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Legal Updates

Conduct of Members Insufficient to Amend Operating Agreement

12/29/2019

 
In an older opinion from 2018 that was eventually published recently, the Appellate Division considered whether or not the provisions in the operating agreement governing the value of the business upon retirement of a member would be strictly construed or amended based upon the members conduct.  Specifically, the retiring member was seeking to have the value of his membership based upon the fair market value of the company as opposed to the operating agreement formula which was the last agreed upon value adjusted to reflect an increase or decrease in the net worth of the company.  The retiring member argued that sixteen years passed since the parties determined an agreed value of the company, and during that time the company had used the fair market value method to value the company on three separate occasions for planning purposes.  However, the Court disagreed and enforced the terms of the operating agreement as written.  In doing so, the court affirmed existing caselaw which requires that there be a "mutual and clear" intention to modify a written agreement by conduct.  Where, as here, such an intention is not demonstrated by the evidence, the court will enforce the operating agreement as written.  (Namerow v. Pediatricare Associates LLC, et. al.)

NJ Jurisdiction is not Available Based Upon a One-Time Internet Post by Non-NJ Resident

12/16/2019

 
In a precedential opinion, New Jersey's Appellate Division held that a one-time internet post created by a private out-of-state resident seeking to sell a used vintage automobile did not create sufficient contacts to invoke the jurisdiction of the New Jersey Courts.  The internet post was made by a California man, seeking to sell his used vintage automobile.  A man in New Jersey responded to the internet post and the parties came to a quick agreement on price ($40,000).  The New Jersey man hired a third-party trucking company to pick up the car in California and transport it to New Jersey. When the vintage car arrived in New Jersey, the Buyer did not like the condition of the car and wanted to sue the California man in New Jersey state court.  However, the court held that the one-time internet post by an out-of-state resident did not create sufficient contacts to invoke the jurisdiction of the New Jersey Courts, and the lawsuit would have to be filed in California.
 
This case is an example of the 21st Century's caveat emptor or "buyer beware." Buyers, when purchasing products on-line, have to remain vigilant in vetting where virtual purchases are made. Large on-line retailers generally have sufficient contacts with the majority of continental states that jurisdiction can be readily invoked. However an individual seller that merely posts a "for sale" ad does not personally submit to the jurisdiction of the Courts of the State wherein the ad is answered. When a problem arises, it is buyer beware.  (Jardim v. Overley)

11 Year Course of Dealing Waives Explicit Contract Terms

12/11/2019

 
In a recent unpublished decision from the Appellate Division, the court found that a real estate broker had waived the right to receive quarterly commission payments in advance since the realtor failed to enforce that contractual provision for 11 years.  The commission agreement at issue was for the lease of a commercial property and stated that the realtor would be paid a 6% commission on the rent, "in four equal installments per year, in advance..."  While such payments were originally made in advance on a quarterly basis, at some point the owner switched to making monthly payments instead.  In ruling for the owner the trial court found that the realtor accepted, "monthly payments continuously for eleven years, thereby constituting a waiver of the quarterly payment schedule set forth in the agreement."  Such finding was upheld by the Appellate Division.  This case underscores the importance that parties to a contract not sit on their rights and enforce contractual provisions in a timely manner when they are not being followed.  (Barry H. Gertsman & Company v. 5218 Atlantic Avenue Associates LLC, et. al.)

    Authors

    Peter J. Vazquez, Jr.
    Jeffrey Heldman

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Peter J. Vazquez, Jr.
pvazquez@vazquezfirm.com

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Jeffrey Heldman
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  • Home
  • Areas of Practice
    • Business Law & Litigation
    • Construction, Real Estate & Development
    • Healthcare and Pharmacy Law
    • Wills, Trusts, Estates and Administration
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  • Blog and Legal Updates