​In a published decision from September of 2021, the Appellate Division reversed a trial court’s award of $12,250.40 in attorney fees, opening the door for the Plaintiff to possibly recover the full $104,670.51 in attorney fees and costs that were incurred.  The Plaintiff subcontractor had filed a Prompt Payment Act claim for $30,500, which the Defendant fought for two years all the way to trial.  In accordance with prosecuting its case through to a trial, the Plaintiff incurred over $100,000 in attorney fees and costs.  However, the trial judge reduced this figure to $16,375.73, finding that a fee award of over $100,000 would be unreasonable where the amount recovered was only $30,500.

The Appellate Division reversed this finding, and remanded to the trial court to revisit the attorney fee award.  In doing so, the appellate court emphasized that to drastically reduce the amount of attorney fees to be recovered would work against the public policy behind the Prompt Payment Act in the first place stating:

The statute's salutary goals of ensuring that contractors and subcontractors are fully and promptly paid for their work are thwarted when such plaintiffs fully prevail on a suit to vindicate their rights under the Act but net little or nothing owing to the costs of the litigation. …  Without the court's unstinting enforcement of the statutory fee-shifting provision, contractors and subcontractors with relatively small claims would win only a Pyrrhic victory against defendants who failed to discharge their statutory obligations to pay promptly what they owe.  Instead of deterring owners and contractors from delaying payment or stiffing their subs as the Legislature intended, it would be the stiffed contractors and subcontractors who would be deterred from suing to vindicate their statutory rights. 

(JHC Industrial Services LLC v. Centurion Companies Inc.)

In a recent published Appellate Division case, the court firmly upheld a trial court's summary judgment decision which dismissed an action filed by an automobile insurer seeking remuneration from a health insurer for PIP benefits paid for certain people injured in auto accidents. The pertinent facts are that these individuals procured auto insurance from the auto insurer but designated the health insurance as the "primary" payor of PIP benefits in the event of accident.

Here, the health insurer never processed any requests for payment which were made directly by the auto insurer. Here, the auto insurer voluntarily issued PIP benefits (i.e., payments) on behalf of the injured people. Here, it appears that the auto insurer did not direct the injured people to submit their claims to the health insurer first. This is an important step in the PIP scheme of "primary vs. secondary" because only after a denial by the health insurer will the auto insurer become responsible for payment.

Therefore due to the many mis-steps by this auto insurer, its complaint was dismissed with prejudice.

Palisades Insurance Company v. Horizon Blue Cross Blue Shield of New Jersey A-2830-19.

In another unanimous opinion by the New Jersey Supreme Court, it was held that a "garage policy" which insured a loaner vehicle, and contained a provision which did not conform to the Regulations promulgated by the MVC, contained an illegal escape clause.

In this matter, a dealership procured insurance coverage for its loaner vehicles which provided for liability coverage in the event of an accident. However, the insurance policy contained a provision that the procured insurance only provided coverage when the "customer lacked the minimum insurance required by law." When the customer with the loaner car got into an auto accident, and the injured sued, the dealership's insurer disclaimed coverage because the customer had personal auto insurance with the legally minimum coverage of $15,000/$30,000.

Upon challenge by the injured, the court reviewed the law and the plain language of the regulations revealed that a "garage policy" must provide for liability insurance of $100,000/$250,000. Thus the court found the disclaimer of coverage, which was based upon language contained in a clause of the policy, to be unlawful, and the injured would be able to demand damages up to the "garage policy" limits. Huggins v. Aquilar (A-78-19).

Where an owner of a property sues a contractor in a construction litigation case, the burden of proof is upon the owner to both prove that the work was defective and what it will cost to have the defective work repaired.  In an unpublished decision from February 2021, the Appellate Division noted that even without testimony from the contractor who prepared the repair estimate, the repair estimate may still be admissible as a business record exception to the rule against hearsay.  The court noted that the repair estimate, "may have been admissible as a business record if: (a) the author prepared the document in the regular course of business, contemporaneously with its estimate, and not for litigation, (b) the business regularly made such estimates, and (c) the method, purpose or circumstances of preparation did not indicate that it was not trustworthy.  Accordingly, while the better evidence would still be to bring in the contractor for live testimony, the court found that the trial court (among other things) should have at least considered if the estimate was admissible as a business record and therefore the case was reversed and remanded.  (Olivera v. NJ Asphalt Services)

In an unpublished decision released today, the Appellate Division gave litigants two reminders for those engaged in construction litigation over unpaid services. The first reminder is directed to a defendant that assert a "setoff" amount is due and owing from the plaintiff. In that regard, the Court reminds that a setoff is an affirmative defense and that the defendant "bears the burden of proving it." In the case at bar, although the defendant sought a setoff amount from the plaintiff, it failed to produce evidence showing that such an amount was actually due. Here, for example, the defendant's trial witness claimed, during testimony, to not have the correct ledger with her while on the stand and thus could not competently testify to the large setoff amount sought.

The second reminder to litigants touches on the Prompt Payment Act ("PPA") which is found at N.J.S.A. § 2A:30A-2. The first subsection of that statute is applicable only with the owner, while the second subsection is applicable only with a subcontractor. In the former subsection "(a)" if an owner does not reject an invoice/work by a contractor it is "deemed approved." In subsection "(b)" if a contractor does not reject an invoice/work by a subcontractor it is NOT "deemed approved." This distinction is important when seeking payment for construction services because if an invoice and/or work performed is "approved" or "accepted" the lone argument between the parties will be financial in nature. (A&E Construction Co. v. Barrier Electric Co., Inc, et als.)

In a reported opinion from the Appellate Division, the Court overturned a trial court verdict in the amount of $457,870.86 (inclusive of counsel fees), finding that there was no violation of the Uniform Fraudulent Transfer Act (“UFTA”).  The suit was brought by a landlord who had been leasing 16,000 square feet of a strip mall to a Amma Corp. for the operation of a supermarket.  Prior to the end of the lease, the owners of Amma Corp., Mr. and Mrs. Perez, created a new company named NRVP LLC and opened another supermarket under that company’s name in a different location less than a half-mile away.  The Perezes operated both supermarkets simultaneously for approximately nine months, but proceeded to have Amma break its lease with its landlord about nineteen months early.  After breaking the lease, the Perezes shut down Amma Corp.
 
Unable to find a replacement tenant for Amma Corp., the landlord sued NRVP LLC for the balance due under the remainder of Amma’s lease on a successor liability theory.  The trial court testimony indicated that other than a trademark, no assets of Amma were transferred to NRVP.  However, given the common ownership, the close proximity in location, and the transfer of Amma’s trademark of the term “Super Supermarket” to the new company, the trial court found that NRVP was liable for the debts of Amma as a “continuation of the selling corporation,” and entered judgment in favor of the landlord.
 
However, the Appellate Division disagreed and reversed the trail court’s decision, finding that transfer of all, or substantially all, of the assets of the prior company is a prerequisite to the imposition of liability upon another company.  Here, while there was the transfer of a trademark, the expert testimony was that is value was only $740 and there were no other assets transferred.  Accordingly, there could be no successor liability.  160 West Broadway Associates LP v. 1 Memorial Drive LLC, et. al

An "underage" adult, over the age of 18 but under the age of 21, who hosts other underage individuals and permits them to consume alcohol before driving drunk, can be held liable under the common law for foreseeable injuries to others.

This case involved a twenty year old host who permitted two other underage individuals, who had illicitly acquired alcohol from a local convenience store, to consume said alcohol at his parents' house where they became drunk and subsequently drove a motor vehicle. The two drunk individuals were involved in a motor vehicle accident resulting in the death of one of them. The decedent's estate sued the underage host seeking to hold him liable for a foreseeable personal injury.

The NJ Supreme Court created a new rule relying heavily on past precedent including case and statutory law. This new rule is as follows:

"A plaintiff injured by an intoxicated underage social guest may succeed in a cause of action against an underage social host if the plaintiff can prove by a preponderance of the evidence the following: (1) The social host knowingly permitted and facilitated the consumption of alcoholic beverages to underage guests in a residence under his control. This element does not require that the social host be a leaseholder or titleholder to the property. It is enough that the social host has the ability and apparent authority to give others access to the property; (2) The social host knowingly provided alcohol to a visibly intoxicated underage guest or knowingly permitted the visibly intoxicated underage guest to serve himself or be served by others. It is no defense that the underage guests bought and brought the alcoholic beverages that they or others consumed; (3) The social host knew or reasonably should have known that the visibly intoxicated social guest would leave the premises and operate a motor vehicle and therefore would foreseeably endanger the lives and property of others; (4) The social host did not take any reasonable steps to prevent the intoxicated guest from getting behind the wheel of the vehicle; and (5) The social guest, as a result of intoxication facilitated by the social host, negligently operated a vehicle and proximately caused injury to a third party."

In summary, if you are an adult and allow people to gather in a place which is "under your control", where knowing consumption of alcohol occurs, and someone over-consumes the alcohol to the point of obvious intoxication, then drives away, and you do not try to stop them, you can be held civilly liable to an injured plaintiff. (Estate of Brandon Tyler Narleski v. Nicholas Gomes)

In a lengthy unpublished decision from the Law Division, a beneficiary of the state funded health insurance plan (NJ Direct Plan) was denied the ability to sustain a legal action filed in the Superior Court. At issue was a benefit determination by the insurer, by no fault of the insured, which resulted in double payment being made to an out of network healthcare provider. Subsequent to the health insurer making double payment for one date of service, the insurer began reducing further payments to this beneficiary and her other healthcare providers. This left the insured to settle each account out-of-pocket.

The error which this insured made was that she did not try to file an internal appeal with the health insurer, and did not follow the steps required by the insurance Plan or the statutory constructs which enables a state funded health insurance plan. Following an adverse benefit determination by a state funded health insurer, the aggrieved insured must file an internal appeal/s, proceed to the State Benefits Healthcare Commission and then the Appellate Division which has original jurisdiction in such matters. 

Although in the instant case the insured tried to circumvent the statutory law and the insurer's Plan by asserting a tort occurred, this Court saw through the ruse and held the legal issue here was an adverse benefit determination. The case was dismissed with prejudice and it remains to be seen if the insured can still timely file an appeal and begin the process as outlined in the insurer's Plan.  (Tomaszewski v. Horizon Healthcare Services, Inc.)

The Appellate Division, in an unpublished opinion, reviewed a challenge by a company seeking to enjoin an ex-contractor from soliciting business from a specific third-party client. The contractor ceased working with the company in 2016 and was precluded by contract from soliciting business from former clients. In 2017, the parties were ensconced in a legal suit seeking to prevent competition. At that time the parties came to an enforceable agreement regarding the ex-contractor's ability to solicit former clients and created a list of untouchable clients. To note, there was no language concerning any clients "successors and/or assigns."  
 
Between 2016 and 2018 one third-party client merged with another unrelated entity. This entity reorganized its internal governance, the IRS issued it a new tax identification number, though the business office address remained the same, and, important to the facts of this case, new account numbers were issued to this new entity for its electric service. In addition, this merged entity was not named as a former client in the settlement agreement.
 
The trial court held that the parties' prior settlement agreement did not include this new entity and that the ex-contractor could contact and solicit business from it. The Appellate Division agreed and upheld the trial court's decision relying on the facts that the merged entity reorganized its internal governance, was issued a new tax id from the IRS, was assigned new account numbers for electric service, and the parties' settlement agreement did not specifically include former clients and their "successors and/or assigns." A court must not rewrite an agreement to create more favorable terms for one party.  Capital Energy Inc. v. MT 

New Jersey's Multifamily Housing Preservation and Receivership Act, N.J.S.A. § 2A:42-114-142 (the "Act"), was created to give municipalities tools to address and protect tenants living in multi-family housing from deadbeat landlords.  The statute permits a court to appoint a receiver when a building is, "in violation of any State or municipal code to such an extent as to endanger the health and safety of the tenants . . . and the violation or violations have persisted, unabated, for at least [ninety] days preceding the date of the filing of the complaint[,]" or "[t]he building is the site of a clear and convincing pattern of recurring code violations, . . .." N.J.S.A. § 2A:42-117(a), (b).
 
In a recent unpublished decision, the Appellate Division upheld Union City's ability to have a receiver appointed for a building that was literally falling onto the tenants and causing injuries which required hospitalization. This building had many violations over the course of years, up to and including illegal apartments. The record showed that despite both the tenants and the city providing notice of the conditions to the landlord, such violations were not cured and negatively affected the safety of the building and its tenants. Accordingly, the city properly and successfully used the process set forth in the statute to have a receiver being appointed.  In addition, fees and costs were assessed against the landlord.   (City of Union City v. Zaky Tadros)