War of the Resolutions: A Cautionary Tale

Yesterday, Eric Solotoff blogged about the phenomenon of the New Years Resolution Divorce.  It happens.  I encourage you to read that post prior to the one below because it provides some useful background on the issue:

It’s the New Year. A time filled with resolutions, promises to change, and commitments to begin anew.  Your marriage is no exception.  You’re fed up – the affairs, the reckless spending or the mistreatment. You’ve determined that this is your year to finally take the road to singles-ville, to start a new life free of this weight you’ve been carrying around for years.

But…what happens your resolution to break free of your spouse coincides with your spouse’s resolution to recommit to the relationship? He promises things will be different; she will take steps to treat you better; he’ll pitch in more with the children; the “extracurricular activities” will stop. Your spouse promises he/she will magically morph into a different person. All of a sudden, your jaded, tired, fed up self is looking at your future model spouse. And now you’re in a quandary.

So the question becomes, which one of you wins the war of the resolutions? Science says, if you’re looking for a complete personality overhaul, think again.

Brian Little, a professor of psychology at Cambridge University and author of Me, Myself, And Us: The Science of Personality and the Art of Well-Being stated in a 2014 interview that in adulthood, your personality becomes pretty much set in stone.

You can thank your parents for that; many of our personality traits have a very strong genetic component, which remains constant throughout much of our lives. However, in your teens and twenties, your personality matrix evolves rapidly while you mature.  As people enter their thirties and beyond, those traits solidify; change slows to a crawl and requires far more effort, according to Paul T. Costa Jr., scientist emeritus at the laboratory of behavioral science at the National Institutes of Health.

The situation becomes even more complex when dealing with a personality disorder, such as Narcissistic Personality Disorder (NPD). This is because NPD had a serious environmental component – it emerges from an environment in which vulnerability feels dangerous to the person.  In turn, insecure attachment styles emerge, where fears of depending on anyone result in attempts to control the relationship or avoid intimacy altogether. For people with NPD, change would mean unlearning a whole host of feelings that are ingrained in them and they subconsciously believe keep them safe.

Essentially, asking or expecting a person to change would be asking them to act “out of character” – an unremitting show where he or she plays a part for your benefit. Little, says, however, that this act has a serious effect on the automatic nervous system, somewhat akin to anxiety.  You heart rate quickens, your muscles tense – as if you’re experiencing a stress reaction.  Eventually, you revert back to yourself because the whole process of morphing into another person can be both physically and mentally taxing.

The amount of time a person can play another character has yet to be studied. But the question is, do you want your marriage to be the test case?

Now, that is not to say that people have not successfully improved marriages that once were on the precipice of the abyss. However, odds are, if you think your spouse is going to assume a completely different personality to save your marriage, you may just lose the war of the resolutions.

_____________________________________________________________________________

 Eliana T. Baer is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com.

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The New Year’s Resolution Divorce

For the last few years, I have posted on the phenomenon of the New Year’s Resolution Divorce. For whatever reason, this post has struck a chord and has been both well received and cited by other bloggers. As such, given that the new year is near, I thought I would share that piece again.

Over the years, I have noted that the number of new clients spikes a few times of the year, but most significantly right after the new year. Out of curiosity, I typed “New Years Resolution Divorce” into Google and got 540,000 results in .29 seconds. While not all of the search results were on point, many were extremely interesting. It turns out that my intuition about this topic was right and that there are several reasons for it.

One article on Salon.com put divorce up there with weight loss on New Years resolution lists. Also cited in this article was that affairs are often discovered around the holidays. Another article linked above attributed it to “new year, new life”. Another article claimed that the holidays create a lot of pressures at the end of the year that combine to put stress on people in unhappy or weak relationships. Family, financial woes, etc. associated with the holidays add to the stress. Turning over a new leaf to start over and improve ones life was another reason given. This seems to be a logical explanation for a clearly difficult and perhaps heart wrenching decision.

In my experience, people with children often want to wait until after the holidays for the sake of the children. There is also the hope, perhaps overly optimistic, that the divorce will be completed by the beginning of the next school year. These people tend to be in the “improving ones life” camp.

So as divorce lawyers, we hope to avoid or at least resolve in advance the holiday visitation disputes that inevitably crop up, then relax and enjoy the holiday as we await the busy season to begin.

In the last several years, the phenomena started early for us and many other attorneys. We were contacted by more people in December in the last few years than in any years in recent memory. Moreover, we have heard of more people telling their spouse it “is over” before the holidays this year. I suspect that in some, it was the discovery/disclosure of a new significant other or perhaps pressure being exerted by that person that was the cause. In other cases, the person just didn’t want to wait until the new year to advise their spouse. Whatever the reason, we await those who see 2015 as a chance for happiness or a fresh start. Happy New Year?!?!

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Eric  Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

 

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A Separation of Powers Anniversary

On this date in 1992, the Supreme Court issued a landmark separation of powers opinion in Communications Workers of America v. Florio, 130 N.J. 439 (1992).  There, state employees and some members of the New Jersey Legislature sued Governor Florio and other executive branch officials in two cases, which were later merged.  Plaintiffs sought a […]

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Parent Did Not “Abandon” Child So As to Lose Right to Share of Son’s Intestate Estate

In re Estate of Michael D. Fisher, II, ___ N.J. Super. ___ (App. Div. 2015).  Under N.J.S.A. 3B:5-4(b), when a person dies with no spouse or children, the person’s parents each share equally in the decedent’s intestate estate.  A parent loses the right to a share, however, if (among other things) the parent “abandoned the […]

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Free Seminar: Community Bank Law Symposium

Stark & Stark Shareholder Bari J. Gambacorta and Associate Allyson Cofran, both members of the Bankruptcy & Creditors’ Rights Group, will be presenting “Community Bank Law Symposium” on January 27, 2016.

The symposium will be presented in Ramada Vineland from 12:00pm to 1:30pm. This free educational symposium is structured to supplement in-house training and education of work-out and collection officers as they restructure and collect outstanding debts. Community Banks, like most financial institutions, are trying to navigate their way through the financial crisis, and some are struggling to do so. This presentation will provide valuable advice and insight into this process.

Edward J. Geletka, Vice President of Cape Bank, will present comments at the start of the symposium. Mr. Geletka will discuss the timeliness of banks properly handling these matters. Other issues that will be discussed by Mr. Gambacorta and Ms. Cofran include instituting and completing foreclosure actions, effective strategies for repossessing machinery, equipment, and automobiles, and strategies for maximizing recovery in bankruptcy cases.

Additionally, this symposium will provide lunch free of charge for all attendees. However, registration is required; to register for this educational presentation, please click here.

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OPRA Records Custodian Cannot Bring Declaratory Judgment Case to Preempt OPRA Suit by Requestor

In re New Jersey Firemen’s Ass’n Obligation to Provide Relief Applications Under the Open Public Records Act, ___ N.J. Super. ___ (App. Div. 2015).  The OPRA (Open Public Records Act) opinions just keep on coming.  This lengthy opinion by Judge Ostrer addressed two issues.  The major question was whether a government records custodian may bring […]

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OPRA Demand for Information About Certain Out-of-State Travel by Governor Christie Was Properly Denied

Lagerkvist v. Office of the Governor, ___ N.J. Super. ___ (App. Div. 2015).  Plaintiff, a journalist, made a request under the Open Public Records Act, N.J.S.A. 47:1A-1 et seq. (“OPRA”) for “[c]opies of all available documentation for out-of-state travel from 2012 to present by Chris Christie and/or members of his senior staff to attend or […]

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An Easy Statute of Limitations Case for the Supreme Court

In re Petition for Referendum to Repeal Ordinance 2354-12 of West Orange Tp., ___ N.J. ___ (2015).  This appeal involved the timeliness of a challenge to a bond ordinance for redevelopment work that was adopted by the Township of West Orange.  Rule 4:69-6(b)(11) requires that actions in lieu of prerogative writ that challenge the adoption […]

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Comedian Bill Cosby’s Wife Moves to Quash Federal Civil Subpoena

On December 18, 2015, Comedian Bill Cosby’s wife, Camille, filed a motion in Federal Court seeking to quash a subpoena, which served by the attorneys representing the women who sued Mr. Cosby.  The complaint against Mr. Cosby was initiated on December 10, 2014, by Tamara Green (see attachment here).  Six additional Plaintiffs were added to the lawsuit filed in the United States District Court for District of Massachusetts, Western Division through various amendments.  Recently, Mr. Cosby filed counterclaims against the Plaintiffs.

Although each of the seven Plaintiffs alleges that they were sexually assaulted by Mr. Cosby several decades ago, the present lawsuit only asserts claims against the comedian for defamation, invasion of privacy, and intentional infliction of emotional distress.   Plaintiffs likely did not include claims for the alleged sexual assaults because those claims are barred by the applicable statutes of limitations.  Plaintiffs alleged that when they publicly accused Mr. Cosby of sexually assaulting them in 2014, Mr. Cosby directed his representative to make six statements denying the allegations.  The complaint alleges that those comments in response to the allegations are the basis for their claims.

On December 9, 2015, Bill Cosby’s wife of over fifty years was served with a deposition subpoena seeking to take her deposition in January, 2016.   Although, Mrs. Cosby is not a party to the case, Plaintiff’s counsel contends that her deposition is proper because she served as her husband’s business manager and issued a public statement on her husband’s behalf.

The Federal Rules require counsel to “meet and confer” to discuss and hopefully resolve discovery disputes before filing a motion.  According to Mrs. Cosby’s motion, counsel discussed the subpoena and their disputes.  Unfortunately, those discussions did not resolve the dispute.  On December 18, 2015, Mrs. Cosby filed a motion to quash the subpoena.

Mrs. Cosby’s motion to quash makes two central arguments to stop her deposition: (1) pursuant to Massachusetts’ law, she is not permitted to testify about private communications with her husband; and (2) because she was not present when the alleged activities between her husband and his accusers took place, she does not have any information about the accuracy of the Plaintiffs’ underlying accusations of sexual assault, and any information she has about the denial of those claims would come from privileged communications with her husband.  The motion also seeks to limit questions, so as not to harass Mrs. Cosby.

In Mrs. Cosby’s motion to quash, Camille Cosby argues that she is disqualified from testifying about certain confidential communications with her husband, Bill because Massachusetts’ law protects and promotes martial communications in two ways:  spousal privilege, which is applicable in criminal actions only, and spousal disqualification, which is applicable in both criminal and civil actions.   The Federal Rules of Evidence incorporate the applicable State privilege laws.  Because the case was filed in the place where the Cosby allegedly reside the Court is likely to apply Massachusetts’ privilege law.

Based upon my experience handling complex civil litigation in both federal and state courts, I believe the Judge deciding the motion will not allow Mrs. Cosby to testify about confidential communications between the spouses.  Nevertheless, I believe that any communications which are not subject to the martial (or other) privilege will be “fair game” for the deposition.  For example, if the couple discussed the allegations with other people who are not within other categories of privileged communications (lawyers, martial counselors, etc.) then it is likely Mrs. Cosby would be required to answer those questions.  Assuming I am correct, counsel for Mr. and Mrs. Cosby will need to object to questions which seek disclosure of privileged information and instruct the witness not to answer those questions.

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Southern New Jersey Divorce Mediation

The divorce process can be a contentious one. This is because it involves the equitable distribution of assets and property by the divorcing couple, and could potentially involve child custody and support issues, so it can be a very emotional process for those involved. While parties can choose to go in front of a judge to decide these issues, there are a growing number of alternatives available to reduce the burden on the parties which can help them come to a mutual agreement before presenting their divorce case to the court.

Mediation is one of those alternatives. Mediation is a type of alternative dispute resolution in which a neutral party assists the divorcing parties in negotiating their differences with an eye towards resolution and settlement. More specifically, mediation is an informal, out-of-court process which allows the parties to come to a mutual understanding on certain issues typically present in divorce cases, without unnecessary and time-consuming litigation in a courtroom. While a mediator has no authority to force or enforce a settlement, they serve as a catalyst for dialogue between the parties – a dialogue that may otherwise not occur during the divorce.

There are several benefits to mediation. A key advantage is that a mediator can explore the underlying background and emotional history in a case far more than a judge can or would, allowing the mediator to get to the root of the underlying conflict. A judge’s job is to look at the facts and law that can be applied to a case. A mediator, on the other hand, will spend significantly more time with the divorcing parties and may be able to address areas of conflict that a judge cannot.

Ideally, mediation is an opportunity for the parties to address all their desires and hash out their differences more comprehensively than any court could offer. Mediation is beneficial because, in a majority of family law disputes, it is better for parties to decide the outcome for themselves than to have a judge make the final decision, simply because the parties know themselves and what they want more than any judge could.

There is virtually no limit to the issues that can be discussed during mediation. Sometimes, parties do not realize the complexity of their marriage (and therefore, their divorce) until it is time to discuss a settlement. During mediation, parties can discuss as many issues as they want. They can talk about tax exemptions, parenting time, division of property, potential property sales, religious upbringing of their children, college contribution for the children, and almost any other issue arising out of the marriage. The more issues that are discussed, the more likely it is that the settlement reached by the parties accurately reflects each party’s interests.

If a settlement is reached during mediation, the parties’ attorneys can use this settlement to draft a Property Settlement Agreement or Martial Settlement Agreement, which can then be presented to the court for entry along with the Judgment of Divorce.

Because every divorce is different, the issues discussed during mediation will vary widely. It is important that those considering a divorce contact an experienced south Jersey family law attorney that can initiate the mediation process as well as ensure that any settlement reached during mediation is property executed.

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Martin Shkreli Arrested for Alleged Securities Fraud Scheme

Martin Shkreli, the controversial CEO of Turning Pharmaceuticals, and his attorney were indicted in an alleged securities fraud scheme.

On December 14, 2015, a grand jury paneled in Brooklyn, New York, returned a seven-count indictment against Martin Shkreli. Mr. Shkreli is charged with seven counts of securities fraud and conspiracy. His attorney, Evan L. Greebel is charged with a single count of wire fraud conspiracy. Greebel and Shkreli also face a United States Securities and Exchange Commission (“SEC”) civil complaint. The SEC commenced an eight-count civil suit against Shkreli, and contains a single aiding and abetting count against Greebel.

Shkreli is accused of running a Ponzi scheme that allegedly funneled money from Retrophin, Inc. to deceived investors in a series of ailing hedge funds. Attorney Greebel is charged with aiding the alleged scam.

The indictment alleges that Shkreli defrauded investors in MSMB Healthcare LP and MSMB Capital Management LP by making known misrepresentations about the funds’ past performance along with the funds’ assets and liabilities.

The indictment references a number of email exchanges between Shkreli and his attorney, and the government contends to support its allegations. I believe one of the central issues in the case will be whether or not the emails between Shkreli and his attorney are protected by the attorney-client privilege.

Generally, the “privilege” applies only if:

• “The asserted holder of the privilege is or sought to become a client;
• The person to whom the communication was made (a) is a member of the bar of a court, or his subordinate, and (b) in connection with this communication is acting as a lawyer;
• The communication relates to a fact of which the attorney was informed ( a) by [a] client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and,
• The privilege has been (a) claimed and (b) not been waived by the client.” United States v. United She Machinery Corp., 89 F. Supp. 357, 358 (D. Mass. 1950).

Clearly, Attorney Greebel was serving as Mr. Shkreli’s counsel. Nevertheless, the government will assert that their communications are not privileged because said communications were in furtherance of a crime or tort. Although the United States has a high burden to overcome the privilege, if it can demonstrate that the attorney and client discussions were in furtherance of a crime, as alleged in the indictment, I suspect that communications between them will not be deemed to be privileged.

Mr. Shkreli sparked widespread outrage in September when he raised the price of a 62-year-old drug used for treating life-threatening parasitic infections, including but not limited to HIV, from $13.50 a tablet to $750, overnight. The indictment, which was filed in the United States District Court for the Eastern District of New York, does not directly address the overnight price increase of Daraprim. Apparently, New York Attorney General Eric T. Schneiderman has indicated that his office is investigating whether or not Turning Pharmaceuticals violated New York’s anti-trust laws by restricting access to the drug Daraprim in order to forestall generic competition.

Social media outlets such as Twitter, Facebook, and Instagram erupted with news of Mr. Shkreli’s arrest. If the case is eventually tried, I suspect the Court will spend a good deal of time vetting potential jurors to ensure that Mr. Shkreli receives a trial before a fair and impartial jury of his peers.

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Stark & Stark Shareholders Present at HalfMoon Education Seminar

Shareholders Timothy P. Duggan, Chair of the Bankruptcy & Creditors’ Rights, Eminent Domain, and Real Estate Tax Appeal Groups, and Gary S. Forshner, member of the Real Estate, Zoning, & Land Use Group, both presented at the Legal Issues for New Jersey Civil Engineers HalfMoon Education, Inc. seminar on December 17, 2015. HalfMoon Education, Inc. is a nonprofit continuing education.

This seminar took place from 8:30am – 4:40pm at the Holiday Inn in Somerset, New Jersey, and included four different seminars and a lunch. The purpose of this all-day seminar was to offer a series of continuing education courses specifically for civil engineers in New Jersey.

Mr. Duggan presented on Eminent Doman and Condemnation Law, which included explanations about eminent domain powers, participating in the condemnation process, appealing a condemnation process, and understanding regulatory “takings.”

Mr. Forshner presented on Land Use Law, which explained land use laws, comprehensive land use planning and zoning, types of approvals, and the engineer’s role in a land use hearing. Additional presentations at the seminar included Overview of Contract Law, State and Federal Site Contamination Law, Civil Engineering Liability.

If you have questions regarding eminent domain and condemnation law and/or land use law, it is recommended that you seek experienced legal counsel immediately.

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The Elective Share of Surviving Spouse

Under New Jersey Law, a surviving spouse or domestic partner may be entitled to an elective share of their spouse’s or partner’s Estate, pursuant to N.J.S.A. 3B:8-1, in lieu of a distribution under their Will. Pursuant to the Elective Share statute, a spouse or domestic partner may take their share of their spouse’s or partner’s Estate either under their Will or pursuant to the elective share statute, unless there is clear evidence of a waiver by the surviving spouse or partner to an elective share of the Estate. Otherwise, the entitlement to an elective share may trump any distribution to the spouse or partner set forth in the Will and may provide for a greater distribution than this person might have received under the Will.

In general, the distribution of an elective, pursuant to the elective share statute, is relatively straightforward. The surviving spouse would be entitled to a share of the decedent’s Estate, which equals one third of the augmented Estate of the decedent. The augmented Estate refers to the Estate reduced by funeral and administration expenses and enforceable claims against the Estate. The value of the augmented Estate may be reduced or increased in other fashions; however, for the purposes of this blog that is a general description of what constitutes the augmented estate.

Pursuant to the Elective Share statute, however, a spouse or partner may not be entitled to an elective share of the Estate if that spouse or partner was not actively residing with the decedent, and was more or less separated at the time the decedent passed away.

In general, if the parties had been living separate and apart and not as man and wife or domestic partners, either as a result of a judgment of divorce or under circumstances which would give rise to a cause of action for divorce, or the annulment of marriage, the surviving spouse or domestic partner would not be entitled to an elective share. It is possible that this issue may arise if there was a brief separation, and thereafter, an elective share is sought by a surviving spouse.

Furthermore, it can involve situations where the parties obtained a divorce, yet continue living as husband and wife or domestic partners after the divorce. Under these circumstances it is wise to consult with an attorney if you are either seeking an elective share or contesting one.

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Analyzing Coach Steve Sarkisian’s Employment Discrimination Lawsuit Against USC

Last week, former University of Southern California Head Football Coach Steve Sarkisian filed a 31-page lawsuit in Los Angeles Superior Court against his former employer. The lawsuit alleges that Coach Sarkisian’s employment was unlawfully terminated. Furthermore, Coach Sakisian alleges that USC discriminated against him by not making a reasonable accommodation to address his disability – alcoholism. The former USC coach is seeking damages in excess of $30,000,000, plus the reinstatement of his employment.

Coach Sarkisian’s employment with USC was terminated on October 12, 2015, after taking an indefinite leave of absence. Coach Sarkisian took this leave of absence in order to seek treatment for alcoholism.

Alcoholism is a recognized disability under both California’s Fair Employment and Housing Act (FEHH) and the federal American’s with Disabilities Act (ADA). The law prohibits employers from discriminating against employees with disabilities that limit a major life activity. Employers are required to make “reasonable” accommodations in order to help the disabled employee overcome their recognized disability. Often Courts find that an accommodation is unreasonable if it substantially disrupts the employer’s business practice or requires an alteration to any essential job responsibilities.

Although Coach Sarkisian’s disability is recognized by California law, I suspect it will be harder for him to prevail in the lawsuit if the USC can prove his drinking interfered with his responsibilities as the head football coach on multiple instances.

I would expect that USC will counter and attest that they made a reasonable accommodation when they first gave Coach Sarkisian a leave of absence to get help for his alcoholism. I also suspect USC will try to demonstrate that Coach Sarkisian’s ongoing drinking issues made it impossible for him to coach and therefore complete his essential job responsibilities.

Based upon my prior experience working for the Ohio State football team and witnessing just how much time and effort is devoted to coaching at the highest levels of intercollegiate athletics, I believe it would be impossible for an individual suffering from untreated alcoholism to perform all of the necessary and essential job functions.

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Making a Claim Against a Bond on a Municipal Project

If you are either a subcontractor or a material supplier on a municipal project and you are not receiving payment from the general contractor or subcontractor, you may have to bring a claim against a payment bond posted by the general contractor. In order to be entitled to make a claim against such a bond, it is important that you follow the protocol required by the relevant New Jersey Statutes. If you do not follow this protocol, you may be barred from making a claim against the bond.

In the relevant New Jersey Lien Law, N.J.S.A. Section 2A:44-145, it explains that a person who does not have a direct contractual relationship with a contractor must provide explicit written notice to the contractor, which explains that the person is an intended beneficiary under the bond. Only after this written notification is provided does that person have the ability to bring forth a claim, and that right commences the day the notice is presented.

This notice should typically be sent in the form of certified mail with a return receipt, or any similar type of notification system which will verify that the party received it, requested. As a note, a subcontractor or vendor should not depend upon another party to make this notification on its behalf, but must instead provide the notification directly to the general contractor or subcontractor who issued the bond. If this procedure is not followed, this party may be prevented from bringing a claim against the bond, should there be any unpaid materials or services.

If the subcontractor or vendor has made proper notification, but they have not been paid by the general contractor or subcontractor, they can begin the process of making a claim. The first step for this is to send a formal demand to the subcontractor or general contractor who posted the bond, as well as the bonding company requesting payment. Typically, the bonding company will then request information, such as the previously sent notice, to support a claim against the bond. Once this information is provided, the bonding company will either issue payment directly to the party who made the claim, or the bonding company may deny the claim by citing other various reasons.

If payment is not issued by the bonding company to the party making the bond claim, the claimant has one year, from the last date of providing the materials or services, to file suit against the bonding company. The claiming party would not have an independent cause of action against the individual who posted the bond, unless they had a direct contractual relationship. For this reason, it is crucial that this party consult with an attorney about the proper procedure for filing a claim against the bond. Stark & Stark has attorneys who can help you through this process.

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Important Choice of Law Decisions Coming From the Supreme Court

Yesterday, the Supreme Court announced that it had granted review in Ginsberg v. Quest Diagnostics, Inc., 441 N.J. Super. 198 (App. Div. 2015), briefly summarized here.  (Confirming that nobody is perfect, the website showed the plaintiff’s name as “Ginsburg”).  “The question presented, as phrased by the Supreme Court Clerk’s Office is “Are the various claims […]

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The Collaborative Divorce Process in South Jersey

Unlike what you know of a traditional divorce, a collaborative divorce process is a mutually respectful, open-minded process that focuses on joint problem solving. The goal in a collaborative divorce is to reach an agreement without going to Court by developing an effective relationship with one’s ex-spouse that allows both parties to make joint decisions without having to repeatedly petition the court or to repeatedly consult with their attorneys.

Collaborative divorces are constructed so that it teaches the divorcing parties how to interact with each other respectfully and cooperatively, with the hopes of getting rid of any negative feelings that they may have towards one another for the future.

Furthermore, collaborative divorces typically involve more than just the two divorcing individuals, their lawyers, and the courts. They often involve an expanded team of professionals. In addition to the family lawyers involved, these professionals include financial experts and counselors. The goal is to ensure that every facet and issue of a divorce is addressed so that the divorce can be as collaborative and inclusive as possible. Considering that a collaborative divorce involves more individuals than standard litigation or mediation, the parties have more access to information, more guidance from experts, more transparency through the proceedings, and more mutually beneficial solutions.

One of the most important benefits of a collaborative divorce is the preservation of a relationship between the divorcing parties during the process. With a divorce done through litigation, parties are often pitted against one another and develop resentment and discord.

However, through a collaborative divorce, the parties agree to be mutually respectful and open with one another. They learn to work with each other rather than against one another. A collaborative divorce establishes a means by which the parties can learn how to resolve their problems in the future without needing to litigate and constantly return back to court.

Every divorce is different, and the collaborative divorce process may benefit the parties in one divorce, but may not be beneficial to another divorcing couple for a variety of reasons. Therefore, a couple seeking a divorce should consult an experienced family law attorney in South Jersey to ensure that a collaborative divorce is suitable for them and their needs.

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Supreme Court Grants Review of a Class Action Appeal

The Supreme Court announced today that it has granted review in Myska v. New Jersey Manufacturers Ins. Co., 440 N.J. Super. 458 (App. Div. 2015).  [Disclosure:  I am co-counsel for New Jersey Manufacturers in this matter].  The question presented, as phrased by the Supreme Court Clerk’s Office, is “Were plaintiffs’ class action claims properly denied […]

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Payments of Transaction-Based Compensation by FINRA Members – A Changing Game for Asset Purchases, Selling Groups and Retiring Representatives

Introduction

On December 30, 2014, the Securities and Exchange Commission (“SEC”) approved a new Financial Industry Regulatory Authority (“FINRA”) rule governing transaction-based payments to unregistered persons. The new FINRA rule—Rule 2040—became effective on August 24, 2015. If you are a FINRA-registered broker-dealer that currently pays an unregistered person, now is a perfect time to examine the relationship and make sure that these payments are proper. In addition, if you are an unregistered or unlicensed person, then you may want to make sure that you can receive or continue receiving these payments. Lastly, if your firm permits “selling groups” of registered representatives for expense paying and marketing purposes, it is also a good time to reassess these practices.

More specifically, this new rule addresses many situations that can arise in a broker-dealer’s regular course of business. These situations include, but are not limited to:

• Asset purchase arrangements between current representatives;
• The receipt of continuing compensation by retiring representatives, their beneficiaries, or estates; and,
• Referral arrangements.

As a result of these new changes, the current FINRA rules addressing payments to non-registered persons, as well as related New York Stock Exchange rules have been deleted from the FINRA rulebook. The rest of this article deals specifically with the requirements and implications of Rule 2040 and Section 15(a) of the Securities Exchange Act (the “Exchange Act”).

The Rule

Rule 2040(a) states, “[n]o member or associated person shall, directly or indirectly, pay any compensation, fees, concessions, discounts, commissions or other allowances to: (1) any person that is not registered as a broker-dealer under Section 15(a) of the Exchange Act but, by reason of receipt of any such payments and the activities related thereto, is required to be so registered under applicable federal securities laws and SEA rules and regulations; or (2) any appropriately registered associated person unless such payment complies with all applicable federal securities laws, FINRA rules and SEA rules and regulations.” In short, this paragraph states that broker-dealers cannot i) pay unregistered persons or entities, unless the payment would otherwise be legal, and ii) pay registered representatives unless the payment is legal.

To summarize paragraph (b) of the same rule, a member may pay continuing commissions to a retiring registered representative so long as a contract between the member and the retiring registered representative existed before retirement, and the retiring registered representative agrees not to solicit new business, open new accounts, or service the accounts generating the continuing commission payments. This section also requires that the payment is otherwise legal.

The rule also defines any “retiring registered representative” as an individual who leaves the securities industry. It also suggests that payments may continue to the retiring representative’s beneficiary or estate after death.

What Does it Mean for Payers and Payees of Transaction-Based Compensation?

This particular method of drafting begs the question of what is legal in terms of paying or assigning transaction-based compensation to unregistered persons or entities. However, this was not a matter of poor drafting. It was a deliberate decision, because FINRA has long deferred to the SEC to determine whether or not a person or entity should be registered as a broker-dealer.[i]

However, SEC approval no longer appears to be the only method for broker-dealers and registered representatives to prove to FINRA that they are in compliance with Section 15(a) of the Exchange Act. A supplement to Rule 2040 gives members additional guidance. This paragraph states, “FINRA expects members to determine that their proposed activities would not require the recipient of the payments to register as a broker-dealer and to reasonably support such determination (emphasis added). Members that are uncertain as to whether an unregistered person may be required to be registered under Section 15(a) of the Exchange Act by reason of receiving payments from the member can derive support for their determination by, among other things, (1) reasonably relying on previously published releases, no-action letters or interpretations from the Commission or Commission staff that apply to their facts and circumstances; (2) seeking a no-action letter from the Commission staff; or (3) obtaining a legal opinion from independent, reputable U.S. licensed counsel knowledgeable in the area. The member’s determination must be reasonable under the circumstances and should be reviewed periodically if payments to the unregistered person are ongoing in nature. In addition, a member must maintain books and records that reflect the member’s determination.”

Option one and two above will not make it very easy for a registered representative to structure the sale of his or her book of business,[ii] nor will they help a selling group operate a corporate entity for expense paying and marketing purposes.[iii] In a line of SEC Interpretive No-Action Letters, the SEC has suggested that it would reserve the right to bring enforcement proceedings against entities that receive securities-based compensation from registered representatives by assignment or otherwise.[iv] However, No-Action Letters are not binding legal authority. These letters merely serve as the opinions of the Commission on arguable questions of the law.

Conclusion

This author has personally spent countless hours conducting legal research on case law dealing with payments by a broker-dealer to a retiring representative, asset purchases between retiring representatives, the use of selling groups for estate planning, marketing, and expense sharing purposes. Not a single case could be located where the SEC tried these issues before an administrative law judge or district court arguing that these practices were in violation of Section 15(a) of the Exchange Act. It is a very prevalent practice in the industry, and if the SEC thought it had a winning argument they would most likely act on it. This is the same government agency that brought 755 enforcement actions in 2014 and collected over $4.1 billion in monetary relief in the same year.[v]

If you or your firm could benefit by receiving or paying transaction related-compensation, then that leaves you with only one option left: to prove to FINRA that your proposal is compliant with Section 15(a) of the Exchange Act. You must obtain a legal opinion from independent, reputable U.S. licensed counsel knowledgeable with commission sharing arrangements.

 

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[i] See NASD Interpretive Letter to Ted. A. Troutman, Esquire, Muir & Troutman (Feb. 4, 2002).

[ii] See Securities Industry and Financial Markets Association (Nov. 19, 2008)(SEC grants no-action relief to a retiring representative structuring the sale of his book of business subject to more than ten conditions to be met.)

[iii] See Herbruck, Alder & Co. (May 3, 2002)(Firm denied no-action relief where all nine owners were registered representatives of a broker-dealer who would receive commission checks directly from broker-dealer, deposit them in their own personal accounts, and then write a check to the firm. The purpose of combining the revenues was that the firm could deduct “overhead, payroll taxes, and fringe benefit costs” and remit the balance to the employee(s).); Wolff Juall Investments, LLC (May 17, 2005)(No relief granted where registered representatives proposed to deposit their commissions with a limited liability corporation not registered as a broker-dealer to cover expenses with the non-registered entity to distribute the remainder to the registered representatives.); Birchtree Financial Services, Inc. (Sept. 22, 1998)(No Action Relief denied where Birchtree Financial Services requested the payment of commissions to an entity owned and operated solely by two registered representatives. Relief also denied for the assignment of commissions by the two registered representatives to an entity. The entity was created to pay operating expenses and health care benefits for employees.); Century Investment Group Incorporated (Jan. 29, 1996)(SEC Division of Market Regulation would not offer relief where certain registered representatives would create their own, single shareholder corporation to receive the individual representative’s share of securities-based compensation.); Voluntary Benefit Systems Corporation of America (Nov. 14, 1995) (Dually registered insurance agent and registered representative of a broker-dealer requested and was denied no-action request where he requested that his commission compensation be directed to an existing life insurance agency not registered as a broker-dealer.); Lombard Securities Incorporated (July 12, 1994)(SEC denied no-action relief when it requested that it be able to direct securities-based compensation directly to “service corporation” rather than make such payments individually to each registered person. All owners of the “service corporation” were proposed to be registered as associated persons of a broker-dealer.); Vanasco, Wayne & Genelly (Feb. 17, 1999)(No Action request denied where registered representatives would continue to be employed by the broker-dealer, the broker-dealer would route all trading commissions earned by the registered representatives to their respective personal service corporations, rather than directly to the individual representatives.).

[iv] See Herbruck, Alder & Co. (May 3, 2002)(Firm denied no-action relief where all nine owners were registered representatives of a broker-dealer who would receive commission checks directly from broker-dealer, deposit them in their own personal accounts, and then write a check to the firm. The purpose of combining the revenues was that the firm could deduct “overhead, payroll taxes, and fringe benefit costs” and remit the balance to the employee(s).); Wolff Juall Investments, LLC (May 17, 2005)(No relief granted where registered representatives proposed to deposit their commissions with a limited liability corporation not registered as a broker-dealer to cover expenses with the non-registered entity to distribute the remainder to the registered representatives.); Birchtree Financial Services, Inc. (Sept. 22, 1998)(No Action Relief denied where Birchtree Financial Services requested the payment of commissions to an entity owned and operated solely by two registered representatives. Relief also denied for the assignment of commissions by the two registered representatives to an entity. The entity was created to pay operating expenses and health care benefits for employees.); Century Investment Group Incorporated (Jan. 29, 1996)(SEC Division of Market Regulation would not offer relief where certain registered representatives would create their own, single shareholder corporation to receive the individual representative’s share of securities-based compensation.); Voluntary Benefit Systems Corporation of America (Nov. 14, 1995) (Dually registered insurance agent and registered representative of a broker-dealer requested and was denied no-action request where he requested that his commission compensation be directed to an existing life insurance agency not registered as a broker-dealer.); Lombard Securities Incorporated (July 12, 1994)(SEC denied no-action relief when it requested that it be able to direct securities-based compensation directly to “service corporation” rather than make such payments individually to each registered person. All owners of the “service corporation” were proposed to be registered as associated persons of a broker-dealer.); Vanasco, Wayne & Genelly (Feb. 17, 1999)(No Action request denied where registered representatives would continue to be employed by the broker-dealer, and the broker-dealer would route all trading commissions earned by the registered representatives to their respective personal service corporations, rather than directly to the individual representatives.). But see, 1^st Global, Inc. (May 7, 2001)(No action request partially denied and partially granted. 1^st Global Capital Corp. was a registered broker-dealer. The firm had many registered representatives who were also partners in accounting firms. The SEC granted no-action relief where 1^st Global Capital Corp. would pay securities commissions to a CPA registered representative who is not subject to a formal or informal agreement requiring him to turn securities commissions over to an unregistered CPA firm, and no unregistered person would be eligible to receive commissions directly or indirectly. However the SEC denied no-action relief where 1^st Global Capital Corp. would pay securities commissions to a CPA registered representative, with the understanding that the registered representative would then “voluntarily” turn those commissions over to an unregistered CPA firm.)

[v] See SEC’s FY 2014 Enforcement Actions Span Securities Industry and Include First-Ever Cases (Oct. 16, 2014), available at http://ift.tt/1AF6oxb.

 

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“Appeals Are Taken From Judgments and Not From Opinions, Let Alone Dicta”

Bandler v. Melillo, ___ N.J. Super. ___ (App. Div. 2015).  It is a venerable rule that a party may appeal only a judgment, not the contents of an opinion that supports the judgment.  Thus, if a party is not contesting the judgment or its ultimate result, a party may not seek review of the rationale […]

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New Jersey Supreme Court Holds That Trial Courts May Order the Disgorgement of “Faithless Employee’s” Compensation

Recently, the New Jersey Supreme Court decided an important case that further protects employers from disloyal or “faithless” employees. The central issue in Kaye v. Roseflelde is whether “a Court may order the equitable remedy of disgorgement of an employee’s compensation when the employee has breached their duty of loyalty to the employer, but the employer had not sustained any economic loss.” The Kaye decision is an extension of Cameco Inc. v. Gedicke, 157 N.J. 504(1999), which allowed Courts to disgorge (or give back) compensation earned if the employee caused their employer to suffer damages.

The facts of Kaye are fairly simple and straightforward. Kaye hired his former attorney, Mr. Roseflelde, to work directly for his timeshare companies. During the course of a twenty-plus day trial, Kaye was able to demonstrate that Mr. Roseflelde committed many serious acts of misconduct during working hours when he acted on his own behalf instead of his employer’s best interests.

Moreover, the trial court found that Mr. Roseflelde’s breach of fiduciary duties exposed his employer to potential liability. For example, the trial court found that Mr. Roseflelde:

• Forged documents;
• Made misrepresentations on insurance applications;
• Sexually harassed other employees; and,
• Used company funds for a personal trip.

In other words, the court found Mr. Roseflelde to be a “faithless servant.”

Employees owe their employers certain “fiduciary duties.” During the course of their employment, these duties mean that an employee must not act contrary to their employer’s interest.

The New Jersey Supreme Court held “depending on the facts of the case, an employee’s breach of the duty of loyalty can give rise to either equitable or legal relief.” Moreover, the Court held equitable discretion is not governed by fixed principles and definite rules. Rather, “implicit in the exercise of equitable discretion is conscientious judgment directed by law and reason and looking to a just result.”

Based upon the same, the New Jersey Supreme Court held that “the equitable remedy of disgorgement is derived from a principle of contract law: if the employee breaches the duty of loyalty at the heart of the employment relationship, he or she may be compelled to forgo the compensation earned during the period of disloyalty. The remedy is substantially rooted in the notion that compensation during a period in which the employee is disloyal is, in effect, unearned.”

The Kaye decision is extremely important on many levels. First, it broadens trial court’s discretion in using disgorgement to rectify disloyal, dishonest, and faithless employees. Moreover, it sets forth a well-reasoned, historical overview of fiduciary duties employees owe to their employers. Finally, it empowers trial courts to use their equitable powers to come up with fair and reasonable remedies to address issues brought before them.

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The Third Circuit Schedules En Banc Oral Argument in the New Jersey Sports Gambling Law Case

As predicted here, the Third Circuit has granted en banc review in NCAA v. Governor of the State of New Jersey, 799 F.3d 259 (3d Cir. 2015).  Oral argument en banc has been scheduled for February 17, 2016 at 11 A.M.  As noted here, en banc review is relatively rare in the Third Circuit.  This […]

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Weakness of State Action Argument in Civil Rights Act Case is Laid Bare and Exposed

PRBA Corp. v. HMS Host Toll Roads, Inc., ___ F.3d ___ (3d Cir. 2015).  Plaintiff, which does business as Bare Exposure, operates a “gentleman’s club” in Atlantic City.  The club advertises itself as “Atlantic City’s Only All Nude Entertainment.”  Defendant (“Host”) leases service plazas along major New Jersey highways, such as the New Jersey Turnpike […]

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Judges Suter and Vernoia Are Elevated to the Appellate Division

As discussed here, Judges Karen Suter and Francis Vernoia have been serving temporarily on the Appellate Division since October 19, 2015.  Their temporary appointments were scheduled to end on December 27, 2015.  Today, Chief Justice Rabner announced that both judges will be elevated to the Appellate Division as of December 28, 2015. Judge Suter has […]

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Untangling the Knots: Bankruptcy and Divorce

Bankruptcy is the legal process by which the debt of the party filing for bankruptcy is discharged, thereby absolving a party of a portion of their debt. Unfortunately, the bankruptcy process is not as simple as it sounds, and it can be further complicated when the parties—or an individual—are in the middle of a divorce or considering a divorce.

As a result of this, family law clients often ask whether they should file for divorce or bankruptcy first. Unfortunately, there is no clear-cut answer, as every divorce and every bankruptcy filing is unique. However, there are a variety of factors one can consider when deciding this question:

• Income of the parties. If one party has significant debt, but the other party makes a substantial income, it will be difficult to qualify to file a joint Chapter 7 bankruptcy. This is because the court will have to consider the total household income when determining whether or not to grant the bankruptcy petition. In this case, it is likely more beneficial to file for divorce prior to filing bankruptcy so that the household income is not considered in the bankruptcy petition.
• Both parties have to agree to file bankruptcy. Filing for joint bankruptcy is not possible unless both spouses consent to the filing. One spouse cannot force the other to file, even during a divorce proceeding. However, the party who wants to file for bankruptcy may still be eligible to do so individually, but filing individually will not discharge the debts of the other party. Therefore, it may be advisable to file for bankruptcy before the divorce so that both parties’ debt may be discharge before the divorce proceedings begin.
• Look at how the debt has been distributed. In some instances, one of the parties may have substantial separate property and assets, possibly received through an inheritance or gift, or pre-marital property. In this situation, the party wanting to file for bankruptcy may want to do so individually, without including the party with substantial assets because these assets may prevent a bankruptcy from being discharged.
• Property of the Estate during a Divorce. After a bankruptcy petition is filed, all of the debtor’s property becomes property of the bankruptcy estate. This means that the property of the bankruptcy estate cannot be divided in any property settlement agreement during a divorce unless permission is received from the bankruptcy judge or if the bankruptcy is over. This can significantly delay any divorce proceeding.

Considering that there are a variety of factors that can be measured, it is very important that anyone with questions about bankruptcy during the divorce process be able to provide complete and accurate information about their assets and liabilities, so that one’s attorney will be better able to assess your situation.

As a result, one should consult with an experienced family law attorney who can then work with a bankruptcy attorney to determine what the best course of action will be given the specific facts of a case.

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Does Your Estate Plan Protect your Spouse and Family?

If you are unavailable due to injury or illness, is there a plan in place to protect a surviving spouse or your family? Sadly, the answer to this question is often “no.” The lack of an effective estate plan can result in unnecessary delays and financial hardships for your spouse and family. Depending on the circumstances, the impact of these problems can be substantial. A recent New Jersey Appellate Division case illustrates some of the problems caused by an incomplete estate plan and the losses it caused for a surviving spouse.

The facts of this case are relatively straightforward. The Decedent worked as an educator in the early 1980s and created three retirement accounts through his employer. At that time the Decedent was not married, and the Decedent named his sister as the beneficiary of all three accounts.

Decedent subsequently married in 1987. However, (i) the Decedent only updated the beneficiary designation for one of the three retirement accounts to name his wife; and, (ii) died intestate (without a Last Will and Testament). Since the Decedent did not update all of his beneficiary designations, two retirement accounts passed to the Decedent’s sister. The reported value of the accounts passing to the Decedent’s sister was about $114,000. Adding to the problems, the Decedent’s sister only survived the Decedent by about three years.

Not surprisingly, this plan resulted in a number of adverse consequences, including:

• Costly litigation between the surviving spouse and the sister’s estate;
• The loss of $114,000 in retirement accounts for the spouse;
• New Jersey Inheritance Taxes on the retirement accounts passing to the sister’s estate;
• Potential adverse impacts on the distributions from the retirement accounts.

This case illustrates some, but not all, of the problems caused by an incomplete estate plan. Each person’s situation is unique, and there are a number of factors that must be considered as part of every estate plan. As demonstrated by this case, failure to address the circumstances of each case can have major adverse consequences for a surviving spouse and other beneficiaries. It is important that you and your family have an estate plan and that your documents fit your circumstances.

If you have any questions about this case, or the planning considerations that may be unique to your situation, it is recommended that you speak with experienced estate planning counsel.

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An Anniversary in Committee on Character Jurisprudence

The Supreme Court of New Jersey Committee on Character evaluates applicants to the New Jersey Bar for their current character and fitness to practice law.  [Disclosure:  I was a member of the Committee for fifteen years, and I currently represent Bar applicants in connection with Committee on Character applications and proceedings].  There is relatively little […]

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Mandatory Early Retirements and its Effect of Post-Divorce Matters

This might come as a surprise, but an individual’s retirement often has a significant effect on post-divorce matters. For example, if the supporting spouse retires, this may lead to a modification of alimony payments that he or she is required to pay the dependent spouse. The criteria for modification in the event of retirement are the following: whether the retirement is permanent or temporary, whether the initial divorce agreement had considerations for retirement, the inability to maintain he or she’s same standard of living once retired, and balancing the needs of the alimony recipient and the supporting spouse.

However, there are certain professions that have mandatory early retirement ages. For example, state troopers in New Jersey are required to retire at 55 years old, whereas the national retirement age is 67.

The court in Lepis v. Lepis established a three-prong analysis permitting a party to modify their alimony obligations when a substantial change is circumstances is shown. These factors include:

• Establishing a prima facie case;
• Showing that the party will be unable to maintain their standard of living; and,
• Weighting the needs of the alimony recipient and supporting spouse’s ability to pay.

Furthermore, Lepis also established that, in order to establish a prima facie case, two additional factors must be shown. They are (a) whether the change in circumstances is continuing or permanent; and (b) whether the original divorce decree has made an explicit provision for such a change.

Applying these factors to an early retirement situation, it is likely that all factors can be met. A prima facie case can be shown because the party being forced to retire cannot return to the position he or she is retiring from and is therefore permanent. In addition, a mandatory early retirement is likely known when the party enters the profession and, is therefore known when the original divorce decree is entered. Thus, it is unlikely to come as a shock to either of the parties when alimony has to be modified due to early retirement. Furthermore, applying the other Lepis factors, the same lifestyle is unlikely to be wholly maintained following retirement, as there is a decrease in income.

In addition to the above, when determining whether mandatory early retirement is reasonable, a court may consider the following factors: whether at the time of the initial alimony award any attention was given by the parties to the possibility of future retirement; whether the particular retirement was mandatory or voluntary; whether the particular retirement occurred earlier than might have been anticipated at the time alimony was awarded; and the financial impact of that retirement upon the respective financial position of the parties. Applying these factors, mandatory retirement will likely be found reasonable because the party has no choice but to retire (and take a decrease in income), and with one party entering a profession, it is likely that both parties knew that mandatory retirement was inevitable and therefore, anticipated.

Applying the above analysis establishing a prima facie case of changed circumstances as well as showing that mandatory retirements are reasonable as a precursor to modify alimony, it is likely that such retirements, while before the national retirement age of 67, will warrant a modification of alimony. However, each divorce is different and each with their own, unique set of facts that an experienced attorney can apply to the above factors.

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Court May Force Sale of House Post-Divorce

Many issues arise after a Final Judgment of Divorce has been entered. One particularly prevalent issue in many cases has to do with the marital home. One party may wish to buy out the other party’s interest in said home, or trade it off against another asset. However, it is not always that easy.

Generally, both parties’ names are on the mortgage by the time of the divorce. The spouse who is taking over the home must refinance the mortgage to get the other spouse’s name removed. If this isn’t done in a timely manner, the spouse who has moved out may not be able to purchase another home because he/she is still obligated to the mortgage of the marital home. Non-payment on the mortgage may also affect the non-resident spouse’s credit rating.

In the recent case of L.H. v. D.H., the wife remained in the marital home, but failed to take steps to refinance the mortgage pursuant to their agreement. She was also late in making some of her mortgage payments, which affected the ex-husband’s credit.

The ex-husband filed a motion in court to deal with this problem. The judge was very concerned that that the ex-husband’s credit rating was being negatively affected, stating “this court takes judicial notice, as a matter of indisputable common knowledge, that a positive credit rating and score is one of the most valuable and important assets a party may presently possess.”

The court granted the ex-husband’s motion, and ordered that the house be sold in order to pay off the mortgage. The parties had 30 days to agree on a realtor, and if they were unable to agree, the court would appoint a realtor. If the ex-wife refused to sign the listing agreement, the ex-husband was given a limited power of attorney to sign on her behalf. While the house was listed, the ex-wife was ordered to maintain it and make all mortgage, tax, and insurance payments in a timely manner. However, if the ex-wife failed to cooperate or tried to block the sale, the judge said he would consider removing her from the house.

Issues that arise after a Final Judgment of Divorce can be tricky. It is for this reason that we recommend that you consult with experienced legal counsel immediately to discuss the issues of your situation.

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Update: New Jersey Supreme Court Revisits Important Employment Decision

Several months ago, I published a blog which discussed an important case that could affect employment discrimination litigation in New Jersey.

In summary, the New Jersey Appellate Court, in the case Rodriquez v. Raymours Furniture Company, Inc., 93 A.3d 760 (App. Div. 2014), permitted an employee to reduce the statute of limitations period for an alleged violation of New Jersey’s Law Against Discrimination from 2 years to 6 months. In that case, the Appellate Court held that the reduced statute of limitations period was set forth in conspicuous, highlighted language in the employment application.

On December 1, 2015, the New Jersey Supreme Court entertained oral argument regarding the important issue of whether or not New Jersey employers may use contractual language in order to significantly reduce the statute of limitations period. Clearly, the enforcement of a shortened statute of limitations period would eliminate some litigation. The central question for the Court is whether or not parties via contract could reduce the legislature’s enactment of a 2 year statute of limitations.

The ultimate decision of the New Jersey Supreme Court will certainly affect employment discrimination litigation in New Jersey. Moreover, if the Court upholds the reduced statute of limitations, it could possibly affect other statutes of limitations. For example, there is a 4 year statute of limitations for a goods contract and 6 year statute of limitations for a non-goods contract in New Jersey. Assuming the decision is affirmed, could parties agree to reduce the time period for which breach of contract claims could be filed?

I will continue to monitor this case and will provide updates as developments are made. Stayed tuned, and continue to check out the New Jersey Law Blog for other important legal issues that may affect you, your business, and your family.

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Shareholder John L. Laskey to Present Two Upcoming NBI Seminars

Stark & Stark Shareholder John L. Laskey, member of the Alternative Dispute Resolution, Banking & Financial Services, Bankruptcy & Creditors’ Rights, Business & Corporate, Collections, and Litigation Groups, will be presenting two identical seminars for the National Business Institute (NBI). The seminars, both titled “BOOT CAMP: Foreclosure & Loan Workout Procedures,” will offer NJ, NY, and PA Continuing Legal Education (CLE) credits and will be presented on December 8^th and 9^th.

These full-day seminars will run from 9:00am to 4:30pm, and will present an explanation of foreclosures and loan workouts. These can be complicated procedures that require careful understanding. The first seminar will take place on Tuesday, December 8, 2015 at the Holiday Inn Princeton. The second, identical seminar will occur on Wednesday, December 9, 2015 at the Holiday Inn Cherry Hill.

For those unable to attend either event, it is possible to purchase the recording and/or course book of the seminar. For the full-day event, attendees will earn 7.20 NJ CLE credits, 7.00 NY credits, or 6.00 PA credits. To register for the seminar on December 8^th in Princeton please click here. To register for the seminar on December 9^th in Cherry Hill, please click here.

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Hamilton Township Revaluation Update: Values to be Mailed to Property Owners in January 2016

Hamilton Township (Mercer County) is completing the revaluation of all properties in the Township and expects to advise property owners of their new assessments in January 2016. By now, each property owner should have been contacted by Professional Property Appraisals, which is the revaluation company hired by Hamilton Township to perform the revaluation. Once each property is inspected and appraised, the revaluation company will send a written notice to each property owner advising him or her of the new tax assessment. As mentioned, you should expect your notice in January 2016.

Additionally, you should expect sticker shock, too – but do not assume your taxes will increase. As a general rule, when a revaluation is completed, about one-third of owners see an increase in their tax bill, one-third a decrease, and one third almost no change at all. Also, do not apply the 2015 tax rate to your new assessment, because the tax rate will decrease as a result of the revaluation.

However, the new tax rate will not be final until the 2016 budget is finalized in the spring or summer of 2016, so any tax change will have to be based upon certain assumptions of what the new budget will look like.

Commercial property owners should take this time to assemble the information necessary to evaluate their new tax assessment, including:

• Current rent roll;
• Profit and loss statement for the subject property;
• Vacancy rate for the past five years;
• Any appraisals that may have been done for bank financing;
• If the property was recently purchased, the contract, deed, closing statement, and listing agreement; and,
• Survey or building plans to confirm the size of the property.

While this is not an exhaustive list, it should be able to get you well on your way.

Stark & Stark’s Tax Appeal Group can assist you in analyzing your new tax assessment, negotiating with the revaluation company and, if necessary, filing a tax appeal. For more information on Hamilton Township’s revaluation or tax appeals in general, please contact Stark & Stark or visit www.NJLawBlog.com.

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The 1,000th Post: A Rare Published Affirmance on the Opinion Below

In re Adoption of Monroe Tp. Housing Element and Fair Share Plan, ___ N.J. Super. ___ (App. Div. 2015).  Many intermediate appellate courts frequently issue opinions that affirm on the basis of rulings by trial level judges.  New Jersey’s Appellate Division, despite being one of the busiest intermediate appellate courts in the United States, does […]

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The Importance of a Credit Score

Lawyers and litigants alike have long understood the importance of maintaining a good credit rating before, during, and after the divorce. As the parties, particularly one who has not had significant employment during the marriage know, a positive credit rating is critical to establish a new residence, purchase vehicles, and start a new, single life. Often however, the actions of one party can have the effect of damaging irreparably the credit rating of the other. This often happens in the context of one party failing to pay the mortgage on a former marital home or refinancing the mortgage to remove the other party as obligor. Recently, this issue was examined by the court in the case of LH v. DH.

In that case, the parties’ settlement agreement at the time of divorce provided that:

…it is the intent of the parties that the wife shall maintain and keep the marital home… Husband shall execute a quit claim deed transferring his interest in the former marital home to wife, and husband’s attorney shall hold the same in escrow pending wife’s refinance of the mortgage in her name. Wife will have nine months from the date of this agreement to obtain refinance of the mortgage in her name.

This is a very common provision which is found in many settlement agreements. In this case, however, the wife failed to refinance the mortgage removing the husband as an obligor. The husband did not take any action to enforce this obligation initially. However, a couple of years after the divorce, he went to purchase a new home of his own. When he applied for a mortgage, he discovered that his credit rating had been negatively impacted, and he was unable to obtain a favorable rate for a mortgage as a result of the fact that his name was still on the mortgage for the former marital home. He then made an application in court seeking enforcement of the settlement agreement and to appoint him as attorney-in-fact to sign any documents to list the home for sale and sell it.

The court agreed with the husband and granted his request. Importantly, however, the court’s decision took notice of the fact that “as a matter of indisputable knowledge, a positive credit rating and score is one of the most valuable and important assets a party may presently possess. Simply put, a strong credit report and score can enable one with relatively limited assets or income to make substantial purchase is which he or she could not otherwise afford…. Reciprocally, a negative credit rating and score can have a detrimental and sometimes disastrous effect on the party’s financial health, often crippling the party’s ability to obtain a loan, either at a favorable rate or at all, for significant purchases such as a house, car, school tuition, or other expensive items, will potentially and simultaneously limiting the individuals healthy financial growth for years.”

This acknowledgment by the court is very significant. As a practical matter, when an agreement provides time to a party refinance a mortgage or loan, it is important for the other party to regularly check his or her credit score. Additionally, when deadlines pass under the terms of an agreement, it may be critical to take appropriate action to enforce its provisions. While this can be sometimes emotionally difficult given the fact that former spouses and often children are living in the house, the repercussions can be devastating.

_____________________________________________________________________________________

Jennifer Weisberg Millner is a partner in Fox Rothschild LLP’s Family Law Practice Group. Jennifer is resident in the firm’s Princeton Office, although she practices throughout the state. Jennifer can be reached at 609-895-7612 or jmillner@foxrothschild.com.

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Humpty Dumpty and Joyce Kilmer, Together, Thanks to Judge Fisher

Freedman v. Sufrin, ___ N.J. Super. ___ (App. Div. 2015).  This opinion by Judge Fisher today involved the proper interpretation of a restrictive covenant that purported to restrict the removal of trees from plaintiffs’ property.  The covenant, one of several contained in a deed from defendants to a developer of the property who long preceded […]

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Shareholder Kevin M. Hart Published Article on NJ.com

Stark & Stark Shareholder Kevin M. Hart, member of the Litigation, Corporate Investigations & White Collar, Shareholder & Partner Disputes, and Insurance Coverage & Liability Groups, authored the article ‘Tis the Season for Employee Theft: Protecting Your Small Business from Within, which was published on NJ.com on November 9, 2015.

The article details the risks to small businesses that come with employee theft. Approximately $50 billion a year is lost courtesy of this theft, and it is a problem which affects all types of businesses. Theft most often occurs in the form of embezzling, which can include “false bank accounts, false bank records, false billing statements, false receivable records, and even false computer records.”

Depending on the total sum of stolen funds, the criminal case will most likely be brought to the county prosecutor’s office. Instead, Mr. Hart recommends, “A far more effective response is to retain either an attorney or accountant that specializes in this area,” to better protect yourself against this theft. “If you believe your company has been a victim of internal fraud or employee theft, you should seek legal counsel immediately.”

You can read the full article by clicking here.

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An Anniversary of a Key Prerogative Writs Opinion

Sixty-five years ago today, on November 20, 1950, the Supreme Court decided Fischer v. Bedminster Tp., 5 N.J. 534 (1950).  That opinion, written by Justice Heher, contains one of the earliest and best post-1947 Constitution expositions of the action in lieu of prerogative writs, which is a staple in municipal land use and other types […]

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Shareholders Timothy P. Duggan & Jeffrey M. Hall Hold Two Presentations

This past week, Timothy P. Duggan, Chair of Stark & Stark’s Bankruptcy & Creditors’ Rights, Tax Appeals, and Eminent Domain Groups, held two presentations for the Mercer County Bar Association and the New Jersey State Bar Association.

Mr. Duggan’s first presentation was collaborated with fellow Shareholder Jeffrey M. Hall, member of the Eminent Domain Group, called Public Utilities and Condemnation, which was done alongside the Mercer County Bar Association. This seminar, held on November 17, 2015, discussed how public utilities are regarded when condemnation becomes necessary. Additionally, Mr. Duggan and Mr. Hall shared their in-depth knowledge of state and federal law to provide tips and strategies for protecting property owners who have been confronted with pipeline projects, including the PennEast Pipeline.

Mr. Duggan’s second presentation, Taxing Issues for Condominium Associations and HOAs: Real Estate Tax Assessments of Common Elements and Real Estate Tax Liens, for the 2015 Community Association Law Summit and was on November 18, 2015. This was a seminar for CLE credits alongside the NJICLE, the branch of the New Jersey Bar Association which handles CLE accreditation. This presentation provided tactics and solutions for a variety of tax issues that are currently impacting condominium and homeowners’ associations.

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Bankruptcy Scammers

If you have recently filed or are in the process of filing a bankruptcy petition, be on the lookout for scammers.  As reported by the National Association of Consumer Bankruptcy Attorneys (NACBA), the scam is initiated by a phone call to the bankruptcy client with a request that money be sent to the “attorney” making the call.  Phone scammers are targeting bankruptcy filers in several states, using personal information from filings and posing as attorneys to get intended victims to immediately wire money to satisfy a debt. NACBA issued a warning that “Under no circumstances would a bankruptcy attorney or staff member telephone a client and ask for a wire transfer immediately to satisfy a debt nor would the bankruptcy attorney and staff ever threaten arrest if a debt isn’t paid.”  So far, the two states where this has occurred are New Hampshire and Virginia but consumers should be vigilant.  Simon Law Group has qualified bankruptcy attorneys to help you.

The “Voting Paradox”: Perverse and Fascinating

Hanover 3201 Realty, LLC v. Village Supermarkets, Inc., ___ F.3d ___ (3d Cir. 2015).  The number of different issues that judicial opinions present never ceases to amaze.  This appeal, which involved questions of antitrust standing and Noerr-Pennington immunity, presented what is known as the “voting paradox.”  Judges Fuentes, Ambro, and Greenberg were so divided on […]

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“Conscious Uncoupling”: An Ode to a Mediated Divorce

As a lover of all things Coldplay, I was sad to hear that lead singer Chris Martin and his wife of more than 10 years, Gwyneth Paltrow, were divorcing. Gwyneth Paltrow announced the separation on her website Goop.com and used the term “conscious uncoupling” to describe their approach to divorce.  Although the term that had been originally coined by marriage and family therapist, Katherine Woodward Thomas, as with anything else endorsed by celebrities, the phrase went viral after her post.  It was of particular interest to me personally given my chosen profession as a divorce lawyer.

As professionals, especially ones whose entire purpose is client-centric, we are always striving for better ways to do our jobs.  In my case, that means getting clients their desired result in the most effective and streamlined way possible. After practicing for several years now, experience has shown me time and time again, that people going through divorce are most satisfied with the process when they feel they have control over it (i.e., are “conscious[ly] uncoupling”) and can proceed with a form of alternative dispute resolution (such as mediation) rather than traditional, costly, protracted litigation.

Even as American culture has become more progressive and accepting, divorce is still somewhat considered taboo and is almost always surrounded with extreme negativity and hostility.  Even if the couple themselves wants to proceed amicably, they are unfortunately often allowing others in their life (parents, siblings, friends, new boyfriend or girlfriend) to control the dialogue and encourage them to dig their heels in.

Once people “dig in”, it is often impossible to “dig out”.  Protracted litigation only intensifies negativity and hostility. The idea that divorce has to be a negative experience then becomes a self-fulfilling prophecy, in which divorcing parties behavior, is influenced by their expectation that divorce must be awful.  I believe if you change the conversation surrounding divorce and allow yourself to “consciously uncouple” you will have much more satisfying experience surrounding your divorce.

I recently completed a 40-hour divorce mediation training program. This program has only solidified my beliefs that in many cases, a mediated divorce, is a better divorce. That is not to say that litigation is never necessary. There are some circumstances that cannot be mediated and some people that simply cannot effectively participate in mediation. That said though, divorce is multi-dimensional: it is legal, it is financial, and it is emotional. The great thing about mediation is that it can effectively address each of those dimensions.

(1) LEGALLY

Whether you litigate or mediate, you achieve the same end result: a legal divorce.  A mediated divorce however is often faster, less adversarial and provides more flexible and creative resolutions, narrowly tailored to your specific family dynamic.  It also allows for a more confidential process than airing out your dirty laundry in a series of public court filings and appearances.

(2) FINANCIALLY

I will never say “always” or “never” because I’ve come to learn that nothing is absolute.  A mediated divorce however, can certainly be more cost effective. Spending less to uncouple leaves more to be divided between the parties and therefore places both parties in a better position to maintain financial independence and stability post-divorce.

(3) EMOTIONALLY

Although emotions can run high during mediation, there is a much more focused approach on compromise and collaboration rather than “winning” as is seen in litigation. When people feel their spouse is negotiating in good faith and trying to be part of the solution, rather than part of the problem (i.e., zealously litigating over the smallest of disputes), they walk away feeling better about uncoupling, which leads to healthier relationships with themselves, their ex-spouse, and future romantic partners.

The takeaway from this is that choosing to uncouple, does not always have to be adversarial, financially draining and emotionally damaging. Take control of your divorce and find avenues in which to minimize the long-term effects.  Before deciding to wage war against your spouse, consult with an experienced and trained family law mediator to see how mediation can work for you.

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Lauren K. Beaver is a contributor to the New Jersey Family Law Blog and an attorney in Fox Rothschild LLP’s Family Law Practice Group. Lauren practices out of the firm’s Princeton, New Jersey office representing clients on issues relating to divorce, support, equitable distribution, custody, and parenting time.  Lauren also offers mediation services to those looking to procure a more amicable divorce. Lauren can be reached at (609) 844-3027 or lbeaver@foxrothschild.com.

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Beware the Divorce Litigant Who is Watering the Money Tree With The Tears From Cries of Poverty

Often, cases are given nicknames, sometimes by judges and law clerks, and sometimes by the attorneys.  Sometimes the nicknames come from who the people are – for instance, a case we had several years ago where both parties were models became the “model case” at the courthouse.  Sometimes, the names come from something that one or both parties did – a case where a spouse tried building a brick wall inside his house to divide the house before the divorce might have been the “brick wall case.” Right now, we have a case called “the money tree case.”

We call this case the money tree case because, despite the husband’s ever present cries of poverty, money keeps materializing from out of nowhere for lavish spending.  Turn over the entire paycheck for support – sure – yet he lives like a king with no apparent income.  $40,000 is needed for a particular expense, it is wired in a day without disclosing where it came from.  Oldest child needs a car – no used car for her, she gets a new Mercedes.  In opposing a motion for counsel fees, his lawyer laments that he hasn’t been paid in a year and as soon as the motion is decided, he gets paid in full from sources unknown.

While at the same time of crying the blues that there is no money, expensive new watches appear which was a “gift.”  One if not two residences are being paid for though who knows by whom. There are expensive vacations.  Showering the children with presents.  The home equity line gets paid off, from no known source.

Of course, there is no transparency or up front disclosure about anything up front.  It is only after he gets caught, is there a lame excuse of a “gift” or a “loan” – with no proofs as to anything.

I, myself, have mused to the judge that I would like to know where to get a money tree too, because literally money keeps appearing in this case from no known source.

What is the takeaway?  When a litigant is crying poverty, you can’t let it go at that, especially when the lifestyle and known expenditures exceed the known sources of income.  Discovery must be doggedly pursued and the total cash flow (notice I didn’t say income because who knows how this person will characterize this endless cash infusion) must be calculated as best as possible.  That is the only way that support can be fairly decided.  Moreover, this money tree may also indicate an undisclosed asset or assets that is being tapped now, but which should be divided in equitable distribution.  When crying poverty, the wiping of the tears with $100 bills  is always a red flag.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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Divorce Arbitration Update

Divorce arbitration is being used much more frequently by divorcing persons in lieu of protracted and fragmented court proceedings. As a certified family law arbitrator, I can vouch for the advantages to those who decide to arbitrate instead of litigate their cases. Recently, I posted an article concerning the “nuts and bolts” of divorce arbitration. This follow-up article is intended to provide a brief update based on a significant addition to the New Jersey Rules of Court, which now specifically reference the availability of divorce arbitration.

Under the new Rules, effective September 2015, divorce cases can be sent to arbitration and thereby removed from the court’s schedule for up to twelve months. Such “official” recognition of divorce arbitration is a testament to the reality of overburdened judges, clogged court calendars and piecemeal trial days. As a result, there is no doubt that an increasing number of divorce cases will be arbitrated moving forward.

If you are considering divorce arbitration, the first step is to discuss it with a family law attorney who can recommend an arbitrator who has been certified by the American Academy of Matrimonial Lawyers and is a member of the New Jersey Divorce Arbitrators Association.

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