In a recent unpublished decision from the Appellate Division, the court reversed the granting of a zoning variance and remanded the matter back to the local zoning board.  A Morristown homeowner sought, and received, approval from the zoning board to convert a two-family residence into a three-family residence.  However, the township's approval was conditioned on the property being occupied by the owner.  On appeal, this residence condition was overturned with the court stating that, "a fundamental principle of zoning that a zoning board is charged with the regulation of land use and not with the person who owns or occupies the land," and, "conditions which make a variance personal to the property owner are invalid."  Since the record reflected that many of the members of the board based their approval votes on the fact that the property would remain owner-occupied, the Appellate Division remanded the matter back to the local zoning board for a rehearing and new vote now that the residence requirement was determined to be impermissible.  (Kiehn v. Mongey, et. al.)

In an unpublished decision, the Appellate Division found that a commercial tenant could be evicted where although there were some minor issues with the building, such issues did not rise to the level of uninhabitability.  First, the court confirmed that the case of Marini v. Ireland, 56 N.J. 130 (1970) is applicable both to residential and commercial tenancies.  After doing so, the court referenced Berzito v. Gambino, 63 N.J. 460 (1973) which established the factors to consider when determining if a landlord breached the warranty of habitability.  Specifically, those factors are as follows:  1. Has there been a violation of any applicable housing code or building or sanitary regulations?  2. Is the nature of the deficiency or defect such as to affect a vital facility?  3. What is its potential or actual effect upon safety and sanitation?  4. For what length of time has it persisted?  5. What is the age of the structure?  6. What is the amount of the rent?  7. Can the tenant be said to have waived the defect or be estopped to complain? and 8. Was the tenant in any way responsible for the defective condition?  Based upon these factors, the appellate court determined that there was no breach of the warranty of habitability.  Although the record did demonstrate that there were some roof leaks as well as some vegetable oil smells and leaks from the adjacent unit in the building, the evidence in the record demonstrated that such issues were mere inconveniences and did not rise to the level of uninhabitability.  Consequently, the tenant was not entitled to an abatement and the matter was remanded so that a judgment of possession could be issued for the Landlord.  (Linwood Avenue Development, LLC v. Advanced Professional Plumbing, Heating & Cooling, LLC)

Many construction contracts contain waiver of subrogation clauses.  Where a property owner agrees to such a clause, that owner's insurer cannot seek reimbursement from the contractor for any payment made to the property owner, even if the claim was caused by the fault of the contractor.  This was the situation in an unpublished Appellate Division case entitled National Fire Ins. Co. of Hartford, et. al. v. Cintas Fire Protection Inc.   There, the sprinkler contractor's faulty work resulted in National Fire having to pay a claim for $1,500,000 in damages to the property, and National Fire sought to be reimbursed from Cintas Fire Protection for such payments.  However, Cintas was victorious at both the trial and appellate levels in arguing that the waiver of subrogation clause in its contract was enforceable and insulated them from any subrogation claims.

Although Ohio law governed in this New Jersey court case, the court found that that both New Jersey and Ohio law were in agreement on the issue.  In so doing, the court held that waiver-of-subrogation provisions were, in fact, valid under New Jersey law.  Further, even if the contract in question could be characterized as one of adhesion, the contract was not unconscionable and the waiver of subgrogation provision was enforceable.  Consequently, despite performing faulty work, the fire sprinkler contractor was not responsible for paying for any of the damages caused by its negligence.  (Nation Fire Ins. Co. of Hartford, et. al. v. Cintas Fire Protection, Inc.)

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.)