New Jersey Legal Update - Podcast # 62

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This week's New Jersey Legal Update podcast will discuss the case In re Lead Paint Litigation, which is currently before the New Jersey Supreme Court. This podcast will give a brief discussion on the background, facts, and parties of the case, an overview of the procedural events that have occurred, as well as a discussion on the impact this decision could have throughout the state of New Jersey.

This week's New Jersey Legal Update is presented by Scott Unger, member of Stark & Stark’s Litigation Group.

You can download the New Jersey Legal Update here. (5.4 MB)

Franchisor Being Sued by Franchisee's Mom?

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Believe it or not, franchisors can have more to fear than simply disputes with franchisees.  Sometimes, in the litigious world in which we live, franchisors are confronted with litigation filed by people they have never heard of, relatives, and even “friends” of the franchisee.

Consider this scenario: the franchisor receives legal papers in the mail.  He or she looks quizzically at the name of the Plaintiff and pulls the franchise agreement out of the file cabinet, flipping to the signature page.  The “franchisee” who signed the franchise agreement is not the same person who filed the claim.
How can this be?  Strangely enough, friends and relatives who claim “sweat equity” in the franchise, or who loaned money to the franchisee to purchase the franchise have decided they are entitled to damages for (fill in one of numerous claims here). Luckily for the franchisor, fundamentals of corporate law enter the picture at this point and, with a few exceptions, result in dismissal of the case.  This is due to the general rule that litigation is limited to the parties who actually signed the franchise agreement. 

When Issues Remain After Closing - Agreements for Post-Closing Obligations

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It is not unusual for a buyer and seller to want to close on their house sale, but there remains obligations on the part of the buyer or seller to fulfill.  It is always imperative that whatever the agreement is for post-closing obligations, that it be reduced to writing and signed by each party involved so that all parties have a clear understanding of what their agreement is.  This will help to avoid any later misunderstandings or disputes over what each party’s obligations were.

Some agreements which address common issues include:

Use & Occupancy Agreements: Sometimes a Seller seeks to remain in the home after closing and the Buyer agrees to this.  In such event, an agreement commonly called a Use & Occupancy Agreement should be prepared.  It should spell out what daily charges the Seller will be paying for the right to remain, what other charges, such as utilities, telephone, cable, the Seller will be paying, the date Seller will be vacating the premises and what happens if the Seller vacates either earlier or later than that date.  In addition, the Agreement should identify what other obligations the Seller may have such as providing proof of liability insurance, responsibilities for maintaining the property, and what condition the property is to be in when the Seller finally vacates.   The parties should determine if they want to hold funds in escrow in the event of any damage to the property while Seller remains (and when the Seller actually moves out), and/or for other charges, and what happens to the escrow if any damage or charges exceed the amount of the escrow.

Inspection Escrows: Sometimes the parties agree that the Buyer has a right to perform an inspection - let’s say of a pool or air conditioning system after the closing.  This can occur when the closing is in the winter and the weather does not permit a proper inspection.  In such an instance the parties should be very specific about the type of inspection, the time period within which it must occur, the amount to be held in escrow, when to release the funds and what occurs if the cost of any repairs is more than the amount held.

Repair Escrows: Sometimes the Seller agrees to make a repair which cannot be completed by the closing date.  Again, the Agreement should be in writing and the parties should provide a detailed summary of what the Seller is obligated to do and when.  Provisions should be made in the event of a delay in completion of the repair.  And again, if an escrow is held, the Agreement should provide what occurs if the cost of repair exceeds the amount of the escrowed funds.

What’s important to remember is to always put the Agreement in writing and make provisions in the event things don’t go according to plan!

Enlarging Time to Appeal Land Use Decisions in the Interests of Justice

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Gregory v. Borough of Avalon

In Gregory v. Borough of Avalon, recently approved for publication, the Appellate Division evaluated the legality of extending the period of limitations under Rule 4:69-6(a) for challenging resolutions of a municipal governing body that are closely related to a subsequent resolution of a municipal board that was challenged in a timely manner in the same action.  The Court answered this question in the affirmative based upon the unique set of circumstances involved in the case.

Specifically, the owner of a beachfront motel seeking preliminary and final major site plan and variance approval to expand its facilities, prior to the municipal board’s hearing on the matter, obtained permission to maintain these encroachments certain encroachments in the street right-of-way and over public dunes, which the governing body gave in the form of written agreements and authorized by resolution.  In partial reliance upon these encroachment continuation agreements, the municipal board granted the owner’s site plan application and request for variance relief.  Following the municipal board’s memorialization of these approvals by resolution, several objectors asked the municipal board to reconsider its decision based upon assertions supported by a transcript of testimony given in a prior proceeding that the owner had made misrepresentations to the municipal board on the aforesaid application.  Soon thereafter, the objectors filed an action in lieu of prerogative writs challenging both the validity of the municipal board’s action and, although out of time, the governing body’s resolutions.  In light of the pending litigation, the municipal board did not rule upon the objectors’ request for reconsideration.  The trial court dismissed the objectors’ challenge to the resolutions of the municipal governing body as untimely and upheld the municipal board’s resolution granting site plan and variance approvals without considering the objectors’ supplemental evidence.

In deciding the pivotal issue of the appropriateness of enlarging the time to appeal the resolutions of the municipal governing body, the Court first recognized the public interests involved in authorizing “a private property owner to encroach upon a public beach area or property dedicated to a street right-of-way” and the significance of “the issues presented by plaintiffs’ challenge to the resolutions,” namely whether the municipal governing body could legally authorize the parking and dune agreements only by ordinance.  Moreover, the Court found that the “close relationship between the . . . governing body’s resolutions authorizing the parking and dune agreements and the [b]oard’s resolution granting the land use approvals” further supported its decision in this regard.

Following its determination on the timeliness of the objectors’ appeal, the Court remanded the portion of the matter relating to the resolutions of the municipal governing body to the trial court “for a determination on the merits of plaintiffs’ challenge to the parking and dune agreements[,]”  and ordered the municipal board to reconsider the owner’s application for development “[i]n light of the court’s disposition of the challenge to the agreements and the evidential materials plaintiffs submitted in support of their application for reconsideration.”

Pharmaceutical Firms Hit with FLSA Class Action

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Tom Lewis, Chair and Shareholder of Stark & Stark's Employment Litigation Group, was quoted in the March 2, 2007 article Pharmaceutical Firms Hit with FLSA Class Action on Human Resource Executive Online.

You can read the full story here.

Zoning Boards Have Jurisdiction to Grant Variances from Redevelopment Plan

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Weeden v. City Council of Trenton
Zoning Boards Have Jurisdiction to Grant Variances from Redevelopment Plan
(at Least when the Plan Constitutes Overlay Zoning)

In Weeden v. City Council of Trenton, recently approved for publication, the Appellate Division evaluated whether a zoning board of adjustment (“ZBA”) has jurisdiction to grant variances from a redevelopment plan that serves as an overlay to existing zoning.  The Court answered this question in the affirmative based upon, but apparently not limited to, the unique set of circumstances involved in the case.

Specifically, an applicant interested in constructing a combined fast food restaurant with drive-thru on property located within a redevelopment overlay zone, made application to the local ZBA for a use variance from an express prohibition in the redevelopment plan for drive-thru operations.  After the ZBA approved the application, an objector filed an appeal with the municipal governing body, which affirmed the ZBA’s grant of the use variance.  The original objector, along with others, then filed a complaint in lieu of prerogative writs alleging that the ZBA had no authority to grant a use variance and that, even if it did, the grant of a use variance in this case was otherwise arbitrary and capricious.  The complaint also challenged City Council’s decision affirming the ZBA’s grant of a use variance.  The trial court ruled that the ZBA, indeed, had jurisdiction to grant variances from the redevelopment plan, but remanded the matter to City Council due to that body’s failure to conduct a de novo review of the ZBA’s decision, and retained jurisdiction.  Upon remand, City Council reaffirmed its initial decision.  The parties provided dueling certifications addressing allegations that the grant of the use variance was based upon political considerations rather than substantial credible evidence.  Rather than permitting discovery and/or having additional hearings on this issue, which might be extensive and time-consuming, the trial court proceeded simply to evaluate the merits of the use variance application and decide the matter.

Although several issues were discussed and decided on appeal, the Court’s ruling on the jurisdictional question is the most significant, as it is one of first impression in this state.  Specifically, the Appellate Division held that although the Local Redevelopment and Housing Law (“LRHL”) does not address whether a ZBA may grant variances from the requirements of a redevelopment plan constituting overlay zoning, such authority is consistent with its power to grant variances under the Municipal Land Use Law (“MLUL”).  The Court then went on to adopt an opinion on this issue offered in the legal treatise New Jersey Zoning and Land Use Administration, and cautioned that if the objectors’ view were to prevail, “[p]roperty owners would be unable to obtain even the most minor exception to the requirements of a redevelopment plan without applying to the governing body for a plan amendment. . . . Nothing in the LRHL or its stated purpose suggests that the Legislature intended to impose such a cumbersome, impractical, and potentially unconstitutional requirement.”

In our opinion, the case is more significant for one of the issues it did not decide, that being whether a ZBA has jurisdiction to grant variances when a municipality adopts a redevelopment plan that supercedes the underlying zoning for the redevelopment area, and amends its zoning district map accordingly, pursuant to the LRHL.  The Court strictly limited its holding.  The Appellate Division noted that it was not addressing whether a ZBA had authority to grant variances from a redevelopment plan where a redeveloper has “covenanted with a municipality to carry out the redevelopment plan,” or where a redevelopment plan “required that all redevelopment be conducted by a designated redeveloper or with the redevelopers prior approval.”  Apparently, we will have to wait for further clarification and when that comes, whether it be through additional case decisions or legislative action, we will keep you posted.

City to issue its position on land seizure

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Raymond Papperman, Shareholder and member of Stark & Stark's Real Estate Group, was quoted in the March 6, 2007 article City to issue its position on land seizure in The Daily Journal.

You can read the article here.

Stark & Stark Blog Featured in New Jersey Law Journal

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The New Jersey Law Journal featured Stark & Stark's New Jersey Law Blog in an article earlier this week discussing the concerns over blogs and what effect they can have on a firm's insurance coverage.

The article discusses the recent surge in law firms using blogs to exhibit their legal expertise in various practice areas, and how insurance companies are becoming increasingly cautious of what content firms place on their blogs.

The article states that just as with websites, blogs need to have strong declaimers in order to notify the general public accessing the blog, that the information posted in no way serves as legal advice. Recent incidents over the past few years in which declaimers were not used, or were not strong enough, opened companies up to multiple lawsuits.

" 'We're very diligent' about the disclaimer, says Richard DeLuca, business manager at Stark & Stark in Princeton, which started its first blog in 2004. He adds that the firm's premiums did not increase."

While many are aware of the concern of increased liabilities, few seem to have actually seen the effects as of yet.

Collecting Unpaid Assessments

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While the actual collection of unpaid assessments is the responsibility of management and/or legal counsel, individual members of the board can play a role far beyond simply voting on payment plans and authorizing specific collection actions.

Since board members most often live in the communities of the associations they oversee, they are in a particularly capable and competent position to ascertain useful information to assist the associations attorneys and management in the collection process. Board members residing in the community can keep an eye on community happenings, such as units listed for sale, prevailing home values, etc. A debtor's current employment status, vehicle information or tenant status, are useful bits of information, essential to collecting outstanding debts. Board members can take note of employment information such as a homeowner who wears a uniform identifying the company name. Such information could make a wage execution possible, without having to pay a searcher to identify a current employer. A board member may also know whether an owner has a tenant residing in his unit. This information will help to make a rent execution possible, and ensure that legal notices are sent to the debtor's actual address, and not the unit.

These are several ways board members can assist counsel and management in collecting unpaid assessments.

Insurers said to steer reps to in-house wares

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Bill Singer, Shareholder of Stark & Stark's Securities Practice Group, was quoted in Insurers said to steer reps to in-house wares in the March 5, 2007 article in Investment News.

You can read the article here.

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Leaving Your Brokerage Firm? Know Your Rights

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Thomas Giachetti, Chair and Shareholder of Stark & Stark's Securities Practice Group, was quoted in the March 2007 TD Ameritrade Transition News article, titled, Thinking of Leaving Your Brokerage Firm and Going Solo? Make Sure You Know Your Rights. The article addresses several important issues advisors need to be aware of, including, when clients are free to follow you, and how to asses the financial costs that are associated with going solo.

You can read the article here.

New Jersey Legal Update - Podcast # 61

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This week's New Jersey Legal Update podcast will discuss the newly revised Federal Trade Commission Rule. This podcast will explain the foundation for the rule, as well as how the revised rulings can affect you and your company.

This week's New Jersey Legal Update is presented by Adam Siegelheim, member of Stark & Stark’s Franchise Group.

You can download the New Jersey Legal Update # 61 here. (9.05MB)

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Unresolved Legal Issues Make For Unsuccessful Mediations

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Mediators want high “batting averages”–i.e. a very high percentage of mediations which successfully resolve all matters in dispute.  As a mediator so do I, and there is nothing more frustrating to this mediator than a mediation which fails because the lawyers have failed to recognize outstanding legal issues and how the resolution of those issues affects the “value of the case.”  In such circumstances, a lawyer cannot perform a litigation risk and cost analysis which is a necessary predicate to a successful mediation.  Furthermore, the lawyer has probably given the client an unrealistic evaluation of various claims making it difficult to successfully mediate the case.  And when several of the lawyers participating in the mediation have given their clients unrealistic evaluations, it is almost impossible to have a successful mediation.  How do I as a mediator attempt to overcome the problem of unresolved legal issues?

First, as soon as I am retained I attempt to obtain as much information as possible.  I immediately request copies of all the pleadings and all briefs which have been filed in support of motions.  I then schedule a telephonic conference to uncover outstanding discovery issues.  At the telephonic conference I set a firm date for the submission of confidential mediation statements, and analyze them as soon as received.  After analyzing all this material I make an initial decision whether to handle the mediation in a facilitative style or an evaluative style or a combination of both.

Using a purely facilitative style a mediator tries to assist the parties in identifying and exploring interests, motivations, concerns, common ground and possible resolutions.  But, a mediator using a purely facilitative style does not draw conclusions for the parties.  The mediator does not offer opinions regarding legal positions or potential litigation outcomes.  Unfortunately, a purely evaluative style cannot result in a successful mediation when there are outstanding legal issues which have not been considered by one or more parties in making a litigation risk and cost analysis.

Instead of using a purely facilitative style I gently pursue an evaluative style.  In an evaluative style a mediator is likely to offer opinions on the strengths and weakness of the case.  But, I approach this evaluative style very gently.  After I discover a serious unresolved legal issue I generally write counsel and tell them that I have discovered a case or a line of cases which may affect the mediation process and ask for counsels’ opinions.  Or, I may request that counsel provide me with case law that supports an important legal position.  However, only when the parties to the mediation process believe that my opinion is necessary will I provide an opinion.

I try by using a modified facilitative approach to encourage the parties to consider the subject of unresolved legal issues and make realistic litigation risk and cost analyses before the day of mediation arrives.  Settlement is then much more likely.  And, SETTLEMENT is what I seek.

Delinquent Condominium Maintenance Fee Liability

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Woodview Condominium Association, Inc. v. Shananhan, et al; 2007 N.J. Super. Lexis 53.

In a recent case, New Jersey's appellate court held that a mortgagee in possession of a condominium unit is personally liable for condominium maintenance fees that accrue during the mortgagee in possession's possession and control of the unit. Here, the mortgagee in possession is personally liable for these fees even though he is not the legal owner of the unit.

In Woodview Condominium Association, Inc. v. Shanahan, et al., Kevin Shanahan owned two (2) units in the Association. In early 2000, Mr. Shanahan conveyed title to both units to Tomas Pratts, Jr. who in exchange, executed a one-year purchase money mortgage payable to Mr. Shanahan. Pratts eventually defaulted on that mortgage. Thereafter, Shanahan assumed control of both units as a "mortgagee in possession". Shanahan then rented the units to third parties.

New Jersey's Condominium Act conditions liability for condominium fees on "ownership". However, special rules and doctrines apply to mortgagees in possession. For instance, New Jersey law provides that "a mortgagee in possession may be liable for services rendered to him in connection with the property during his occupancy thereof on the basis of an express or implied contract." Here, Woodview provided services to these units, including utilities. Here, "monthly dues ... represent carrying costs necessary to maintaining the property and keeping the rental income flowing". Ultimately, Shanahan should not be allowed to benefit from the goods and services provided by the association to him without "having to pay" that association "his pro rata share of the costs".

McGreevey Seeks Sole Custody and Child Support in Amended Complaint

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Stark & Stark Divorce group Shareholder John Eory was quoted in today's Star Ledger's article that discussed Former Governor James McGreevey's amended complaint in his divorce case.  The former Governor is now seeking sole custody of the his 5-year-old daughter as well as child support.

You can read the Star Ledger article here.

You can also watch John Eory later this evening when he will appear on 6ABC Action News discussing the McGreevey divorce matter.

New Design For The New Jersey Law Blog

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We are pleased to announce that we have completed our redesign of the New Jersey Law Blog.  The blog’s new design allows visitors to easily locate information that interests them and provides a richer and more productive visit. One major aspect of the new design is the availability of multiple subscription methods.

The blog now offers more than 60 separate RSS feeds which allows visitors to subscribe to the topical areas, individual authors or media format of interest to them.

One of the more unique aspects of the redesigned blog is the availability of an embedded Flash player that allows visitors to listen to any of the more than 40 author introductions.  Each attorney author has recoded a brief audio introduction which gives visitors insight to their particular capabilities and experience.  The embedded player allows the visitor to listen any of these introductions without leaving the blog or opening a secondary audio player.   Our weekly New Jersey Legal Update podcast also plays through this embedded player and is still available as a free download through the blog as well as at the iTunes music store.

You can read an extended press release about the New Jersey Law Blog redesign here.