Justia New Jersey Supreme Court Opinion Summaries

In 1995, Jazz Photo Corp., one of several commercial entities (collectively referred to as the Jazz Entities), entered into a factoring agreement with Rosenthal & Rosenthal, Inc. Jazz Photo sold Rosenthal its accounts receivable in return for cash. Five years later, Vanessa Benun, the daughter of Jack Benun, a principal of the Jazz Entities, guaranteed Jazz Photo's obligations under that agreement. At that time, Benun also executed a mortgage on real property she owned in Monmouth County as security for her personal guaranty. In March 2005, another of the Jazz Entities, Ribi Tech Products, LLC entered into a factoring agreement with Rosenthal. Benun personally guaranteed Ribi Tech's obligations to Rosenthal. In March 2007, Riker, Danzig, Scherer, Hyland & Perretti, L.L.P. (Riker), a law firm providing legal services to Jack Benun and the Jazz Entities, obtained a third mortgage from Benun on the same real property. This mortgage was executed in favor of Riker to secure Jack Benun's personal debt under a letter agreement. When Benun executed the mortgage, Jack Benun owed Riker $1,679,701.33 in unpaid legal fees, and the letter agreement reflected his obligations to Riker and Riker's promise to provide continuing legal representation. Riker's mortgage was recorded on April 13, 2007. Rosenthal received actual notice of the Riker mortgage in August 2007. Despite notice of the Riker mortgage, Rosenthal continued to make advances to the Jazz Entities that totaled millions of dollars. In September 2009, Jazz Products filed for bankruptcy. The Jazz Entities defaulted on their obligations to Rosenthal, owing Rosenthal close to $4 million. Benun, in turn, defaulted on her personal guaranty to secure the debt. After Riker recorded its mortgage on the Monmouth County property, it continued to perform legal services for Jack Benun, and his unpaid legal fees ballooned to over $3 million. Jack Benun, and the Jazz Entities defaulted on their obligation to Riker and Benun defaulted on her guaranty. Rosenthal filed a foreclosure complaint against Benun, her husband, and Riker. Benun and her husband did not respond, and Rosenthal requested that a default judgment be entered against them. Riker answered, disputing the priority of Rosenthal's mortgages. Later, both Rosenthal and Riker filed cross-motions for summary judgment regarding the priority of their respective mortgages. The trial court granted Rosenthal's motion, determining that the dragnet clauses in the Rosenthal mortgages were fully enforceable. With regard to priority, the trial court held that Riker's argument that its mortgage displaced the two Rosenthal mortgages was legally flawed because the firm accepted a mortgage on the property with knowledge of two prior mortgages, each securing an obligation of up to $1 million, and with knowledge of the anti-subordination clauses. The court concluded that there was no convincing justification for rewarding Riker a superior priority. Riker appealed, and the Appellate Division reversed. The Supreme Court affirmed the Appellate Division, finding that Rosenthal had advance notice of the law firm's intervening lien but nonetheless proceeded to make optional advances to the commercial entities. "Having done so, its mortgages securing those optional future advances were subordinated to the law firm's intervening lien." View "Rosenthal & Rosenthal, Inc. v. Benun" on Justia Law

In May 2013, plaintiffs Annemarie Morgan and Tiffany Dever filed suit against defendants Sanford Brown Institute, its parent company, Career Education Corporation, and Sanford Brown's chief executive officer, admission and financial aid officers, and clinical director. Sanford Brown was a private, for-profit educational institution with a campus in Trevose, Pennsylvania, that offered medical-related training programs. In the complaint, plaintiffs claimed that defendants misrepresented the value of the school's ultrasound technician program and the quality of its instructors, instructed students on outdated equipment and with inadequate teaching materials, provided insufficient career-service counseling, and conveyed inaccurate information about Sanford Brown's accreditation status. The complaint further alleged that Sanford Brown employed high-pressure and deceptive business tactics that resulted in plaintiffs financing their education with high-interest loans, passing up the study of ultrasound at a reputable college, and losing career advancement opportunities. The Sanford Brown enrollment agreement included payment terms for tuition and fees, disclaimers, and an arbitration provision. Without answering the complaint, defendants filed a motion to compel arbitration and to dismiss plaintiffs' claims. The Appellate Division found the parties clearly and unmistakably agreed an arbitrator would determine issues of arbitrability and that plaintiffs failed to specifically attack the delegation clause. The panel therefore determined that arbitrability [was] for the arbitrator to decide. The Supreme Court reversed, finding that the Appellate Division and trial court did not have the benefit of "Atalese v. U.S. Legal Servs. Grp.," (219 N.J. 430, 436 (2014), cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed.2d 847 (2015)) at the time they rendered their decisions. The New Jersey Court held in "Atalese" that an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer s right to pursue relief in a court of law was unenforceable. This case was therefore remanded for further proceedings in light of Atalese. View "Morgan v. Sanford Brown Institute" on Justia Law

The insured, who had been sued for damages by plaintiffs, entered into a settlement whereby it agreed to assign its rights and interests under the insurance policy to plaintiffs. However, when plaintiffs sought to recover under the policy, the insurer denied coverage because the insured breached the policy's notice conditions. The trial court granted summary judgment to the insurance company, finding that notice was not given as soon as practicable, and that the insurance company need not show appreciable prejudice as a result of the delay in notice in order to refuse coverage. Plaintiffs appealed, and the Appellate Division affirmed substantially for the reasons given by the trial court. After its review, the New Jersey Supreme Court held that because this Directors and Officers claims made policy was not a contract of adhesion but was agreed to by sophisticated parties, the insurance company was not required to show that it suffered prejudice before disclaiming coverage on the basis of the insured's failure to give timely notice of the claim. View "Templo Fuente De Vida Corp., et al. v. National Union Fire Insurance Co." on Justia Law

Shortly after plaintiff John Ross signed a contract to sell his home, he learned of contamination on his property as a result of a leak that previously existed in an underground oil storage tank located on a neighboring property. The prospective purchaser then cancelled the contract, and plaintiffs commenced suit against the current and former owners of the neighboring property, and their respective insurers. After the insurers remediated the contamination on the property, the lawsuit proceeded on the claims for damages against all defendants on theories of negligence, strict liability, private nuisance and trespass, as well as violations of the Spill Compensation and Control Act. In this appeal, the issue presented for the Supreme Court's review centered on whether plaintiffs' claims were properly dismissed, and whether plaintiffs could maintain claims as third-party beneficiaries against the insurers which provided coverage to the former owner of the neighboring property where the underground storage tank was located. The Court found no basis for the claims of private nuisance or trespass against the homeowner defendants because there was no proof of negligence, recklessness, intentional conduct, or the conduct of an abnormally dangerous activity, by these parties. Additionally, the Court declined to expand these causes of action to impose strict liability upon defendants. Plaintiffs could not proceed with a direct claim against the defendant insurers for breach of the implied covenant of good faith and fair dealing contained in the insurance contracts because they did not hold an assignment of rights from the named insured, and there was no evidence that the named insured or her insurers agreed to recognize plaintiffs as third-party beneficiaries of the insurance contracts. View "Ross v. Lowitz" on Justia Law

In February 1995, the State executed a contract with Perini Corporation to design and build South Woods in Bridgeton (the Project), a twenty-six building medium- and minimum-security correctional facility. Perini subcontracted with L. Robert Kimball & Associates, Inc. as the architect and engineer. Defendant Natkin & Company was designated the principal contractor for heating, ventilation, and air conditioning (HVAC). The design that Kimball provided to Perini included an underground HTHW distribution system to serve the entire Project. It also included a central plant from which the hot water was distributed to the various buildings that comprised the Project. Perma-Pipe, Inc. manufactured the underground piping used in the HTHW system. Natkin furnished and installed the underground piping system and the boilers and heat exchangers housed in the central plant. Defendant Jacobs Facilities, Inc. (formerly known as CRSS Constructors, Inc.), was retained by the State to provide construction oversight services. In 2008, the State filed a complaint against Perini, Kimball, Natkin, Jacobs, and Perma-Pipe in which it alleged that the HTHW system failed in March 2000, and on several subsequent occasions, and that these failures were caused by various defects including design defects, defective site preparation for the pipes, defective pipes, and deficient system design. The State asserted breach of contract against Perini, negligence and professional malpractice against Kimball, negligence and breach of contract against Natkin, and breach of contract against Jacobs. Against Perma-Pipe, the State asserted a claim under the New Jersey Products Liability Act (PLA), as well as breach of implied warranties, negligence, and strict liability in tort. All defendants moved for summary judgment, arguing that the Project was substantially complete well before April 28, 1998, and that, therefore, the statute of repose barred the State's complaint. The Appellate Division reversed the orders granting summary judgment in favor of defendants Perini, Kimball, Natkin, and Jacobs. The panel held that the statute of repose was triggered when defendants substantially completed their work on the entire project, no earlier than May 1, 1998, the date when the minimum-security unit and garage were certified as substantially complete. After its review, the Supreme Court held that the statute of repose does not begin to run on claims involving an improvement that serves an entire project (including those parts constructed in multiple, uninterrupted phases) until all buildings served by the improvement have been connected to it. In addition, the Court held that the statute of repose did not apply to claims relating solely to manufacturing defects in a product used in the HTHW system. View "New Jersey v. Perini Corporation" on Justia Law

In this case, Beverly Maeker and William Ross, although unmarried to each other, lived together and shared a marital-like relationship from 1999 to 2011. In the course of that relationship, Maeker alleged she gave up a career and devoted herself to Ross, who promised to support her in the future. In short, Maeker claimed that the two entered into a palimony agreement. In 2011, their relationship dissolved, and Maeker filed an action to enforce Ross's promise to provide financial support. Ross argued that the alleged agreement was not reduced to writing and could not be enforced under the 2010 Amendment to the Statute of Frauds. The trial court rejected Ross's argument, concluding that the Legislature intended the 2010 Amendment to be prospectively applied. The Appellate Division reversed and dismissed Maeker's complaint, holding that the Legislature intended that any palimony agreement as of 2010 had to be in writing and that oral agreements predating the Amendment were no longer enforceable. Upon review of the matter, the Supreme Court disagreed with the Appellate Division, finding that the Legislature did not intend the 2010 Amendment to apply retroactively to oral agreements that predated the Amendment. "In amending the Statute of Frauds, the Legislature was aware that historically the Statute has been construed -- absent a legislative expression to the contrary -- not to reach back to rescind preexisting, lawfully enforceable oral agreements. The Legislature has given no indication that it intended to depart from the traditional prospective application of a change to the Statute." Accordingly, the Appellate Division was reversed and Maeker’s complaint reinstated. View "Maeker v. Ross" on Justia Law

The issue this appeal presented for the New Jersey Supreme Court's review centered on an agreement for the sale of a residential property and a subsequent lease and repurchase agreement, specifically whether the transactions collectively gave rise to an equitable mortgage, violated consumer protection statutes, or contravened its decision in "In re Opinion No. 26 of the Committee on the Unauthorized Practice of Law," (139 N.J. 323 (1995)). In 2007, defendant Barbara Felton faced foreclosure proceedings with respect to her unfinished, uninhabitable home and the land on which it was situated. Felton and plaintiff Tahir Zaman, a licensed real estate agent, entered into a written contract for the sale of the property. A week later, at a closing in which neither party was represented by counsel, Felton and Zaman entered into two separate agreements: a lease agreement under which Felton became the lessee of the property, and an agreement that gave her the option to repurchase the property from Zaman at a substantially higher price than the price for which she sold it. For more than a year, Felton remained on the property, paying no rent. She did not exercise her right to repurchase. Zaman filed suit, claiming that he was the purchaser in an enforceable land sale agreement, and that he therefore was entitled to exclusive possession of the property and to damages. Felton asserted numerous counterclaims, alleging fraud, slander of title, violations of the Consumer Fraud Act (CFA), and violations of other federal and state consumer protection statutes. She claimed that the parties’ transactions collectively comprised an equitable mortgage and constituted a foreclosure scam, entitling her to relief under several theories. She further contended that the transactions were voidable by virtue of an alleged violation of "In re Opinion No. 26." A jury rendered a verdict in Zaman’s favor with respect to the question of whether Felton knowingly sold her property to him. The trial court subsequently conducted a bench trial and rejected Felton’s remaining claims, including her contention that the transactions gave rise to an equitable mortgage and her allegation premised upon In re Opinion No. 26. An Appellate Division panel affirmed the trial court’s judgment. The Supreme Court affirmed in part and reversed in part the Appellate Division’s determination. The Court affirmed the jury’s determination that Felton knowingly sold her property to Zaman. Furthermore, the Court affirmed the trial court and Appellate Division's decisions that Felton had no claim under the CFA, that this case did not implicate "In re Opinion No. 26," and that Felton’s remaining claims were properly dismissed. The Court reversed, however, the portion of the Appellate Division’s opinion that affirmed the trial court’s dismissal of Felton’s claim that the parties’ agreements constituted a single transaction that gave rise to an equitable mortgage, adopting an eight-factor standard for the determination of an equitable mortgage set forth by the United States Bankruptcy Court in "O’Brien v. Cleveland," (423 B.R. 477 (Bankr. D.N.J. 2010)). The case was remanded to the trial court for application of that standard to this case, and, in the event that the trial court concludes that an equitable mortgage was created by the parties, for the adjudication of two of Felton’s statutory claims based on alleged violations of consumer lending laws, as well as several other claims not adjudicated by the trial court. View "Zaman v. Felton" on Justia Law

A "discrete, narrow legal question" came before the Supreme Court: is a health care provider who has received an assignment of personal injury protection (PIP) benefits from an insured obligated upon request to furnish to the insurer broad information with respect to the provider’s ownership structure, billing practices, and regulatory compliance? Plaintiffs in this matter consist of six “Selective Insurance Company” entities. Individuals insured by Selective sought medical treatment from defendants for injuries received in automobile accidents. Those insureds assigned to defendants the benefits to which they were entitled under their PIP coverage, giving defendants the contractual right to seek PIP reimbursement under those policies. In reviewing claims submitted for payment, Selective detected what it considered to be suspicious patterns in both the treatments defendants had provided and the corporate links among the treating entities. Selective requested that defendant supply to it a variety of data with respect to their ownership, structure, billing practices, and compliance with certain regulations. In support of its request, Selective cited the provision within the insureds’ insurance policies requiring the insureds to cooperate with Selective in the investigation of any claim under the policy. When defendants refused to supply the material Selective sought, Selective sued, alleging that defendants' failure to supply the information was a breach of they duty to cooperate and a violation of the PIP discovery statute. After hearing oral argument, the trial court denied defendants’ motion to dismiss and granted Selective the relief it had requested by directing defendants to respond to Selective’s discovery requests. Defendants thereafter moved for reconsideration, but the trial court denied that motion, together with defendants’ request for a stay. Upon review of the matter, the Supreme Court held that an insured had no duty to provide information to plaintiff with respect to the ownership structure, billing practices, or referral methods of the medical providers from whom he or she sought treatment for his or her injuries. Because an insured had no obligation to supply that information to plaintiff, the assignment of benefits executed by an insured could not serve to impose that duty on the providers. View "Selective Insurance Company of America v. Hudson East Pain Management" on Justia Law

Plaintiffs Memorial Properties, LLC (Memorial) and Mount Hebron Cemetery Association (Mt. Hebron) are respectively the manager and owner of Liberty Grove Memorial Gardens. Mt. Hebron was sued in 2007 and 2008 in seven lawsuits in the Superior Court of New Jersey and the Supreme Court of New York by family members of decedents whose remains were sent by funeral directors to Liberty Grove for cremation in 2003, 2004 and 2005. The New Jersey and New York plaintiffs alleged that prior to being sent to Liberty Grove, the decedents’ bodies were unlawfully dissected, and that tissue, bone and organs were removed for commercial sale. The families contended that they did not discover the illegal harvesting scheme until 2006, when law enforcement officials who investigated and prosecuted the perpetrators advised them that their relatives’ body parts had been illegally harvested. Memorial and Mt. Hebron contended that they received the decedents’ remains in closed containers and were unaware that the remains had been tampered with before being turned over to the crematory. Memorial and Mt. Hebron were not prosecuted as a result of the criminal investigation of the illegal harvesting. This appeal arose from Memorial’s and Mt. Hebron’s pursuit of a defense and indemnification with respect to the New Jersey and New York litigation, under two insurance policies. The first policy, issued by Assurance Company of America (Assurance), provided coverage for the year 2003 for claims arising from damage to human remains and bodily injury, including mental anguish. The second, issued by Maryland Casualty Company (Maryland), provided analogous coverage for the year 2006, but contained an "improper handling" exclusionary clause, barring coverage for bodily injury or property damage arising from specified acts and omissions including "[f]ailure to bury, cremate or properly dispose of a 'deceased body.'" In 2008, Memorial and Mt. Hebron demanded that Assurance and Maryland defend and indemnify them. Assurance declined coverage on the ground that the occurrences were outside of the policy period, invoking plaintiffs' claims that they learned of the harvesting scheme in 2006. Maryland declined coverage, citing the "improper handling" exclusionary clause in its 2006 policy. Memorial and Mt. Hebron filed a declaratory judgment action on May 14, 2008, naming as defendants Assurance, Maryland and Zurich North American Insurance Company (Zurich), and demanding defense and indemnification. Assurance and Maryland cross-moved for summary judgment. The trial court denied the summary judgment motion filed by Memorial and Mt. Hebron, but granted defendant insurers' cross-motion for summary judgment, identifying the year 2006 as the time frame of the "occurrence" in the two cases for which the insureds sought coverage. The Appellate Division affirmed both of the trial court’s orders granting the summary judgment motions filed by Assurance and Maryland. After its review, the New Jersey Supreme Court concluded that neither the Assurance policy nor the Maryland policy required the insurer to defend or indemnify Memorial and Mt. Hebron for claims asserted in the New Jersey and New York litigation. The Court affirmed the Appellate Division's ruling. View "Memorial Properties, LLC v. Zurich American Insurance Co." 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