New Jersey Appellate Court Permits Employers to Reduce The Statute of Limitations for New Jersey Based Employment Claims Under Certain Circumstances

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A New Jersey Appellate Court was presented with deciding “whether a contractual provision, contained in an employment application, by which the employee waives the two year statute of limitations applicable to claims against the employer and shortens the period for such claims to six months” is enforceable? Rodriquez v. Raymours Furniture Company, Inc., 93 A.3d 760 (App. Div. 2014). As will be explained further below, the Rodriquez decision has important implications to New Jersey employers, employees and labor attorneys. That is, because the Appellate Division permitted under certain reasonable circumstances for an employer to reduce the two year statute of limitations governing claims brought pursuant to the New Jersey Law Against Discrimination to six months.

The facts of the case were simple and not in dispute. In August, 2007, the Plaintiff approached the defendant, a retail furniture company, seeking employment. The defendant gave Mr. Rodriquez a two page employment application. Towards the bottom of the second page, in bold faced letters, it stated:


Mr. Rodriquez took the application home with him. Although, Mr. Rodriguez’s primary language was Spanish, he brought the application home with him and had a bilingual friend assist him with completing the application. In other words, Mr. Rodriquez was afforded ample opportunity to review the terms and conditions set forth on the application.

Mr. Rodriquez was hired by the Defendant. Eventually, his employment was terminated. More than six months after his employment was terminated, Mr. Rodriquez filed a civil complaint in the Superior Court of New Jersey in which he alleged that he was terminated in retaliation for having filed a workers’ compensation claim and was discriminated against based upon disability, in violation of the Law Against Discrimination, N.J.S.A. 10:5-1 to -49.

After discovery was completed, the Defendant filed a motion to dismiss Plaintiff’s complaint. In Defendant’s motion for summary judgment, it asserted that because Mr. Rodriquez did not file his suit within the six month time period provided for in the employment application he executed before he was hired his claims were time barred. Defendant’s motion was granted. The Appellate Court agreed with the Trial Court.

In his appeal, Plaintiff first argued that the shorted statute of limitations period in the initial application is unconscionable and therefore unenforceable. Although, the Appellate Court found that the limitations period contained in the initial application was a contract of adhesion, the Court reason, that is the “beginning, not the end of the inquiry into whether a contract or any specific term therein, should be deemed unenforceable based upon policy considerations.” Citing, the United States Supreme Court’s decision in Order of United Comm. Travelers of Am. v. Wolfe, 331 U.S. 586, 608 (1947), along with a myriad of New Jersey State Court decisions, the Appellate Division concluded that the absence of a specific controlling statute which does not permit a statute of limitations to be reduced by contract, the parties to a contract may agree to shorten the statute of limitations, so long as the shorter period is reasonable.

First, the Appellate Court while recognizing that there is a strong public policy to protect workers’ rights, the statutes of limitations in the New Jersey Law Against Discrimination does not specifically disallow parties from agreeing to shorten the time period. Hence, the Court moved to the second part of the analysis – whether or not reducing the statute of limitations to 6 months from the termination of employment was reasonable in the context of New Jersey’s Law Against Discrimination. In performing that analysis, the Court recognized that the New Jersey Legislature selected differing statute of limitations period for different employment based claims. For example:

  1. There is a one year statute of limitations pursuant to New Jersey’s Conscientious Employee Protect Act (whistle blower statute) – (N.J.S.A. 34:19-5);
  2. There is generally a two year statute of limitations to bring a claim under the New Jersey Law Against Discrimination, but a party seeking an administrative remedy rather than filing a lawsuit must file a claim with the Division on Civil Rights within 180 days;
  3. There is a six month statute of limitations for an alleged unfair practice pursuant to the New Jersey Employer-Employee Relations Act (N.J.S.A. 34:13A-5.4)

Because the Court recognized that at least one employment based New Jersey statute had a six month statute of limitations, it concluded that the six month limitation contained in the employment application Mr. Rodriquez signed was reasonable.

Next, the Court considered whether or not Mr. Rodriquez agreed to the reduction. The Court considered the facts that the clause was not buried in the agreement to be extremely important. The fact that the clause was in bold faced print contained in a short agreement was important. Moreover, the fact that Mr. Rodriquez was afforded an opportunity to take the application home and review it was also important and favorable to the Defendant.

So, what can employers learn from this case:

  1. If reasonable, employers can reduce the statute of limitations period – a six month reduction to assert New Jersey based discrimination claims is reasonable (it may not be reasonable as to federal causes of action)
  2. The reduction of the statute of limitations period should be placed in bold face print. I also recommend that the prospective employee be asked to initial the clause limiting the statute of limitations period.
  3. When a prospective employee is hired, include in their acceptance letter a reminder that pursuant to the terms and conditions of the employment that they agreed to reduce the statute of limitations; and
  4. Give the prospective applicant an opportunity to review the application. Let them take the application home and submit it on another day.

Employees and labor attorneys who represent Plaintiffs should also be aware of this decision. An attorney should ask the prospective employee if they signed an agreement reducing the applicable statute of limitations. The employee should be aware if they did. This case eliminates the “one sized, fits all” analysis of statutes of limitations. 

New Jersey Court Case Addresses Location of Depositions

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Unfortunately, sometimes disputes arise as to where and when depositions should be taken. Most (possibly all) Judges hate those kinds of disputes. Discovery disputes are best resolved amongst capable attorneys by way of reasonable compromise. That principal was articulated by the New Jersey Supreme Court in Gero v. Culter, 66 N.J. 443, 446 (1975) which held “experienced trial lawyers work out among themselves every day of the week, problems of scheduling and expenses and the like in connection with depositions rather than consume valuable court time to resolve any differences. That informal approach is not only highly desirable; it is probably indispensible to the continued efficient functioning of our judicial system.”

In Ferrer v. Stahlwek Annahutte Max Aicher GMNH Co., KG, 2014 N.J. Lexis 1882 (Ch. Div. 2014), Bergen County, New Jersey Chancery Judge Doyne addressed a discovery dispute which could not be resolved by counsel. The dispute arose when Plaintiff’s counsel sought to take the depositions of three defendants who all reside in Germany. The German defendants’ counsel refused to produce them in New Jersey. Rather, he offered to produce them in Germany.

New Jersey Court Rule 4:14-2, provides that a deposition is to occur at a time and place “reasonably convenient for all parties.” If a party disagrees with the time and place of a deposition they should not simply fail to appear. Rather, the Court rules require that they bring an application seeking a protective order. See Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:14-2.

Judge Doyne, in addressing this interesting discovery dispute, balanced the burden along with the economic and practical aspects of the location of the deposition. The Court considered the fact that the German witnesses all came to New Jersey from time to time, their company’s headquarters was in New Jersey, they were parties to the litigation and asserted third-party claims against others when he held that the depositions should take place in New Jersey.

A Look into Los Angeles Clippers' Owner Donald Sterling's Lawsuit against the NBA

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On May 30, 2014, Los Angeles Clippers owner Donald Sterling filed a civil suit against the National Basketball Association and its commissioner, Adam Silver, in the United States District Court for the Central District of California, Western Division. The Civil Complaint sets forth five causes of action against the defendants. They include: antitrust violations; conversion; breach of contract; breach of fiduciary duty; and violations for denial of Sterling’s constitutional rights. The Complaint seeks compensatory in excess of $1 billion along with injunctive relief “eliminating [Sterling’s] lifetime ban, eliminating the $2.5 million fine, the reinstatement of longtime Chief Executive Officer of the Clippers, Andy Roeser, the removal of the interim Chief Executive Officer installed by the NBA, Richard Parsons, and the termination of the NBA’s proceedings to strip Donald Sterling and the Sterling Family Trust of their ownership in the Los Angeles Clippers.”


Sterling’s Constitutional Claims:

In his complaint, Sterling alleges that his telephone conversation with his girlfriend, Ms. Stiviano was a private conversation which took place in California. He asserts that unbeknownst to him and in violation of California Penal Code §632(a), that private telephone conversation was recorded. Moreover, his complaint asserts that pursuant to California Penal Code §632(d) “[e]xcept as proof in any action or prosecution for violation of this section, no evidence obtained a result of….recording a confidential communication in violation of this section shall be admissible in any judicial, administrative, legislative, or other proceedings.” Sterling asserts that the NBA’s use of an illegal recording as evidence against him constitutes a violation of his right to privacy. In support of that contention, Sterling will assert that the NBA investigation constitutes an “other proceeding.” His complaint cites two federal court decisions in which secretly recorded telephone conversations were excluded from evidence in civil lawsuits per that statute.

Unlike most states, California’s right to privacy is applicable both to “state actors” (i.e. the government) and non-state actors. For example, in Hill v. National Collegiate Athletic Assn., 865 P.2d 633, 641-642 (Ca. 1994) the California Supreme Court rejected the NCAA’s argument that its drug testing policy did not violate the California Constitutional right to privacy because the NCAA was not a state actor. The California Supreme Court in Hill held that both state and private actors could violate California’s constitutional right to privacy. In 2009, the California Supreme Court revisited and narrowed its previous holding in Hill in the case Sheehan v. San Francisco 49ers, Ltd., 201 P.3d 472, 478 (Ca. 2009) as to the applicability of the right to privacy to non-state actors.

First, I expect the Defendants to argue that they are not subject to California’s constitutional right to privacy because they were in New York State. In other words, I expect a choice of law argument. Assuming the Court applies California law, I expect Silver and the NBA to argue that they are not “state actors” and the “other proceeding” set forth in California Penal Code §632(d) does not apply to the NBA’s internal grievance and discipline system. I also anticipate that the defendants will argue that Sterling suffered no damages because the team sold for a price which met or exceeded the fair market value of the team.


Conversion Claim:

Sterling’s civil lawsuit against the NBA and Commissioner Silver alleges that the forced sale of the Clippers constitutes the civil tort of conversion. Pursuant to California law “conversion” is generally described as the wrongful exercise of dominion over the personal property of another. Gruber v. Pacific States Sav. & Loan Co., 13 Cal.2d 144, 148 (1939) The basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property; (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages. Burlesci v. Petersen, 68 Cal.App.4th 1062, 1066 (1998).

I expect the NBA and Silver to attack the conversion claims by attacking the “causation” and “damages” elements of the tort. As per the causation element, the NBA and Silver should assert that it did not sell the Los Angeles Clippers. Rather, Sterling’s wife, Shelly sold the team after Mr. Sterling’s doctors determined that he was “impaired” by early onset dementia. The Sterling Family Trust document contains a provision which allows either Mr. or Mrs. Sterling to control the trust in the event the other is deemed to be impaired. Hence, they should argue that they did not cause Sterling to lose the team.

Second, the NBA and Silver should attack damages by asserting Sterling did not suffer any damages because the $2 billion sale price either equaled or exceeded the value of the team.


Breach of Contract Claim:

Sterling’s complaint asserts the NBA’s fine, lifetime ban and initiation of the process which lead to the sale of the team are not authorized by the NBA-Constitution and its By-Laws. He claims that his private actions do not warrant the imposition of the punitive measures imposed by NBA Commissioner Silver. I expect the NBA and Silver to assert that they possess inherit and specific powers to protect the integrity of the game and therefore were authorized by the governing documents to impose those punishments on Sterling. I also expect Silver and the NBA to argue that the NBA-Constitution and By-Laws do not prohibit Sterling’s punishments. Finally, I expect the defendants will also assert that Sterling’s punishments were warranted because of his abhorrent behavior.


Anti-Trust Claim:

Sterling’s Complaint asserts that the forced sale of the Los Angeles Clippers violates federal anti-trust laws because it will result in the team being sold for less than it is actually worth. As stated above, I expect both Silver and the NBA to assert that although they said that the team must be sold, it was Sterling’s wife Shelly who sold the team. She did so prior to the adjudication of the case and had the power to do so pursuant to the trust language.

I also expect Silver and the NBA will argue that their actions do not violate federal anti-trust laws as a matter of law.

Finally, I believe the NBA and Sterling will argue that Sterling did not suffer damages because the team was sold for a price which met or exceeded its fair market value.


Breach of Fiduciary Duties:

Finally, Sterling’s complaint asserts that Sterling, the NBA and its Board of Commissioners owed him certain fiduciary duties, including duties of loyalty, cooperation, good faith and fair dealing, and the exercise of good care by violating his constitutional right to privacy, “imposing harsh and unprecedented penalties disproportionate to the alleged offense and to the offenses of others, by conducting an inadequate investigation, and by expressly denying Plaintiffs an adequate opportunity to prepare and defend themselves.” I expect the NBA and Silver to assert as a matter of law that they neither owed nor violated any fiduciary duties to Mr. Sterling. Furthermore, I expect them to assert, assuming arguendo Sterling can demonstrate a breach of fiduciary duty, that he suffered no monetary damages because the team was sold for a price which met or exceeded its fair market value.

Pursuant to the Federal Rules of Civil Procedure, the NBA and Silver will either file an answer to the complaint or a pre-answer motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b). Assuming the case is not settled or dismissed by way of motion, the parties will be afforded an opportunity to take discovery. After the close of discovery, I expect the parties to file various motions. Assuming the case is not dismissed or settled by then, I expect the case to be tried. Typically, Federal Court Judges try to move their cases along. Hence, if the case is to be tried, I expect a trial in the next 24-36 months. 

Getting Paid when the Hiring Contractor is in Financial Trouble

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A major concern any contractor or sub-contractor has when working on a project is being paid for the materials and services that they have provided. When the project is progressing without any financial difficulties, payments are timely issued and the sub-contractor or contractor is paid for all the work that they perform. At times, however, there may be concerns as to the financial stability of a sub-contractor or contractor who hires your company to provide materials and services. In such cases, when a party is experiencing a financial difficulty, it becomes important to try to make arrangements to ensure that your company receives payment. If the financial situation concerning the contractor or sub-contractor who retained your company is fairly dire, there are two different vehicles by which your company may attempt to secure payment for the materials and services it has provided without filing a lien claim which might affect the project being completed. This could be in either the form of a Joint Check Agreement, or in the alternative, the issuance of direct payments from the owner or the primary contractor directly to your company.

Should the party which hired your company be experiencing financial difficulty, one potential arrangement would be a Joint Check Agreement. Pursuant to a Joint Check Agreement, payments would be issued directly to both the company which retained your company, as well as your company directly from either the owner or the primary contractor. The fact that checks are issued jointly in your company’s name, as well as the company that retained your company, it would prevent the other company from cashing the checks without your authority and/or consent. As a result, this ensures that your company receives payment for the materials and services it provided. 

Another arrangement whereby your company could receive payment when the financial stability of the company which hired your company is in question concerns direct payments being issued from the primary contractor or the owner. In such circumstances, in lieu of paying the party which retained your company, and thereafter, you receiving payment, the owner or primary contractor would pay your company directly. In order for payments to be directly issued, the primary contractor or the owner would have to obtain the consent of the company who hired you in this regard.

Both a Joint Check Agreement, as well as a direct payment from the primary contractor owner are two vehicles by which your company can receive payment without the risk of the contracting party which hired your company from taking the payment for its own use and benefit. These vehicles would typically require the consent of the party which retained your company.

It is suggested that if you have concerns as to payment from the primary contractor or a sub-contractor that you contact an attorney to discuss the possibility of a Joint Check Agreement or direct payments. If you wait too long in the process, you may end up not receiving any payment for materials and services you’ve provided. As such, it is best to consult with an attorney early and often. 

New Jersey Appellate Court Reverses Trial Court and Remands Member Deadlock Case to Binding Arbitration

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On May 22, 2014, the New Jersey Appellate Division reversed a trial court’s denial of a motion to compel deadlocked members of a limited liability company to arbitrate their disputes in accordance with the governing operating agreement. Comando v. Nugiel, 2014 N.J. Super. Unpub. Lexis 1167 (App. Div. 2014). The Comando decision: (1) provides a good overview of the law in New Jersey governing arbitration of disputes; and (2) concludes the disagreements present in the dispute constituted “deadlock.”

The Comando case centered on a dispute between Elizabeth Comando (“Comando”) and Mary Nugiel (“Nugiel”) regarding a New Jersey limited liability company, 10 Centre Drive, LLC (“the LLC”). The two of them contributed money and co-signed a mortgage, to aid the LLC in purchasing a building located at 10 Centre Drive in Mercer County, New Jersey. The building was purchased to be used by another company (RCP Management Company) they worked together for. Although RCP Management Company was initial owned solely by Nugiel, the two agreed that Comando would eventually become a co-owner.

Comando and Nugiel executed an operating agreement for the LLC. Section 5.5 of the operating agreement addressed the circumstance of a members' deadlock on management decisions (deadlock provision), which stated:

In the event the [m]embers are unable, for any reason, to agree regarding any matter or decision requiring the approval of a majority or more of the [m]embers, (a "[d]eadlock"), then the [m]embers shall mutually agree upon an individual with appropriate expertise to cast a vote to break any [d]eadlock (the "[r]eferee"). The [r]eferee shall be appointed by the [m]embers within three (3) days after the date of the [d]eadlock. The [r]eferee will make such inquiry into the [d]eadlock as it, in its sole discretion, deem appropriate. The [m]embers may agree on any rules to govern such inquiry, and in the absence of an agreement, the rules of the American Arbitration Association shall apply. Within five (5) days after the date of the appointment of the [r]eferee, the [r]eferee shall present a written decision regarding the resolution of the [d]eadlock to the [m]embers which shall be final and binding upon the [m]embers. The [r]eferee shall have the authority to decide all matters presented to it. In the event either [m]ember fails or refuses to act in accordance with the [r]eferee's decision for any reason, then the other [m]ember may seek all remedies permitted under the law in order to enforce the decision. The [c]ompany shall pay the fees and reasonable out-of-pocket expenses of the [r]eferee. Except as otherwise set forth herein with respect to [r]eferee expenses to be paid by the [c]ompany, each [m]ember shall be responsible for their own costs and expenses association with the resolution of any [d]eadlock hereunder.

Difficulties and disagreements developed between them concerning RCP Management Company. By January 2013, the two reached an impasse over RCP's ongoing operations. In February 2013, Nugiel informed Comando she desired to sell RCP to a third-party. Comando replied, expressing her desire to exercise her right to purchase RCP, which Nugiel rejected. Comando resigned on April 1, 2013. Beginning in June 2013, Comando urged the sale of the LLC’s real property, a request which Nugiel refused.

On July 13, 2013, Comando, individually and derivatively filed a lawsuit against Nugiel in the Superior Court of New Jersey, Bergen County, Law Division. Included among the numerous claims against Nugiel and RCP are an assertion of Comando's de facto ownership interest in RCP Management Company and breach of contract, as well as a claim Nugiel wrongly diverted corporate profits for her sole benefit and committed fraud. Nugiel filed a counterclaim, alleging Comando overbilled clients to inflate her salary and percentage of profits, Comando revealed RCP Management Company’s confidential information to her new employer, and if Comando is found to be a shareholder of RCP Management Company, she breached her fiduciary duty to the corporation and fellow shareholder, Nugiel.

Comando filed a motion pursuant to the above-mentioned “deadlock provision” seeking to have the case remanded to binding arbitration. Nugiel opposed that motion. In her opposition, Nugiel argued that the “deadlock provision” was inapplicable and that Comando waived arbitration when she filed a lawsuit in Court. The trial court agreed with Nugiel.

The Appellate Division reversed that decision. In doing so, the Comando Court cited governing case law favors enforcing parties’ contractual agreements to arbitrate. Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 131 (2001); Alamo Rent A Car, Inc. v. Galarza, 306 N.J. Super. 384, 389 (App. Div. 1997); Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 148-49 (App. Div. 2008).

The Comando Court found that the disagreements between Nugiel and Comando concerning the sale of the LLC’s real property constituted “deadlock” which triggered the arbitration clause contained in the Operating Agreement.

Finally, the Comando Court held that the commencement of the litigation in Court did not constitute a waiver of the arbitration clause. In reaching that conclusion, the Court recognized “"[t]here is a presumption against waiver of an arbitration agreement [.]" Spaeth v. Srinivasan, 403 N.J. Super. 508, 514 (App. Div. 2008). Moreover, “party's waiver must be expressed "clearly, unequivocally, and decisively.” Camando (quoting, Cole v. Jersey City Med. Ctr., 215 N.J. 265, 277 (2013)). There is no single test for the type of conduct that may waive arbitration rights." The Camando Court following the New Jersey Supreme Court’s Cole decision set forth that the factors should be evaluated when undertaking the necessary are:

(1) the delay in making the arbitration request; (2) the filing of any motions, particularly dispositive motions, and their outcomes; (3) whether the delay in seeking arbitration was part of the party's litigation strategy; (4) the extent of discovery conducted; (5) whether the party raised the arbitration issue in its pleadings, particularly as an affirmative defense, or provided other notification of its intent to seek arbitration; (6) the proximity of the date on which the party sought arbitration to the date of trial; and (7) the resulting prejudice suffered by the other party, if any.

Cole v. Jersey City Med Ctr., 215 N.J. at 280-81

After applying those factors, the Camando Court held that there was not a waiver and reversed the Trial Court’s decision. The case was ripe for arbitration.

Delaware Supreme Court Allows By-Laws to Require "Losing" Party to Pay the Prevailing Party's Legal Fees and Costs If Adopted for A Proper Purpose

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On May 8, 2014, the Delaware Supreme Court in the case ATP Tour, Inc. v. Deutscher Tennis Bund, 2014 Del. Lexis 2009 (2014), held that a fee shifting provision in a non-stock corporation’s by-laws can be enforceable under Delaware law provided it was adopted for a proper purpose.

The case involved a Delaware non-stock corporation ATP Tour, Inc. Its members include professional men's tennis players and entities that own and operate professional men's tennis tournaments. In 2006, the board amended ATP's bylaws to add an Article 23, which in summary provided that if any member or owner commences litigation against ATP Tour which “does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought, then each Claiming Party shall be obligated jointly and severally to reimburse the League and any such member or Owners for all fees, costs and expenses of every kind and description (including, but not limited to, all reasonable attorneys' fees and other litigation expenses) (collectively, ‘Litigation Costs’) that the parties may incur in connection with such Claim).”

After the enactment of that bylaw, two members commenced litigation against ATP asserting that the corporation violated federal anti-trust laws and breached fiduciary duties. A federal jury ultimately found in ATP’s favor after a ten day trial. ATP filed a motion pursuant to Federal Rule of Civil Procedure 54 seeking the recovery of the attorneys’ fees and costs it spent successfully defending itself in that litigation. The Federal District Court Judge denied the application finding that federal law pre-empted the enforcement of fee shifting agreements when anti-trust claims are involved. ATP appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit. That Court disagreed with the trial court’s reasoning but found that there was no Delaware case law answering questions relating to whether or not a Delaware corporation’s bylaws could permit a losing party to pay the prevailing party’s counsel fees and costs. The case was sent to the Delaware Supreme Court to answer those unanswered questions.

The Delaware Supreme Court affirmed that Delaware follows the American Rule, under which parties to litigation generally must pay their own attorneys' fees and costs.Relying on previous decisions, the Delaware Supreme Court found it was settled that contracting parties may agree to modify the American Rule and obligate the losing party to pay the prevailing party's fees.The Delaware Supreme Court held that “corporate bylaws are ‘contracts among a corporation's shareholders,’ [and found that] a fee-shifting provision contained in a non-stock corporation's validly-enacted bylaw would fall within the contractual exception to the American Rule.”

The Delaware Supreme Court did limit their decision to the enactment of fee-shifting bylaws so long as they were put into place for a proper purpose. Citing the landmark decision, Schnell v. Chris-Craft Industries, 285 A.2d 437 (Del. 1971), the Delaware Supreme Court held when deciding whether or not a specific fee-shifting bylaw is enforceable “depends on the manner in which it was adopted and the circumstances under which it was invoked.” The Delaware Supreme Court further held “bylaws that may otherwise be facially valid will not be enforced if adopted or used for an inequitable purpose.”

This is an extremely important decision because Delaware is the state where a majority of corporations are incorporated. The decision could profoundly change intra corporate litigation because Delaware corporations may take notice and adopt similar bylaws in an effort to make litigation more expensive and risky. The decision is also extremely important because Delaware law is often followed by other jurisdictions. It is possible that other states may follow Delaware law and permit their corporations to enact bylaws that force the losing party to pay the winner’s counsel fees.

Do You Have The Waiver and Release You Need?

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Having the right waiver and release can help you to quickly save money and find peace.  If you fail to obtain a required waiver or release, you can suffer from liens, disputes and lawsuits.

Black’s Law Dictionary states that a waiver or release involves giving up or abandoning of a claim or right.  Often, waivers and releases are included as part of settlement agreements.  Since it is also possible to give up claims and rights by conversations or conduct, it is essential to ensure that you do not unintentionally lose your claims and rights.  Waivers and releases can also be contained in other documents and good leases, construction contracts, and other agreements will include lien and claim waivers and releases.  In addition to obtaining releases, it is important to obtain both lien and claim waivers, since simple lien waivers may not prevent the filing of claims.  

Waivers and Releases Can Cut Costs 

Waivers and releases can help you to quickly prevent liens and claims, and resolve disputes and lawsuits.  They can also save you time and money by deterring defaults with tough language to inspire compliance, such as increasing payments and attorneys’ fees and costs for violations.  Waivers and releases are effective at cutting costs and reducing risks because they are generally enforced when they are voluntarily and properly prepared and exchanged unless there is a defense to the making of the document, or they are prohibited by laws, such as laws relating to residential tenants and consumers.  It is also important that documents be exchanged at the right time.  For example, construction lien and claim waivers may not be enforceable if they are not exchanged when required by law.  Similarly, certain rights and judgments may not be enforceable unless they are obtained to settle a pending claim, such as an eviction action.  In order to fully benefit from these valuable documents, it is essential to consider all possible issues, including all potential parties (such as subsidiaries and affiliates, officers, directors, shareholders, partners, employees, agents, members, managers, successors, assigns, heirs and personal representatives) and all potential issues (including past, present, and future claims, demands, actions, causes of action, suits, debts, sums of money, promises and damages, regardless of whether asserted, unasserted, known or unknown). 

Waivers and Releases Can Create Opportunities  

Well drafted waivers and releases can also grant you additional new rights to help you reach your current and future goals.  For example, they can be used to quickly obtain missing rights, such as rights to develop and improve properties.  They can also be used to creatively and quickly resolve other issues that you may not be willing or able to cost-effectively resolve at a trial, such as other current problems, future potential problems and payments, confidentiality, jurisdiction, venue, and governing law. 

Obtain the Waivers and Releases You Need

It is critical to consult counsel to ensure that you have the waivers and releases you need to succeed.  Many issues must be addressed, including what waivers and releases you need, when you need them, and if and when they are enforceable.

Properly Serving As a Power Of Attorney

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At some point in our lives, many of us are chosen to serve as a Power of Attorney for an elderly or an incapacitated person who may need assistance with their day to day affairs, whether due to infirmity, immobility, or issues with their mental capacity.  Prior to taking actions utilizing the Power of Attorney, it is a good idea for an individual to have ground work laid out to properly memorialize any actions taken while utilizing the Power of Attorney to avoid potential future legal action.  As a litigator who works extensively in probate litigation, I have seen many instances where a lawsuit is filed due to alleged abuses of a Power of Attorney.  As such, below are some simple rules to follow when utilizing a Power of Attorney. 

The first suggestion would be to utilize accounting software, such as Microsoft Excel, in order to create a spreadsheet wherein you would track any and all transactions when utilizing the Power of Attorney.  Each transaction can be recorded in an Excel spreadsheet, and furthermore, all relevant receipts can be indexed which are related to the expense.  It is suggested that you spend the time to organize and categorize any and all expenses, as well as the accompanying receipts and keep them organized in a notebook which corresponds with the Excel spreadsheet.  In this notebook, it would also make sense for you to maintain copies of all bills which facilitated and required the payment.  The use of an Excel spreadsheet when coupled with the retention of original bills and receipts is a very strong step towards alleviating any confusion concerning the use of the Power of Attorney should an accountant be required. 

Another important consideration would be to ensure that the party you are assisting has a separate bank account that is not co-mingled with any assets of your own.  Is it is important while utilizing a Power of Attorney that you do not co-mingle any of your assets, or the assets of the person you are assisting.  Maintaining separate and distinct accounts is a good way of ensuring that there is no co-mingling of funds, and as well, alleviates allegations as to the misuse of an account.   In this same breath, it is suggested that a party save any and all bank account statements and keep them in the same notebook which contains the accounting and the Excel spreadsheet that was discussed above.

If there are concerns that a sibling or other family member may challenge your expenses under the Power of Attorney, it is suggested that you continuously invite them to review any expenses on no less than a quarterly basis.  By providing them with this opportunity it may resolve any issues which might lead to future litigation.  Above all else, in order to avoid litigation it is essential that while serving as a Power of Attorney that you maintain transparency with all accounts and that you maintain and organize your records.

An Unfair Will Doesn't Mean an Invalid Will

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Just because a Will may be unfair to different members of a family its lack of perceived fairness does not invalidate the Will in the absence of additional evidence.  It is well settled that if the testator has the capacity to execute a Will, then in that event, it is not the duty of the Court to rewrite the Will, but instead, to enforce it in its current format.  The test of capacity to execute a Will is quite a low standard.  In general, the testator need only understand the property which he possesses and which he wishes to dispose of and the individuals to whom he wishes to bequeath this property.  Provided the testator meets this simple two pronged test, and the distribution is not the subject of an outside influence which is unlawful in nature, then the bequest will stand.  This might be despite the fact that the decedent’s bequest may be extremely unfair to other potential heirs of the Estate.

Often times, a party may seek counsel due to a Will which they feel is unfair or improper.  Usually, this occurs when a change is made in the Will not long prior to the death of the decedent.  Unfortunately, the minimal test of capacity allows the decedent to execute a Will which may drastically differ from his or her previous wishes and one which the Court will uphold if the testator possesses the capacity on the date it was executed.  There are other ways to challenge a Will based upon allegations of undue influence which thereby caused the decedent to execute a Will which was not in accord of his true intentions, but instead, reflects the wishes of another person who has benefitted by same. The test of undue influence, however, is entirely separate and distinct from capacity to execute a Will.

With regard to capacity, if the Court finds that there is sufficient capacity and there is no evidence of any other improper influence, the Will will be enforced in its present format no matter how unfair it may be to the other members of the decedent’s family.  As such, simply because a Will is unfair does not mean that it is invalid.  Obviously, if a party encounters a Will which is grossly unfair and was created not long prior to the death of the testator, then in that event, this individual can consult with an attorney to see whether there are ways to attack the validity of the Will based upon either an allegation of lack of capacity or undue influence.

The Joint Accounts and Multi Party Deposit Account Act

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Often times, in order to simplify writing checks on behalf of an elderly individual or one whose capacity may be failing, individuals may agree to open a joint account which would then permit the person who is providing assistance to write checks on behalf of the individual who actually has deposited the funds into the account.  This typical joint account with right of survivorship is subject to the Multi Party Deposit Account Act.  This Act has important implications with regard to matters wherein the subject account may be a substantial asset of the Estate once the true owner of the account passes away.  It is for these reasons that you should be aware of the Multi Party Deposit Account Act.
Under the Multi Party Deposit Account Act, the joint account belongs to the parties in proportion to the net contribution by each to the sums on deposit unless the terms of the contract indicate a different intent or there is clear and convincing evidence of a different intent at the time the account was created. In other words, if one party deposits all the account funds into the account during their life, then in that event, this party owns all the funds contributed to the account. At the time of death of one party to the joint account, however, there is a reputable presumption that a right of survivorship was created in the remaining party. This means that the sums remaining on deposit at the death of a party through a joint account belong to the surviving party, or parties, against the Estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created. As such, the account would pass to the survivor under the account, unless there is clear and convincing evidence that the account was created as a matter of convenience to assist the decedent during his life, or there is other evidence which demonstrates by clear and convincing evidence that the account was not to pass to the survivor upon the death of the decedent. Clearly, this is important when considering how funds may pass to the Estate.
In a recent decision, the Court also found that not only may it consider evidence at the time the account is created, but moreover, that the Court may also consider evidence after the account was created to determine whether or not the account was one of merely convenience, or the account passed to the survivor at the death of one party to the account. The standard is whether there is evidence of a clear and convincing nature which demonstrates that the right of survivorship has been invalidated by prior intentions of the true owner of the account. The case law differs, however, whether the account was created as a means of convenience in lieu of the operation of the Power of Attorney or a similar instrument. As discussed above, recent case law has held that the intention of the owner to the account may be revealed at a time long after its creation if the parties’ conduct throughout the time that the account was maintained demonstrates its convenient nature. Regardless you should always be aware of the impact of The Multi Party Deposit Accounts Act as it relates to what assets may compromise an Estate. 

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