Modification of Road Access: Do Not Sit on Your Rights!

Modification of highway access is one of the most problematic and confusing areas of the law. As a general rule, the government’s use of its “police power” enables it to regulate the state highway system. In New Jersey, the government also has the benefit of the Highway Access Management Act.

In adopting the Highway Access Management Act, the New Jersey Legislature declared: (1) “[t]he State has a public trust responsibility to manage and maintain effectively each highway within the State highway system to preserve its functional integrity and public purpose for the present and future generations” (N.J.S.A. 27:7-90c), and (2) “[t]he access rights of an owner of property abutting a State highway must be held subordinate to the public’s right and interest in a safe and efficient highway.” (N.J.S.A. 27:7-90g).

Often, the government will use these powers to change access to a property and refuse to pay just compensation or damages to the owner. If the change in access is severe but does not rise to the level of an actual taking, the property owner may be left with no recourse. This article provides a brief overview of the process for the modification of highway access.

By way of background, the government can adjust, modify or revoke access. As defined by the Highway Access Management Code:

“Adjustment of access” means changes to an access point, in conjunction with the implementation of a highway improvement project, which result in changing the width of an access point by five feet (1.5 meters) or less, changing the location of an access point by 10 feet (three meters) or less, moving an access point away from the centerline of the highway, or changing the elevation or profile of an access point.

“Modification of access” means changes to access in conjunction with the implementation of a highway improvement project, which results in changing the number of access points, changing the width of an access point by more than five feet (1.5 meters), or changing the location of an access point by more than 10 feet (three meters).”

“Revocation” means termination of an access permit by the Commissioner after a determination that alternative access is completed and available for use.

If the government adjusts access, no notice of the decision to adjust access is provided to the owner, only notice of the construction (unless the government is also acquiring a right-of-way). However, the government cannot modify or revoke access without first providing the property owner with: (1) written notice of the decision to modify or revoke access, (2) a copy of the new access plan showing to changes to access, and (3) an opportunity to have a hearing.

Assume you own property fronting on a highway and the NJDOT wants to modify your access by moving it 30 feet (which is still on your property) and construct a sidewalk. Assume further that the government sends you a copy of the plan showing the change in access, accompanied by a written notice of the change. If you do not like the change in access, what should you do if you want to object?

First, file a timely notice of appeal and object to the change in access. The most important deadlines are:

• A property owner has 30 days from receipt of the initial notice to reject the plan and file an appeal with the New Jersey Department of Transportation. The appeal must be in writing.
• After receiving the written appeal, the Manager of the Bureau of Major Access Permits schedules an informal meeting with the property owner to resolve any differences. A property owner is given an opportunity to present further information regarding access at the meeting.
• Within 30 days of the meeting, the Manager of the Bureau of Major Access Permits issues a decision in writing.
• If a property owner does not agree with the decision, the property owner has 30 days to submit an appeal to the Director, Division of Design Services.
• The Director, Division of Design Services, schedules an informal hearing within 10 days of receipt of the appeal. Within 30 days of the hearing, the Director, Division of Design Services, renders the final agency decision, with reasons.
• A property owner can file an appeal of the final decision to the Appellate Division of the Superior Court of New Jersey within 45 days of the final decision.

It is important to file a timely appeal from the initial notice from NJDOT in order to present your objections to the Department of Transportation. Failure to file the initial appeal within 30 days of receiving notice of the proposed modification is generally deemed a waiver of your right to appeal and object to the modification.

It is also very important to be prepared for the meeting with the NJDOT. Often, it is prudent to have a traffic engineer review the access plan and advise the property owner of how the access modification will impact traffic to and from the property, and any potential onsite circulation problems caused by the modification of access.

Finally, it is important to know the difference between damages caused by the modification to access and damages caused by a small taking (ie. slight road widening or installation of sidewalk). Some damages are compensable; others are not. Due to the important differences between modification to access and takings, it is advisable to seek component legal counsel to assist you in your analysis of the government’s action.

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Withdrawing a Published Opinion

State v. Jones, ___ N.J. Super. ___ (App. Div. 2017).  In the “old days,” when judicial opinions appeared only in books, there was a procedure for withdrawing an Appellate Division opinion that had been approved for publication.  At that time, paper volumes of opinions approved for publication were released every week.  When there were enough […]

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Let’s (Not) Make a Deal

While we do not typically blog on cases outside of the family court, a recent law division case examined the child support lien statute, N.J.S.A. 2A:56.23b and its impact on settling a personal injury case and on settlements in general.  The statute requires that a child support judgment search be performed to determine if a plaintiff in a given lawsuit has an outstanding child support obligation.  If he or she does, then the statute requires that any “net proceeds of a settlement” (i.e. the proceeds left after the payment of attorney’s fees, witnesses’ fees, court costs, and other related costs associated with the lawsuit are deducted from the settlement award) in excess of $2,000 be paid in either full or partial satisfaction of the outstanding child support arrears.  For example, let’s say $10,000 was owed in child support arrears, and a given plaintiff’s litigation costs totaled $10,000.  If the plaintiff took a $20,000 settlement, then $10,000 would go to pay his litigation costs, $8,000 would go to pay off the child support arrears, and the plaintiff would get to keep $2,000 (but would still have $2,000 in child support arrears).

In Smiley v. Thomas, et. al. , the plaintiff sued the defendants for personal injury as a result of a car accident.  He had also entered into a contingent fee agreement with his counsel, meaning that they agreed to take a fixed percentage of whatever the plaintiff was awarded in settlement or after a trial as their fee, rather than charging the plaintiff at their hourly rates.

Eventually, the defendants made a settlement offer of $25,000.  The only problem was, after the child support judgment search was conducted pursuant to the statute, it was discovered that the plaintiff had outstanding child support arrears in the amount of $19,306.04.  After satisfaction of the arrears and payment to his attorneys, the plaintiff would be left with $2,000; in fact, because his counsel fees and litigation costs exceeded the difference between the child support owed and the settlement amount, he would also be left with some unpaid child support arrears because he would have to pay counsel first.  The plaintiff refused to accept the settlement if, at the end of the day, it meant that he would only walk away with $2,000.

But, evidently, the plaintiff’s attorney really wanted him to settle his case.  So badly, in fact, that the attorney was willing to reduce his fee.  So, the attorney asked the Court to modify the fee agreement accordingly; but, and here’s the rub, the attorney also asked the Court to call the money that the plaintiff would realize as a result of this reduction something other than “net settlement proceeds” so that they would not be subject to the child support lien by operation of law.

The Court weighed two important competing interests.  On the one hand, Courts love settlements!  Settlements make both parties feel happy (or equally unhappy) with the outcome and therefore (hopefully) curb future or continued litigation.  On the other hand, our case law is replete with decisions affirming over and over again a parent’s obligation to financially support his or her children and there is plenty of case law carving out exceptions, identifying specific needs of the children that should be included in support, and generally providing guidance as to arrival at an appropriate child support arrangement (seriously, there are a lot of these decisions and we’ve blogged on them here, here, here, here, here, and many more times).

Ultimately, the Court determined that a parent’s obligation to financially support his or her children trumps the competing interest in promoting settlement.  The Court found that it had the obligation to call a spade a spade.  It did not, and found that it could not, call the money that the plaintiff would receive as a result of the reduced counsel fee award something other than “net proceeds from settlement” in order to help the plaintiff evade his child support obligation.  To do so would be in direct contravention of the very purpose of the child support judgment lien statute.

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Jessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

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Financial Institution’s Non-Compliance With Internal Policy Does Not Create a Duty to Non-Customers

Wolens v. Morgan Stanley Smith Barney, LLC, ___ N.J. Super. ___ (App. Div. 2017).  In the opening paragraph of his opinion for the Appellate Division today, Judge Sabatino encapsulated virtually this entire case: “Plaintiff Kathleen Wolens appeals the trial court’s October 9, 2015 order granting summary judgment and dismissing her complaint against her deceased mother’s […]

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Legislation to Expand Lending for NJ Vineyards and Wineries

Legislation geared towards establishing a loan program for vineyard and winery capital expenses was released by the Assembly Commerce and Economic Development last month. The bill (A-4274) would direct the New Jersey Economic Development Authority (“EDA”), in consultation with the Department of Agriculture (“Department”), to create a loan program and application process for the purpose of supplying loans to certain eligible vineyards or wineries to pay for qualified capital expenses.

Vineyard is defined in the bill to mean agricultural lands in the State of New Jersey “consisting of at least 1 contiguous acre dedicated to the growing of grapes or other fruit that are used or are intended to be used in the production of wine by a winery as well as any other plants or other improvements located thereon.”

Winery is defined as a “commercial farm where the owner or operator of the commercial farm has been issued and is operating in compliance with a plenary winery license or farm winery license.”

Qualified capital expense is defined as “all expenditures made by an eligible vineyard or winery for land acquisition or improvement, infrastructure acquisition or modernization, and the purchase or modernization of machinery and equipment…”

Under the bill, if an applicant applies and qualifies for the loan, the loan amount must be between $10,000 and $100,000, plus interest, which may be repaid in a term up to ten years. If the borrower plans to use funds from the loan to acquire more property in order to expand its business it may be eligible for higher loan amounts with lower interest rates set by the EDA and Department. The bill will now go to the Assembly Speaker for further consideration.

The bill represents a step in the right direction for vineyards, wineries, and alcohol beverage manufacturers in general since one of the greatest challenges for small business manufacturers is obtaining startup financing for their venture. Hopefully the legislature enacts the law and eventually expands the reach of the program to allow eligibility for New Jersey craft breweries and distilleries.

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Offers of Judgment and High-Low Agreements

Serico v. Rothberg, ___ N.J. Super. ___ (App. Div. 2017).  In this medical malpractice case, plaintiff and defendant entered into a “high-low” agreement while awaiting a jury verdict.  As Judge Rothstadt noted in his opinion in this case today, such an agreement “guarantees a plaintiff a minimum recovery and limits a defendant’s exposure to an […]

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Whether a Child is Emancipated Requires Full Legal Analysis, and Findings and Conclusions

Ricci v. Ricci, ___ N.J. Super. ___ (App. Div. 2017).  As Judge Lihotz observed in the opening sentence of her opinion for the Appellate Division in this case, Newburgh v. Arrigo, 88 N.J. 529 (1982), established the principle that “the privilege of parenthood carries with it the duty to assure a necessary education for children.”  […]

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The “Time of Application Rule” and the Definition of an “Application for Development” That Triggers That Rule

Dunbar Homes, Inc. v. Franklin Tp. Bd. of Adj., ___ N.J.  Super. ___ (App. Div. 2017).  The Municipal Land Use Law (“MLUL”), in N.J.S.A. 40:55D-10.5, contains a “time of application rule” that determines what ordinance governs a land use development application.  Under that provision, regulations that are in effect “on the date of submission of […]

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Supreme Court Will Review a Defamation Case, a Vehicle Search Case, and a Warrantless Entry Case

The Supreme Court announced today the addition to three more cases to its docket.  The first of those appeals comes from a published opinion of the Appellate Division.  Petro-Lubricant Testing Laboratories, Inc. v. Adelman, 447 N.J. Super. 391 (App. Div. 2016), discussed here.  The question presented, as phrased by the Supreme Court Clerk’s Office, is […]

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When You Sue Your Parents to Pay for College, You May Be Emancipated

In a new published (precedential) decision, Ricci v. Ricci, the Appellate Division addressed an adult child’s (an oxymoron, I know) request for her divorced parents to contribute to her college education expenses. Going  back to basics, the Appellate Division reminded us that – before any determination about a divorced parent’s obligation to contribute to college education expenses can be made – a threshold question must be answered, namely: Is the child emancipated?

The Facts

The pertinent facts are as follows:

• Maura and Michael Ricci divorced when their daughter, Caitlyn, was four (4) years old.  As Caitlyn grew older, she engaged in some less-than-responsible behavior.  This is not in dispute.  Caitlyn graduated from high school in June 2012, at which time it was determined by Caitlyn’s parents that – due to said irresponsible behavior – Caitlyn wasn’t ready to go away to college and live on her own.  Therefore, Maura and Michael agreed that Michael would pay for the summer and fall semesters of community college; Caitlyn attended as a part-time student while continuing to live with her mother.
• In Winter 2012, Maura and Michael agreed, as a way of testing the waters as to Caitlyn’s readiness to live on her own, that Caitlyn would  participate in the Disney College Program in Florida.  Within a month of starting the program, Caitlyn was expelled for underage alcohol use.
• This is where the facts get a bit murky.  Maura and Michael say that, after Caitlyn’s expulsion from the Disney College Program, they wanted her to return to community college on a part time basis to complete her associate’s degree and outlined for Caitlyn a program of school, counseling, and work (i.e. a part time job) in order to instill discipline and a sense of responsibility in her.  Caitlyn viewed these expectations as unreasonable and impossible.  What is undisputed is that at this point, Caitlyn moved out of her mother’s home and in with her grandparents.  In Michael and Maura’s views, this move was intended as a rejection of their parenting and their attempts to help Caitlyn.  In Caitlyn’s view, her parents’ unrealistic demands “pushed her beyond the sphere of parental influence.”
• In March 2013, after Caitlyn moved out, her parents agreed that Caitlyn was emancipated.  They entered into a consent order accordingly.
• Months later, Caitlyn, still enrolled in community college, filed a motion to intervene in her parents’ divorce matter and sought continued support from her parents; specifically, their contribution to her community college tuition.  In October 2013, the trial court judge granted her application.  Importantly, the judge deemed Caitlyn “un-emancipated [sic] solely for the purpose of a potential contribution from [her parents] as it relates to college costs.”  He ordered that Maura and Mike pay for Caitlyn’s tuition, fees, and costs for the 2013-2014 school year, after application of Caitlyn’s financial aid award.  This amounted to about $2,000, or what the trial judge viewed as a “de minimis” amount.  The judge did not conduct a plenary hearing prior to making its decision that Caitlyn be deemed “un-emancipated” for this specific purpose.  Nor did he conduct a review of the parents’ finances to determine their abilities to pay for Caitlyn’s college expenses.
• Caitlyn was accepted to Temple University for the Fall 2014 semester.  She applied for financial aid and received it, but had about $18,000 / year in un-met tuition expenses, which she wanted her parents to pay.  Caitlyn filed a motion seeking to enforce the Court’s prior order, arguing that it required her parents to pay her tuition, fees, and book expenses.  Maura and Michael opposed the application, arguing that the October 2013 Order was limited to tuition, fees, and books for the 2013-2014 year and that the Order did not determine their obligations, if any, for college contribution in subsequent years.  In October 2014, the Court granted Caitlyn’s application and “enforced” the prior Order, ordering Maura to cover 40% of the unmet college costs, and Michael to cover the balance.
• Michael and Maura filed a motion for reconsideration.  They argued that the order was unfounded because Caitlyn had unilaterally moved out of Maura’s home after refusing to even compromise about the plan they had laid out for her to impose discipline; transferred to an expensive out-of-state school without conferring with them; refused to communicate with her parents; and continued to act independently, without regard to their parental input.  In short, they argued, she was emancipated and their obligation to support her ended with her rejection of their parenting.  The Court denied their motion and Mike and Maura appealed from all three (3) trial court orders.

The Legal Framework

Whew, that was a lot of facts!  Now let’s get to the law.  In her opinion, Judge Lihotz walked us through the legal framework to which the Court should adhere in these cases.  First, the Court needs to answer the threshold question of whether the child at issue is emancipated.  Lots more on that below.

Next, if the child is not emancipated, the court must consider whether the child has the aptitude for college.  The seminal Newburgh case does not require deferred emancipation for children reaching the age of majority in every single instance; if a child is unable to perform adequately for his or her academic program, then it may be appropriate to find that the child is emancipated.

Finally, if a child has the aptitude for college, a review of the parents’ finances and determination of their abilities to pay and to afford college must be undertaken so that the Court can determine what a parent may reasonably contribute to a child’s college education expenses.

Highlighting the Threshold Question of Emancipation

In reviewing the trial court decisions below, Judge Lihotz essentially found that the trial judges had put the proverbial cart before the horse by failing to address the threshold question of whether Caitlyn was emancipated or not.

Simply put, the parent-child relationship imbues parents with certain “rights, privileges, duties, and obligations.”  One such duty  is to provide financial support, a form of which is contribution to a child’s college education expenses.    The Court, in exercising its power to protect children, has authority to impose support obligations, but this power is limited and terminates upon a child’s emancipation.

So when is a child emancipated?  Well, Judge Lihotz wrote, this depends upon the nature of the parent-child relationship as much, if not more so, than the age of the child:

The dependent parent-child relationship indicative of unemancipation is not merely shown by a child’s claimed need for financial support.  Our jurisprudence unmistakably mandates there must be examination of the parent-child relationship itself.  In fact, a better description is the relationship is one of interdependence: the child’s right to support and the parents’ obligation to provide payment are inextricably linked to the child’s acceptance and the parents’ measured exercise of guidance and influence.  Conversely, a finding of emancipation is a recognition of a child’s independence from a parental influence. (internal citations omitted).

In this case, Judge Lihotz observed, the two sides of the story could lead to different results.  Caitlyn’s version of the facts was, essentially, that she couldn’t possibly have accepted her parents’ guidance and influence because they were imposing unreasonable, unbearable restrictions and demands upon her; they had forced her outside of their sphere of influence involuntarily, and why should she be penalized for that?  Maura and Michael’s version of the facts, on the other hand, was that they were parenting Caitlyn; she needed their strict guidance due to her wild and irresponsible behavior, but she had outright rejected it and chosen to live independently of them and their influence.  Given the diametrically opposed accounts of what had happened, Judge Lihotz observed, a plenary hearing and a fact-finding should have taken place in order to make a determination as to whether Caitlyn’s version of events rang true such that she should be deemed unemancipated, or whether it was appropriate for her to remain emancipated because her parents’ version of the story was more accurate.

One thing seems to be certain: it was improper for the judge to deem Caitlyn un-emancipated for the limited purpose of assessing college expenses to her parents.  As Heidi Klum might say, you’re either “in” or you’re “out.”

Either you are emancipated and not entitled to support from your parents – including payment for college expenses – or you’re not emancipated, and you are entitled to support.

Let’s Try This Again…

Ultimately, Judge Lihotz ordered a remand (legalese for a “do-over”) to the trial court.  First, the trial judge must hold a plenary hearing to determine whether Caitlyn was emancipated after all.  The judge will have to review the record and make an assessment as to whether Caitlyn voluntarily set out on her own path and rejected her parents’ guidance and influence.  If not, and she was not emancipated, then the Court will have to address the secondary questions of whether Caitlyn had the aptitude for her academic program (which, now that Caitlyn is 23 and may or may not have graduated from college by now, should be self-evident), and will have to review the parties’ finances to determine their fair shares of financial responsibility.  But it all boils down to that first question:  was Caitlyn emancipated when she made her initial application?

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Jessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

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Gander Mountain Shooting for Chapter 11 Bankruptcy

Reuters reports Gander Mountain, the St. Paul based hunting and fishing chain, is preparing to file for bankruptcy. The bankruptcy is reportedly due to aggressive expansion that failed to draw new customers. Gander Mountain is known as America’s firearms superstore.

Gander has faced stiff competition from Bass Pro Shops, Cabela’s, and Dick’s Sporting Goods.

Currently, Gander Mountain has about 160 stores, with about 60 new stores opened or announced since 2012. According to Reuters, the company has a $30 million loan and revolving credit lines for $25 million and $500 million.

If Gander Mountain files, it will be the fifth outdoor retailer to file for bankruptcy in the last year. Others include Sports Chalet, Sports Authority, EMS, and Eastern Outfitters.

Stark & Stark’s Bankruptcy & Creditor’s Rights Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the District of New Jersey, Southern District of New York, District of Delaware and Eastern District of Pennsylvania on a variety of issues. Most recently, our Group has represented landlords and trade creditors in the EMS, Golfsmith, RadioShack, A&P, Joyce Leslie and Sports Authority Chapter 11 bankruptcy cases.

For more information feel free to contact the author of this blog.

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Eminent Domain and Condemnation Frequently Asked Questions

What is eminent domain and who uses it?

Eminent Domain is the power of the government to take private property and convert it into public use. Government agencies that use eminent domain include state government agencies like the Transportation department and local agencies tied to the municipalities. “The Fifth Amendment provides that the government may only exercise this power if they provide just compensation to the property owners.” This means if the government wants your land for public use it must buy it from you at fair market rates. Usually it tries to buy your property before going through the condemnation process.

What does “public use” mean? Can eminent domain be used to give my property to a private for-profit company?

Eminent domain was traditionally used to construct new roads, public buildings, parks, and water/sewer fixtures to improve community services to the general public, i.e., “public use.” As cities matured, the public use definition was broadened to allow cities to rectify “blight” through redevelopment of decaying neighborhoods and revitalization projects for commercial areas. In some states, public use also includes condemnation for “economic development.” This use is the most controversial because it generally involves the transfer of land to private interests. As part of redevelopment plans, Government agencies can use the power of eminent domain to take private property and turn around and transfer the property to a private company. Also, certain private companies have been granted the right to acquire property by eminent domain, including railroads, energy companies and natural resource companies.

How does the eminent domain process work?

The government process for using the power of eminent domain varies from state to state. In general it follows a set of steps similar to these:

1. The government determines there is a need to use eminent domain for a public use purpose, and obtains the necessary approvals from the governing body (usually by the adoption of a resolution or ordinance).
2. The government negotiates with the property owner to buy the property.
3. If an agreement can’t be reached with the owner and the property is necessary for the public use project, then the government exercises its power of eminent domain to condemn the property.
4. If the compensation amount is still in dispute it may go to a panel of condemnation commissioners or court or both.

Can I stop the government from taking my property?

The eminent domain process can only be stopped in a limited number of ways:

1. Public use. The government must support its claim that the “taking” is for a valid public purpose.
2. The government must also support its claim that the taking of your property is a necessity. If it is taking too much land, it will fail the necessity test—those parcels may then be removed from the condemnation. This also applies to blighted property. If you can prove that your property does not meet a test for blight, you may also be relieved of condemnation.
3. The government must strictly follow all of the statutory requirements, including negotiating in good faith, accurately describing what property is being taken, and adhering to other procedural protections designed to protect property owners.

Inability to agree on compensation will not change the eminent domain rulings. Your property will still be condemned and you will be compensated at the fair market value determined by the courts or condemnation commissions.

Will I be penalized if I choose not to negotiate and force the government to go to court?

No. As a property owner you have the right to question the government’s purpose and force condemnation.

What if they take the part of the land I needed or wanted most and it ruins my remaining property?

Compensation in partial or full takings can be awarded for certain inconveniences and in certain circumstances. For example, compensation may be suitable if: 1) access is completely blocked or unreasonably limited; 2) use of your property is less efficient then before the taking, e.g., on a farm; and possibly for 3) loss of visibility or view but only in the case of a taking. You are unlikely to get compensated just because an adjacent property or public use building blocks your view.

Do I need a lawyer? Can’t I just negotiate with the government on my own?

You can negotiate on your own, but, depending on your knowledge of eminent domain, you might be better off having an attorney—and getting that attorney at the beginning this complicated process. The government is just a buyer in a real estate transaction–it is trying to get the most value at the lowest price and it has all of the power in the negotiation. Anything you say or information you reveal at the beginning of the process may be used to decrease the value of your property at the end. If you are not aware of all of the compensation options and all of your rights, you could miss out on getting the most money for the property you never intended to sell, or even preventing the condemnation. The government is not obligated to look out for the property owner’s best interest; it only has to make sure you are “fairly” compensated. Keep in mind that fair compensation could be at the bottom of market rates. A lawyer that is experienced in eminent domain can help you get the best price and ensure you are compensated to the full extent of the law and your rights.

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Two Issues Under the Open Public Meetings Act

Kean Federation of Teachers v. Morell, ___ N.J. Super. ___ (App. Div. 2017).  As a public body, Kean University’s Board of Trustees is subject to the Open Public Meetings Act, N.J.S.A. 10:4-6 to,-21 (“OPMA”).  This decision by Judge Fuentes addressed two issues under the OPMA.  The first was what is meant by the statute’s requirement, […]

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The Defend Trade Secrets Act (DTSA)

A company that invents original technologies, unique compositions, or special development processes (“IP”) knows intuitively that it must protect those interests to stay ahead of the competition. However, knowing how to protect that IP is not quite so instinctual.

In the recent past, a company would weigh the benefit of 1) filing a public patent with 20 year exclusivity and strong infringement remedies; or 2) choosing to keep the IP “secret” despite limitations on court actions and remedies. A balancing advantage for “trade secret” over patent is the indefinite period of protection. If the business keeps it well-hidden, it has a sort of quasi-monopoly over the “product.”

Unlike with patents, however, trade secret misappropriation rights have historically been limited. For example, if a suspected bad actor reverse-engineered a product protected by patent, it would be ruled an infringement with harsh penalties. For a trade secret however, accidental discovery or reverse-engineering are not protected rights. Both are valid defenses to a misappropriation claim.

In addition, there has been little consistency in state court for trade secret actions under the historic 1979 Uniform Trade Secret Act (UTSA). There are alternate definitions, a variety of misappropriation tests, shifting burdens of proof, and limitations on remedies that make it difficult to predict the outcome to legal action. Furthermore, in the recent past, the only option for federal court was dependent on diversity jurisdiction.

Some of these challenges were relieved in May of this year when President Obama signed the Defend Trade Secrets Act (DTSA). The new law enables trade secret IP owners to bring a civil cause of action in federal court for misappropriation acts. One of the most powerful business advantages under the new law is the ability to get a preliminary “civil seizure” of misappropriated products prior to a ruling in the case. There is a strict set of facts that must be proven to secure an order including, among other things, that the harm to the applicant outweighs the harm to the defendant and third parties; and that the seizure request has not been publicized. The DTSA also provides for additional remedies including injunction (sans certain non-compete restrictions on former employees); imposition of royalty payments; monetary damages; and attorney fees for bad faith actions.

Without losing sight of the reverse engineering loophole, the DTSA enhanced protection has strengthened arguments in favor of choosing a “trade secret” strategy over patent registration in certain cases. Moreover, the DTSA’s broad definition of “trade secrets” may expand IP monetization opportunities. Depending on interpretation of that definition companies may be able to protect previously unprovided-for and/or borderline unpatentable formulas, technologies, and developing processes that can be capitalized on for licensing and partnership opportunities.

Dealing with issues involving patents or trade secrets can be very complex. It is suggested that you consult with experienced legal council to assist with the process.

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Possible Chapter 22 for EMS Brand – Sports Direct Eying EMS After Poor Holiday Sales

Reuters reports that Sports Direct International Plc, Britain’s largest sporting goods company with about 700 stores throughout Europe, is discussing a bid for Eastern Outfitters LLC (“Eastern Outfitters”), the parent of Bob’s Stores and Eastern Mountain Sports (“EMS”).

Versa Capital Management LLC (“Versa”) is the owner of Eastern Outfitters. Last April, Vestis Retail Group LLC, the former holding company for Bob’s, EMS, and Sports Chalet, filed for Chapter 11 bankruptcy protection. Versa acquired Bob’s and EMS through the bankruptcy.

However, after lower than expected holiday sales and problems with financing, many landlords of the almost 90 operating EMS and Bob’s stores report that January and February rents remain unpaid. EMS and Bob’s Stores, along with Golfsmith and Sports Authority, were among the major sporting goods retailers that filed for bankruptcy protection in 2016.

According to Reuters, industry insiders speculate that Eastern Outfitters is preparing for a Chapter 11 bankruptcy filing this month and that Sports Direct, if there is a bankruptcy filing, would be the stalking horse bidder for the company.

Landlord’s Prepare – Call Defaults / Document Termination / Check Operations

The Bankruptcy Code allows a debtor 120 days to assume or reject a lease if the agreement has not expired or terminated prior to the bankruptcy filing. As such, ensure that your tenants are current with rent. If not, default them now.

Be advised that if your client terminates an agreement prior to bankruptcy it is possible for a debtor to argue that the value of the lease is an avoidable transfer under Bankruptcy Code sections 547(b) and 548(a)(1). These Code Sections permit the filing of a complaint to recoup the value lost to the Debtor.

In a recent case, In re Great Lakes Quick Lube, LLP, 816 F. 3d 482 (7^th Cir. 2016), the Seventh Circuit reversed and remanded the case to the Bankruptcy Court to determine the value of transferred leases. The case concerned an action by the creditors’ committee to find two (2) profitable leases that were terminated pre-bankruptcy with three (3) unprofitable leases could proceed as an avoidance action – meaning the creditor could have to give money back to the Debtor for the value of the two (2) profitable leases.

In the interim, when a lease or other agreement is terminated by consent, whether unilaterally by landlord or by Court order, it is advisable that your client document any lack of value. This includes a review of liability for non-payment, covenant defaults, and/or other requirements. Incorporating this reasoning into any agreement, order, or correspondence can provide a coherent defense if an avoidance claim is filed a year or two after the bankruptcy case commences.

In addition to staying current with rent and documenting any terminations, ensure that your operations personnel are apprised of the physical location. For instance, when was the last time your property manager spoke with the store manager to obtain important security codes, HVAC, and utility information? When was the last time a walk-thru was conducted? Having that information on hand can help avoid real world property issues, like freezing or burst pipes, if a debtor up and leaves or fails to maintain the premises. You don’t want to be scrambling for that information after the fact.

An Ounce of Prevention…

As the Boy Scout motto says, “Be Prepared.” Speak with bankruptcy counsel now, to formulate and execute a plan. Taking a proactive approach can help limit exposure, keep you current, and ensure that you are protected during the next bankruptcy.

Stark & Stark’s Bankruptcy & Creditor’s Rights Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the District of New Jersey, Southern District of New York, District of Delaware and Eastern District of Pennsylvania on a variety of issues. Most recently, our Group has represented landlords and trade creditors in the EMS, Golfsmith, RadioShack, A&P, Joyce Leslie and Sports Authority Chapter 11 bankruptcy cases.

For more information feel free to contact the author of this blog.

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Supreme Court of New Jersey Addresses Equitable Claims and Remedies (while reinforcing a potential palimony loophole through the proverbial “black hole”)

What rights do people have to an equitable distribution of assets stemming from a period prior to the marriage itself?  If there is no right to equitable distribution under those circumstances, then what rights exist and what remedies can be implemented to protect those rights?  In Thieme v. Aucoin-Thieme, a post-Judgment dispute involving several interesting issues including the equitable distribution of marital assets, distribution of assets pursuant to equitable principles stemming from a pre-marital cohabitation period, and the remedy of a constructive trust in connection with an ex-husband’s receipt of a bonus, the Supreme Court of New Jersey primarily held that:

1. said bonus received by the ex-husband (Michael) was subject to equitable distribution to the extent it was earned during the parties’ marriage; and
2. the matter’s “extraordinary circumstances” merited imposition of a constructive trust to protect the ex-wife’s (Bernice) claim of unjust enrichment and request for a portion of the bonus earned during the parties’ pre-marital cohabitation period.

Before even getting into the details of what happened, what is, perhaps, most interesting about this matter is not the very specific facts and circumstances at issue and how such circumstances led to an understandably fair result but, rather, how this case addresses the sort of equitable claims that may arise in connection with a palimony claim that were kept alive in Maeker v. Ross.  While the 2010 amendment to the statute of frauds requires that all post-amendment palimony agreements be in writing, this case also provides a window to argue around the amendment in certain cases if no writing exists – in other words, even without a written palimony agreement for a post-amendment case, the equitable arguments discussed in Maeker can still be made to procure relief.  The case certainly is not limited to that sort of analysis, and, in because of the unique circumstances at issue it even seems to overcome prior case law suggesting that the rights of cohabitants come to an end once the marriage occurs.  With that being said, let’s take a look into what happened…

Here are the unique facts you should know:

• Michael and Bernice cohabited for eight years and were then married for a brief time.
• During the cohabitation period and marriage, Michael was an employee of a company called IBG.  He had no ownership interest in IBG, but the company’s principals made a written commitment to Michael that IBG would compensate him for his contributions to the company if it sold.  A written Statement of Understanding was executed, and Bernice’s knowledge as to same was the subject of dispute at the subject post-Judgment trial.
• Based on that commitment, Michael and Bernice “made personal and financial decisions” with the expectation of such future compensation including, but not limited to, Michael working and traveling extensively for the company, Bernice foregoing employment to devote her time to the parties’ child, and the parties purchasing a new home.
• The parties divorced and the resulting settlement agreement distributed their assets.
• During the divorce negotiations, the parties discussed Michael’s potential receipt of deferred compensation or some form of ownership stake in the company, with Michael representing that it “may never happen,” and that he did not anticipate a “big cash payment.”  He further indicated to Bernice that they could revisit the issue in the future should something transpire with the company.
• Three months after the divorce concluded, IBG was sold and paid Michael $2.25 million (described as a “closing bonus”) for his contributions to the company.  The bonus was paid in accordance with the earlier Statement of Understanding and was paid “to show our appreciation for [Michael’s] contributions in helping [IBG] grow into the successful organization that it is today.”  During a deposition, a company representative testified that the bonus was based on Michael’s contribution to the company over thirteen years and that Michael did not know about the sale before its completion.
• Bernice first learned of the bonus payment when Michael deposited the money into a bank account that, unknown to Michael, remained a joint account despite the divorce.  Bernice, without notice to Michael, withdrew the funds from the account.
• Bernice then filed an application for a share of the closing bonus.
• The trial held that Bernice was entitled to distribution of the bonus, but only that portion stemming from Michael’s work during the marriage.  The Appellate Division affirmed the trial court.

In affirming in part and reversing in part, the Supreme Court, in a decision authored by Justice Anne Patterson, held as follows:

• It would contravene New Jersey’s equitable distribution statute to find that the portion of the bonus earned prior to the marriage was a marital asset subject to distribution.  As a result, the Court held that the trial court properly allocated the pre-marital and marital periods in determining what portion of the bonus was subject to equitable distribution.  While arguments can be made that this component of the trial court’s decision should not have been upheld based on how the marital portion of the bonus was calculated, that is not the primary focus of the case or this blog post.
• As Justice Patterson noted, however, the story was not over.  As for that portion of the bonus earned during the parties’ cohabitation period, the Court addressed whether Bernice had made a claim of unjust enrichment.  Addressing a claim for unjust enrichment and its related remedies, the Court provided:

To prove a claim for unjust enrichment, a party must demonstrate that the opposing party ‘received a benefit and that retention of that benefit without payment would be unjust.’

• Bernice would also have to show that she “expected remuneration” from Michael at the time she “performed or conferred a benefit” on Michael and that “the failure remuneration” enriched Michael “beyond [his] contractual rights”.
• In the event of unjust enrichment, a court may impose the remedy of a constructive trust to prevent such enrichment.  Legally speaking, a constructive trust is “the formula through which the conscience of equity finds expression.  When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.”  More generally, such a trust is a remedy designed to protect a party harmed by another party’s receipt or retention of property procured through unjust enrichment or some other wrongful means (fraud, mistake, undue influence, and the like).
• Relying on its prior decision in Carr v. Carr, wherein the trial court equitably imposed a constructive trust awarding a wife a share of the marital assets controlled by the husband’s estate where the husband died during the divorce proceedings, the Court here held:

As the evidence presented at trial made clear, the prospect that [Michael] would be generously compensated was a significant factor in the parties’ personal and financial planning from the early stages of their relationship.  [Michael] and [Bernice] each relied on the expectation of deferred compensation if IBG were sold as they made important decisions for themselves and their family.

The parties’ shared anticipation that [Michael] would be paid deferred compensation was more than wishful thinking.  Given IBG’s written commitment to [Michael], and its owners’ genuine desire to reward their valued employee, both parties had reason to anticipate a significant payment in the event of a sale.

. . .

[I]t is clear that on multiple occasions [Michael] advised [Bernice] about his expectation that any sale of IBG could generate a substantial financial reward for their family.

. . .

[I]BG’s commitment to reward him was an important consideration in the decisions made by the parties throughout their cohabitation and marriage . . . In short, as they planned their finances and personal lives, [Michael] and [Bernice] anticipated that they might someday share in the proceeds of the company’s sale.

During the parties’ eight years of cohabitation, and for most of their brief marriage, [Bernice] undertook significant efforts to support [Michael’s] challenging career.

. . .

Indeed, [Michael] himself recognized that [Bernice’s] contributions to their family should be rewarded.

. . .

Accordingly, the record supports the conclusion that [Bernice’s] decision not to seek further education and employment was made, at least in part, in reliance on [Michael’s] financial commitment to her.

As family law practitioners, Thieme v. Aucoin-Thieme provides guidance as to how to not only bring an equitable claim stemming from a period when parties were not married, but also the sort of appropriate remedy that can be imposed in the event of a viable claim.  In a way, despite its specific factual scenario, it also opens the door to creative lawyering as to when these types of equitable claims could come into play.  Especially in the context of a palimony matter where other related equitable claims are raised, there is, perhaps, more opportunity to overcome an adverse party’s argument that all of the equitable claims are simply palimony claims dressed in different clothes.

_____________________________________________________

Robert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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Jury Waiver and Fee Award to Defendant in CEPA Case Are Overturned

Noren v. Heartland Payment Systems, Inc., ___ N.J. Super. ___ (App. Div. 2017).  In Abbamont v. Piscataway Tp. Bd. of Educ., 238 N.J. Super. 603 (App. Div. 1990), aff’d, 138 N.J. 405 (1994), the Appellate Division ruled that there was no right to a jury trial under the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to […]

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Judge Barry Steps Away

The Associated Press has reported that Judge Barry has decided to go on inactive status.  According to Chief Judge Smith, Judge Barry will be giving up her chambers and staff. Inactive judges do not hear appeals but can still serve on court committees.  They also have the ability to return to active status at a […]

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A Red-Letter Day for Beach Access

One might not think that February 2, a date in the dead of winter, would have anything to do with access to New Jersey’s beaches.  But on this date in 1984, the Supreme Court decided Matthews v. Bay Head Improvement Ass’n, 95 N.J. 306 (1984).  The Court’s 6-0 opinion, written by Justice Schreiber, discussed the […]

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Britt J. Simon Receives NHTSA Training

Britt J. Simon, Esquire recently was trained in the approved National Highway Traffic Safety Administration's (NHTSA) newest DWI and Drug training for Law Enforcement Officers. This training covered  the recently released 2015 ARIDE training curriculum.

Insurance Policy’s Anti-Assignment Clause Does Not Bar Assignment of Post-Loss Claim

Givaudan Fragrances Corp. v. Aetna Cas. & Surety Co., ___ N.J. ___ (2017).  Today’s opinion by Justice LaVecchia, a 6-0 ruling (Justice Albin did not participate) aligned New Jersey with the majority of jurisdictions on an issue of insurance law.  As the first sentence of the opinion states, the issue was “whether this state adheres […]

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Two More Supreme Court Grants of Review Announced Today

The Supreme Court announced today that it has granted review in two more appeals.  One case involves unemployment benefits, a subject that the Court visits only occasionally.  The other is a criminal appeal. The unemployment matter is Ardan v. Board of Review.  The question presented in that appeal, as phrased by the Supreme Court Clerk’s […]

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Take Me Out to the Ball Game, Take Me Out to the Crowd…Unless the Crowd Consists of a Parent Chastising a Coach over a Little League Baseball Game.

Growing up, my siblings and I all played sports. My brother and I were basketball players and my sister was, in no uncertain terms, a track star. Playing sports was a lifestyle in our family, and no one took it more seriously than my father himself, a former basketball player and my toughest coach. My dad was not only an extremely skillful basketball player, but he was a great teacher and I valued all the time he spent with me in the driveway teaching me how to perfect my shot. I like to think this is why he was always my most vocal fan at my games.

No matter how packed the stands were for a Friday night game (my high school had almost 4,000 students), I could tune out every cheer, scream and shout, that is, except of course, my dad’s. He had his share of one liners, “advice” for the referees and positive feedback, but when I wasn’t playing up to his standards (which rival that of Coach K or Jim Boeheim), I was always able to find him in the sea of parents, with two fingers on the bridge of his nose shaking his head in disappointment or somehow hear his “instructions” as to what I could be doing better, over all the noise.

A few distinct memories are as follows: once, when I was about 12, in the middle of a game, my dad, then toting along my much younger sister, came down from the stands over to the bench to tell me that I was playing “so badly” he was going to wait in the car–if that did not instill fear in you to play better, nothing would. It was going to be a long car ride if I didn’t turn that around! Another time a referee told him to start drinking decaffeinated coffee before coming to tournaments. But my favorite was when I missed a few foul shots in a game (which was the equivalent, or worse than, being expelled from school). My dad drilled into my head from a young age the importance of foul shots, so after the game, I was not allowed to come inside the house until I made 25 foul shots, in a row. I still remember that cold December evening, standing outside in the dark on the chalk-drawn foul line he made, taking shot after shot in the glow of the overhead garage light. Once you learn how to make foul shots without feeling your hands, it becomes second nature.

In any event, everything my dad did (except maybe his “advice” towards the referees), taught me how to be a better basketball player, a better team player, work harder and, subsequently/somehow, positively shaped me into the person I am today. And while he was tough, I never once felt discouraged or embarrassed; instead he motivated me to work harder. After all, by high school, I was our team’s technical foul shooter.

But all too often, parents cross the line from teaching their children to be better athletes to acting inappropriately, disparagingly, and disruptive not only towards their own children, but towards their children’s team and coaches.

In the unpublished (non-precedential) matter of D.W. v. M.W., the mother of a 7-year old child filed a motion seeking to prohibit her ex-husband, the child’s father, from attending their son’s coach-pitched Little League baseball games due to what she alleged, was “inappropriate public criticizing and disparaging of the coach’s baseball-related decisions and abilities in an embarrassing and demeaning manner”. According to the mother, the father routinely made negative and demeaning comments at the baseball field, that their 11-year old daughter then began repeating, that other parents witnessed this inappropriate conduct, and that the father even took his commentary from the baseball field to FaceBook. The child’s father denied these allegations.

After recognizing the cultural importance of Little League baseball, Judge Jones took judicial notice “that the results of particular Little League games are not nearly as significant as the underlying goal of developing a child’s ongoing personal character in a positive fashion. In this respect, there is a paramount importance in maintaining the surrounding environment at the Little League field as one which promotes respect, integrity, responsibility, discipline and self-restraint. Ironically, however, a great challenge in meeting these goals often comes not from the participating children, but from parents. While fathers and mothers come to games and practices for the alleged purpose of supporting their sons and daughters, there are times when overly critical, judgmental and interfering parents invariably end up acting in an objectively inappropriate manner, which can be highly embarrassing and emotionally detrimental for their own children, and others as well.”The “social phenomenon of out-of-control sports parents is often informally referred to as ‘Little League Parent Syndrome”.

But when and where does the Court intervene in this matter? A parent’s inappropriate and disruptive conduct, not only at the ball field but in any public venue, may be directly contrary to the best interests of their child, and in cases before the family court, a child’s best interests, rights and needs are greater than that of either parent.

In the case at bar, Judge Jones made it clear that he could have set the matter down for a costly and elongated plenary hearing, but decided to undertake what he referenced as the “fresh start” approach. The “fresh start” approach does not make any finding as to the credibility or accuracy of either party’s viewpoints, but requires that both parents submit to the same “(a) parameters of parental conduct at the ball field; and (b)… act at all times in a manner which is consistent with the children’s best interests as well as the true purpose of organized youth sports in the first place.”

The parties were also directed to follow all league rules concerning parental conduct and additionally, adhere to the following parameters not only at the site of the games and practices, but also on social media:

1) A parent may not publicly harass or demean his or [her] child or any other child;

2) A parent may not publicly harass or demean any coach or official. If a parent has a particular issue which he or she wishes to communicate with a coach or official, then absent a legitimate emergency, the parent may address the issue with the coach or official, privately, either by letter or by any other method deemed acceptable by league officials, including but not limited to, if reasonably necessary, an in-person meeting, outside the presence of children, and consistent with any existing league rules, with all such communication conducted in a mature, diplomatic, and respectful manner;

3) A parent may not publicly harass or demean any other or any parent or other spectator in the stands; including but not limited to that parent’s separated divorced, or otherwise estranged spouse, or such person’s guest(s). A child’s sporting event is a wholly inappropriate place for any public domestic disputes of any kind;

4) A parent who attends a child’s youth sporting event or practice has an affirmative obligation to act in a manner which upholds the dignity of the event. In particular, a parent may not act in a manner which is directly contrary to the core purposes of the event itself, such as teaching children concepts of maturity, respect, and discipline, and good sportsmanship. A parent who cannot or will not accept these parameters, and who acts in a manner which publicly undermines these core goals and values, may undermine the integrity of the event and the rights of all participating children and other adults in attendance;

5) A parent is to fully comply with all other rules of conduct required by the league or organization in question.

The purpose of the “fresh start” approach is much like the lessons learned from youth sports; there is always a second chance to do better. “With parenting, the reality is that parents who allegedly commit errors or fumbles in raising children, and who end up in court over such incidents, may positively and constructively learn from the entire experience” and make positive changes going forward that are in the best interests of their children. While the “fresh start” approach is contingent upon both parties making positive changes, if they are willing and able undertake this approach, I believe it can be successfully extended to other parenting issues as well. In the right instances, as practitioners, we should be mindful of this approach when dealing with similar parenting issues.

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