, many parents have never even discussed the appropriate time to emancipate their child and terminate child support.

If you and your child's other parent are unable to reach such an agreement about when your child should be emancipated, it may be necessary to file a motion with the Court. However, the process is complicated and can be overwhelming without legal representation and significant preparation. Typically, parents file competing applications that may or may not present enough evidence for the Court to make its final decision.

After reviewing each parent's motion and supporting documents, the Court may find it necessary to conduct a plenary hearing, or formal trial, upon the single issue of whether it is appropriate to emancipate the child at that time. If the Court conducts a plenary hearing, it is in the best interest of each parent to spend a great deal of time preparing their respective witnesses, evidence, and testimony.

Once the Court has all of the evidence it needs, it will critically evaluate all of the facts presented. Generally, the Court presumes that it is not appropriate to emancipate a child who is under the age of eighteen. However, it is sometimes possible to overcome that presumption. There is also a rebuttable presumption that a child who reaches the age of eighteen should be emancipated.

Once a parent who seeks to emancipate the child establishes that the child is in fact, eighteen years of age or older, the parent who opposes the emancipation has the burden to prove that it is still not appropriate to emancipate the child. If that parent fails to meet the burden, the child will be emancipated.

The Court will often emancipate a child if it finds that the child has moved beyond the sphere of influence and responsibility exercised by a parent, and if the child has obtained an independent status of his or her own. The analysis often focuses upon: the child's maturity level, the child's educational and career status, the child's educational and career goals, the child's reasonable needs to achieve those goals, the ability of the parents to continue to pay support, and any agreement previously reached between the parents about when to emancipate the child.

Due to the fact that the Court evaluates each emancipation application based upon the distinct facts of each case, it is always beneficial to retain the assistance of an attorney to help you through the process.

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This week's New Jersey Legal Update discusses recent decisions that limit the scope of the New Jersey Consumer Fraud Act, define the parameters of the Absolute Litigation Privilege, broaden the breadth of probability cause and expand the State's immunity provisions under the New Jersey Torts Claims Act. The decisions discussed include:

Sickles v. Cabot Corp. (N.J. App. Div. 2005)
Williams v. Kennedy (N.J. App. Div. 2005)
Scannavino v. Dowd (N.J. App. Div. 2005)
Mackin, etc. v. Ciliberti. (N.J. App. Div. 2005)

This week's New Jersey Legal Update is presented by Rachael Costigan a member of the Firm's Litigation group.

You can download the New Jersey Legal Update Podcast # 3 here.(3.9MB)

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On June 28, 2005, the United States Court of Appeals for the Third Circuit issued a decision in Jaasma v. Shell Oil Co. The matter was appealed to the Third Circuit by the plaintiffs, Alice Jaasma and the Trust of Ralph McEwan after the District Court had dismissed their case against the defendants, Shell Oil Company and Motiva Enterprises, LLC, and granted the defendants a judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a). In evaluating whether the District Court's dismissal of the plaintiffs' case was appropriate the Third Circuit addressed a number of issues.

First, the Third Circuit inquired into whether a reasonable jury could find that the failure of defendants, who leased and operated a gas station on the premises, to provide landlord with the true environmental status of the leased premises and obtain a No Further Action Letter from the NJ Department of Environmental Protection following termination was a breach of their obligations under the lease to (a) comply with all applicable environmental laws and (b) return the premises to its original state. The Third Circuit answered this first question in the affirmative. According to the Court, based upon the text of the lease agreement and the parties' course of dealing, a reasonable jury could determine that compliance with all applicable environmental laws includes a duty to produce evidence and reports as necessary for the Department of Environmental Protection to issue an NFA. The Court further stated that a reasonable finder of fact might conclude that the term "original state" required that the property be free from the impediments that would render it unmarketable and that the property could not be fully marketable in the absence of an NFA where one was required by law or regulation.

The second issue that the Third Circuit evaluated was whether New Jersey law recognizes loss of use as a measure of damages for breach of a lease agreement resulting in uncertainty impairing the marketability of real property. Here, as well, the Court answered affirmatively, concluding that the District Court erred by limiting its assessment of damages to diminution of value or cost of environmental remedial work and thereby ignoring damages for temporary loss of use. Indeed, even in the absence of actual discharge, a claim may be recognized under New Jersey law for the period of uncertainty following a pollution incident, especially where such uncertainty is due to an ongoing investigation..

Additionally, the Third Circuit assessed issues related to the mitigation of damages and the exclusion of expert testimony, and determined that the District Court abused its discretion in granting to the defendants a judgment as a matter of law.

In light of the foregoing, the Third Circuit reversed the decision of the District Court and remanded the case for further proceedings.

The decision in Jaasma v. Shell Oil Co. was discussed in the New Jersey Legal Update - Podcast #1 on July 1, 2005. This podcast also discussed other recently issued decisions that will have an impact on real estate in New Jersey.

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Today's Star Ledger has an article regarding a recent deck collapse at a Warren County condominium complex. The incident took place at the Overlook at Lopatcong condominiums. In the article, David Byrne, co-chair of the Firm's Community Association group and attorney for the Overlook at Lopatcong's owners association, discusses the association's concerns regarding the construction of common elements in the community.

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This week's New Jersey Legal Update will discuss recent decisions that will impact the relationships between employers and their employees. The decisions discussed include:

Morales v. Board of Review (N.J. App. Div. 2005)
Raggio v. Board of Review (N.J. App. Div. 2005)
McDowell v. Axsys Technologies (D.N.J. 2005)
Karraker v. Rent-A-Center Inc. (7th Cir. 2005)

This week's New Jersey Legal Update is presented by John MacDonald a member of the Firm's Employment Litigation group.

You can download the New Jersey Legal Update Podcast # 2 here.(7.0MB)

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On January 21, 2005, the Appellate Division in Mintz v. Township of Millstone, 374 N.J.Super. 396, held that a local planning board could not use anecdotal evidence of an alleged land use restriction as a basis for denying an application for subdivision approval where the owner/applicant took title to the affected lands without notice of such restriction. Here, the anecdotal evidence consisted of the "memories of some residents" and a comment in the minutes of the planning board's hearing that took place when the owner/applicant's predecessor in title first obtained approval from the board to create the property out of a larger tract. According to the court, there was "no dispute" that the purchaser/applicant would have been unable to discover the planning board's alleged prohibition against further subdivision by "conducting a diligent search of the chain of title." Mintz, 374 N.J.Super. at 398, 402. "Indeed, as the evidence heard by the board indicates, the only way a purchaser . . . could gain knowledge of this alleged restriction would be through the testimony of neighbors and the decoding of a typographical error in the minutes of a board meeting that occurred over twenty years earlier." Ibid. at 402.

The court further remarked that under the instant circumstances where "[t]he board's actions in attempting to create [an] alleged restriction are so wanting" a reviewing court may simply declare the restriction unenforceable without having to weigh the "competing interests" that may exist between a governmental agency seeking to impose a limitation on the use of land and an innocent purchaser who acquires the said property without notice of any such restriction. On the contrary, "[t]here need only be a weighing of these competing interests when a local agency has at least memorialized its ruling. A 'deed restriction of the mind,' such as that found by the board to exist, cannot be enforced." Ibid. at 406.

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Stark & Stark is pleased to announce that the following attorneys have been named Shareholders in the Firm.

William Brosha - Chair, Collections group
Mark Davis - Accident & Personal Injury
John Eory - Divorce
Raymond Papperman - Chair, Enviornmental group
Scott Unger - Litigation

Announcement card (PDF)

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Right now in New York and Northern New Jersey, there is a trend of cooperative buildings converting to condominiums. A Cooperative, or co-op is a combination of corporate ownership of shares of stock and a residential leasehold interest in real property. The corporation owns the land and the building which is a residential apartment house. Shares of the corporation's stock are sold in blocks to individuals. Each block of shares is allocated to a particular apartment in the building. By purchasing the block of shares allocated, the owner of the stock becomes entitled to a lease, known as a "proprietary lease", for the apartment to which such shares are allocated.

When a co-op building is converted to condominium ownership, the purchase buys an apartment. At the same time, the purchase, together with the other unit owners, buy an "undivided interest" in the common elements of the building. An owner of a condominium owns the actual unit.

Depending on the area of New York in which the building is located, different laws apply related to the conversion of co-ops and condominiums. Basic provisions include the Martin Act (PDF) which applies to the sale of all types of cooperatively owned real estate including sale of co-op shares, condo units and interests in homeowner associations. The Cooperative and Condo Conversion Act, also part of New York State's General Business law, regulates the conversion of existing rental buildings to cooperative forms of ownership. These laws provide specific protection for tenants living in buildings undergoing conversion, and require that offering plans include explanations of the rights and obligations of purchasers and non-purchases.

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Stark & Stark is pleased to present the first installment of the New Jersey Legal Update.

The New Jersey Legal Update is a weekly podcast published each Friday and designed to provide an overview of some of the most important decisions issued by the courts that week.

This week's New Jersey Legal Update will discuss recent decisions that will affect landowners, tenants, developers, and government agencies. The decisions discussed include:

Kelo v. New London (U.S.S.C.)
Boyer v. Miller (App. Div.)
Jaasma v. Shell Oil Co. (U.S. Court of Appeals - Third Circuit)

You can download the New Jersey Legal Update Podcast # 1 here.(5.72MB)

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The June edition of the American Bankruptcy Institute Journal has published an article written by Timothy Duggan, Chair of the Firm's Bankruptcy and Creditor's Rights group. The article, Informal Proof of Claim: Form or Substance?(PDF) discusses a recent Third Circuit decision in which the Court clarified the boundaries surrounding the filing of informal proofs of claim.

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