In a matter of first impression due to statutory amendments addressing certain issues relating to the continued re-building after Superstorm Sandy, an owner of a townhome in Margate was permitted to raise their home to meet new flood standards despite a deed restriction limiting the height of the structure. The townhome development consisted of one row of ten attached two-story oceanfront townhomes, and a second row of ten attached three-story townhomes located directly behind the first row. The expressed purpose of this configuration was to give both rows of townhomes an ocean view. Although the townhomes shared party walls that extended down into the foundation, each was situated on its own subdivided lot, was owned in fee simple. After the home in question was destroyed by Superstorm Sandy, the owner sought to elevate the unit thirteen feet in order to meet the new flood-protection standards, negatively affecting the ocean view of the second row of townhomes. Despite a deed restriction limiting the height of the owners townhome, the Appellate Division found that it could be built at the new height. Relying on the legislature's amending of N.J.S.A. 58:16A-103, the court held that he was entitled to, "elevate the structure as required by current flood-safety standards, despite Declaration provisions that would otherwise preclude him from doing so. As intended by the Legislature, the amended statute overrides the Declaration and any local development regulations that might otherwise prevent Iannuzzi from elevating the townhome." Furthermore, the court clarified that the structure could be rebuilt to the same total height, even at its new elevation stating that, "Iannuzzi's right to protect his property from flood hazards outweighs his neighbors' right to preserve their ocean views." (Gross, et. al. v. Iannuzzi, et. al.)
In an unpublished case, the Appellate Division overruled a trial court's finding that customer lists used by a former employee to compete with his former employer were not considered protected trade secrets. The trial court held that the information was not protected since the names, addresses and phone numbers of the people on the list were "well known in the industry" and therefore it was immaterial that the defendant obtained the information from his former employer's database. However, the Appellate Division opined that a more detailed analysis is required pursuant to Lamorte Burns & Co. v. Walters, listing the factors to be considered as follows: (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the owner to guard the secrecy of the information; (4) the value of the information to the business and to its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Given these factors and the specific facts of the case at issue, the appellate court ruled that there were issues of fact as to whether or not the customer lists were protected trade secrets and consequently remanded the case for trial. (Steris Corporation v. Shannon)
In an unpublished opinion, the New Jersey Appellate Division upheld a trial court's order of specific performance in a commercial real estate transaction involving a car wash. During the due diligence period, the buyer of the car wash discovered some soil contamination and the parties entered into an amendment to the contract providing that the seller would remediate the known contamination as well as, "any additional contamination that may be discovered." When seller's contractor discovered that the ground water was contaminated in addition to the soil, seller sought to void the rider for lack of consideration. However, both the trial and appellate courts disagreed, finding that the buyer had a right to cancel the contract based upon the discovery of the initial contamination and that, "[a]n agreement to refrain from exercising a legal right is a form of consideration." Likewise, the court rejected seller's argument that it only had a duty to address the soil contamination under the terms of the amendment since no such limitation was explicitly stated therein. Consequently, the Appellate Division enforced the trial judge's order of specific performance. (Miguel A. Hector v. Super Car Wash Limited Liability Company, et. al.)
The New Jersey Consumer Fraud Act ("CFA") places many responsibilities upon a home improvement contractor which, if violated, render the contract null and void. However, if the CFA violations are only "technical" and "inadvertent" in nature, then the contractor can still recover monies for unpaid work performed under a theory of quantum meruit. This was specifically the situation presented to the court in CB Construction, Inc. v. Jill Panico, which was decided on June 26th. There, the Appellate Division affirmed an award in favor of a contractor despite three technical violations of the CFA. Moreover, even though the technical CFA violations did entitle the homeowner to recover attorney fees, the trial court substantially reduced such fees to only 10% of what was requested by the homeowner defendant. As stated by the trial judge, "The litigation could have been resolved in the Special Civil Part at minimal legal expense to the parties, but for Defendant's decision to utilize the CFA as a sword in an effort to win a large judgment and attorneys' fees award. Defendant made the decision to transform this case from a simple dispute over a book account, into, relatively speaking, a "high stakes" multi-count, multi issue dispute. That defendant failed on almost all of her factual defenses and legal theories must also weigh heavily on this court as it tries to determine a fair and proportionate counsel fee award." The appellate court upheld this substantial reduction. (CB Construction, Inc. v. Jill Panico)
In a recent opinion, the New Jersey Supreme Court held that a change in the trial testimony of a defendant-physician in a medical malpractice litigation did not warrant a new trial. In the underlying trial, the physician's testimony deviated from that given in his discovery responses, including his deposition. Plaintiff's counsel did not object to this deviation at trial, and ultimately a jury found in favor of the physician defendant. The Appellate Division, in as split opinion, overturned the verdict and ordered a new trial. However, the Supreme Court reversed the appellate court's decision, holding that there was no prejudice to Plaintiff in the failure of plaintiff's counsel to object at trial regarding the difference in testimony. On the contrary, they noted that counsel for Plaintiff indicated it was "strategic and tactical" why no objection was made. Specifically, Plaintiff's counsel believed that the changed testimony now favored the Plaintiff because the defendant-physician admitted to reviewing data from a clinical trial of the prescribed medication and same was rife with dangerous side effects. Thus, Plaintiff's counsel believed that Plaintiff's position that the physician must have known the dangers prior to prescribing was supported by the testimony. However, the jury ultimately denied compensation to the Plaintiff. The Supreme Court's main focus was on whether or not the change in testimony prejudiced the Plaintiff. Citing to a prior decision named McKenney that the Appellate Division relied upon, the Supreme Court recapitulated that in McKenney the change in testimony was "egregious and clearly prejudicial" while in the matter at bar, the change was "arguably favorable" to the Plaintiff. Consequently, the jury verdict was affirmed. (T.L. v. Jack Goldberg, M.D.)
Where there is no contractual privity with a property owner, a subcontractor cannot sue an owner for unpaid work performed except under the Construction Lien Law. Consequently, in the event that the lien fund available under the Construction Lien Law is insufficient to make a subcontractor whole, the subcontractor can only seek additional payment from the general contractor who hired them, not the owner. In a recent matter before the Appellate Division, a landscaping contractor was owed $87,696.40 from the general contractor, who failed to make payment. The landscaper filed a lien against the property and prevailed on such claim. However, since there was only a limited lien fund available, the landscaper only received its pro rata share of $35,300.94 from the lien fund, leaving an unpaid balance of over $50,000. The landscaper then attempted to recover the remaining balance from the property owner directly by asserting quasi-contractal claims in the Law Division, but the matter was ultimately dismissed. The Appellate Division affirmed such dismissal, stating that, "New Jersey law is clear that subcontractors who are not paid by the general contractor who hired them cannot sue the property owners who they lack privity." (Ash Maple, LLC, et. al. v. Jeral Construction Company, Inc., et. al.)
Business entities, including properly-formed foundations, are separate legal entities that are distinct from the individuals associated with those entities. Consequently, there is a "corporate veil" that cannot be breached to impose liability on such an entity unless the elements required to pierce the corporate veil are proven. In the recent unpublished Appellate Division decision, the court confirmed this premise and found that the John "Jack" Phillips Family Foundation LTD. was not responsible to pay a judgment entered against John Phillips Jr. individually. In doing so, the court stated, "Like any other person or entity, the Foundation was entitled to due process, which would include the right to have the civil claim against it set forth in a complaint, the right to be personally served with that complaint, the right to file a responsive pleading, the right to discovery, and all the other rights delineated in our court rules prior to the entry of a judgment against it. See Nelson v. Adams, 529 U.S. 460, 465-66 (2000). The proceedings in the trial court short-circuited all these rights. Indeed, it seems as though the mechanism employed in the trial court required that the Foundation disprove its liability rather than requiring plaintiff to prove its entitlement to relief." Consequently, absent a separate lawsuit and requisite proofs, the only person or entity responsible for the judgment would be the individual defendant who was named in the lawsuit. (Comegno Law Group, PC v. John Phillips, Jr.)
The New Jersey Prompt Payment Act ("PPA"), N.J.S.A. 2A:30A-1, et. seq., includes numerous provisions that protect contractors including, the ability to collect interest of prime plus 1% on overdue balances and the ability to suspend performance after seven-day written notice of non-payment. In ERCO Interior Systems, Inc. v. National Commercial Builders, Inc., a New Jersey contractor sued a Kansas company for work that the contractor performed in New Jersey. When the NJ contractor brought suit for non-payment, the Kansas company moved to dismiss the case on the basis that the contract has a forum selection clause mandating that any enforcement actions be brought in Kansas. However, the Appellate Division held that due to the fact that the case involved the PPA, the forum selection clause was invalid. Noting that forum selection clauses will not be enforced where such enforcement would violate the public policy of New Jersey, the Court found that there was a strong public policy behind the PPA and that the PPA claim, along with the other associated claims of breach of contract, etc. must all be litigated in New Jersey. ERCO Interior Systems, Inc. v. National Commercial Builders, Inc.
In an unpublished decision from March 25th, the Appellate Division found a general contractor to be responsible for providing a safe working environment for the employees of its subcontractors based on the specific set of facts in that case. Notably, the court did not examine the terms of the subcontract (which wasn’t signed until after the accident), but relied upon provisions in the general contractor’s agreement with the owner that placed responsibility for safety barriers and OSHA compliance on the general contractor. Consequently, the court found that the general contractor owed a duty of care to a subcontractor’s employee that fell through a hole in the roof where there were no safety barriers or other fall protection. In doing so, the Appellate Division quoted the almost twenty-year-old case of Kane v. Hartz Mtn. Industries, stating, “[t]he public interest supports imposing a duty of care upon [the general contractor] for Plaintiff’s benefit. We have held the ‘public policy of this State … favors the general contractor as the single repository for the safety of all employees of a job.’” (Joel Rivera v. PNL Jersey Properties LLC, et. al.)
In 1994 the Borough of Haledon approved a variance for the operation of a car wash located on a gas station property. The variance contained certain conditions that required certain aspects of the car wash business to be run out of the gas station. Over the years, the car wash was sold separately from the gas station, which ended the common ownership of the two businesses. The car wash was actually sold three different times, with each new owner receiving a certificate of occupancy from the Borough. However, when the latest owner sought a certificate of compliance as part of the process to sell the business to a fourth owner, the Borough denied the application for failure to comply with the conditions of the 1994 variance. The owner argued that the conditions could no longer be complied with due to the lack of common ownership of the car wash and gas station, and that the Borough never sought to enforce the twenty-year-old conditions. However, the Borough disagreed as did the trial court. In a recent unpublished decision, the two-judge panel affirmed the Borough's decision and held that despite the Borough's non-enforcement of the variance conditions for almost twenty years, and despite the fact that multiple prior certificates of occupancy had been issued to car wash owners during that time, the variance conditions were enforceable as such conditions run with the land as part of the variance and there was no action by the Borough amounting to a permanent waiver of enforcement. (Belmont Car Wash LLC v. Planning and Zoning Board of the Borough of Haledon)
|
AuthorsPeter J. Vazquez, Jr. Archives
June 2023
Categories
All
|