Justia New Jersey Supreme Court Opinion Summaries

In a series of decisions arising from personal injuries sustained by business invitees on the premises of businesses whose operations involve customer self-service, the New Jersey Supreme Court has recognized a principle known as “mode of operation.” This appeal arose from a slip-and-fall accident that occurred at a Kentucky Fried Chicken restaurant in Cherry Hill. On the evening of her accident, plaintiff Janice Prioleau and her adult son and daughter, Richard Prioleau and Adriana Prioleau, were on a trip from their home in Delaware to New Jersey. Plaintiff and her children recalled that the weather that evening was rainy; plaintiff stated that there was a torrential storm. Plaintiff and her children decided to stop at the Kentucky Fried Chicken restaurant to have dinner. Plaintiff testified that, because of the heavy rain outside, she and her children tracked water into the restaurant. As she approached the restroom, plaintiff slipped and fell, landing on her buttocks and hands. According to plaintiff, the floor near the restroom felt greasy and wet. She stated that there were no mats or warning signs in the area where she fell. Plaintiff s children agreed with her that the floor near the restroom at the restaurant was slippery and greasy. Plaintiff’s testimony established that she had not yet ordered or purchased her dinner when her accident occurred. Instead, by her own account, plaintiff fell immediately after entering the restaurant. She asserted a negligence claim and specifically alleged that defendants failed to exercise reasonable care by failing to provide plaintiff, an invitee, with a safe place to traverse the premises. The jury found defendants negligent, without identifying the theory of negligence on which its verdict was based, and concluded that defendants’ negligence was a proximate cause of plaintiff’s accident. Defendants appealed the trial court’s judgment. A divided Appellate Division panel affirmed the trial court’s denial of defendant’s motion for a directed verdict. The majority reasoned that the unifying factor in case law recognizing the “mode-of-operation” doctrine was the negligence [that] resulted from the business’s method of operation, which was designed to allow patrons to directly handle merchandise or products without intervention from business employees, and entailed an expectation of customer carelessness. Finding no reversible error in the Appellate Division’s judgment, the Supreme Court affirmed. View "Prioleau v. Kentucky Fried Chicken, Inc." on Justia Law

Plaintiff Bruce Kaye, the controlling principal of three entities that sold and managed timeshare interests in resort properties in Atlantic County, hired defendant Alan Rosefielde, an attorney admitted to practice law in New York but not in New Jersey, initially as outside counsel, and then as an employee. After defendant had worked closely with plaintiff for approximately four months, the parties entered an agreement providing that, as compensation for his services, defendant would earn an annual salary of $500,000. For approximately two years, defendant served as Chief Operating Officer for several of the timeshare entities, and effectively functioned as their general counsel. In that capacity, defendant committed serious misconduct by acting on his own behalf instead of for his employers benefit, and exposing his employers to potential liability. Based on this misconduct, and dissatisfaction with defendant’s performance, plaintiff terminated defendant’s employment. Kaye, in his individual capacity and as trustee of two trusts, Kaye’s son Jason Kaye, and the business entities that Kaye owned, sued Rosefielde and several other entities. Plaintiffs asserted claims based on Rosefielde’s breach of fiduciary duty, fraud, legal malpractice, unlicensed practice of law, and breach of the duty of loyalty. Following a lengthy bench trial, the trial court found that Rosefielde engaged in egregious conduct constituting a breach of his duty of loyalty, breach of his fiduciary duty, legal malpractice, and civil fraud. The trial court rescinded Rosefielde’s interest in several entities, awarded compensatory damages, punitive damages, and legal fees, and dismissed Rosefielde’s counterclaims. It declined, however, to order the equitable disgorgement of Rosefielde’s salary as a remedy for his breach of the duty of loyalty, on the ground that his breach did not result in damage or loss to the entities that employed him. The Appellate Division affirmed that determination, and the New Jersey Supreme Court granted certification on the issue of equitable disgorgement. “In imposing the remedy of disgorgement, depending on the circumstances, a trial court should apportion the employee’s compensation, rather than ordering a wholesale disgorgement that may be disproportionate to the misconduct at issue. . . . If an agent is paid a salary apportioned to periods of time, or compensation apportioned to the completion of specified items of work, he is entitled to receive the stipulated compensation for periods or items properly completed before his renunciation or discharge. This is true even if, because of unfaithfulness or insubordination, the agent forfeits his compensation for subsequent periods or items.” The judgment of the Appellate Division was reversed with respect to the remedy of equitable disgorgement, and the matter was remanded to the trial court to decide whether plaintiffs were entitled to disgorgement. If so, the trial court should apportion Rosefielde’s compensation, ordering disgorgement only for monthly pay periods in which he committed acts of disloyalty. View "Kaye v. Rosefielde" on Justia Law

Plaintiffs Sam Hargrove, Andre Hall, and Marco Eusebio delivered mattresses for defendant Sleepy s, LLC. Plaintiffs claimed that they were employees of Sleepy's, that Sleepy's miscategorized them as independent contractors, and that misclassification caused various financial and non-financial losses to them. Plaintiffs argued that the Independent Driver Agreement signed by each of them violated state wage laws because the contracts were a ruse to avoid payment of employee benefits, such as health insurance, deferred compensation benefits, and medical or family leave. The issue of whether plaintiffs were employees or independent contractors was submitted to the United States District Court for the District of New Jersey on cross motions for summary judgment. The federal court held that the undisputed facts demonstrated that plaintiffs were independent contractors. Plaintiffs appealed. The Court of Appeals filed a petition with the New Jersey Supreme Court seeking to certify the question of New Jersey law: which test should a court apply to determine a plaintiff's employment status, the New Jersey Wage Payment Law, N.J.S.A. 34:11-4.1, et seq., or the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a, et seq.? The New Jersey Court responded that the test derived from the New Jersey Unemployment Compensation Act, N.J.S.A.43:21-19(i)(6), governed whether a plaintiff is an employee or an independent contractor for purposes of resolving a wage-payment or wage-and-hour claim. View "Hargrove v. Sleepy's, LLC" on Justia Law

This case arose from a business venture that was established by plaintiff Brendan Allen and defendant Asnel Diaz Sanchez. The venture was operated through plaintiff ADS Associates, Inc. (ADS), a corporation fully owned by Sanchez. Allen and Sanchez opened a business checking account in the name of ADS at a branch of Oritani Savings Bank where ADS had preexisting accounts. By agreement between ADS and Oritani, the new ADS account required the signatures of both Allen and Sanchez to appear on each check drawn on the account. Despite that limitation, Sanchez linked the new ADS account to other ADS accounts within his control and, through a series of internet transactions, transferred a substantial sum of money from the ADS account he had established with Allen to his other ADS accounts. After learning of these transfers, Allen sued Oritani and Sanchez. Although it dismissed Allen’s claims, the trial court permitted Allen to assert claims on ADS’s behalf against Oritani, notwithstanding Sanchez’s issuance of a resolution denying Allen the authority to maintain an action on ADS’s behalf. A jury returned a verdict in favor of ADS. The trial court, however, entered a judgment notwithstanding the verdict in favor of Oritani premised on an indemnification provision in the agreement governing ADS’s account with Oritani. An Appellate Division panel reversed the trial court’s determination. It found that the ADS resolution signed by Sanchez deprived Allen of authority to assert a claim on behalf of ADS. The panel held, however, that Allen could assert a common law negligence claim against Oritani despite the fact that he was not Oritani’s banking customer. It concluded that Allen had a “special relationship” with Oritani, and that Oritani had a duty to advise Allen of its internet banking policies when he and Sanchez opened the ADS account. The Supreme Court agreed with the trial court that Article 4A of the Uniform Commercial Code (UCC) governed the wire transfers at the center of this case, and that Allen could not assert a claim under Article 4A against Oritani because he did not meet the statutory definition of a bank “customer.” Furthermore, the Court held that Allen could not assert a negligence claim based upon an alleged special relationship with Oritani. Accordingly, the Appellate Division was reversed and the trial court's judgment was reinstated. View "ADS Associates Group, Inc. v. Oritani Savings Bank" on Justia Law

Zagami, LLC owned the Landmark Americana Tap and Grill in the Borough of Glassboro. In 2006, Zagami applied to the Borough for a renewal of its liquor license. Luis Perez, a citizen residing in Glassboro, opposed the renewal. In a letter to the Glassboro Borough Council, Perez complained of several serious infractions allegedly committed by Zagami, including serving alcohol to minors and bribing public officials with free meals and drinks. As a result of those allegations, the Council scheduled a liquor license renewal hearing and invited Perez and Zagami to participate. At the hearing, Perez testified that, among other things, Landmark flouted fire-safety regulations, served alcohol to visibly intoxicated patrons, and encouraged bouncers to physically harm rowdy customers. Zagami disputed the allegations, calling them unsubstantiated. At the conclusion of the hearing, the Council voted to renew Zagami’s liquor license. A year later, Zagami filed a defamation complaint against Perez for statements that he made during the liquor license renewal hearing. Perez filed a motion to dismiss the complaint, arguing that his remarks were made in the course of a quasi-judicial proceeding and thus were entitled to absolute immunity. The trial court denied the motion to dismiss and the Appellate Division denied leave to appeal. The Supreme Court granted Perez’s motion for leave to appeal to this Court and summarily remanded the matter to the Appellate Division for consideration on the merits. On remand, the Appellate Division found that Perez’s statements during the liquor license proceeding were entitled to absolute immunity and dismissed the defamation complaint with prejudice. Perez filed a complaint against Zagami in 2010 for malicious use of process., alleging Zagami had instituted its defamation complaint as a Strategic Lawsuit Against Public Participation (SLAPP) designed to punish Perez for speaking out against Zagami at the liquor license renewal hearing and to discourage his participation in future public proceedings. Zagami filed a motion to dismiss the complaint, and Perez filed a cross-motion to amend his complaint to include as defendant the law firm retained by Zagami during the defamation suit. Finding that Zagami’s defamation suit was supported by probable cause, the trial court granted Zagami’s motion to dismiss the malicious use of process claim and denied Perez’s cross-motion to amend the complaint. On appeal, the Appellate Division reversed both determinations of the trial court. The panel determined that Zagami’s defamation suit was not supported by probable cause and that Zagami should have been aware that Perez’s statements were privileged at the time it filed suit. Accordingly, the panel reversed the trial court’s grant of Zagami’s motion to dismiss the malicious use of process claim. The Supreme Court granted certification to review only whether the New Jersey Civil Rights Act (CRA) permitted a private right of action against an individual who was not acting under color of law. The Court concluded that a private CRA cause of action only may be pursued against persons acting under “color of law”; the Attorney General, however, is authorized to file CRA actions against persons whether or not they acted under "color of law." View "Perez v. Zagami, LLC" on Justia Law

Defendant Jean Millman worked as a sales representative for Plaintiff Target Industries, an industrial bag company. Plaintiff Thomas F. Fox was Target's director of development and purchased all of its assets after Target filed for Chapter 11 bankruptcy protection in 1999. Plaintiffs asserted that Millman signed a confidentiality agreement when hired. Target terminated Millman on September 7, 2000. Several days later, Defendant Polymer Packaging Inc., an industrial bag company owned by Defendants Larry and William Lanham, hired Millman knowing that she had previously worked for Target. The Lanhams asserted that Millman assured them that she was not subject to the terms of either a confidentiality agreement or a non-compete clause. The Lanhams did not verify independently the truth of that assertion. The Lanhams conceded that Millman provided Polymer with a list of customers, but contended that she described it as a customer base that she had developed over the years, thereby implying that she had generated the list on her own. The list did not identify Target or bear any indication that it was not Millman's own, and the Lanhams did not further inquire into the genesis of the list. Millman sold products for Polymer to former Target customers and, before leaving Polymer in October 2004, was responsible for generating substantial sales for the company. The core dispute over the list gave rise to a series of rulings by the trial court prior to and following a jury verdict based on special interrogatories, all of which were affirmed by the Appellate Division. Plaintiffs' petition for certification to the Supreme Court asserted that it was error for the trial court to permit Defendants to raise the defense of laches. In particular, they argued that permitting a laches defense, in circumstances in which the statute of limitations had not expired, would erase clearly defined deadlines and therefore create ambiguity, lead to confusion and engender inconsistent results in application. Further, Plaintiffs asserted that the trial and appellate courts erred in rejecting the continuing violation doctrine, in misapplying settled precedents from the Supreme Court recognizing that customer lists are protected as trade secrets, and in failing to require Defendants to inquire independently about the proprietary nature of the customer list prior to utilizing it. Upon review, the Supreme Court held that the equitable doctrine of laches could not be used to bar an action at law that was commenced within the time constraints of an applicable statute of limitations. The case was reversed and remanded for a new trial. View "Fox v. Millman" on Justia Law

Defendant-Appellant KPMG already was in the process of auditing Papel Giftware's 1998 and 1999 financial statements when merger discussions began with Plaintiff Cast Art. In a November 1999 letter to Papel’s audit committee, KPMG explained that the audit was planned "to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Absolute assurance is not attainable . . . ." The letter cautioned that there is a risk that "fraud" and "illegal acts may exist and not be detected by an audit performed in accordance with generally accepted auditing standards," and that "an audit is not designed to detect matters that are immaterial to the financial statements." In September 2000, KPMG delivered completed audits to Papel. KPMG's accompanying opinion letter, addressed to Papel's audit committee, stated that the audits were conducted in accordance with generally accepted auditing standards. The letter concluded by observing that as of December 31, 1999, Papel was not in compliance with certain agreements with its lenders, which raised "substantial doubt" about Papel's "ability to continue as a going concern." Three months later, Cast Art and Papel consummated their merger. Soon, Cast Art had difficulty collecting accounts receivable that it had believed Papel had outstanding prior to the merger. Cast Art investigated and learned that Papel's 1998 and 1999 financial statements were inaccurate and that Papel had accelerated revenue. Cast Art sought to recover from KPMG for the loss of its business. Cast Art alleged that KPMG was negligent; that if KPMG had performed a proper audit, it would have uncovered the fraudulent accounting activity that was taking place at Papel; and that Cast Art would not have proceeded with the merger if it had been alerted to the fraud. KPMG argued, among other things, that Cast Art had not retained KPMG and was not its client, and thus Cast Art's claim was barred by the Accountant Liability Act, N.J.S.A. 2A:53A-25. Upon review, the Supreme Court found that because Cast Art failed to establish that KPMG either "knew at the time of the engagement by the client," or later agreed Cast Art could rely on its work for Papel in proceeding with the merger, Cast Art failed to satisfy the prerequisites of N.J.S.A. 2A:53A-25(b)(2).View "Cast Art Industries, LLC v. KPMG LLP" on Justia Law

In 2002, Defendants decided to purchase, renovate, and resell a home located in Medford Lakes. According to their plan, Defendants Christopher Masso and John Torrence would finance the purchase; Defendant James Githens would perform the renovations; and Defendant real estate agent Jennifer Lynch would serve as the listing agent. Plaintiff Debra Lombardi viewed the home and made an offer. The sales contract, which was signed by Masso and Torrence, indicated that the house was being sold to Lombardi “as is” and that any guarantees, unless set in writing, would be void. However, handwritten into the contract was a notation to “see construction addendum attached.” That addendum reflected at least seventy repairs and renovations. At the closing, the house was nowhere near completion. Masso agreed to place money in escrow to ensure completion of the renovations. The escrow was to be held until which time the renovations would be completed. Against her realtor’s advice, Lombardi went ahead with the closing. Thereafter, the house remained unfinished and Plaintiff filed suit. The trial court granted summary judgment to the Defendants, finding that Lombardi accepted the property “as is,” Defendants did not breach the contract, Defendants could not be held liable under the Consumer Fraud Act, and they made no misrepresentations. Later the trial judge would write a letter to the parties, including the dismissed defendants, informing them that he was going to reconsider his order granting summary judgment and was scheduling a new hearing on the issue. The judge ultimately vacated the grant of summary judgment in favor of Defendants. The Appellate Division granted defendants’ motion for leave to appeal, remanded to the trial court for further findings of fact and conclusions of law, and ultimately reversed the trial court. The Supreme Court concluded after its review that the Appellate Division correctly determined that the trial court’s original summary judgment order dismissing several of the defendants was issued in error, the trial judge was well within his discretion in revisiting and vacating the summary judgment order. View "Lombardi v. Masso" on Justia Law

Defendant New Community Corporation appealed judgments in favor of Plaintiff Pomerantz Paper Corporation stemming from a breach of contract claim. Pomerantz appealed a judgment in favor of New Community on a counterclaim that held that Pomerantz engaged in unconscionable business practices as defined by the state Consumer Fraud Act (CFA) stemming from the same contract. According to New Community, items regularly were missing from shipments. In 2000, New Community began to question the invoices and prices Pomerantz charged. By 2004, Pomerantz claimed that New Community had failed to pay invoices totaling approximately $700,000, and it filed a claim for breach of contract. New Community filed a counterclaim asserting that Pomerantz engaged in unconscionable business practices in violation of the CFA. Upon review of the contract, the parties' business dealings and the trial court's record, the Supreme Court concluded that the trial court’s findings that were central to its evaluation of the New Community's Consumer Fraud Act counterclaim failed for want of sufficient credible evidence in the record, and that the appellate panel erred in deferring to those findings and, by extension, in affirming the trial court’s conclusions. Furthermore, the appellate panel erred in its analysis of the seller’s breach of contract claim by imposing a duty of written notice of non-delivery on the buyer that is found neither in the Uniform Commercial Code nor in the course of dealing between the parties. The Court remanded the case for further proceedings. View "Pomerantz Paper Corp. v. New Community Corp." on Justia Law