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

On June 19, 2008 a New Jersey appeals court determined that a  police chief's retirement, even if involuntary as claimed, was not sufficient to modify his alimony obligation. The Court found that the trial judge had failed to consider numerous other factors which had  bearing on whether alimony should be reduced or terminated, as defined by statute and case law.


Thus, it is important for persons on the verge of retirement and paying alimony, or persons to whom alimony is being paid in such circumstances, obtain sound legal advice and plan accordingly.

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In a decision released for publication on June 16, 2008, the New Jersey Appellate Division held that parenting or custody issues can not be submitted to binding arbitration notwithstanding the parties agreement or even a Court Order. (Fawzy v Fawzy, Judge Simonelli)


In Fawzy the parties agreed, on the record and in open Court, to submit their parenting disagreement to binding arbitration. The parties agreement was then reduced ot a Court Order.
The husband, apparently believing that the arbitration was not proceeding according to his liking, applied to the Court to be released from his agreement to arbitrate the matter and, instead, to have his day in Court.


The Trial Court held Mr. Fawzy to his agreement to arbitrate, but the Appellate Division reversed.
The Appellate Division reasoned that submission of parenting issues to binding arbitration deprived the Court of its parens patrie jurisdiction, and that only the Court (not an arbitrator) can determine what is or is not in the "best interests" of the children.


In all due respect to a very learned panel of the Appellate Division, their decision, although, perhaps, technically correct based upon the time worn doctrine of parens patrie (the assumption that the State is the ultimate parent of all children with rights which are superior to and even exceed those the child's parents) is contrary to public policy which dictates in favor of divorce litigants resolving their disagreements by alterative resolution techniques (mediation or arbitration).


Virtually all experienced Divorce Attorneys would concur that in cases involving custody or parenting issues litigation is often an ineffective means of resolving the issues. It is not uncommon for competent counsel to advise their clients that such matters do not belong in the Court system and should be resolved between the parties and by alternate means. The Fawzy case could certainly be taken a setback to the mediation and arbitration process which is so desperately needed in the Family Courts.


There are any number of very experienced Arbitrators in new Jersey. Some are extremely competent practicing Divorce Attorneys. Some are experienced mental health professionals. Many have served as Family Court Judges, Appellate Judges or even Supreme Court Justices.
Many have extensive background, understanding and training in matters involving the "best interests" of children.


For the Appellate Division to apparently assume that only a sitting Family Court Judge (even one who has little or no experience or background in such matters) can fulfill the State's Parens Patire responsibility of protecting the best interests of the State's children is, at best, premised upon little more than the assumption that a black robe vests the wearer with a innate understanding that can not be delegated to competent counsel, a skilled arbitrator or even well meaning parents seeking to avoid the emotional trauma and cost of litigation.

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In a previous blog post I discussed House Bill 790 in Vermont which would have had a substantial negative impact upon franchising in Vermont.  It would essentially void non-compete provisions in franchise agreements. 

The Bill apparently languished in committee through the end of the May session, which effectively kills it for the time being.  The danger of such bills is that they tend to leach into “sister” states.  The demise of the Vermont Bill is a positive development for franchisors and helps strengthen the franchise community in general because it protects the general integrity of franchise systems.

 

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In Cottelli v. Leisure Village East Association, plaintiff slipped and fell on snow and ice outside of the condominium association. After the plaintiff filed suit, and before the deposition of the association could occur, the association filed a summary judgment motion stating that tort immunity language within their governing documents absolved them from liability in this case.


The association’s governing documents states, “Except for willful or gross negligence, Association not label for bodily injury." The Appellate Division granted summary judgment, but also stated that additional facts relating to the case need to be found in order to determine whether or not negligence or willful misconduct existed on the part of the association. 


This case follows logically what should occur with the tort immunity statute.  While an association may eventually win the case, in order to make certain there is no appeal that can be won, all discovery should be completed so there are no facts in controversy, and the trier of fact (in this case, the judge) can make a determination if tort immunity statute can be utilized in the instant case.

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Scott I. Unger, Shareholder of Stark & Stark's Litigation group authored the article Minority Oppression Claims: A Primer on Acting, Standing, Remedies and Valuation for the June 16, 2008 edition of the New Jersey Law Journal.


The article addresses what constitutes actionable minority oppression, who has standing to assert minority oppression claims, the remedies available to oppressed parties and the meaning of “fair value” with respect to a court-ordered buyout of a minority shareholder’s interest in the closely held company.


You can read the full article here.

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Bill Singer, Shareholder of Stark & Stark's Securities Practice group, was interviewed for Bloomberg Radio regarding the government's case against former Bear Stearns' hedge-fund managers Ralph Cioffi and Matthew Tanni after they were indicted on June 19, 2008.


Mr. Singer outlines possible strategies for both the prosecution and defense, and discusses the failure of U.S. regulators prior to the collapse of the mortgage market. You can read a full article discussing the indictment here.


You can download the full interview here. (3.8 MB)

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During the past decade divorce lawyers have witnessed the steady growth of "Alternate Dispute Resolution" (ADR) techniques such as mediation and binding arbitration of matrimonial issues. While ADR may be a viable option to a judicial decision, a recent case demonstrates the limits of binding arbitration in the divorce context.


On June 16 a New Jersey appeals court ruled that a divorcing couple could not, as a matter of law, bargain away a court's obligation to review the best interests of their children by agreeing to be bound by an arbitrator's decision respecting child support and, by implication, custody or parenting time.


The key word is "binding". In the above case, the parties had initially agreed that the arbitrator's decision concerning child support would be final and not subject to judicial review or appeal. The appellate court disagreed, stating that courts have a "non-delegable, special supervisory function" when it comes to children which cannot be bargained away and voided the parties' agreement.


The point is that persons seeking to resolve their matrimonial differences through ADR need to be aware of what can and cannot be accomplished by seeking advice from skilled and independent attorneys before and during the process.

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Gerald Faber, Shareholder of Stark & Stark's Employment, Business & Corporate and Real Estate, Zoning & Land Use Groups authored the article Regulatory Hammer Strikes Again for the June 9, 2008 edition of the New Jersey Lawyer.


The article discusses a company's need to have a clear understanding of the Construction Industry Independent Contractor Act (CIICA), as well as the need for employers to follow the requirements outlined in the Act. Mr. Faber discusses the need for an employer to exercise control over the methods and quality of a worker's performance in order to maintain a positive and productive employment relationship.


You can read the full article here. (PDF)

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When buying and selling a home, many believe that they can represent themselves, or that the others involved in the house sales transaction will adequately protect their interests. But is this a penny-wise and pound foolish approach? Just what does an attorney do when representing a buyer or seller?


The attorney’s obligation is to represent their client’s interest exclusively. They do not represent the lender, nor the realtors, nor the title company. Each of those parties are receiving payment based generally on the size of the transaction and their fees are contingent upon the sale going through.


First, an attorney helps their client understand and negotiate the terms of the Contract of Sale. While frequently a standard real estate broker form contract is used to commence the purchase/sales process, a party’s interest may need to be protected with additional provisions. For a buyer, perhaps the contract needs to be conditioned upon the sale of their existing home. For a seller, perhaps there are conditions at the property or an easement or restriction which need to be mentioned, or items affixed to the house which the seller wants to remove. Or, for either party, perhaps it is essential that the closing occur no later than a certain date. In all these situations, terms can be added to insure this.


Second, inspection issues often spur additional negotiations. Do buyers or sellers want repairs, or should credits be provided. An attorney can provide assistance in these negotiations.


Third, issues which effect title may arise. For a seller, there may be old mortgages from a prior loan or owner which have been paid off, but not removed from the record and perhaps the lender no longer exists - or has merged with another bank. These will need to be addressed prior to sale. For a buyer, there may be limitations on the use of the property which make the property unacceptable to a buyer. Perhaps it has wider setbacks than what the local zoning ordinances require, or perhaps there are limitations as to how the property may be used. Or, perhaps there is a sewer easement or a pipeline easement running through the property so that an intended pool the buyer sought to install would not be possible. These are all issues that an attorney, after consultation with their client and being informed of the client’s expectations, can be in a position to protect.


Fourth, for Sellers, the attorney will prepare all the necessary transfer documents. For buyers, the attorney will assist with the loan documentation and execution of the mortgage documents.


Finally, issues can arise at the actual closing. It may be an explanation of the loan documents to the buyer, a walk-through issue which needs to be negotiated or a last minute title issue raised by the final run-down of title. A buyer’s or seller’s attorney present at closing can explain the consequences and offer options available to remedy the situation.

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Michael J. Fekete, member of Stark & Stark's Business & Corporate group, authored the article Contractors Be Warned: Don't Get Nailed for the May 5, 2008 edition of the New Jersey Law Journal.

Mr. Fekete's article discusses how contractors can avoid potential liabilities by complying with the New Jersey Home Improvement Contractors Act. While compliance with the regulations alone will not protect a contractor from claims regarding workmanship, adhering to the regulations will reduce the chances that litigation will occur.

You can read the full article here.

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On April 22, 2008, the New Jersey Law Revision Commission issued a revised draft of its tentative report on the Construction Lien Law, N.J.S.A. 2A:44-1, et seq., which includes numerous suggestions that, if enacted, would serve to clarify some and completely change other provisions of the statute. There are also some brand new sections proposed for the Construction Lien Law. One example of the Commission’s recommended legislative amendments relates to the Construction Lien Law’s definitions section. The Commission proposes revising the meaning of certain terms, such as “contract” and “residential construction contract” and creating new definitions for terms that had not previously been defined in the statute, such as “dwelling,” “lien fund” and “residential unit.”


Another example is the proposed clarification of the language governing entitlement to liens for work performed and materials or equipment provided on leased property at N.J.S.A. 2A:44-3. Presently, a construction lien attaches to the leasehold estate rather than the interest of the owner in the real property, unless the owner-landlord authorized in writing the specific improvement contracted to be installed at the leased premises. This essentially was how the Appellate Division read N.J.S.A. 2A:44-3 in its 2007 unreported decision captioned Cherry Hill Self Storage, LLC v. Racanelli Construction Company, Inc. The proposed change, if enacted, would allow construction liens for improvements to leased premises to attach to the owner-landlord’s interest in the real property without a separate written authorization for a given improvement provided that “the tenant’s lease agreement, signed by the owner, permits the improvement without further owner authorization[,]” and would thereby legislatively overrule the Cherry Hill Self Storage case.


The Commission’s revised draft tentative report also contains revisions to the requirements for the filing of lien claims at N.J.S.A. 2A:44-6, which specifies what must be included in a lien claim and increases the amount of time to file lien claims for work performed and materials or equipment provided on residential construction contract from 90 to 120 days. Additionally, among other things, the Commission seeks to create a new section - proposed to be codified at N.J.S.A. 2A:44-9.1 - that outlines in detail the method for calculating a lien fund, an owner’s maximum liability and impermissible reductions from a lien fund. The addition of proposed N.J.S.A. 2A:44-9.1 is one of the most significant changes to the Construction Lien Law recommended by the Commission, which was prompted, at least in part, by a number of case decisions, such as Labov Mechanical, Inc. v. East Cost Power, L.L.C., 377 N.J.Super. 240 (App. Div. 2005) and Craft v. Stevenson Lumber Yard, Inc., 179 N.J. 56 (2004).


It is uncertain what the fate of the aforesaid proposed legislative revisions will be in the coming months. However, it is interesting to see how a handful of judicial rulings on the Construction Lien Law have sparked debate and provided the basis potentially for some decisive legislative action in this area of law.

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Massachusetts and, perhaps, California now permit Same Sex Marriages. Several States (including New Jersey) permit same sex Civil Unions or Domestic Partnerships.


A Same Sex Marriage can only be dissolved by a divorce and most Civil Union and Domestic Partnership statutes provide that they can only be terminated by an action tantamount to a divorce. The Rhode Island Supreme Court, however, has cast into doubt whether a State which does not permit Same Sex marriages or Civil Unions can dissolve such relationships.


The situation arises when parties who have entered into a same sex marriage or civil union now reside within the jurisdiction of a non-sanctioning State. In Chanbers v. Ormiston 935 Atl 2nd 956 (RI 2007) the Rhode Island Supreme held that the Courts of Rhode Island had no jurisdiction to terminate a Same Sex Marriage or Civil Union entered into in another State on the basis that Rhode Island does not authorize such unions. In a decision based upon the strict construction of its Family Court enabling statutes, the Court ruled that the Rhode Island Family Courts only had authority to dissolve "marriages" as defined and authorized by their State law. Thus, the litigants would be required, under the Rhode Island Supreme Court reasoning, to return to and re-establish residency in the (or, presumably, a) State which authorized their marriage or union.


In some case, New Jersey for example, that would require a period of 1 year of such residency prior to instituting the action to dissolve the Civil Union. It is respectfully submitted that such consequences offend the notions of Equal Process or Full Faith and Credit recognition of the Statutes of a sister state. It would seem that Rhode Island's apparent opposition to the underlying concepts of same sex marriages or civil unions has controlled its decision, not fundamental concepts of Equal Protection and Full Faith and Credit.


Should the Rhode Island reasoning become the prevailing law, it is further submitted that significant inequities will be visited upon person who entered into legal and binding relationships in their State of residence at that time simply because they subsequently relocate to another State which disagrees with the underlying validity of their relationship. Consider, for example, the inequity of requiring the party seeking the termination of the relationship to surrender their employment in order to return to the State of origin of their relationship in order to terminate the relationship.
Suppose there are children of the relationship, the children must be removed from school and relocated simply so that their parents may terminate their relationship.


In no other area of Family Law does a terminating state refuse to terminate a marriage because it does not comply with the marriage laws of that State. Suppose , for example, persons were married at age 16;the legally permitted age under the law of the State of origin of the marriage, but not permitted in the terminating state. Would or should the terminating State refuse jurisdiction to terminate the marriage because it does not comport with it us marriage statutes? Of course not.


From this author's perspective, it is time for our Courts and Legislatures, and most importantly our Family Courts as Courts of Equity, to give Equal Protection to all of our citizens, not simply those of heterosexual orientation.

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Milford Mill 128, LLC v. Borough of Milford, et al.


On May 2, 2008, the Appellate Division in Milford Mill 128, LLC v. Borough of Milford, et al. evaluated, among other issues, the validity of a redevelopment plan that required the municipal governing body to review of all proposed redevelopment projects for consistency with the redevelopment plan and any relevant redeveloper agreement as a prerequisite to the filing of an application for development with the local planning board - in this case a joint board - and prohibited the joint board from granting any variances from the plan requiring, instead, that any such deviations be approved by the governing body by way of amendment to the redevelopment plan. Ultimately, the Court upheld the redevelopment plan, but was careful to limit its ruling strictly to the circumstances presented.


In this matter, the plaintiff had sought consistency review for a redevelopment project within a redevelopment zone that contained uses not permitted in the redevelopment plan or by the underlying zoning district regulations for the subject property and proposed an intensity of development well in excess of permitted densities. When the municipal governing body failed to conduct a review of the plaintiff’s redevelopment proposal for consistency with the redevelopment plan in a timely manner, the plaintiff proceeded to file an application for variances directly with the joint board. However, this application was deemed incomplete due to the lack of the aforesaid consistency review. The plaintiff then brought suit against the municipal governing body and the joint board alleging, among other things, that the redevelopment plan was arbitrary, capricious and unreasonable and that the joint board unduly delayed its review of the application for variances and, thereby, should have been approved.


Although the Appellate Division determined that the plaintiff’s challenge to the redevelopment plan was barred by the 45-day appeal period provided by the Rules of Court, the Appellate Division addressed the plaintiff’s substantive challenge to the review procedures contained in the redevelopment plan and rejected it. According to the Court, nothing in the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”), the governing statute, “foreclose[s] a redevelopment plan from specifying, as here, that an applicant must present its proposal initially to the governing body for a determination of consistency.” Moreover, “[i]t is entirely sensible for the municipal governing body, rather than the municipal land use board or boards, to conduct an initial review of a developer’s proposal to assure that it does not amount, in effect, to a de facto repeal of, or amendment to, the redevelopment plan.”


The Appellate Division also upheld the provision in the municipality’s redevelopment plan that restricted the joint board’s review of variance applications as applied to the instant circumstances where “the massive scope of plaintiff’s proposal” was in effect an attempt “to rezone the entire redevelopment area.” However, the Court noted that had plaintiff sought approval of “a ‘minor exception’ to the requirements of the Redevelopment Plan, as we countenanced in Weeden [v. City Council of Trenton, 391 N.J.Super. 214 certif. denied 192 N.J. 73 (2007),] it might not have permitted the governing body to foreclose such consideration.


In short, although a victory for the municipality, the Appellate Division’s decision in Milford Mill 128, LLC v. Borough of Milford, et al. should be viewed with caution by local governments that are intent upon restricting redevelopment of designated areas through the use of pre-application review procedures or other development controls. Indeed, the Court made clear in its decision that redevelopment plans will not pass muster if they have the effect of depriving developers or landowners “of the opportunity to make use of the property in an economically productive manner.” The Milford Mill 128 opinion has been approved for publication and is officially reported at 400 N.J.Super. 96 (App. Div. 2008).

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Condominiums and HOAs often proceed in transition with the concern that it may not get defects fixed, damages paid and/or funds contributed by developers because a developer may be insolvent, bankrupt, an inactive "shell" company or otherwise asset-less. While it is always good to enter a transition with some trepidation, any board that enters into a transition with any developer - whether solvent or insolvent - without considering the existence and provisions of its developer's commercial general liability policy ("CGL") is doing its members a disservice. It is very often the case that a carrier via its CGL will have to pay developer - and then an association - for damages that resulted from faulty work done by that developer's subcontractor.


In just the past 12 months courts throughout the country have held carriers, via CGL, liable for construction-related damages. Most recently, the Florida Supreme Court unanimously ruled that a carrier must pay damages resulting from a subcontractor's defective work. In this case, the court considered whether a CGL, issued after 1986, and to a general contractor, provided coverage when a claim is made against the contractor for damage to the completed project caused by a subcontractor's defective work. In this case, after the sale of homes, damage to foundations, drywall and other interior portions was discovered. There as no dispute that the cause of this damage was a subcontractor's use of poor soil and improper soil compaction and testing. Pursuant to the CGL, the carrier agreed that there was coverage for owner personal property, but not for the cost of repairing the structural damage to the homes (i.e., foundation and wall damage).


The Florida Supreme Court ruled against the insurance carrier, concluding that defective work performed by a subcontractor that cause damage to the developer's completed project, and is neither expected nor intended from the standpoint of the developer can constitute 'property damage' caused by an 'occurrence' as those terms are defined in a standard form CGL. In turn, a claim mad against the developer for damage to the completed project cause by a subcontractor's defective work is covered under a post-1986 CGL. Since the CGL included a subcontractor-related exception to the CGL's main exclusion, coverage existed.


It is imperative that every board consider the CGL of its developer, when faced with construction defects - especially since a developer's work is almost always performed by a subcontractor. Considering, and being mindful of, this during transition can increase a community's leverage, and options, and lead to a more successful transition.

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The Fair Housing Act (the "FHA") makes it illegal to discriminate against any person in the provision of housing-related services and facilities based on familial status. "Familial Status" is defined by the FHA as one or more persons who have not attained the age of 18 who live with a parent or legal guardian. Community Associations are subject to the requirements of the FHA and accordingly must be careful not to discriminate against persons 18 or younger with regard to services or community amenities offered by the Association. Mindful of this, Boards ought to be wary of placing restrictions on pool use based on age. Some common violations include age-based swim tests, adult supervision requirements, adult only swim times and greater restriction on guest allowances for junior members.


Courts across the country routinely strike down rules which require a swim test for only individuals who fall within a certain age group. The court’s rationale is that swimming capabilities have no reasonable connection with age. A 13 year old certainly may be able to swim better than an 18 year old. Unless the Association wishes to test everyone, it cannot restrict swim testing to a certain age group.


Although most courts would agree that adult supervision is viewed as a reasonable and necessary health and safety restriction for children under 12 years, courts have found required adult supervision for children who are 13 years or older as unreasonable and thus in violation of the FHA.


Similarly, many communities wish to enact a rule that allows for "adult only" swim time. However, without a reasonable basis that such a restriction is necessary for health and safety reasons, courts will likely strike such a rule. A better option might be to enact a regulation that allows for time where only swimming laps is permitted. Most often the reason for wanting adult swim time is to offer time in the pool where adults can swim laps without interference. The "lap only" restriction would accommodate this desire, yet not unreasonably discriminate against minors.


Lastly, Boards should be wary of enacting a policy that places greater restrictions on guest attendance for "junior" members. A guest policy should be uniform for all members as to avoid a violation of the FHA.

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In this digital world that we live in, a common question that arises from our clients relates to what ability a condominium association has to restrict and control the placement of satellite dishes. Issues regarding the placing of satellite dishes tend to arise in associations that are either located in heavily populated urban areas where a direct line of sight to a satellite is not available or in a heavily wooded area where surrounding trees block reception. The placement of over-the-air reception devices, which include satellite dishes, is regulated by the Federal Communications Commission (the "FCC"). The specific rule covering these antenna was put into effect in October 1996 and is titled 47 C.F.R. Section 1.4000 (the "Rule"). The Rule applies to video antennas, including direct-to-home satellite dishes that are less than one meter (39.37 inches) in diameter, t.v. antennas, and wireless cable antennas.


The Rule prohibits most restrictions that unreasonably delay or prevent the installation, maintenance or use of an antenna; unreasonably increase the cost of the installation, maintenance or use of the antenna; and/or would preclude the reception of an acceptable quality signal. However, of specific note is the fact that the Rule does not apply to the common elements of a condominium association. The FCC does not restrict the association from prohibiting the placement of satellite dishes on the roofs or on the siding of the association’s building(s) or those areas deemed to be common areas/elements under the association’s governing documents. The association is not obligated to allow access to either the roof, the siding, or the common elements to allow unit owners to place satellite dishes or other antennas.


However, if a unit owner has exclusive use of property within the association, such as a balcony, patio or backyard, then the satellite dish may be placed there. "Exclusive use" means an area of the property that only the unit owner may enter and use to the exclusion of other residents. Even if the satellite dish is placed on an area of exclusive use, the association may restrict the drilling through of exterior walls which are common elements or where the drilling would affect the fire safety or structural integrity of the building. The installer/retailer must find an alternative way of providing wiring into the unit to transmit the signal. Furthermore, the association may prohibit the installation of satellite dishes which would extend beyond the balcony or patio of a unit. Therefore, if the satellite dish is placed on the railing of a balcony which is the exclusive use of a condominium unit, but the dish extends past the railing, the association may prohibit its placement on the railing. Even if a satellite dish is placed in an area of exclusive use, the association can create restrictions designed to protect the safety of the association, such as restricting areas that are close to powerlines or fire escapes. However, all such safety restrictions must be placed in writing, explaining the reason for the safety restriction.


If the Association decides to allow a unit owner to place a satellite dish on a common element, including a lawn area, roof, chimney or exterior wall, the association can establish procedures which include: a). the charging of a deposit to protect against any damage to the common element; an application form to be completed and reviewed prior to the installation; b). a requirement that the unit owner indemnify the association from any harm or damage caused by the installation of the satellite dish; and, c). a requirement that the unit owner remove the satellite dish at the time of sale and return the common element to its original condition. In addition, the association may require that the satellite dish be painted a particular color to match the surrounding area and not become an eyesore to the association.


If you have questions regarding the rules promulgated by the FCC regarding antennas and satellite dishes, you may contact our office regarding same.

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Owners in a condominium or homeowners association must understand that non-payment of maintenance fees will result in either foreclosure or a personal judgment against them. Maintenance fees are the lifeline of community associations and these associations would not survive without them. When an owner does not pay his/her maintenance fees, he/she is a delinquent owner. The Board will then determine at what point the delinquency is referred to an attorney’s office for collection. Generally, the collection process begins with a collection letter. The Board should decide quickly thereafter, if payment is not made, what avenue of collection to take. There are two options: foreclosure or money judgment.


In the case of foreclosure, the end result is a sheriff’s sale and the unit is ultimately taken from the owner. The Association is rid of an owner who does not pay his/her maintenance fees. These non-paying owners are a financial drain on the community and not beneficial for the financial health and well being of the community.


In the case of a money judgment complaint, the Association will end up with a personal judgment against the owner. So long as the owner has a bank account, the Association may levy the account. If the owner is employed, the Association may also garnish the owner’s wages. However, if the owner is not employed and has no assets, there may be no way to collect on the judgment and, therefore, the Association has an owner who continues to not pay maintenance fees and a judgment it may not be able to collect. In that event, we can docket the judgment with the Superior Court which will remain on the debtor’s credit for twenty (20) years. These are all necessary considerations when making collection decisions.

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It is well-settled law that retirement plans such as pensions, 401(k)s, 403(b)s, KEOUGHs, profit sharing plans, deferred compensation plans and IRAs are subject to equitable distribution in the event of divorce.


But what about a disability pension?  Is that an asset accumulated during the marriage and subject to equitable distribution like a retirement pension, or should it be looked at like a personal injury award or worker’s compensation award wherein if it’s attributable to pain and suffering it is not subject to equitable distribution.
   

In a recent New Jersey Appellate Court case, the Husband, who had been a fireman, was injured on the job and entitled to the Police and Fire Retirement System disability pension.  The issue was whether this disability pension was subject to equitable distribution.  It must be noted that State of New Jersey employees, whether public employees, teachers, police or firemen, are entitled to a pension upon retirement if those employees have the requisite number of years in the retirement system.  If an employee becomes disabled before retirement, that employee may be eligible for a disability pension which takes the place of a future retirement pension. 
   

It was determined by the New Jersey Appellate Court that the State disability pension is made up of two components–one that represents a retirement allowance and one that represents compensation for the disability.  It was held that the retirement allowance portion is subject to equitable distribution and the compensation for disability portion is not.  Since the Court was not provided with evidence in allocating a value to each of these components and since the plan itself  is not divided into separate components, the Court came up with its own formula.
 
   
In this particular case, wherein the disability was the result of a traumatic event occurring during the performance of duties, the disability allowance was two thirds (66-2/3%) of the employees’ final compensation regardless of age or years of service or contributions to the pension.  There is a lower percentage disability allowance in the event of disability which is not a qualifying traumatic event (i.e. disabling illness).  If an employee  is injured early in his career, he/she receives the same percentage of final salary as an employer who may be injured later on in his/her career.  In comparing the ordinary retirement pension to a disability pension, the retirement pension is dependent upon years of service and age.  Those pensions generally range from 50% to 65% of final salary.  Therefore, the enhanced benefit in the event of a qualifying traumatic event during performance of duties is anywhere between 16-2/3% and 1-2/3%. 
   

The expectations of a divorcing couple are that the retirement portion of this pension, which was a forced savings during the marriage and an anticipated benefit by both parties in the future, should be allocated between the two of them upon divorce.  If the disability occurs when the employee would have already been eligible for retirement, even if early retirement, then we would know what percentage of the disability pension would have been for retirement–anywhere between 50% to 65% depending on the number of years of service.
  

So, for example if the employee had worked for 20 years and would have been eligible for a retirement pension of 50% of their final salary, but became disabled as result of a qualifying traumatic event and therefore received a disability pension of 66-2/3% of a final salary, then  the additional 16-2/3% of the disability pension is related to the disability and 50% of the pension is related to service and subject to equitable distribution.
 
   

But what happens if the employee does not have enough years of service in to be eligible for the ordinary retirement pension?  How are the two components determined?
   

The Appellate Division decided that it would use the earliest retirement percentage of final salary which is 50% attributable to 20 years of service, stating that the disabled employee would have most likely worked until early retirement but for the disability.  So, for example, if the employee became disabled after 10 years on the job, in order to determine the percentage of the retirement portion of the pension subject to equitable distribution, we should use a coverture fraction wherein the numerator of this fraction is the number of years the employee worked during the marriage (in this example, 10 years) and the denominator is the total number of years worked (or in this case, number of years he would have worked but for the disabling injury, which is 20 years).  Therefore, the coverture fraction would be 10/20 or ½.
   

Now, assume the employee’s final salary before the qualifying traumatic disability was $60,000.  The disability retirement pension would be $40,000 per year, or 2/3 (66-2/3%) of the employee’s final salary.  A normal retirement pension would have been $30,000 or 50% of the final salary.  The $10,000 per year difference between the two is the disability component  which belongs to the injured employee and is not subject to equitable distribution.
   

The retirement pension component is subject to the coverture fraction, as discussed above, wherein 10/20 or ½ of the $30,000, or $15,000 per year, is subject to equitable distribution.         
   

This recent case now gives us a definitive answer that State disability pensions are subject to equitable distribution as well as gives us the formula for determining which portion is divisible in the case of divorce. 

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Monroe Properties, LLC, et al. v. The City of Hoboken, et al.


On May 30, 2008, the Appellate Division in Monroe Properties, LLC, et al. v. The City of Hoboken, et al. (and the companion case Hoboken Parks Organization, et al. v. The City of Hoboken, et al., which was consolidated with the former for purposes of the opinion) squarely rejected an attempt on the part of a municipality to select and enter into a memorandum of understanding with a private redeveloper prior to designating the study area as an area in need of redevelopment.


According to the Court, a municipality or other redevelopment entity has no inherent authority to enter into a memorandum of understanding for redevelopment but, rather, must abide the statutory procedure set forth in the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”). This procedure requires the conduct of a preliminary investigation by the local planning board into whether a given study area is in need of redevelopment, the actual designation of such area by the municipal governing body and the adoption of a redevelopment plan by ordinance. “Once an area is determined to be a redevelopment area and a redevelopment plan is adopted, then a municipality may exercise redevelopment functions[,]” which includes, among other things, entering into contracts with redevelopers “for the planning, replanning, construction, or undertaking of any project or redevelopment work.” N.J.S.A. 40A:12A-8f.


Although the Monroe Properties decision has not yet been approved for publication, and therefore has no precedential value, it is well reasoned and firmly grounded in the statutory text of the LRHL. As such, municipalities or developers who have entered into (or are considering entering into) a memorandum of understanding or other pre-redevelopment agreement would be well advised to reevaluate their legal strategy.

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In the world of post-divorce litigation, the issue of cohabitation by an alimony recipient continues to be an area of contention.


On the one hand, since there is no longer a duty of marital fidelity, should a former spouse who is receiving alimony be barred from living with whoever he or she chooses, especially since the paying spouse is free to do so?


On the other hand, should a person paying alimony be compelled to continue doing so when his or her former spouse is cohabiting instead of remarrying which would terminate alimony?


New Jersey courts have wrestled with these issues for years and, while every case is (as we lawyers say) fact-specific, there are legal guideposts to help navigate the terrain.


First, the mere fact of cohabitation, even when admitted-to or demonstrated to a court, is insufficient to terminate or even reduce alimony. What occurs in such cases is that the burden shifts to the person receiving alimony to prove why he or she is still entitled to payment.


In a case just decided on June 3, 2008, a three judge New Jersey appeals court upheld the lower court's decision that alimony should continue despite the recipient's acknowledged cohabitation and an economic inter-relationship with her boyfriend.


This case does not mean that alimony cannot be reduced or terminated if cohabitation exists. It does, however, highlight the strong need for someone seeking relief to consult with experienced legal counsel in order to determine how to proceed.

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Stark & Stark is proud to support The Law Center, home to both the New Jersey State Bar Association and the New Jersey State Bar Foundation, through a donation which will enable The Law Center to provide wireless internet access to all public areas of the building.


For 20 years the Law Center in New Brunswick has been the state’s go-to place for public legal education and professional development for lawyers. Lawyers networking with their colleagues or attending an event at the Law Center need only bring their wireless-enabled laptop computers and turn them on. As long as the computer has a wireless network card installed, it will automatically recognize the network and enable Internet access.


“This is a great boon for all visitors but especially for attorneys who need to maintain electronic communication with their offices and clients while participating in a Foundation program, attending a Bar Association meeting or an ICLE [Institute for Continuing Legal Education] seminar,” said Angela Scheck, Executive Director of both the Association and the Foundation. “We’ve been working on an ambitious plan for Center upgrades for some time, so to see the first big technological step come to fruition is tremendously satisfying. Our sincerest thanks go to Stark & Stark for putting the first of many vital renovations and improvements into place. “


Stark & Stark is donating the Wi-Fi access in response to the Foundation’s Forever Vital Capital Campaign, which began last year. The campaign’s goal is to bring the Law Center into the 21st century with renovations and upgrades to state-of-the-art communications technology, including hotel-style workstations for visitors, videoconferencing in all rooms, and live and archived auditorium broadcasts of ICLE seminars and more. The technological advances will allow attorneys to reduce the time and expense of attending ICLE programming onsite by participating online if they so choose.


“As a leading law firm, we welcomed the opportunity to take a leadership position to help move the Law Center ahead technologically,” said John A. Sakson, Stark & Stark’s co-managing shareholder. “Today technology plays a large role in what we as attorneys do. Through this gift of wireless communication, we not only fulfill the needs of the Bar Association and Bar Foundation, but we set an example for other lawyers. Stark & Stark believes in the mission of the Bar and the Law Center.”


The wireless capability made possible by the Stark & Stark donation enhances the Bar Foundation’s burgeoning reputation as the preeminent resource for lawyers and law-related education for everyone. Founded in 1958, it is the educational and philanthropic arm of the New Jersey State Bar Association. The Foundation’s mission is to promote public understanding of the law through a free, comprehensive public education program. Among its activities, the Foundation conducts seminars and conflict resolution training, publishes materials, operates a videotape loan library and speakers bureau, and coordinates elementary, middle and high school mock trial competitions. For more information about the Foundation’s programs and publications, visit them online or call 1-800-FREE-LAW.

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A. Christopher Florio, Shareholder and Co-Chair of Stark & Stark's Community Associations group, contributed to the Questions & Answers section of the May 2008 edition of the New Jersey Cooperator. Mr. Florio's Q&A can be found below:

Q - I filed a civil action against my condo association’s board. At the end of each year, each condo owner legitimately and rightfully is entitled to obtain the balance sheet and budget for expenses. I requested that the managing agent make these documents available for me to copy. I received a reply from the condo’s attorney saying I must cease and desist from all and any communication with his clients (the condo association). He also indicated that my request for documents, i.e., the financial statements, is not a proper discovery request, and that I must prepare and serve a discovery request in accordance with the rules governing the courts of the state of New Jersey. Is a unit owner who files a lawsuit against the condo barred from obtaining financial accounting, budgets, and statements from the association?
—Litigating Owner

A - “First, I am going to assume that you are litigating this matter against your association on a pro se basis,” says Christopher A. Florio, an attorney with the law firm of Stark & Stark in Princeton. “That is, you have not engaged the services of a licensed legal professional to represent you in this matter. Second, without knowing exactly how the association’s attorney responded to your discovery inquiry by setting forth the form of discovery as improper, I will answer this question based not only in a litigation context, but as it relates to any member’s request for certain information from any condominium association in New Jersey.


“As it relates to your discovery demand, unless the association can show the information requested is privileged under New Jersey Rules of Court (there are certain other ways the association can argue in court that you are not entitled to certain discovery requests, but for purposes of your general question, the privileged exception is the most common), the association must produce the discovery requested.


“Notwithstanding the discovery process under the New Jersey Court Rules, my personal opinion, based on New Jersey regulations, is that almost all functions of a condominium association, including documentation, is open and available to the members of the association. That is, notwithstanding the lawsuit you have commenced, as a member of the condominium association, you are entitled to almost all documentation that is generated as it relates to the operation of the association. New Jersey regulations as it pertains to the conduct of open meetings sets forth four instances where member attendance can be restricted upon the following criteria: 1.) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; 2.) Any pending or anticipated litigation or contract litigation; 3.) Any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his or her ethical duties as a lawyer; and 4.) Any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. (N.J.A.C. 5:20-1.1).


“As almost all condominium associations in New Jersey are formed under Title 15A of the New Jersey Non-Profit Corporations Act, you should be aware that N.J.S.A. 15A:5-24 deals with the ability of the corporation’s members to have reasonable access to the books and records of the corporation. I have successfully utilized this provision a number of times to compel an association to turn over books and records to a member when it had initially refused to do so. Additionally, your master deed and bylaws may require the board to conduct an annual audit, and to provide that audit to its members. Failure by the board to abide by the terms of its master deed or bylaws as it relates to an annual audit could be cause in asserting the trustees have breached their respective fiduciary obligations to the association.


“If your allegations against the association involve alleged financial improprieties; or the failure of the board to provide required financial information to its members; or any other basis dealing with the finances of the association, in order for you to prove your case—you must have access to the financial information of the association. The discovery process provides you with the mechanism to obtain this information and notwithstanding the counsel for the association advising that your discovery request is improper, you are entitled to this information. Assuming you are pursuing this matter on a pro se basis, upon motion with the court, you can demand that the association make this information available to you.


“Finally, you indicated in your colloquy that the association’s attorney stated that you ‘must cease and dismiss from all and any communication with his clients.’ Because counsel represents the association, even though you are pro se, you must direct all inquiries relative to this matter to the association’s counsel.”

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Cary S. Kvitka, member of Stark & Stark's Franchise and Business & Corporate groups, will present a seminar in association with SCORE of Princeton, Counselors to America's Small Business. SCORE offers free and confidential small business advice to help you build your business from idea to start-up to success.


The seminar will focus on what you need to know when starting a business. Mr. Kvitka will discuss:

• The pros and cons of the three options: buying an existing business; purchasing a franchise; or building your own business.
• Intellectual property issues, such as trademark or copyright concerns.
• How to negotiate commercial leases and other vendor contracts.

You can access additional information, and registration information, here.

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When a parking war erupted last year between two adjacent restaurants in northern New Jersey, the battle resulted in a law which affects the rights of community associations to tow vehicles from their premises. In October 2007, Governor Corzine signed a new bill into law called the “Predatory Towing Prevention Act” (“Towing Act”) which primarily increases oversight of tow companies. While a law regulating tow companies may not seem relevant to your community association, if you want to tow vehicles from private property areas, it does have implications which could affect your ability to do so.


As expected, the Towing Act mainly regulates what tow companies must do and not do. One provision, however, directly addresses what a private property owner must do before removing a vehicle from its premises without the vehicle owner’s permission. A property owner may only cause removal of a motor vehicle parked on the property if certain signage is posted, the storage facility is a reasonable distance from the property, and the tow company complies with the Towing Act. The Towing Act further requires a tow company to obtain written authorization from the property owner for the tow.


The signage requirement of the Towing Act is burdensome and may be aesthetically undesirable. Signs which are at least 36 inches high and 36 inches wide must be installed “in a conspicuous place at all vehicular entrances to the property which can easily be seen by the public”. The signs must state the following:

1. The purpose for which parking is authorized and the times during which it is permitted.
2. That unauthorized parking is prohibited and unauthorized vehicles will be towed at the vehicle owner’s expense.
3. The name, address, and telephone number of the towing company that will perform the towing.
4. The charges for the towing and storage.
5. The street address of the storage facility where towed cars can be redeemed and the times during which the vehicles may be redeemed.

If the required signs are not posted, a property owner may still tow vehicles parked (a) on a lot on which a single family home is located, (b) on a lot on which an owner occupied multi-unit structure of not more than six units is located, or (c) in front of any driveway where the motor vehicle is blocking access to that driveway. While legal arguments could be made that the first two exceptions should exempt many associations from the signage requirements, it is likely a tow company would still require compliance before removing vehicles.


A community association also must provide written authorization and have a representative present in order to get a vehicle towed. The Towing Act requires that a tow company obtain written authorization from the property owner (or its agent) and that the property owner (or agent) be present at the time the vehicle is towed to verify the alleged violation. A general written authorization is permissible for towing done outside of the property owner’s normal business hours or to remove a vehicle which blocks a fire hydrant or entrance to the property. Vehicles must be removed to a storage facility which is a reasonable distance from the property.


The Towing Act does not address the many obvious differences between community associations and a busy mall or restaurant parking lot. Community associations will often have very different reasons for towing vehicles than a retail center. A community association may tow a vehicle if the owner’s membership rights have been suspended for delinquency in the payment of maintenance fees or if a vehicle violates the rules in some way. Community associations also have more opportunities for communicating directly with vehicle owners than businesses serving a transient population and can give unit owners advance written notice of any actions or rules changes. Unit owners, as members of the community association, have the obligation to know and comply with the rules. Despite these differences, the Towing Act as currently written appears to apply to community association and it is not clear how it will ultimately be enforced.


What is clear is that the Towing Act is scheduled to go into effect in October 2008. If your community association uses towing services to remove vehicles from its private property, you will want to discuss the Towing Act with your towing company and ensure that the proper signage is posted. You should also be aware that there may be regulations established by the local municipality which apply to the removal of vehicles from private property. With any vehicle towing policy, legal counsel should always be consulted first to establish proper procedures.

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