New Jersey Lawyers Blog

Published on: August 8, 2013

Defining Severe Misconduct when Denying Unemployment Benefits

In 2010, the New Jersey State Legislature and Governor Chris Christie revised New Jersey’s Unemployment Compensation Law to combat the significant increase in funds needed to pay unemployment benefits as a result of the rise in the unemployment rate in New Jersey.

To achieve this problem of fast-depleting funds for unemployment benefits, the state created a new category of conduct, called “severe misconduct,” which would allow the state to disqualify employees from receiving unemployment benefits.

The prior two categories of misconduct which could be assessed were: “simple misconduct” and “gross misconduct.” Simple misconduct includes actions that are improper, intentional, malicious, or exhibit a willful disregard of the employer’s interest, a deliberate violation of the employer’s rules, a disregard of standards of behavior which the employer has the right to expect, or negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design. Simple misconduct disqualifies the individual from disability for eight weeks (the week in which the misconduct occurred and seven weeks immediately following that).

Gross misconduct includes acts that are criminal, in the first, second, third, or fourth degree under the New Jersey Code of Criminal Justice. Employees fired for gross misconduct are disqualified from receiving any unemployment benefits.

The revisions implemented by the State in 2010 regarding “severe misconduct” failed to define severe misconduct, but included examples, such as: repeated violations of an employer’s rules, repeated lateness or absences after a written warning, falsification of records, physical assault or threats, misuse of benefits, sick time, or leave, theft of company property, excessive use of intoxicants or drugs on work premises, or where the behavior is malicious and deliberate.
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Published on: July 31, 2013

New Jersey Property Condition Disclosure Statements

by Jennifer C. Meusel

Standard form real estate contracts in New Jersey usually contain a provision that a home is being sold in “as is” condition. This is essentially an indication that the seller feels that the contract sale price takes into consideration the condition of the home and the seller does not intend to make any repairs to the property. However, buyers generally have a right under a separate provision of the contract to conduct inspections of the property to ascertain its condition. If the buyer is not satisfied with the condition of the property for the contract price, they can often still request repairs and may cancel the contract if the Seller fails to make them. Further, these clauses often provide that the buyer accepts the property in its “as is” condition at the closing and the seller will not be held responsible for defects discovered by the buyer afterward.

This does not, however, mean that a seller can intentionally misrepresent the condition of the property. Courts have held that if a seller knowingly makes a material misrepresentation they can be found liable for common law fraud if the seller intends the buyer rely on the misrepresentation, the buyer does indeed rely on it, and the buyer suffers damages as a result of it. If this occurs, the buyer may be able to cancel the contract or seek damages from the seller.

New Jersey courts have found that failing to disclose certain types of conditions will constitute material misrepresentations. If a seller fails to disclose a condition which is latent (not currently visible or obvious) and plays a vital role in the buyer’s decision to purchase the property, the seller may be liable for damages. For example, in Weintraub v. Krobatsch, although the buyers found the condition of a home acceptable during their home inspection, when they visited the property on another occasion they were able to see that the property suffered from an insect infestation. The inspection was during the day and the subsequent visit was at night. The buyers refused to close. As the insect activity only occurred at night, this was a latent defect which was not observable during the day. The court found that the failure to disclose this information to the buyers was an intentional and material misrepresentation, and therefore the buyer was permitted to cancel he contract.

Real estate brokers have responsibilities for not making misrepresentations as well. Arguably their responsibility is even greater than that of the seller if the condition is known to the real estate broker, as they can be subject to the Consumer Fraud Act. The New Jersey Division of Consumer Affairs publishes a property condition disclosure form which should be completed by a seller of real property. Under the Consumer Fraud Act, real estate brokers will only be liable for misrepresentations of sellers if they had actual knowledge of the condition or failed to make a reasonable inquiry as to whether the information provided was false. The reasonable inquiry can be satisfied by a home inspection report by a qualified inspector, the report of a governmental official, or by a seller’s property disclosure statement – provided the buyer is advised that the information came from the seller themselves. The seller’s real estate broker can also be held liable for the failure to disclosure a defective condition if it was a latent condition known to the broker, and the broker, intentionally concealed the condition with the purpose that the buyer would rely on the concealment of the condition.
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Published on: July 29, 2013

New Jersey’s Law Against Discrimination: Discrimination Not Always Required

by Pauline M.K. Young

New Jersey’s Law Against Discrimination (“LAD”) protects employees from wrongful termination or other acts based on their race, nationality, ethnicity, gender, age, or other protected characteristic. The LAD is a remedial statute, meaning that the legislature enacted the law not only as a preventative measure, but as a direct response to the rampant discrimination in employment that was being observed. As a result, New Jersey’s courts read the LAD law broadly, providing for expansive protection to employees.

Not only does the LAD protect employees from being fired because of their race, gender, or other protected classification, it also protects employees from being fired, demoted, or mistreated in retaliation of that employee’s objections to discriminatory practices that she has observed against other employees. Therefore if one employee observes another employee being discriminated against and the observing employee complains, protests against, or objects to the discriminatory action, she cannot be fired in retaliation for objecting. The observing employee also cannot be retaliated against for aiding or encouraging any other person from objecting to discriminatory acts by the employer.

Therefore an employee may have a valid retaliation claim under the LAD if she was fired, demoted, or otherwise mistreated in retaliation for that employee’s objections to discriminatory acts by the employer. There needs to sufficient evidence to show that the employee’s objections played a role in the decision to fire her (or take other negative action). It is the employee’s burden to prove these elements.
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Published on: July 26, 2013

New Jersey Home Improvement Contractors That Violate The Consumer Fraud Act May Still Recover For The Value Of The Services Rendered

by Boris Peyner

In New Jersey home improvement contractors are heavily regulated by the Consumer Fraud Act (the “CFA”). The CFA and administrative regulations require strict compliance which cannot be ignored. Failure to follow these requirements can result in the home improvement contract to be found invalid and a homeowner’s a ascertainable lose can result in the home improvement contractor paying triple that amount and attorneys fees to the home owner.

However, recently the New Jersey Appellate Division held that a home improvement contractor can recover the value of the services rendered even if the contract violated the CFA.

In Gemini a dispute arose between a homeowner and his contractor with regards to home improvement renovations. The homeowner hired a contractor and an architect, who was his friend, to perform renovations on the home. The architect was the intermediary between the homeowner and the contractor. The architect made all the decisions for the homeowner and worked directly with the home improvement contractor.

The contractor initially began the work for the homeowner pursuant to a written contract. After the work began, however, the homeowner sought various changes which the contractor orally agreed to perform and, subsequently, would forward his bills to the architect. A subsequent contract for the additional work was never prepared.
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Published on: July 22, 2013

Those Involved in New Jersey Real Estate Need to Know About Procuring Cause

by McLaughlin & Nardi, LLC

If you are in the market for a new home, you may not be aware of the legal principle of “procuring cause,” but many New Jersey realtors are painfully aware of the ramifications of it. In the swirl of open houses and realtors involved in finally deciding upon a home, procuring cause helps determine which realtor is entitled to profit from the sale.

New Jersey law acknowledges that more than one real estate broker may be involved in developing the interest of a potential buyer in a home, and that often “one reaps what another sows.” Ordinary services that do not result in a home sale are considered the cost of doing business. Procuring cause enters in when the broker brings together a buyer and an owner with “no substantial break in the ensuing negotiations,” at which time the broker is considered to be the “efficient cause of the sale” and entitled to a commission. Further, New Jersey courts have found that negotiations do not need to be uninterrupted if the broker can establish his or her continuity in bringing the transaction to a conclusion. But a broker may be denied commission if negotiations break off and the broker abandons his or her efforts or if there is a “substantial break” in the negotiations and the broker does not help conclude the transaction.

Understandably, what counts as a “substantial break” can be the source of controversy and even litigation. Courts have found that a potential buyer’s passivity does not necessarily equal purposeful abandonment. Also, a seller’s acceptance of different terms than those in the listing agreement does not interrupt procuring cause. Further complicating the issue are sales occurring after expiration of an extension period in an exclusive listing agreement. Some courts look for evidence of “meeting of the minds” between seller and buyer or otherwise evidence of bad faith in deciding whether to apply the procuring cause doctrine. The area can be thorny, and all sides need effective legal representation.

Procuring cause finds its roots in contract law and the equitable principle that a person should not be allowed to enrich himself unjustly at the expense of another. Courts look for evidence of notice that a real estate broker expected payment when performing services and have allowed brokers to recover for services even though a contract may prove unenforceable because of lack of agreement on essential terms such as the amount of the broker’s commission. Courts rely heavily on terms of contracts drafted between buyers and sellers and will try to enforce them first before looking to other legal principles.
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Published on: July 19, 2013

Special Considerations when Purchasing New Jersey Real Estate from an Estate

by Jennifer C. Meusel

In addition to the usual issues which come up when you are purchasing real estate, such as the contract review, home inspections, negotiations, and applying for a mortgage if necessary, when you purchase real estate from an estate there are some additional concerns.

When the owner of the property has died prior to entering into a contract of sale, and the property is being sold by an estate, the first question is: Who has the power to sell the property?

The person who has the power to enter into a contract for sale is usually the executor. If the deceased owner had a will and the property is passing with the residuary estate, (the residuary estate is what is left after specific bequests), the executor can do everything needed to effectuate the sale. It will be necessary during the contract period to obtain the death certificate, a copy of the will and the letters testamentary (the document from the surrogate’s court appointing the executor). The buyer’s attorney should insist that these documents are provided within a short time period after the contract is finalized.

However, if you obtain a copy of the will and see that the property passes by specific bequest to specific named beneficiaries, then not only does the executor need to be involved in the sale, but also under the New Jersey Real Estate law the beneficiaries must join in the sale. This can only be determined by seeing a copy of the probated will. When real estate is devised by specific bequest, it can create significant delays as the beneficiaries may be scattered throughout country, or even out of the country. In this case, the beneficiaries must all agree to sell real property on the terms and conditions in the contract, they must all agree to the resolution of any issues throughout the contract period, including home inspection negotiations. The seller’s attorney will need to seek the consent of each beneficiary for attorney review changes, home inspection repairs requests, etc. Each of the specific bequest beneficiaries must also execute the closing documents. Clearly, a purchase is more difficult if there is a specific bequest of real estate. However, if the buyer is represented by an attorney who understands the issues involved, these issues can be effectively managed.
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Published on: July 18, 2013

New Jersey Companies Must Develop Procedures to Mitigate The Threat of Trade Secrets Misappropriation

by McLaughlin & Nardi, LLC

It isn’t every day that the activity of your business catches the attention of the White House. In February 2013, the Executive Office issued its Administration Strategy on Mitigating the Theft of U.S. Trade Secrets, the result of the collaboration of different departments to develop a strategy to protect the innovation that drives the American economy. Trade secret theft is bad for businesses, and it is bad for the United States, with results that could be detrimental to our economy and American jobs. Efforts to steal American trade secrets are on the rise, but your corporation can act to protect itself.

The Administration proposed voluntary “best practices” for private industry to implement to protect its trade secrets, which are geared toward identifying the threat to targeted technologies and examining corporate procedures in light of the threat and potential impact. Businesses are responsible for making sure they have information and reporting systems and for monitoring those systems to avoid illegal conduct by the businesses employees as well as to protect against outside threats. The following are some of the steps to take in developing company procedures:

Determine the specific information to be regarded as a trade secret.
Take reasonable measures to protect the secrecy of the information.
Identify potential risks and threats to identified trade secrets.
Take additional measures to protect trade secret information where appropriate.
Examine internal operations and policies to determine whether current approaches are mitigating the risks and factors associated with trade secret misappropriation, considering the following areas:

research and development compartmentalization
information security policies,
physical security policies, and
human resource policies.

Periodically reevaluate procedures to determine the adequacy of mitigating threats to the trade secrets.

Published on: July 17, 2013

Litigation Implications of Social Media

by Boris Peyner

The impact of social media continues to grow in litigation. Social media is becoming increasingly more popular in society. Social media is important for companies to utilize for advertising and marketing to allow businesses to stay competitive. Various sites like Facebook, Google Plus, Twitter, Instagram, Flicker, LinkedIn, YouTube and the like provide companies the opportunity to connect with millions of people. However, they simultaneously create legal risks that can range from bad public relations to brand confusion. Social media is also used by many people during their free time to make various posting about all aspects of life.

In litigation, lawyers are using social media to screen jurors, jurors use social media to post about cases they are sitting in, judges are using social media to make sure jurors are not using it, people use social media in general to offer legal advice on matters in which they have no experience, and jury consultants are following social media to give advice on trial strategy. Social media is paving the way to new litigation strategy.

Social media implicates considerable privacy concerns, allowing people to learn the most intimate information about one another. Posted content may be available to family, potential employers, school admission officers, romantic contacts, and others. Even if the content is removed from the social media site it may still continue in cyberspace. Further, once litigation is pending or reasonably foreseeable, there is a duty to preserve evidence. The material can be taken down off the social media website, but must be preserved. This means that even if a post is removed, it still must be maintained and produced if requested in discovery.
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Published on: July 16, 2013

The Importance For New Jersey Business Owners To Pay Employment Tax

by Frank P. Nardi

New Jersey business owners should be aware that there are strict regulations which allows the Internal Revenue Service (“IRS”) to collect employment taxes from a business or its owners and potentially senior employees, who are not owners, if a business fails to pay employment withholding tax to the IRS.

Federal employment tax require employers to withhold money, for Social Security and Medicare, and pay it to the IRS on a quarterly basis (also known as a “941 payment”). These payments are known as “trust fund taxes” because the withholding amounts are held in “trust” by the employer for the IRS.

Failure to pay employment taxes is therefore viewed as theft because the owner is using money that belongs to the employee. The IRS therefore has strict regulations which allow it to recover trust fund taxes directly from owners and senior employees if the business fails to pay the tax.

In a typical case the IRS will assess personal liability against individuals it alleges were responsible to pay this tax on behalf of the business. The IRS will also assess penalties and interest. The penalty (also known as a “jeopardy assessment”) is equal to the amount of the unpaid trust fund tax. Responsible individuals will personally be required to pay the tax, penalty, and interest.
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Published on: July 15, 2013

Requirements Before Settlement Funds May Be Disbursed

by Pauline M.K. Young

Litigation can often be a long and painstaking process resulting in two parties who ultimately just want to see the dispute come to an end, and hopefully with a resolution that they are satisfied with. Indeed, perhaps as high as 97 percent of cases are resolved before trial. However, once a case is settled, the time between an initial agreement to settle and an injured party receiving money is almost never instantaneous.

First the attorneys must draft settlement documents. Depending on the complexity of the case, this can be anywhere from a page long to over thirty pages, and the exact language is important. While a plaintiff may not understand why her attorney is fighting with the defense attorney over what she may think trivial, the settlement agreement becomes a contract that will ultimately decide the entire resolution of the case and, in many cases, direct the parties’ actions in the future. Failure to adhere to the settlement agreement’s terms could lead to the case being reopened, a new action being brought, or a forfeiture of everything gained in the settlement. Therefore the specific language is essential to the parties’ security and the integrity and power of the settlement agreement itself.

Once the language of the settlement agreement is finalized and the parties all sign off on their agreement, assuming that the settlement results in one party paying money to another, there will likely be a waiting period for the funds to be delivered. However, even if the money is delivered to the injured party’s attorney immediately, the attorney cannot immediately release the money. The attorney must first ensure that the amount being forwarded to the client is correct and is being legally distributed.
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