For many years, New Jersey's courts have endorsed contract terms that can limit the consumer’s access to the courthouse with provisions that require arbitration. The general philosophy of these cases is that the arbitration process is a favored process, largely because arbitration avoids the profligation of public and private resources.

Last summer, the Supreme Court addressed the validity of a clause in a consumer contract that limited the liability of a gym for injuries resulting from the use of the gym’s equipment or when participating in its classes and concluded that clauses of that nature are valid, stating in essence, that "when a party enters into a signed, written contract, that parties presumed to understand and assent to its terms, unless fraudulent conduct is suspected."

This case has motivated certain legislators to draft a bill that would invalidate any consumer contract that would require the consumer to waive rights under various statute conceived to protect the consumer, including New Jersey’s Consumer Fraud Act. (CFA).  The statute would also render invalid any contract that would bar a consumer from reporting illicit conduct to various law enforcement agencies.

The state Supreme Court recently decided a case involving an attorney that had retained fees belonging to his former law firm. Fortunately for the attorney, the court determined that the nature of the attorney’s conduct was such that a disbarment was inappropriate punishment and referred the case to the Disciplinary Review Board (DRB) for further assessment as to punishment.

The lawyer subject of the controversy was previously employed by Ravin Sarasohn. When he and others defected to another law firm, Ravin filed a lawsuit, under circumstances where the attorney had a claim against Ravin for $30,000 in back salary. Before the attorney left the Ravin law firm,  he was working for client that had an open invoice. Once situated with the new law firm the client send the lawyer a check in excess of $200,000.  Later, the attorney sent a named partner in Ravin a check under a letter that indicated he withheld over $35,000 for his unpaid salary. The partner of Ravin filed a grievance against the attorney.  The Office of Attorney Ethics reviewed the matter and recommended a reprimand. The DRB, however, return the case back to the OAE and instructed it  to analyze whether there was a “knowing misappropriation" which would have required disbarment. The OAE stood its ground and determined that the conduct was less serious.

The controversy reached the Supreme Court, which ordered the appointment of a special investigator.  That investigation ultimately determined that a misappropriation complaint was not warranted. Thereafter, the court instructed the DRB to make a determination for the appropriate discipline to be imposed on the attorney.

One component of New Jersey's drunk driving (DWI) statute provides that a person convicted of driving while intoxicated. "shall have no cause of action for recovery of economic or non-economic loss sustained as a result of an accident,". In a recent case, an appellate panel analyzed whether a drunk driver could prosecute a civil claim against a bar under New Jersey's so-called Dram Shop Act.

The court opened its analysis in this case, by noting that although the law requires judges to ascribe, ordinary meaning to plain words used in a statute, it decided that, despite the direct language of the section of the drunk driving (DWI) statute recited above, a drunk driver could assert a claim against the bar for serving him/her while visibly intoxicated. The court's reasoning began with a recognition that this provision in the drunk driving (DWI) statute was conceived to reduce the cost of automobile insurance and since an automobile insurance policy was not involved in the drunk driver’s claim the underlying purpose of the statute should not apply. Next, the court determined that if the drunk driver was barred from asserting its claim, liquor license holders would be immune from certain instances of liability, which was inconsistent with the state's policy to reduce incidents of drunk driving. Finally, the court focused on an earlier decision, which addressed the question of whether this section of the drunk driving (DWI) statute could prevent the liability of a social host who served an underage claimant  injured in an automobile accident that ultimately produced a drunk driving (DWI) conviction for the claimant.  In that case, the court concluded that the underage claimant had a cause of action against the social host despite the instructions of the drunk driving (DWI) statute prohibiting people convicted of drunk driving (DWI) from asserting civil claims for injuries received while intoxicated.

Just last week the Supreme Court decided to review this case.

The effective and efficient administration of the law requires faithful and prompt attendance at all schedule court dates. In a recent child custody case, an appellate panel reviewed a trial court’s decision to impose over $25,000 in sanctions against a litigant for failing to appear on a scheduled court date. 

After a preliminary phase of discovery, the trial judge scheduled a plenary hearing to begin on a date certain. Before that hearing, however, the mother told her attorney that she would not attend because she was concerned about losing her job and that she felt harangued by her former husband. The trial judge issued an order to show cause to determine whether she should be excused from the scheduled date. When she failed to appear, the judge held her in contempt. The husband’s attorney then submitted a certification establishing that he spent over $56,000 in two years of litigation.  Ultimately, the trial court issued an order in favor of the husband requiring the wife to pay him over $25,000 of his legal fees.

The appellate panel determined that $25,000 sanction for non-appearance was an abuse of discretion because it was unreasonable.  Resultantly, the case was remanded to the trial court to reconsider its ruling.

It seems to be well settled that if one party to a contract prevents or hinders another by making performance impossible, the person victimized by that type of conduct may consider the contract breached and recover damages.

That doctrine was recently applied in a Appellate Division case involving the construction of a nursing school. In that case, the general contractor had engaged a subcontractor to grade and install walkways, curbs and parking lots. The subcontractor ultimately walked off the job. Initially, his claim was that the general contractor failed to make necessary payments. The general contractor alleged that the subcontractor failed to complete the job, and otherwise performed improperly. Later, the subcontractor contended that toward the end of the job, the grading and elevation at a location on the construction site were different then the job’s specifications. Discussions follow between the parties as to whether the condition would be subject of analysis by the various engineers involved in this project. When both the landowner and the general contractor balked at producing an engineer, the subcontractor told the general contractor that it intended to have its own engineer analyze the problem and add the cost of the analysis to the contract value. During this time, a number of vexatious e-mails were exchanged that were, in the words of the court, "closer to nasty than civil". Moreover, at a  meeting, the principals of the general contractor and subcontractor's got into a heated argument where the general contractor’s principal grabbed the arm of the subcontractor’s principal.  Evidence at trial indicated that the encounter produced a bruise on the arm of the subcontractor’s principal.

During the trial, the parties seem to have expanded upon their original contentions. Particularly, the subcontractor argue that its failure to perform was a grounded upon the duress produce from the physical encounter between the principals of the contractor and subcontractor. There, the court noted that where one party threatens or makes unreasonable demands to interfere with another party’s performance, the breach is one of implied covenant of good faith and fair dealing. Notwithstanding the Appellate Division endorsed the trial court's decision that the encounter was not serious enough to excuse the subcontractor’s non-performance because there was no threat to inflict future bodily harm, if the subcontractor return to the site

The plaintiff in this case was an attorney who worked "of counsel" for a law firm in Bergen County. The lawyer sued the law firm for legal services, he performed while of counsel.  The law firm denied the claim and alleged that the lawyer’s invoices were untimely, inaccurate and related to substandard work.

The litigation produced a rather significant controversy with respect to discovery.  While discovery motions were pending, the lawyer filed a motion for summary judgment.  The law firm responded with a cross-motion for summary judgment. In the meantime, the trial court suppress the defendant’s defenses because of its discovery derelictions.  Unfortunately, the order was not sent to either litigant. Resultantly, the summary judgment motions were not heard. Later, the trial court vacated its order suppressing the defense and ordered the parties to trial the next day. The lawyer sought an adjournment complaining that he did not receive discovery. When the trial court refused to grant the adjournment, the lawyer told the court that it would be a waste of time to try the case,  since he had not received discovery and refused to go to trial. The trial court dismissed the lawyer’s complaint. The law firm then moved to assess attorney fees against the lawyer for filing a frivolous lawsuit. The trial court granted defendant’s application and awarded it $3,740 in attorney fees and costs.

The lawyer appealed the court's decision to dismiss the action and to award attorney fees to the law firm. On appeal, the court noted that the case was "fraught with confusion." In addressing the attorney fee shifting issue, the court determined that the law firm had failed to provide a “safe harbor” notice to the lawyer, and to that extent, the trial court's decision to impose attorney fee sanction was improper. It also noted that the law firm appeared pro se and, as a result, the shifting opportunity could not available.

Quite a number of years ago, New Jersey Supreme’s Court decided the case of Gennari v. Weichert Realty. One of the many issues addressed in that opinion was whether personal liability could be imputed to a real estate broker who took part in misrepresentations made to a home buyer?  The question was answered in favor of the home buyer.  

In a recent case, the plaintiff landowners sued a contractor corporation and its principal when a retaining wall built on the landowner’s property failed. During the trial phase, the court dismissed the claims against the principal. Thereafter, the case proceeded to trial and produced a jury verdict of $490,000 against the contractor corporation. The landowners ultimately appealed the dismissal of the personal liability of the principal of the contractor corporation to the Appellate Division which reversed the trial court’s decision to dismiss the claim against the corporation’s principal. The appellate court concluded that the term “person” as defined by the CFA included employees, agents, officers, directors and stockholders.  The case is now before the Supreme Court.

Last month, an appellate panel addressed the question of whether an expert witness was needed to establish damages in a construction case.

In that case, a homeowner engaged a home improvement contractor to build an addition on her home. The job was completed in 2003. Sometimes in 2007, the roof began to leak.  Thereafter, the contractor returned to the home at least four times in a 15 month periods to repair the roof.   On the last occasion, he removed all of the shingles on that part of the roof that he thought was causing the leak and replaced some of the flashing. The roof continued to leak, however.  At that point, the homeowner obtained estimates from four other roofers, and then sued the contractor.

During a pretrial mediation session, the estimates were reviewed by the contractor.  Notably,  they were not offered into evidence at trial.  Ultimately, the trial court, sitting without a jury, determined that the contractor had breached its contract, and that damages should be awarded to the homeowner in the amount of $2,000. In rendering his decision, the court noted that plaintiff’s estimates were “ kind of all over the place". Parenthetically, the case did not identify how the trial court made these observations when the estimates were not placed into evidence.

The contractor appealed the decision and argued that the estimates were inadmissible hearsay and that plaintiff could not prove damages because an expert witness did not establish his fault. In reversing the trial court's decision, the Appellate Division concluded that the court below did not provide an adequate explanation as to how the damage figure was computed, placing special emphasis on the trial court's observation that the estimates were “all over the place." Unfortunately, it did not specifically address the contention of the contractor, as to whether estimates could be used as evidence to establish damages.

Although the Appellate Division reversed the trial court's decision because of the damage issue it, continued to analyze the question of whether an expert was needed to establish fault. In that regard, the court said that experts are not required to establish appropriate professional standards, where either the doctrine of common knowledge or res ipsa loquitur apply. As to the former, the court observed that the common knowledge doctrine applies when a lay person can determine whether a standard had been breached without assistance of an expert witness. As to the issue of res ipsa loquitur, the court recognized that the doctrine applied where: (a) events generally “bespeaks" of negligence; (b) the instrument used in the conduct was within the exclusive control of the defendant; and, (c) no evidence existed that the negligence resulted from the plaintiff's conduct. Grounded upon these observations, the court concluded that both doctrines did not require the homeowner to produce expert witnesses in the context of the case.

An appellate panel recently decided an issue relating to whether an attorney could be recused from prosecuting claims against a business entity that had previously discussed with the attorney the prospects of representation an anticipated, yet unrelated lawsuit.

In the case subject of the appeal, the attorney was engaged by a contractor to sued a corporation for failing to pay for work performed by the contractor at the corporation’s restaurant. Within a month into litigation, the corporation’s attorney requested the trial court to disqualify the contractor’s attorney because of discussions the corporation’s principal had with the contractor’s attorney about representing her in pending litigation. The corporation’s principal claimed that she disclosed to the contractor’s attorney extensive information about the corporation’s business history and existing legal problems.  The trial court was not convinced and refused to disqualify the contractor’s attorney.

An attorney employed by the Department of Human Services was recently censured for stealing food and drink from a kiosk in his office’s lobbying that was operated by a blind owner. The lawyer was seen on video stealing food and beverages on at least 14 times in a month and a half.  The Supreme Court endorsed the disciplinary review board’s recommendation and labeled the offense" particularly repugnant."

The lawyer denied that he participated in the thefts and contended that the blind vendor was extremely vexatious and did not want to make change at times. Resultantly, when the lawyer had only a $20 bill, he would take a bottle of water and pay for it later.

The lawyer was not charged criminally, but he agreed to retire from public employment, where he has worked since the 1970s and not to work for the government again. He paid the blind vendor $120.00.

Currently, ethics complaints against lawyers that are rejected by county ethics panels can not be appealed. That rule may change, however, if the Supreme Court embraces an appeal filed by a disgruntled citizen.

The underlying facts associated with this appeal relates to a situation where an attorney engaged by a contractor, sought to collect money against the homeowner for work performed at his property by the contractor.  The contractor's lawyer wrote to the homeowner’s lawyer and contended that the homeowner had built an the illegal unit at the property and concealed the work from local inspectors in order to obtain a C.O. When the homeowner refused to pay, the contractor's lawyer sent a letter to the local authorities disclosing his contention that the homeowner had any legal use. That letter precipitated a municipal court complaint and an action in the Superior Court.  In the process, the homeowner paid approximately $100,000 in legal and expert fees.

Later, the homeowner filed an ethics complaint against the contractor's lawyer, contending that the lawyer violated a rule of professional responsibility that prohibits an attorney from threatening to file a criminal action to obtain an improper advantage in a civil claim. At first review, the complaint was rejected by the court’s ethic committee’s, secretary. The homeowner then engaged a well received law firm in Atlantic City, to further advance the grievance. The law firm presented to the secretary of the ethics committee a well-integrated writing identifying various ethical opinions and rules that supported the homeowner’s position. Again, the grievance was rejected.

Resultantly, the homeowner filed an action in the Superior Court against the county ethics committee.  That action was rejected by the assignment judge who felt that she did not have jurisdiction to adjudicate the issue. The homeowner appealed to the Appellate Division, and then sought direct review by the Supreme Court. The homeowner’s attorney contends that the present procedure is flawed because there is no watchdog component of the process that can prevent "idiosyncratic policies" at the local level for ethics violations.

In the meantime, the contractor has yet to collect on the $25,000 judgment, he obtained against the homeowner.

Recently, a well-respected lawyer with vast experiences in municipal bond transactions was censured for his role in three deals involving the fraudulent flipping of residential real estate. The property subject of the illicit scheme were sold twice in the same day where the second transaction produced  an elevated sale price. On each occasion the first purchaser did not have the funds sufficient to make the purchase, but was allowed to use money from the second buyer's mortgage to complete the transaction.  In addition that the lawyer executed a HUD-1 closing statement that  inaccurately failed to collect the money required for the closing and represented both the buyer and seller in each of these transactions.

The district ethics committee recommended a censure and a prohibition against the attorney from engaging in real estate transactions or holding trust funds in connection with real estate transactions. It also recommended that he participated in a small business management course. The Disciplinary Review Board, however, only prohibited the lawyer from participating in real estate transactions and found that the other restrictions were unnecessary.  

The lawyer, told the DRB that, sometime in 2004\2005, his law firm “suffered financially from the abrupt departure of its managing partner." Resultantly, he saw these real estate transaction as a creative way to add additional money to his law firm's income stream.