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

In New Jersey, new home builders are not required to have general liability insurance. As a result, purchasers of new homes and condominium units are sometimes left without recourse in the event that their home was not constructed properly.

As discussed in several Superior Court opinions, the New Home Warranty Program is ineffectual at best and is rarely an advisable option. Therefore, homeowners and condominium associations are often times forced to sue the developer of their property in an effort to obtain money for necessary repairs. Unfortunately, it often happens that home builders and condominium developers create a corporation or limited liability company for a specific project. The company is minimally funded, and it hires only independent subcontractors. The company is then shut down when the project is completed. A judgment against this company would be completely worthless. In other instances, if a project is not particularly profitable, the developer company may file for bankruptcy protection and whatever limited assets it has would be disbursed to the various creditors. In these situations, if the homeowner or association discovers defects in the construction after several years, there would be no source of recovery. The warranty program provides almost no assistance, and suing a defunct corporation is a waste of time. Therefore, the homeowner or association would be stuck paying for costly repairs. However, if the developer had general liability insurance in place during the project, those insurance policies could provide coverage for the construction defects. Unfortunately, in New Jersey and many other states, builders are permitted to develop land and build homes with minimal or no insurance in place.

In order to prevent these problems and protect new homeowners, the Nevada Assembly has proposed a bill that would require all licensed contractors to carry liability insurance. The bill would require all contractors to carry between $300,000 and $3 million worth of insurance, depending upon the size of the contract. According to the bill's sponsor, Majority Leader John Oceguera, this would protect homeowners from having to sue and/or negotiate with shell companies that are no longer in business, or companies that have filed for bankruptcy protection. Not surprisingly, the Associated General Contractors organization in Nevada objects to the proposed requirement, claiming that insurance is an expensive product, that it would put a significant burden on the contractors and that the cost would be passed directly to the homeowners. The bill has not yet passed, and faces strong opposition as well as a competing bill from the Nevada Senate.

In the last several years, the New Jersey legislature sought fit to require home improvement contractors to carry liability insurance, but has thus far not applied such a requirement to new home builders and developers of cooperatives and condominiums. We will continue to monitor the situation, and update our readers in the event that additional information becomes available.

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The plethora of recent ponzi schemes, frauds and scams poses a new challenge for divorce attorneys and litigants throughout New Jersey and the country. Are the accounts real or are they the subject of scam which may ultimately prove them to be worthless?

It is bad enough that many divorce litigants know that their 401K or other accounts are 50% of last years’ value, even worse if they subsequently learn that event their remaining accounts have been strip of value by  “Madoff type” managers.

If, for example, one of the parties exchanges the house for an account which, subsequent to the divorce, and through no fault of either party, proves to be worthless, is there Post Judgement relief available to the party who, as a result receives nothing of value?

The answer: we don’t know.

A Post Judgment Court may find that the parties should have known of could have obtained pre divorce discovery which would have disclosed the circumstances or could find that it is a”change of circumstances” which justifies a modification of the settlement agreement or judgment.

With regard to the latter, the current status of the law in New Jersey is that a “change of circumstances” does not justify the modification of an equitable distribution agreement or award. Thus, to grant relief to the wronged party a Court may have to “create new law”.

The word of warring is “caution”.

Counsel and the parties must even more carefully than before scrutinize assets and investment accounts.,

Creative Counsel may even develop clauses for their Settlement Agreements which addresses subsequent developments which are beyond the control of the parties, but result in an asset becoming worthless. 

The art form will be “which assets”, how have they failed, why have they failed and for how long is the clause effective?

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Although municipal boards are not bound by the strict rules of evidence during the conduct of proceedings, their findings and determinations must be based upon substantial credible evidence created in the record. This applies when a municipal board acts in a quasi-judicial capacity during the review of applications for development under the Municipal Land Use Law, N.J.S.A. 40:55D-1, et seq. (“MLUL”), and when a municipal board (specifically, a planning board) acts in a quasi-legislative capacity during a preliminary investigation into whether certain properties are in need of redevelopment pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”).

In order to meet the substantial evidence standard an adequate record must exist. This requires a verbatim recording of the proceedings. The MLUL expressly requires that “[t]he municipal agency shall provide for the verbatim recording of the proceedings by either stenographer, mechanical or electronic means.” N.J.S.A. 40:55D-10f. Although there is no comparable provision in the LRHL, the Appellate Division in Concerned Citizens v. Mayor implied that the minimum procedures required for hearings on applications set forth in the MLUL applies equally to the conduct of proceedings by municipal agencies under the LRHL. 370 N.J.Super. 429, 463 certif. denied 182 N.J . 139 (2004). The application of the MLUL in this regard is reasonable in light of the importance a written record plays in memorializing issues, concerns and policy considerations that were relevant when the municipal board made its determination. A written record of proceedings also provides the judiciary with a basis for evaluating the validity of a determination when it is challenged on appeal.

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Minority shareholders in closely held corporations often find themselves on the outside looking in when it comes to managing the daily affairs and making important corporate decisions regarding the corporation in which they have invested. The reason for this circumstance is that, generally, the majority shareholders of a closely held corporation constitute the management of the corporation and, therefore, maintain control. With this division of power, it is not uncommon for minority shareholders of a closely held business to feel as though decisions are being made which favor the majority over the minority and that as minority shareholders they are being “oppressed.” Allegations of oppression often arise when management’s decisions result in the majority shareholders being awarded excessive compensation; when management furnishes what are deemed by the minority to be inadequate dividends; when management is accused of misapplying corporate assets; when shareholders in closely held corporations consist of family members or friends and the personal relationships deteriorate; or when minority shareholders become dissatisfied with the management of the corporation.

The New Jersey legislature has responded to the concerns of New Jersey minority shareholders by enacting the “Oppressed Minority Shareholder Statute” (N.J.S.A.14A:12-7). The Oppressed Minority Shareholder Statute was enacted to protect minority shareholders against shareholders, directors and officers of closely held corporations that have (i) acted fraudulently or illegally, (ii) mismanaged the corporation, (iii) abused their authority as directors or officers, or (iv) acted oppressively or unfairly toward one or more minority shareholders. The statute, coupled with a series of cases decided by New Jersey courts over the course of the past twenty-five years interpreting the “Oppressed Minority Shareholder” statute, have afforded minority shareholders in closely held corporations, with twenty-five or fewer shareholders, substantial protection against oppressive conduct. Interestingly enough, the percentage of stock that a shareholder owns does not necessarily determine whether or not a shareholder is considered a minority shareholder. In one decision, the court found that the plaintiff (a 98% shareholder of the subject corporation) was an oppressed minority shareholder. In that case, the stock was held in a voting trust which was controlled by the owner’s father and the shareholder had no control over the stock. Since that decision, courts  have interpreted the meaning of “minority shareholder” loosely, allowing any shareholder to claim protection under the statute if the shareholder can prove, irrespective of the percentage of stock he/she owns, that he/she lacks sufficient control over the affairs of the corporation and is being oppressed by those shareholders in control.

If a minority shareholder has concerns of oppression, said shareholder has recourse by commencing litigation against the majority shareholders under N.J.S.A.14A:12-7. In the event that litigation is initiated, a court will fashion a remedy that it deems most appropriate, given the facts of the case. If oppression is found to exist, one of the most common remedies is to appoint a custodian or provisional director to run the corporation’s daily affairs until the shareholder disputes are resolved, ordering a sale of the corporation’s stock, or entering judgment to dissolve the corporation. A judgment dissolving a corporation is a very drastic remedy and will only be ordered by the court if the court finds that the corporation has been irreparably harmed. Another common remedy that a court will utilize in resolving shareholder oppression claims is to order a buy out of the stock of one or more of the shareholders involved. The usual scenario is for the court to order the majority shareholders to buy out the minority shareholder’s stock interest in the corporation. However, in special circumstances, courts have ordered the minority shareholder to buy out the majority shareholders’ stock interest.

In the instance of a buy out, a critical element of the court’s decision will be the value of the selling shareholder’s interest.  In such cases, a shareholder agreement may establish the value or a court may determine the value of the interest. It is important to understand that there are various ways of valuing an interest in a corporation. In some instances the court may apply a “fair value” standard. “Fair value” is intended to fairly compensate the shareholder and may differ from a stock’s “fair market value,” as consideration is given to the fact that an impartial buyer may not be willing to buy a small stake in a closely held corporation. In appropriate circumstances, a court may also apply “marketability” and/or “minority interest” discounts to the valuation of the stock. Marketability discounts are applied to reflect the fact that there is only a small pool of potential buyers, if any, for the stock held by the minority shareholder and finding a market for the sale of the stock to an outside buyer would be difficult. Minority interest discounts may be applied when it is determined that any outside purchaser will also lack control over the corporation, so the “minority interest discount” will reflect a downward adjustment to the value of the minority shares.

A shareholder in a closely held corporation would be wise to remember that if “frozen out” of corporate decisions, shareholders may have significant rights under New Jersey law. A shareholder should continuously document the acts of the majority shareholders that he/she disapproves of, because acquiescence in inappropriate corporate acts can be used as a defense by the majority shareholders should litigation ensue. Furthermore, if a shareholder feels that the majority shareholders are mismanaging the corporation, he/she should exercise his or her statutory right to access the records of the corporation to determine if the majority shareholders are mismanaging the corporation and wasting corporate assets. In the event that a review of the corporate records proves that the majority shareholders have mismanaged the corporation, subjecting the minority shareholder to oppression and a resulting loss of stock value, he/she should seek legal counsel and protection under the “Oppressed Minority Shareholder” statute.

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Bisphosphonates are a class of drugs that drug companies claim promote bone regeneration. Bisphosphonates are commonly sold under various brand names including Fosamax®, Actonel®, Aredia® and Zometa®.

These drugs are manufactured by pharmaceutical companies such as Merck, Novartis, Proctor & Gamble and Sanofi-Aventis. Bisphosphonates are used to treat, among other things, osteoporosis, bone metastasis during cancer treatment, osteoarthritis and other conditions that feature bone fragility. Studies show that bisphosphonate treatment can cause severe side-effects including Osteonecrosis of the Jaw and low-trauma bone fractures.

 

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Palimony cases have provided attorneys and judges with vexing factual and legal issues, largely as the result of competing versions of what was intended by the parties. Was there a promise to support someone for life? What if the promising party dies and the estate is sued? Now that actual cohabitation is no longer a necessary element of palimony ( Devaney v. Esperance, decided by the New Jersey Appellate last year), the introduction of a bill which would require palimony agreements to be in writing is most welcome.


The bill, which still needs full Senate approval, would also allow courts to void a written palimony agreement if the parties are not told that they have the right to seek independent legal counsel before signing.  Based on Devaney, the bill does not require cohabitation.
The bill  drew no public testimony and passed without opposition. Its passage by the full Senate is anticipated.


I expect that written palimony agreements will become increasingly  common even if the bill does not pass and absolutely essential if it does. Such agreements should be negotiated and drafted with the same precision as premarital agreements are today so there is no room for misunderstanding if the need for enforcement arises months or years down the road.

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The New Jersey Appellate Division recently decided the matter of McGinty v. K. Hovnanian at Somerset, A-6100-07 (March 17, 2009), in which the Plaintiffs argued that a leak in their condominium unit in 1985 gave rise to a lawsuit filed in 2004.  The Plaintiffs, parents and children, lived in the home from 1985 until 1990.  When the family first moved in, they had a water leak from a bathroom pipe, which caused damage and mold growth.  The children claim in their 2004 lawsuit that exposure to toxic substances caused them to suffer from neurotoxicity with attention and cognitive problems.  The Defendants filed motions for summary judgment under the New Jersey Statute of Repose, N.J.S.A. seeking to dismiss their claims.

The Plaintiffs had several responsive arguments, each of which the court rejected.  The court found that the statute of repose began to run upon substantial completion of the McGinty's unit, not the completion of the entire 2,663 unit development nearly ten years later, as argued by the Plaintiffs.  The court relied upon the Supreme Court cases of Daidone v. Buterick Bulkheading, 191 N.J. 557, 564 (2007), in which the Supreme Court found that the Statute of Repose began to run upon "substantial completion" of their unit, not the entire project.
 

The court also found that although Hovnanian performed repairs after the certificate of occupancy was issued, those repairs were "temporary and cosmetic" and thus did not constitute a separate improvement to the property, and even if they were separate improvements, the complaint was not filed within ten years of those repairs.
 

Interestingly, the plaintiffs further argued that the statute of repose was not meant to deny recovery to a person who is in direct privity with the negligent party, but was intended only to apply to a third-party social guest, with no direct privity to the owner-builder.  The court rejected this argument as well, finding no such language in the statute.
 

All of the claims, including the personal injury claims were extinguished within 10 years of the date of the certificate of occupancy.  This decision reinforces the strict nature of the statute of repose and the New Jersey Judiciary's strict adherence to the letter and intent of the statute as drafted by the legislature.  If you or your Association has incurred damage related to the construction or improvement of real property, contact the author of this article to discuss your rights under the statute of repose and other applicable statutes and rules. 

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The payment responsibilities of a child’s unreimbursed medical expenses is often an issue that does not receive a lot of attention during divorce litigation.  However, as the cost of uncovered medical procedures have increased throughout the years, establishing each party’s financial responsibilities for these expenses is an extremely important element of reaching a final resolution of your case.

The New Jersey Child Support Guidelines mandate that the custodial parent cover the first $250 per year for each child’s unreimbursed medical expenses.  With the price of co-pays and prescriptions these days, this $250 does not go very far.  All unreimbursed medical expenses above this amount are to be paid by agreement between the parties, or through a Court Order.

The most common resolution to the issue of what each party’s responsibility is towards these medical expenses is to use an “income shares” approach.  Under this method, each party’s respected income is registered a percentage in direct connection to the total combined income of the litigant.  For example, if Wife earns $100,000 per year and Husband earns $80,000 per year, Wife would have an obligation to pay for 55% (her share of parties’ total income) of the registered unreimbursed medical expense, after the first $250 credit is properly applied.  I have found that this model is the most efficient resolution to the issue.  However, it is important to note that the “income shares” approach is not a mandated or Court ordered resolution to this issue.  It is merely a practical approach that many attorneys utilize.

When drafting a Marital Settlement Agreement or a Post-Judgment Order, parties also have the option of coming up with their own agreed upon payment method of these expenses.  I have seen many litigants agree to a 50/50 split, even when their income percentages are not truly equalized.

Being that a vast majority of litigants share the designation of joint legal custody (joint decision making rights) of their children, if you are the custodial parent and wish to receive reimbursement for the medical expenses that you covered “out of pocket”, I suggest that you develop a system to inform the other spouse of these anticipated cost.  Many litigations focus on whether or not the other party had a chance to approve a medical procedure that will incur some “out of pocket” expenditure before the non-emergency procedure commenced.  Like many other areas of a successful post-divorce relationship with the other parent, effective communication is the key to avoiding a potentially costly litigation.

As always, if you predict that the payment of unreimbursed medical expenses may be an issue in your pending or existing divorce agreement, I suggest that you consult with an experienced family law attorney to fully explore your options.

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To resolve certain disputes which can arise over title to real estate, the New Jersey legislature has provided a process by which a party in possession of the real estate can protect or clear up the title to his property.  If another person or entity raises a claim, or disputes the title to the property in some way, then the party in possession of the property may wish to commence a lawsuit to "quiet title" and thus resolve any outstanding issues relating to the title. 

While quiet title actions have historical roots, the remedy available today  in New Jersey is a statutory one pursuant to N.J.S.A. 2A:62-1 et seq..  It is a remedy which permits a person who is in peaceable possession of lands in New Jersey to settle disputes over the title to his land. A person in "peaceable possession" may, when title to his lands or any part of them is denied or disputed, or when a lien or encumbrance is asserted against his lands, use this process  "to settle the title to such lands and to clear up all doubts or disputes" concerning the land.   N.J.S.A. 2A:62-1.

Such an action would be commenced in the Superior Court of New Jersey, Chancery Division.  In order to commence such an action, the party seeking relief must allege that he is in "peaceable possession" and that no action is pending to enforce or test the validity of the defendant's claim to title or an encumbrance.  After proving this, the burden then falls on the defendant to prove his claims.

Sometimes a plaintiff is not able to be in "peaceable possession".  If the lands involved are "wild, wood, waste, uninclosed or unimproved," and if no other person is in actual possession of the lands,  there will be a presumption that plaintiff is in "peaceable possession" if the plaintiff can claim ownership pursuant to a duly recorded deed in New Jersey and that, as owner under the deed, he (or his grantors) has been assessed and  paid taxes for the five (5) years preceding the commencement of the quiet title action.  N.J.S.A. 2A:62-2.

Actions to quiet title may be tried by a jury, upon the application of either party. N.J.S.A. 2A:62-4.

A plaintiff may use a quiet title action to remove any claims created through adverse possession.  Other examples of quiet title actions include removing claims of any heirs, devisees and personal representatives of a long deceased past owner of an interest in the property; or claims of those alleging a lien or encumbrance against the property. 

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Virtually all opinion polls confirm that same sex marriage legislation is the future. To those who said , "leave it to the people, not judges" the  outcome will be passage of such laws in New Jersey and elsewhere within the foreseeable future.

Acknowledging this as a likely outcome, some legal scholars are already raising questions as to the potential for conflict between such laws and religious liberty. For example, to what extent, if any, should the law protect the rights of "conscientious objectors" to refuse service to married same sex couples in religious-based social service agencies? How far may government  go in requiring religious institutions to accommodate same sex marriage? It is interesting that according to one 2008 survey, when asked if they would favor same sex couples to marry if the law "guaranteed that no church or congregation would be required to perform such marriages", support for same sex marriage jumped from 29% to 43%.

As one commentator put it: "Gay marriage is here to stay. And religious objections to gay marriage are not likely to evaporate anytime soon. Our best option-the one that serves the common good-is to work together to find the right balance between equality and religious freedom, two of our nations most cherished ideals."

Since it is predicted that New Jersey will  have same sex marriage within a year, such issues are the true future of gay marriage.

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On March 31, 2009, Governor Jon Corzine signed into law new legislation known as the Residential Development Solar Energy Systems Act. (P.L. 2009, c.33) codified at N.J.S.A. 52:27D-141.1, et seq.. The Act requires developers of residential developments containing 25 or more single-family dwelling units to disclose in advertising and offer to install solar energy systems. The act requires the Department of Community Affairs (DCA) in consultation with the Board of Public Utilities to adopt regulations respecting the technical sufficiency of solar energy systems to be installed pursuant the act and prescribes certain minimum standards.  For example, a solar energy system installed under the act shall have components that are new and shall have a manufacturer’s warranty of not less than 10 years.

Although the Residential Development Solar Energy Systems Act became effective immediately, in actuality, it shall apply only to dwelling units that have received a construction permit on or after the 90th day following the DCA’s promulgation of the aforesaid technical sufficiency regulations for solar energy systems.

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David J. Byrne, Partner and Co-Chairperson of Stark & Stark's Condominium and Co-Op Practice Group, presented materials related to mediation, arbitration and alternative dispute resolution during a seminar entitled Neighbors at War - Real-Life Arbitration. The presentation was held at the New York Cooperator Expo, New York City on Tuesday, April 7, 2009. 

Mr. Byrne focused his presentation on how condominiums and cooperatives can avoid and/or resolve conflicts through alternative dispute resolution, as well as be spared the acrimony of litigation.  He discussed mediation, arbitration and ADR.  Mr. Byrne also discussed these concepts in relation to fair housing, addressing how condominiums and cooperatives can minimize conflict while ensuring fair and discrimination-free housing.

You can listen to Mr. Byrne's portion of the presentation online here. (12 MB)

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For more than two decades New Jersey legal scholars, Courts and Legislature have tried valiantly to make a NJ a "no fault" divorce state. Why? To protect litigants from the unnecessary humiliation of disclosing highly personal information, and to recognize that there are at least two sides to every story and/or very often underlying reasons for a person's conduct.

For over a half century New Jersey has abandoned its former "Heart Balm" statutes which allowed a "wronged" litigant to sue the third party for "alienation of spousal affections". Why? Such claims simply had no relevancy in modern society. But, despite the best efforts of many, some of our citizens seem to have a inexplicable need to be certain that not only the "fault" of their spouse is glaringly exposed, but that the rest of us are inundated with all of the prurient details.

First, our former First Family, the McGreevy's "entertained" us with daily allegations and cross allegations regarding homosexual behavior, multiple sexual partners and group sex. Who, I ask are interested and, if so, why?

Now we are bombarded with allegations concerning the sexual exploits of the "Boss". Is there a person out there who cares, and, if so, why?

Experienced New Jersey divorce attorneys strive to keep cases under control, eliminate unnecessary allegations of "fault" and to refrain from allegations which can only inflame the matter, embarrass the parties, severely damage the children and cause irreparable harm to all concerned. Unfortunately, our task is made much more difficult when political media hounds, show business publicity seekers and attorneys who, apparently feel that such publicity, will benefit their personal careers allow the divorce process to regress into media messes.
 

Why? Certainly for no legally viable reason. Most likely for some distorted emotional reaction, some publicity seeking litigant or attorney or some other distorted reasoning. None of which benefits the system. All of which further, and unnecessarily, burdens an already overworked system. All of which prevents the Court form directing its attention to those litigants who do "play by the rules".

Note to the famous NJ residents --- enough already --- handle your problems like the rest of us, in private and civilly.

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The proposed law could perhaps inadvertently impair associations’ ability to recover unpaid assessments from owners in default on their mortgages.

The Presidents plan to stabilize the housing markets, H.R. 1106, would allow federal courts to reform mortgages in cases where a homeowners property is worth less than their principal mortgage balance.  More specifically, the law would give bankruptcy judges the ability to cram down a mortgage's principal balance and the related monthly payments.  It remains a concern however whether, if adopted, this law would threaten both associations ability to collect past due assessments and their lien-related rights (including rights under the priority lien portion of New Jersey's  Condominium Act).  Recent amendments to the proposal have attempted to minimize these threats.  H.R. 1106 was recently amended to clarify what costs must be included in an owners' post bankruptcy payments. The proposed law now specifically includes assessments in the resulting formula.  Experts interpret this amended language as intending to ensure that the modified mortgage payment must be lowered enough so that when payments for taxes, assessments and other mandatory costs are added to the new payment, the resulting amount is below a sustainable threshold set by law. 

However, additional study of this proposed law is necessary, along with additional amendments.  It would certainly help for our elected officials to be reminded by owners within community associations of their need to protect the rights and financial security of a debtor's neighbors, as well as the debtor himself.

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Pending Amendments to the Family Part Rules of Court

For over 25 years our Family Courts have utilized Early Settlement Panels as, perhaps, the most effective means of helping divorce litigants settle their cases. The Settlement Panels are staffed with two voluntary attorneys who read extensive written submissions and then meet with and hear the arguments of the Attorneys for the parties. The Panelists then meet with the parties and make settlement recommendations.

Statistics show that almost 60% of the cases submitted to the Early Settlement Panels, do, in fact , settle very consistently with the Panelists’ recommendations. If not accepted, the Panel’s recommendations are confidential and can not be subsequently communicated to the Trial Judge without the mutual consent of the parties.

In a well intended effort to discourage litigants from unreasonably rejecting the Panel’s recommendations., recently proposed amendments to the Court Rules would allow the disclosure of the Panelists’ recommendations relevant only to the issue of Counsel Fees if the recommendations are rejected by one of the parties and, as a result the case proceeds to trial.

A seemingly logical suggestion which will not work and will, in fact, discourage the effective use of Early Settlement Panels.

Why? Because divorce cases have no clear “winner” or ‘loser”. The issues in a divorce case are not easily or clearly defined as to who “won” and who “lost”.

Thus, a Panel may make a recommendation on Issue A which is perfectly sound and should have accepted but for the fact that it was related to Issue B which could not be resolved.

For a Trial Judge to have to go reconstruct the Panel’s recommendations and make a determination as to who reasonably accepted the recommendations and who unreasonably rejected them creates “a trial within a trial”.

The statistically fact is that Early Settlement Panels are highly effective and useful tools of settlement for all divorce litigants.

Do not tamper with them—they work well and effectively—they require candid and confidential exchange of information and changes such as those proposed have only the downside risk of deceasing their effectiveness.

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This week in Vermont, the legislature overturned the Governor’s veto of the gay marriage bill.  The effect of this decision is that Vermont will be the fourth state in the United States to legalize gay marriage, providing gay couples the same rights and privileges of heterosexual couples.   Vermont already had a statute permitting civil unions that are recognized in New Jersey, however, the bill allowing gay marriage provides additional protections as the couple may refer to each other as “spouse” not partner.   This is especially significant to those in the military, who are essentially prohibited from obtaining health and other benefits for their civil union partners, as the result would be outing themselves.

The laws of New Jersey recognize gay unions, whether marriage, civil unions or domestic partnerships, so long as the rights and privileges under the laws of the state granting such a union are substantially similar to those provided to a married heterosexual couple.  Thus, not only will a same sex marriage or civil union from Vermont be recognized here, but should the marriage or civil union disintegrate, New Jersey will also provide a forum for dissolution by way of divorce if the jurisdictional requirements are met. 

New Jersey’s recognition of same-sex unions even reaches beyond the United States.  This issue was recently before the Honorable Mary C. Jacobson, P.J.F.P., of the New Jersey Superior Court in Mercer County, who held that a same-sex couple who were married in British Columbia were entitled to a divorce in New Jersey based upon the principles of comity and ordered that the Plaintiff was entitled to pursue dissolution of her same-sex marriage to the Defendant by seeking a Final Judgment of Divorce.

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Thomas B. Lewis, Chair of Stark & Stark's Employment Group, and Michael J. Brittan, member of Stark & Stark's Employment group, authored an article for the Monday March 30, 2009 edition of the New Jersey Law Journal entitled A Safe Harbor for Employment Claims: Ensure minimal liability from discrimination claims.

The article discusses what employers should do in a discrimination case if, after investigating and taking action against the discriminating employee, the offended employee continues to pursue legal action. You can read the full article online here.

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There has been some recent concern about Senate Bill No. 2577 that is apparently being prepared for Governor Corzine’s desk for adoption as it relates to age-restricted communities.

The bill would allow developers to make an application permitting a change from an age-restricted development to a non-restricted development. What appears to be causing a lot of concern is the reliance upon the buzz word of “age-restricted” to “non-restricted” without delving into the bill itself.

One of the major requirements for an age-restricted development to be converted to a non-restricted development is that the developer of the age-restricted development cannot be holding any deposits for, or has not conveyed any units within, a particular development. Therefore, any development that is already under construction, or houses have closed, or even if a development has yet to close its first home, but a deposit has been conveyed by a purchaser to the developer, that particular development cannot be converted from age-restricted to non-restricted.

You may access a copy of Senate Bill No. 2577 here.

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In a ruling this past February in Stengart v. Loving Care Agency (BER-L-858-08), a New Jersey Superior Court Judge found that an employee’s e-mail correspondence with her counsel, made on the company’s laptop was not protected under the attorney-client privilege, despite the fact that she has used a password-protected, web-based email account and not her company email. 

Courts throughout the country have consistently found that when an employee utilizes an email account issued by the employer, over the employer’s servers, such correspondence is not generally protected by the attorney-client privilege if the employer gave sufficient notice that emails are subject to review.  The Stengart case, however, is one of first impression and seemingly takes the policy rationale of these noted decisions one step further, finding that even when an employee is prudent enough to use a “private” email account, such communications may be deemed company property and should not be considered “private” nor “protected”.  

Its important to note, however, that the Court’s findings took into large account the fact that the employee handbook specifically provided that “Email, voice messages, internet use and computer files are considered part of the company’s business and client records” and that “such communications are not to be considered private or personal to any individual employee.” The handbook further prohibited the use of email for “other employment activities outside the scope of the company’s business.”

The Plaintiff attempted to argue that she was unaware of the company’s policy governing email when she communicated with her attorney regarding her intent to resign, trusting that such communication was private and privileged.  The Court dismissed Plaintiff’s insufficient notice argument and was persuaded rather by the fact that the employee handbook was distributed to each employee, an electronic version is accessible on the Company’s server and the Plaintiff herself assisted in creating the handbook. 

Therefore, while certainly this is a significant case establishing a basis for recovering material that may otherwise be protected by the attorney-client privilege, employers must be cautious and mindful that much of the ruling was based on a particular factual scenario.  In Stengart, the employer carefully drafted and distributed an email communication policy that warned employees against any privacy expectations.  However, had the employee handbook not been as clear with its policy regarding email or had sufficient notice of the policy not been established, the Court may have ruled differently. 

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Thomas B. Lewis, Shareholder and member of Stark & Stark's Employment group, was quoted in the April 1, 2009 OnWallStreet.com article The Last Weapon. The article discusses the increased rise in advisors being accused of taking classified client information as a breach of the Protocol for Broker Recruiting when leaving a current firm. Mr. Lewis offers several Do's and Don'ts for advisors as they consider a move. You can read the full article here. (PDF)

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The New Jersey Superior Court recently found that under New Jersey law, when used properly, the fictitious party practice allows a plaintiff to join a specific subcontractor more than 10 years from the date of it's work.  In Society Hill at University Heights III Condominium Association, Inc. v. K. Hovnanian at Newark Urban Renewal Corp., III, Inc. et al, ESX-L-5867-03, the court permitted a claim against a contractor that had allegedly completed its work in 1994 but was not joined until 2008 to proceed. 

New Jerseys Statute of Repose N.J.S.A. §2A:14-1.1 provides in pertinent part that:

No action . . . arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained on account of such injury, shall be brought against any person performing or furnishing the design, planning, surveying, supervision of construction or construction of such improvement to real property, more than 10 years after the performance or furnishing of such services and construction.
[N.J.S.A. § 2A:14-1.1]

The statute applies to, among others, building contractors, whose professional work is functionally related to and integrated with a building plan or design, which gives rise or contributes to a defective and unsafe condition.   E.A. Williams Inc. v. Russo Development Corp., 82 N.J. 160, 169; (1980).   However, the New Jersey Supreme Court, in Greczyn v. Colgate-Palmolive, 183 N.J. 5 (2005), addressed the interplay between the fictitious party practice and the Statute of Repose.  In doing so, the court allowed plaintiffs to join defendants in a lawsuit after the expiration of the statute of repose as long as the plaintiff was diligent in determining the identity of the responsible party.  In Society Hill, supra, the New Jersey Superior Court relied upon the Greczyn case in allowing the Condominium Association to continue its case against one of the contractors, in part, because the Association relied upon another defendant, the Developer K. Hovnanian, for information and documents related to the construction of the buildings.  Given that the Association did not construct the buildings, it was at the mercy of the Developer and others as to information related to construction.  Once that information was provided and thoroughly reviewed by the Association, the contractor was joined by name in the lawsuit.  The Judge found that it is at least a question of fact as to whether or not the Association was diligent in joining the contractor, thereby leaving the issue to be determined by the jury.

If your association has building issues and have been told that your claims are barred by either the statute of limitations or statute of repose, contact my office to discuss.  Your community may have options and other means of recovery for construction defects caused by negligent construction.

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Today, in Iowa, the State Supreme Court unanimously held that prohibiting gay marriage violates the Iowa Constitution. The effect of this decision is that there will be yet another state where gay couples will be entitle to the same rights and privileges of heterosexual couples. This will also mean that marriages in Iowa will be recognized here in New Jersey.

The laws of New Jersey recognize gay unions, whether marriage, civil unions or domestic partnerships, so long as the rights and privileges under the laws of the state granting such a union are substantially similar to those provided to a married heterosexual couple. Thus, not only will an Iowa gay marriage be recognized here, but should the marriage disintegrate, New Jersey will also provide a forum for these marriages to be dissolved by way of divorce if the jurisdictional requirements are met.

New Jersey’s recognition of same-sex unions even reaches beyond the United States. This issue was recently before the Honorable Mary C. Jacobson, P.J.F.P., of the New Jersey Superior Court in Mercer County, who held that a same-sex couple who were married in British Columbia were entitled to a divorce in New Jersey based upon the principles of comity and ordered that the Plaintiff was entitled to pursue dissolution of her same-sex marriage to the Defendant by seeking a Final Judgment of Divorce.

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Timothy P. Duggan, Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights group, was  quoted in the March 29, 2009 Asbury Park Press article, Already owed thousands, Kara Homes contractors now told to pay back what they already got.

Mr. Duggan discusses the effects the Kara Homes bankruptcy is still having on contractors throughout New Jersey over two years after the company initially filed for bankruptcy. Contractors who were paid by Kara Homes within 90-days of the bankruptcy filing are now being told they have to pay back any money they received from the builder. You can read the full article here. (PDF)

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Loss of a job, unexpected medical bills, divorce, or other difficult circumstances can cause a homeowner to fall behind in his/her mortgage payments.  Many lending institutions are offering assistance and payment alternatives to delinquent homeowners.

Falling behind but not in default yet?  Look first for other available sources of funds.  This may include funds withdrawn from a retirement account or cash value taken from a life insurance policy.  Check with a tax adviser however, about the tax consequences of a retirement withdrawal and whether a hardship exception applies.  The Office of Housing and Urban Development (HUD) also has interest-free loans available to qualified homeowners to pay past due interest and escrows.

Try to work out a repayment plan with the lending institution.  Especially in these difficult economic times, lenders are open to working out a plan to pay any arrearage.  If the borrower can provide an explanation as to why the cause is a temporary one, the lender may be willing to spread the arrearage out over an extended time period to allow the borrower time to catch up.

Seek a mortgage modification.  The lender may be willing to voluntarily change the terms of the loan which may include a change in the interest rate, principal balance or time period for repayment.

Many homeowners may qualify for the recently enacted stimulus programs.  As details are provided, these programs should be investigated.

Consider a short sale.  A short sale involves the sale of a property for a sum which is not sufficient to pay the costs of closing and the outstanding loans against the property.  Lenders must approve the short sale which may take 20-40 business days, so a flexible buyer is essential.  Because a short sale does not generate sufficient funds to pay off the mortgage in full, there will remain a balance due under the note unless the lender agrees to discharge any balance due on the underlying debt, so that no balance remains due and owing after the short sale.

Finally, a homeowner in default on their mortgage may want to consider a deed in lieu of foreclosure.  In such instances the lender agrees to accept a deed transferring title to the lender to avoid the cost of a foreclosure sale.  Check with the lender to find out if they have any time restrictions on when they will accept a deed in lieu.  As with a short sale, the borrower would also want to make sure that the underlying debt is discharged as well.  If there is a second mortgage on the property, this would have to be addressed as well.

The worst course of action for a homeowners in default is to ignore the situation.  Given the newly enacted stimulus bills and the efforts of banks and the government to address the high default rate, many lenders have loss mitigation, or homeowners assistance departments to help such homeowners find the best solution for their individual circumstances.

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David J. Byrne, Shareholder in Stark & Stark's Community Association group, authored an article for the March 23, 2009 edition of the New Jersey Law Journal entitled Representing HOAs and Condominiums in Transition During A Challenging and Difficult Time. The article discusses the transition of responsibility for community associations, condominiums and homeowner's associations and the impact the New Jersey Condominium Act the New Jersey Planned Real Estate Development Full Disclosure Act can have during the transition process.

You can read the full article here. (PDF)

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Legal Briefs On Divorce is a video podcast series providing viewers with a discussion on timely news and insight on current trends impacting divorce. This installment of Legal Briefs On Divorce is an interview with John S. Eory, Shareholder in Stark & Stark's Divorce Group, and Len Rossine, Divorce Lending Specialist with Bank of America.

Mr. Eory and Mr. Rossine discuss the obstacles people will often face when going through a divorce in relation to their mortgage such as, “Can I afford to keep my home after my divorce?” or “What is the best way to split the equity in my home during my divorce?” Mr. Eory and Mr. Rossine offer several possible solutions to these questions and provide tips on how to deal with your financial situation early on in your divorce case.

Legal Briefs On Divorce With John Eory & Len Rossine from Stark & Stark on Vimeo.

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This installment of the New Jersey Legal Update podcast is an interview with Adam J. Siegelheim, member of Stark & Stark's Franchise group, and Bruce Bloom, President of Bloom & Associates, Inc. The interview took place at the 2009 International Franchise Expo in Washington, DC. Mr. Siegelheim and Mr. Bloom discuss preventative measures franchisors can implement in order to prevent a crisis from occurring in these difficult economic times and tips on crisis management, in the event a crisis does occur.

You can listen to the full podcast online here. (5.5 MB)
 
 

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