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

Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 24, 2010 FinancialPlanning.com article, The Recruiting Wars Turn Nasty. The article discusses the Protocol for Broker Recruiting and the recent decrease in firms suing each other over poached advisors. The article goes on to discuss some of the recent more highly publicized cases which have advisors, and their attorneys, questioning whether or not the days of increased claims and counterclaims are about to return.

Mr. Lewis discusses the fact that both Goldman Sachs and Credit Suisse have not signed on to the protocol, and Mr. Lewis states that Goldman Sachs in particular takes the attitude that the clients belong to the firm, not the advisor, and therefore should not move if an advisor defects.

You can read the full article here. (PDF)

 

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Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 19, 2010 On Wall Street article, Goldman Drops Case Against Former Advisors. The article discusses Goldman Sachs' recent decision to drop their case against five former financial advisors and two support staff members (David Greene, Craig Savage, Andrew Thompson, Sharran Srivatsaa, John Pitt, Stephanie Dennard and Kim Tyson). The suit accused the advisors of breaching their non-solicitation agreements by moving to rival firm, Credit Suisse, and attempted to take their clients with them.

Mr. Lewis states that these types of cases are typically settled quickly and the firm who poached the advisors will often agree to pay a portion of the revenue generated by any of the accounts that the advisors’ transferred over for a period of 12 months to their prior firm.

You can read the full article online here.

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In today’s harsh economic climate, a general contractor or subcontractor is often faced with non-payment from a project owner.  The question then becomes what is the best fashion in order to collect the unpaid balance which is due the general contractor or subcontractor.  As a general contractor, you have a few options.  The first option is to attempt to negotiate a resolution with the owner.  Another option is to file a lawsuit.  If a lawsuit is the preferred option, it is suggested that a Lien Claim be filed within ninety-days of the last date of materials or services were provided pursuant to N.J.S.A. 2A:44(A)-3.  This secures the general contractor’s interest in the property and may provide it with leverage to facilitate a settlement.

For a subcontractor, the best process in which to collect an unpaid amount becomes more complex.  Pursuant to the relevant Lien Statute, N.J.S.A. 2A:44-126, a “subcontractor” is any person or party who has a contract to provide labor or materials with a contractor or with a subcontractor who has a contract with the general contractor.  The purpose of this definition is to limit who may file a Lien Claim against the property.  Like a general contractor, a subcontractor may attempt to resolve the dispute as to the unpaid balance with the general contractor or the subcontractor who hired them.  In the absence of a quick resolution, however, it is often suggested that a Lien Claim be filed by a subcontractor or sub-sub-contractor on the project.  Unfortunately for a lot of subcontractors, this is when a critical error is made with regard to filing a Lien Claim.

Pursuant to N.J.S.A. 2A:44(A)-3, the Lien Claimant shall file a Lien against the owner of the property, or the tenant of the property for whom the contract to perform services exists.  The critical point is that a Lien cannot be filed against the property owner if the tenant contracted to have the work done and the improvement was not authorized in writing by the owner of the property.  This is critical because if a contractor files a Lien Claim against the property owner and not the tenant as well and it is later determined that the improvement was not authorized by the owner, the Lien Claim is invalid and the subcontractor may be left without a claim against the tenant.  As such, the best practice is to always file a Lien Claim against the tenant who is occupying the leased property and for whom the work is being performed and against the property owner as well.  At any time, the contractor can withdraw the Lien Claim against the property owner, however, continue against the tenant if it is found that the improvement was not authorized in writing.  If this procedure is not followed and more than ninety days have passed since the last day materials and services were provided, the contractor may lose its right to bring a Lien Claim against the tenant.

As always, a lawsuit to foreclose upon the Lien must be commenced within thirty days upon request by the tenant or owner or within one year of the date of the Lien Claim was filed, otherwise it will expire.  A subcontractor or sub-subcontractor does not lose its rights to proceed against the party whom directly contracted with it, however, an action to foreclose upon the Lien Claim as well only gives the contractor further leverage.

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Stark & Stark Litigation Shareholder, Scott I. Unger, authored the article, Oppressed Minority Shareholders Should Be Afforded Protection: An argument for a revision of the Limited Liability Act, for the February 1, 2010 edition of the New Jersey Law Journal.

The article discusses the fact that the minority oppression statute, which prohibits majority shareholders in closely held corporations from oppressing minority shareholders, was not specifically incorporated in the statutes governing limited liability corporations. Mr. Unger states that the business section of the New Jersey State Bar Association is considering recommending changes to statutes governing limited liability corporations, one major change would be to specifically state that minority members in an limited liability corporation may sue if they are oppressed. Mr. Unger goes on to discuss the importance of the incorporation of those protections and believes that Court's of Equity should utilize and apply the minority oppression statute to limited liability companies.
 

You can read the full article online here. (PDF)

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Thomas B. Lewis, Shareholder and Chair of Stark & Stark's Employment Group, was quoted in the January 14, 2010 RegisteredRep.com article, Citi Files Motion To Dismiss In Bonus Pay Class Action. The article discusses Citigroup's recent decision to file a motion to dismiss a class action lawsuit filed against the firm over the terms of its financial advisor bonus pay agreements. The motion was filed with the U.S. District Court for the Southern District of New York this past Monday, January 11, 2010.

Mr. Lewis states that there is a good chance that the court will dismiss the complaint, and goes on to say, “realistically it’s an issue that’s subject to FINRA’s jurisdiction. The plaintiffs tried to get out of the FINRA arbitration by getting class action status for the case. But courts are reluctant to get involved if there is FINRA jurisdiction.”

You can read the full article online here. (PDF)

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In the matter of Brolley Electrical v. Ernest Bock and Sons, Inc., the Court reviewed the validity and enforceability of a “paid when paid” provision within a construction contract.  The contract provided that payment by the owner to the general contractor being a condition precedent prior to the general contractor is obligated to pay the subcontractor. 

The contract further provided that should the general contractor not receive payment from the owner that the general contractor would not be obligated to pay the subcontractor for the work performed.  In validating the enforceability of the “paid when paid” provision, the Court explained that where the condition precedent to payment was clear and unambiguous, there is no room for interpretation and the Court must strictly construe the terms of the contract . 

The Court distinguished this decision from other opinions by stating that the condition precedent language within the present “paid when paid” clause rendered the clause wholly enforceable in nature and did not require payment until corresponding payment is received by the general contractor.  For these reasons, the Court ruled that the “paid when paid” clause and the conditioned precedent language was enforceable, and therefore, no payment was due to the subcontractor until and unless payment is received by the general contractor from the project owner.

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Construction Litigation Group Chair, Donald B. Brenner, and Litigation Shareholder, Thomas J. Pryor, authored the article Builders, Contractors and Homeowners: Beware Insurance Carriers Are Delegating Construction Deficiencies Coverage for the October 19, 2009 edition of the New Jersey Law Journal.

The article discusses a recent trend in New Jersey in which builders and homeowners are left without insurance coverage for property damage caused by substandard work performed by subcontractors. Due to the recent rise in bankruptcies and business failures, denying homeowners insurance coverage would leave homeowners without any avenue of recourse.
 

You can read the full article online here.
 

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In Nunez v. Pachman, the Appellate Division recently discussed the section of the Expungement Statute which prohibits the disclosure of any information relative to the records, proceedings or any other related documents once an event is expunged.  In Nunez v. Pachman, the Appellate Division explained that the litigation privilege will not permit the disclosure of any expunged arrest or proceeding.  Moreover, the Court hinted that a private party may potentially possess a cause of action for damages should a disclosure cause harm to this party.  This reaffirms the section of the Expungement Statute which prohibits the disclosure of any expunged records once an expungement is granted.
 

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Model A Fitness of Boonton, New Jersey has sued Retrofitness for fraud, consumer fraud, breach of contract, and violations of New Jersey’s Franchise Practices Act. Retrofitness Enterprises and Retrofitness Corp. owns, operates and franchises body building, health and fitness facilities under the “Retrofitness” trademark. The Retrofitness lawsuit is being watched by franchisors and franchisees alike.

Retrofitness franchises have been steadily increasing in number over the last few years.  Back in November 2005, Retrofitness entered into a license agreement with Model A’s owners for the development of a facility in Boonton, but Model A alleges in its Complaint filed in New Jersey Superior Court that Retrofitness’ principal, Eric Casaburi, enticed them into the license agreement through a series of false promises and misrepresentations, and then attempted to coerce them into signing a franchise agreement on far less favorable terms for the owners.  When the owners refused, Retrofitness terminated the license agreement and, according to the Complaint, opened a new location up the street which unfairly competed with Model A. 

The case is being watched because it raises significant issues under the Franchise Practices Act, and also because it will test the applicability of New Jersey’s Consumer Fraud Act generally to franchises.  The Complaint filed in New Jersey Superior Court can be viewed online here.

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In a recent New Jersey Appellate Division Decision, Stengart vs. Loving Care Agency, Inc., the New Jersey Superior Court, Appellate Division, clarified when a company/employer can review and access an employee’s emails when the employee uses company technology to receive emails.  Many employees mistakenly believe that personal emails received on a company computer are private.  The Stengart case provides guidance on how email and internet policies should be drafted in the company/employee handbook.  The law holds that electronic communication policies must be drafted with unambiguous language alerting employees that the employer retains the right to monitor and review emails of the employee for any legitimate business purpose.  Although the Stengart Court did find that the company’s electronic communication policy was subject to claims of ambiguity, it is clear that a well-drafted electronic communication policy will properly advise the employee that there will be no expectation of privacy for that employee’s personal emails received on a company computer and that the company may review employee’s emails for any legitimate business purpose.  The policy should also advise the employee that use or misuse of company technology for non-business purposes violates company policy and may subject the employee to disciplinary action.

The Stengart Court clarified that a carefully crafted electronic communications policy will allow employees to understand that the employer retains the right to access electronic communications when the employee uses company technology.  This well-drafted policy will alert the employee that there is no expectation of email privacy, and will shield the employer from liability for reasonably reviewing an employee’s email on the company technology.

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