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

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The New Jersey Business Corporations Act and current New Jersey Limited Liability Company Act have slight differences in the way they define and address “corporate deadlock.”   

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The Minority Oppression statute sets forth four remedies which a Court “may” order to remedy oppressive conduct.   The Minority Oppression Statute provides that a Court may appoint a custodian, appoint a provisional director, order the sale of the corporation’s stock (per the statute) or enter a judgment dissolving the corporation.  Id. The Statutory power of a Court to Order a stock sale is described in further detail in N.J.S.A. 14A:12-7(8).  On its face, it appears that N.J.S.A. 14A:12-7(8) does not authorize a mandatory purchase by someone otherwise unwilling to buy the stock.   Nevertheless, a Court may use it’s equitable powers to Order that shareholder to buy another shareholder’s stock if oppression is found.  Bonavita v. Corbo, 300 N.J. Super. 179, 197-198 (Ch. Div. 1996).   That is because in Brenner v. Berkowitz, 139 N.J. 488, 512-514 (1993), the New Jersey Supreme Court held that when a statutory violation such as oppression occurs, Courts retain their equitable discretion to fashion remedies.  Hence, if a Court finds that the majority oppressed the minority it could order the majority to purchase the minority shares for “fair value,” even if the majority does not want to buy that interest. 

Scott Unger is a Shareholder in Stark & Stark's Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

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According to the New Jersey Department of Banking and Insurance, as of March 1, 2013, approximately 40% of flood-related Sandy claims are still unresolved. Many claims involve legal issues associated with the following circumstances, many of which we have seen in cases we are currently handling on behalf of insured policy – holders in the tri-state area: 

1. Reconstructing the cause of loss – whether the damages were caused by wind (typically covered under homeowners policies) or flood (covered under Federal flood policies); 
2. Whether there were concurrent causes of the loss (for example, caused partially by wind driven rain and partially by flood waters) requiring an analysis of insurance policies which may have clauses barring or supporting coverage under those circumstances;
3. Whether the damages to a building occurred below the lowest elevated floor in designated flood zones, or in a basement. Under Federal flood policies, coverage for damage in these areas is significantly more limited than when damages occur above the lowest elevated floor; 
4. Whether adequate steps were taken by the insured to prevent mold from forming (impacted significantly by whether the insured had access to the structure – given widespread governmental restrictions on access for weeks following the storm); 
5. Reconstructing damages in those instances where homes were completely washed away and the cause of the loss is debatable or difficult to re-create, requiring the involvement of engineering professionals or other forensic analysis;
6. Disputes over the rates of labor and materials utilized in adjuster appraisals, given the wide variation in experience levels of adjusters brought in from all parts of the country, and fluctuation in labor and material rates by location and in relation to when the loss was adjusted;
7. Practical concerns regarding obtaining good faith estimates and contractors available to provide required services to rebuild structures to avoid further damage;
8. The interplay of flood policies issued to individual condominium unit owners, vs. the coverage available to Condominium Associations for damages to the common elements of the condominium buildings;
9. Issues concerning extensive debris removal costs where the debris comes from neighboring properties and ends up on the insured property, but not on or in an insured building; and
10. Practical decisions concerning whether or when to rebuild, given uncertainty surrounding finalizing the Federal Flood maps and inconsistent municipal actions regarding property rights, dune reconstruction, access for contractors, permits, height restrictions and other considerations.

This represents a sampling of issues we are encountering, as we assist policyholders in these matters, although there are numerous additional issues faced by insureds as they seek to rebuild their lives and property. Policyholders are encouraged to seek legal advice, given that policy language can vary significantly from one policy to another and the rights defined in the policies can vary widely. While some of the areas in question have been the subject of opinions by reviewing courts, some of the issues arising out of Sandy are novel, and are likely to spawn both litigation against insurance carriers and, eventually, legal opinions defining the rights of policyholders under these unique circumstances.

Thomas J. Pryor works in Stark & Stark's Lawrenceville, New Jersey office concentrating his practice in Insurance Coverage & Liability issues. For questions, or additional information, please contact Mr. Pryor.

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Gene Markin, attorney in Stark & Stark’s Construction Litigation Group, authored the article, Construction Officials & Municipalities: Immune from Liability for Construction Defects?, published on March 27, 2013 in US1 Newspaper.

The article discusses how municipalities are not liable in tort for negligently granting certificates of occupancy.  Municipal power to issue a certificate of occupancy is created by N.J.S.A. 40:48-1(13).

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The New Jersey State Foreclosure Mediation Program has become a helpful tool for many homeowners facing foreclosure.   It has allowed homeowners the benefit of skilled attorneys and housing counselors to help them navigate the maze of rules and regulations which meant the difference between securing a modification on a mortgage in default and losing their home.   Both legal counsel and the housing counselors were available free of charge as they were paid through State programs.  The money for these programs has run out.  Homeowners in need of these services will have to retain private counsel and housing counselors for services previously provided at no cost.   This will prove to be a large burden for homeowners who are unable to make payments on their mortgages.

Mediators, who were also paid under the New Jersey State Foreclosure Mediation Program, with a few exceptions, will no longer be paid.  

In addition, unlike previous liberal guidelines where homeowners could get into the mediation program until there was a Sheriff's sale, commencing April 1, 2013, residential homeowners that are being foreclosed upon will only be eligible to participate in the foreclosure mediation program if they request mediation within 60 days of service of the complaint.  For existing cases already older than 60 days from the service of the complaint the homeowner must have requested mediation before April 1, 2013. 

As of March 1, 2013, due to loss of funding, housing counselors are no longer accepting new clients exclusively for mediation.  However, there are still some agencies that are continuing to offer services to homeowners under other programs.  What was already a confusing process for many to navigate, will become even more confusing.

One program known as the "Homekeeper Program" allows homeowners who may qualify to apply directly and have a housing counselor assigned to them.  The application for the HomeKeeper Program is available here.  

With the rules continuing to change, those that are in threat of foreclosure must act quickly and diligently if they want to receive the benefit of the State Court sponsored mediation program.

Lewis J. Pepperman is Co-Managing Director of Stark & Stark and the Chair of the Litigation Group in Stark & Stark's Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Pepperman.

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No pilot wants to find himself flying into a temporary flight restriction (TFR).  TFRs can pop up at a moment’s notice because they often include presidential or VIP movement in the skies.  In other words, if President Obama decides to visit Princeton, New Jersey, then a presidential TFR will be implemented.  And for obvious security reasons, these TFRs are not posted in advance.

A TFR violation almost always means a certificate suspension for at least fifteen days, and often more.  While this may seem trivial, the suspension becomes part a pilot’s record and can often hamper a pilot’s career aspirations.  Pilots aspiring to fly private jets for the elite companies will find it almost impossible to get a job if they have a certificate suspension on their record.  And forget about the big airlines.

Many pilots have found themselves innocently navigating the skies when suddenly an F-16 is sitting on its wing ready to escort them to the nearest runway.  This is not a pleasant experience because it only marks the beginning of a painful process that often includes a Secret Service agent waiting as you disembark the aircraft.  Moreover, a TFR violation almost definitely requires meeting with an FAA enforcement attorney to answer the charges.

Avoiding these TFRs are very easy through proper flight planning, which must begin with a timely check of the notices to airman (NOTAMS).  Because this mistake is easily avoided, the FAA maintains a zero tolerance policy, so no matter what legitimate excuse a pilot may offer or think he or she may have, chances are that his or her certificate will be suspended.

As mentioned above, pilots must answer to an FAA enforcement attorney.  This means, at a minimum, responding to the Notice of Proposed Enforcement Action that the pilot receives and potentially ending up at a judicial hearing in front of a National Transportation Safety Board judge.  This process can be confusing, so you should consult with an attorney who has experience with these matters. 

Timothy F. Trainor served as an Enforcement Attorney for the Federal Aviation Administration in Washington, D.C. before joining Stark & Stark.  He has extensive experience prosecuting violations of FAA regulations, focusing on operational and maintenance issues.  For questions, or additional information, please contact Mr. Trainor.

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The New Jersey Revised Uniform Limited Liability Company Act gives Courts discretion to remedy oppressive conduct.  If a court determines that a member or controlling member has, is or will act illegally, fraudulently, harmfully or oppressively towards a member, a Court may:  (1) appoint a custodian or provisional manager; (2) order the sale of a member’s LLC interest to the LLC or the members (N.J.S.A. 42:2C-48(b));  (3) dissolve the company; and (4) award legal fees and other expenses if a party acted vexatiously or otherwise not in good faith (N.J.S.A. 42:2C-48(c)).
 
The New Jersey Supreme Court in Brenner v. Berkowitz, 134 N.J. 488, 512 (1993) held that in addressing corporate minority oppression, Courts were not limited to the statutory remedies contained in the statute.  That means at least within the context of a shareholder dispute within a corporate entity, Courts may utilize its common law powers to fashion an equitable remedy.   At this point, it is unclear whether or not the same equitable powers will be given to Courts when confronted with remedying an oppressive conduct within an LLC.   Based upon my review of the Brenner decision, I believe Chancery Courts will have the same equitable powers to remedy oppression whether the entity is a corporation or an LLC.  That is because the Supreme Court in Brenner held “when a statutory violation occurs, a court retains its discretion to fashion equitable remedies.”  Brenner v. Berkowitz, 134 N.J. at 514.   

Scott Unger is a Shareholder in Stark & Stark's Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.

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Paul W. Norris, Stark & Stark Shareholder and member of the Firm’s Litigation Group, authored the article Contesting a Will, published in US 1 on March 6th, 2013. 

The article describes the process and the possible repercussions of contesting a will.  Mr. Norris explains the process of contesting a will, including the possible range of emotions that the Executor and others involved may experience throughout the litigation process.

Mr. Norris explains that, prior to challenging a Will, “an individual must first evaluate the value of the Estate and their potential gain as compared to the expenses they may incur in obtaining that relief.  In addition, a party should consider the emotional trauma which is prevalent in Estate litigation.”  Additionally, he explains that, “After a Will contest has been commenced, the Court will often recommend that the parties consider mediation in an attempt to resolve the matter without the need for additional litigation.  Often, the parties are able to resolve the dispute through Mediation without the parties incurring costly additional expenses.  If a case cannot be resolved through mediation however, the case will move forward through discovery, and thereafter, to Trial.”

To read the full article, Click Here.

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