In New Jersey, the Uniform Fraudulent Transfer Act ("UFTA") is codified at N.J.S.A. 25:2-20 to -33 and provides protection to creditors of companies that sell off their assets without providing adequate security for the company's creditors. In a March 8th unpublished opinion of the Appellate Division, the court agreed with the trial judge that a fraudulent transfer occurred when the proceeds of the sale of a Dunkin' Donuts were distributed to the owners of the company without providing adequate security to satisfy a lease guaranty that the company remained obligated on.
The company that owned the Dunkin' Donuts location was called ARCP, LLC and they sold the location to a new entity in 2010. As part of the sale, the commercial lease was assigned to the buyer but ARCP remained as a guarantor on the lease. Despite the fact that ARCP remained as a guarantor on a lease that had multiple years remaining, ARCP disbursed all of the proceeds from the sale by paying off any debts due at the time and then disbursing the remaining $326,793.19 to the members of ARCP, leaving ARCP insolvent. Eventually, the buyer defaulted on the lease and declared bankruptcy, resulting in the landlord enforcing the lease guaranty of ARCP as there were significant monies owed. The Appellate Division agreed with the trial court that the transaction demonstrated the "badges of fraud" that a court uses to determine whether or not a fraudulent transfer had occurred. Although there was no lease default at the time of the sale of the location, the lease guaranty was a contingent liability that should have been accounted for prior to the disbursements to the members. Accordingly the individual members were found liable for the $291,464.94 judgment obtained by the landlord. (Main Land Sussex Company, LLC v. Priti Shetty, et. al.)
The New Jersey Consumer Fraud Act ("CFA") protects homeowners from (among other things) unconscionable commercial practices of residential contractors, including those who threaten to file criminal charges if they are not paid. A recent Appellate Court decision involved a homeowner who withheld payment to an HVAC contractor who failed to repair an air conditioning system after three service calls. The contractor then proceeded to threaten the homeowner with the filing of criminal charges, and then (when payment wasn't made) actually filed charges for theft of services with the local police department. The charges were eventually dismissed by the municipal court, and the homeowner was ultimately successful on a CFA claim in Superior Court.
On appeal, the Appellate Division upheld the finding of a CFA violation but remanded the case back to the trial court to revisit the award of only $19,800 in attorney fees and costs. In doing so, the court noted the specific conduct of the contractor stating, "[the contractor] admitted that [it] has a history of instituting criminal actions as a means of collecting its unpaid invoices. This outrageous abuse of our criminal justice system is precisely the type of unconscionable commercial practice the CFA was designed to protect consumers from and deter unscrupulous commercial entities from engaging in." Accordingly, the matter was remanded to the trial court to revisit the amount of attorney fees and costs awarded. (Jeffrey S. Jacobs v. Mark Lindsay and Son Plumbing & Heating, Inc., et. al.)
If you lend your car to someone who you know does not have a driver's license, should they be covered by your automobile's insurance PIP policy if they drive your car and get into an accident? The New Jersey Appellate Division has ruled unlicensed drivers should not be covered and are therefore ineligible for recovery of medical benefits under the personal injury protection provisions of the owner's auto insurance policy.
This decision builds upon prior case law and continues to refine who a "permissive user" of an automobile can be. The Appellate Division held that public policy bars an owner from giving "permission" to someone who cannot, and should not, legally be operating a vehicle on the roadways. In this particular case, the owner was the mother of the unlicensed driver and both of them lived at the same residence. Not only was knowledge imputed to the mother, but she admitted that she knew the driver was unlicensed. Although the terms of the insurance policy did not explicitly exclude coverage of unlicensed drivers, the Court examined public policy which forbids unlicensed drivers from operating vehicles on the roadways of this State. If you are not entitled to drive but chose to do so, then you are not entitled to the benefits provided by an automobile's PIP insurance coverage, even if you are operating the vehicle with the owner's permission. (Norma Blanco-Sanchez v. Personal Service Insurance Company)