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.)
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)
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.)
A recent unpublished decision from the Appellate Division found there to be no enforceable contract between a buyer and seller of real estate where, despite a term sheet and letter of intent, no formal contract was signed. The case involved the sale of commercial property in Millstone, New Jersey. The parties exchanged a term sheet and letter of intent for the buyer to purchase the property, and the attorneys proceeded to draft and modify a formal contract for the sale. Despite the buyer signing the negotiated contract, the seller never executed it and decided not to move forward with the transaction. Consequently, the buyer filed suit and sought a court order directing that the sale go through.
The Buyer argued that while the language of the LOI stated that terms of the LOI would be enforceable upon a mutually-agreed upon contract. it did not specify that the contract had to be signed. Therefore, based upon the signed LOI and the negotiated contract terms, there was an valid agreement to be enforced by the court. However, both the trial judge and Appellate Division disagreed, finding that the evidence as a whole demonstrated an intent that a final agreement was contingent upon the parties executing a formal written contract. Since this didn't happen, the Buyer's case was dismissed. (501 Jersey Ave LLC v. XXXIII Associates/Riverside Center, LLC)
Attorney Jeffrey Heldman recently obtained a $300,000 judgment for a client following a four-day trial in Bergen County Superior Court. In a case that rested upon the credibility of the witnesses (including competing handwriting experts), Mr. Heldman successfully proved to the court that the disputed debt was due. Key to this result was Mr. Heldman’s cross-examination of both the defendant, and the defendant’s handwriting expert witness, which led to the court giving less weight to the testimony of the defendant and his expert. In a case where the believability of the witnesses was the critical factor, such a finding was essential to the success of the firm’s client. The case was tried in the before Judge Mary E. Thurber. Please be advised that every case is different and has a unique set of facts. Therefore, past results are not necessarily indicative of the outcome in any other matters.
In a recent unpublished decision of the Appellate Division, a construction management company was seeking to recover 50% of the profits from the construction of two new buildings in Montclair. The Plaintiff claimed that he had brought the Defendant into the project because the Plaintiff did not have the bonding capacity or experience needed in order to be awarded the project, and also participated in some of the pre-construction services. While there appears to have been some verbal discussions regarding a possible joint venture, nothing was ever put in writing and the Plaintiff did not actually participate in the construction of the buildings.
In finding that there was no joint venture created, the court found that the Plaintiff was, "unable to contribute money, property, effort, knowledge, skill or other asset to the common undertaking. Plaintiff's contribution to the joint venture seems to have been simply connecting [the owner and the Defendant] to perform the necessary work." The panel affirmed the trial court and found that the Plaintiff did not make any substantial contribution to the venture, and lacked the relevant construction experience and bonding capacity for the project. Finally, the court cited Supreme Court authority for the proposition that there cannot be joint venture unless there is an agreement to share not just profits, but also losses, and that was not present here. Consequently, the mere referral of a customer was found to be an insufficient basis to form a joint venture. (The Holder Group, Inc. v. Pike Construction Co., LLC, et. al.)
New Jersey Residential home improvement contractors are required to provide clients with an estimated timeframe for the completion of the work. In a recent unpublished case from the Appellate Division, a contractor provided the homeowner with a 45-day time period from the date of the contract to complete an addition. However, due permit delays and other reasons, the work did not begin until months later. Despite the contractual time-frame not being met, the court found that there was no violation of the CFA, stating that the homeowners, "were aware that ... [c]onstruction began approximately 120 days from the contract date, yet defendants did not cancel the contract or allege a breach at that time." Furthermore, although a change order for additional work was never signed by the homeowner, a regulatory violation of the CFA, the court found that since there was no ascertainable loss suffered by the homeowner as a result of the regulatory violation, the contractor was not liable for damages under the CFA. (MYCWHome, LLC v. White, et. al.)
A recent non-precedential Appellate Division case serves as a reminder that not all arbitration provisions are drafted equally. At issue in a residential construction suit was the defendant-contractor's arbitration provision which required an aggrieved homeowner to file a claim with the American Arbitration Association in lieu of filing an action in court. However, the provision at issue did not contain specific language which would have informed a reasonable homeowner that by going to arbitration they would be "waiving a right to seek relief in a court of law." (see Atalese v. U.S. Legal Servs. Grp., 219 N.J. 430 (2014)). This proved fatal to the defendant-contractor's invocation of arbitration, and the defendant-contractor's motion to compel arbitration was reversed and the matter remanded to the trial court for (expensive) litigation. This serves as a reminder for all businesses and individuals with arbitration clauses in their contracts to have same reviewed by an attorney knowledgeable on the subject matter. (Becker v. Ollie Slocum and Son, Inc.)
A group of homeowners joined together to sue the builder of their development for selling them homes with infiltrator septic systems instead of stone and pipe septic systems, which allegedly have a substantially-shorter useful life. Since many of the homes were sold over ten years prior to the filing of the complaint, the Plaintiffs only filed Consumer Fraud Act ("CFA") claims and did not file faulty design or construction defect claims. However, the Appellate Division affirmed the ruling of the trial judge that all claims must be dismissed based upon the statute of repose. Noting the broad application of the statute of repose, that it covered all claims regardless of how a plaintiff couches the cause of action, citing the legislature's use of the language that no action could be brought after ten years, "whether in contract, in tort, or otherwise." (Allen, et. al. v. Beazer Homes Corporation)
In an interesting unpublished Law Division case, tenants argued that a landlord violated the City of Newark's rent control ordinance because it was trying to evict them for failure to pay "additional rents" (such as late fees and legal fees for collection of past-due rents) which would increase the total rent above the cap set forth in the ordinance. The Judge agreed with the tenant’s argument that the landlord could not insist on the additional rent as part of a summary dispossess (eviction) action, which is an important factor in this case as the only remedy sought in the case was to evict the tenants for failure to pay rents. The Court wrote that its holding only applies in a summary dispossess action and that the landlord could file suit pursuant to contract law in the law division seeking a monetary remedy. The unpublished nature of this decision means that it is not binding upon other courts, but it will be interesting to see if the Court's clarifying dicta holds up in an action to recover the additional rent because if the lease violates the law per the rent control ordinance, then it would follow that the portion of the contract that is in violation of the law would be unenforceable. (Opex Realty Management LLC v. Taylor
Peter J. Vazquez, Jr.