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STATE COURT CASES BANKING – CHECK ASSIGNMENTS – FRAUD 06-2-7804 Triffin v. Automatic Data Processing, Inc. v. Avallone, App. Div. (Lyons, J.S.C., t/a) (21 pp.) The court finds that plaintiff manufactured assignment agreements for checks upon which he filed suit against the drawer. However, the jury’s verdict on the drawer’s counterclaim for common law fraud against plaintiff cannot stand, due to lack of reliance on the drawer’s part. The appellate court recognizes, though, that sanctions for committing fraud on the court may be appropriate and remands the matter for a hearing on that issue. [Approved for publication.] CONSTRUCTION – PUBLIC CONTRACT AWARDS � BIDS 43-2-7805 Ferreira Constr. Co., Inc. v. Bd. of Chosen Freeholders of Cy. of Somerset, et al., App. Div. (per curiam) (8 pp.) The panel affirms the award, by the defendant Somerset County Board of Freeholders, of a construction contract for the replacement of a county bridge to defendant Midlantic Construction, the lowest bidder, over the objection of plaintiff Ferreira Construction Co., the second-lowest bidder. The panel rejects plaintiff’s contention that, by affording bidders the option of providing a Notice of Classification in lieu of submitting financial statement forms, the County reinstated the previously-deleted requirement for NJDOT pre-qualification. The County declined to use the DOT’s pre-qualification guidelines, but rather offered them as one of three methods by which a bidder could comply with the financial statement solicitation. Nor does the governing statute, N.J.S.A. 40A:11-28, mandate that the County utilize a classification or pre-qualification system; it only requires that the public entity establish “reasonable regulations for the controlling of the qualifications of prospective bidders,” which the panel finds was done here. CONTRACTS – INTER-GOVERNMENT AGREEMENTS – NOTICE OF CLAIM – CONTRACTUAL LIABILITY ACT – LIMITATIONS 11-2-7806 Cy. of Hudson v. State of N.J., Dept. of Corrections, App. Div. (per curiam) (8 pp.) The lower court dismissed the complaint of the plaintiff County � alleging that the State Dept. of Corrections (DOC) had paid plaintiff less than it agreed to pay for housing state prisoners in its county correctional facility � concluding that plaintiff did not file a timely notice of claim as required by N.J.S.A. 59:13-5, and that the entire action was therefore barred by the Contractual Liability Act. The appellate panel affirms in part and reverses in part, concluding that the plaintiff complied with its obligation to give notice of its claim by letter dated Sept. 4, 2003; therefore, its claims based on payments made more than ninety days prior to that date are barred, but claims for payments made or due thereafter are still viable. CORPORATIONS – CLUBS – NON-PROFIT ORGANIZATIONS – DISSOLUTION AND DISTRIBUTION 12-2-7807 Farinella, et al. v. North Hudson Yacht Club, etc.; one other caption, App. Div. (per curiam) (15 pp.) In this dispute between plaintiff � former members of a yacht club � and defendants � the club’s current members � the court rejects plaintiffs’ appeal from two orders granting summary judgment to defendants and denying plaintiffs’ motion for reconsideration. The plaintiffs, all of whom voluntarily resigned their memberships in 2001, learned in 2004 that the current membership had voted to potentially disband the club and sell its property in Edgewater. They claimed that the club could not disband, and had to continue in perpetuity, and that the property could not be sold. However, if the property were sold, they claimed that the proceeds had to be given to charity or the State, or, alternatively, that they were entitled to share in the proceeds of sale. Although the trial judge found that the club’s constitution and bylaws were not specific regarding either the distribution of proceeds on the sale of property or the winding-up of the organization, he noted that plaintiffs could cite to no authority that prohibited a not-for-profit organization to disband and distribute its assets to its membership. He noted that the decision passed by a majority vote; and found that the fact that the remaining members stood to gain a substantial amount of money from the sale and the wind-up of the club was not, in and of itself, inequitable. Plaintiffs are no longer members of the organization, and must have a sustainable legal interest to warrant judicial intervention, absent here. FAMILY LAW – CUSTODY – REMOVAL TO FOREIGN COUNTRY 20-2-7808 Muniz v. Castrillo, App. Div. (per curiam) (14 pp.) The plaintiff received a promotion and three-year assignment to a senior executive position for General Motors in Mexico and, with the consent of defendant, her former husband, left her home in N.J. with the couple’s fourteen-year-old son to assume her new position; their sixteen-year-old son chose to remain in N.J. with his father. However, concerned about her older son’s failing grades, an automobile accident, and reports of his partying and playing cards, she filed a motion to allow him to join her in Mexico. Defendant countered with a motion seeking custody of both boys. The judge ordered the parties to mediate the removal issue with a court-designated attorney, and an agreement was entered into, whereby the older son was to join his mother in Mexico, and the younger son was to come back to N.J. for his senior year of high school; neither of these occurred, the boys apparently having changed their minds. The judge ordered the youngest son to return to N.J. and suggested that plaintiff be interviewed by a mental health professional. After interviewing the boy, the judge noted that he said he hated living in Mexico, and had been held a “prisoner” there by his mother. The judge rejected the mother’s request for a plenary hearing and ordered enforcement of the parties’ agreement that the youngest son be returned to N.J. In this opinion, the appellate court reverses the order prohibiting the parties’ younger son from leaving the U.S., continuing the joint custodial arrangement, but transferring primary physical custody from plaintiff to the defendant. The appellate court concludes that a plenary hearing was required to fully address the myriad issues implicated by plaintiff’s relocation to Mexico and her desire to keep her youngest son with her. There was no consideration of plaintiff’s showing of good faith, a viable visitation plan, or defendant’s initial consent to the removal INSURANCE – VERBAL THRESHOLD 23-2-7809 Jeffrey, et ux. v. Borges, App. Div. (per curiam) (6 pp.) Summary judgment was properly entered in favor of the defendant in this verbal threshold case, the trial judge finding that, although plaintiff had arthroscopic surgery of her left shoulder about a year after the accident, and the surgical report indicated that the injury was related to the accident, nowhere was it mentioned that plaintiff had suffered any permanent injury. The doctor’s report found full range of motion and excellent strength in the shoulder, and any diagnosis of pain was based on subjective responses and not objective testing. LABOR AND EMPLOYMENT – UNEMPLOYMENT COMPENSATION 25-2-7810 Freas v. N.J. Dept. of Labor, Bd. of Review, App. Div. (per curiam) (3 pp.) The claimant was justifiably denied unemployment benefits because she left work voluntarily without good cause attributable to the work, where her resignation was motivated solely by her husband’s transfer to a position in another state. LABOR AND EMPLOYMENT – UNEMPLOYMENT COMPENSATION 25-2-7811 Tronco v. Bd. of Review, etc., App. Div. (per curiam) (4 pp.) The claimant became a full-time college student and could no longer work full-time hours at her job with the respondent photography shop. Although the shop offered her a part-time position, she declined because it did not include health benefits or as great an hourly wage as she had earned previously. Under the circumstances, she was properly disqualified from receipt of unemployment benefits because she left work voluntarily without good cause attributable to the work. LABOR AND EMPLOYMENT – UNEMPLOYMENT COMPENSATION 25-2-7812 Conlan v. Bd. of Review, etc., et al., App. Div. (per curiam) (10 pp.) The Appeal Tribunal aptly found, pursuant to N.J.A.C. 12:17-9.10, that appellant, a truck driver, was disqualified from receipt of unemployment benefits because he was absent without good cause from work for over five consecutive work days; failed to notify the employer of the reasons for his absences; and was considered to have abandoned his job. MUNICIPAL LAW – PUBLIC CONTRACTS � BIDDING 30-3-7813 EIC Inspection Agency Corp. v. Town of Kearny, et al., Law Div. � Hudson Cy. (Sarkisian, J.S.C.) (10 pp.) The plaintiff appeals the award of an elevator inspection contract by the defendant Town to the defendant-incumbent Municipal Inspection Corp. (MIC), challenging the change in the law governing the award of these types of public contracts with respect to the level of fees that the municipality can receive as an administrative fee. The court reviews various errors in the bid evaluation process, and concludes that the record clearly shows that the contract was awarded to MIC under the wrong, outdated, legal standard, and complete rebid should occur. [Decision dated Jun. 27, 2007.][Released Jun. 27, 2007.] REAL ESTATE – RIGHT OF FIRST REFUSAL – CALCULATION OF PURCHASE PRICE 34-4-7814 St. George’s Dragons, L.P. v. Newport Real Estate Group, LLC, et al., Chancery Div.-Monmouth Cy. (Lehrer, P.J.Ch.) (24 pp.) In this opinion reviewing the Right of First Refusal Law, in the absence of New Jersey precedent, the court adopts out-of-state authorities which hold that the purchase price to be paid upon exercise of the right of first refusal is the gross amount of the third-party offer, regardless of real estate commission consequences which may affect the net amount realized by the seller. [Decision dated Jun. 26, 2007.][Released Jun. 27, 2007.] TAXATION – GROSS-UP AWARDS – CALCULATION – LABOR AND EMPLOYMENT 35-3-7815 Quinlan v. Curtiss-Wright Corp., Law Div.-Essex Cy. (Goldman, J.S.C.) (14 pp.) In this opinion, the court explains the calculation of a tax gross-up award in accordance with the court’s June 15 th decision in this “glass ceiling” case.* [Decision dated Jun. 28, 2007.][Released Jun. 28, 2007.][*See DDS No. 25-3-7679 in the June 15 th Alert, repeated for ease of reference in a footnote at the end of this Alert.] CRIMINAL LAW AND PROCEDURE – ARMED ROBBERY – PRE-TRIAL PHOTO ARRAYS 14-2-7816 State v. Conde, App. Div. (per curiam) (11 pp.) On the State’s appeal, the court reverses the Law Division order directing the State to conduct a pre-trial photo array with the victim of an armed robbery, agreeing with the State that the defendant did not satisfy the three-prong test of State, in the Interest of W.C., because the statement provided by the co-defendant was not properly qualified as an affidavit, and thus could not provide a sufficient basis for the judge to have determined that the co-defendant recanted her prior statement identifying defendant as her co-robber, calling identification into question under the first prong of the test. The court is also satisfied that the defendant did not prove the third prong of the test, that is, that the motion was filed as soon as practicable after his arrest or arraignment. CRIMINAL LAW AND PROCEDURE – DRUG INFLUENCE – REBOUND AND HANGOVER EFFECTS 14-2-7817 State v. Franchetta, Jr., App. Div. (Lyons, J.S.C., t/a) (9 pp.) Considering a novel issue, the appellate court holds that a “rebound effect” or a “hangover effect” from a previous ingestion of cocaine constitutes being “under the influence” of a narcotic drug under N.J.S.A. 39:4-50. Although the cocaine ingested by defendant was not pharmacologically active at the time of the incident, it was the proximate cause of his impaired behavior and he was, therefore, “under the influence” of a narcotic drug for purposes of the cited statute. [Approved for publication.] CRIMINAL LAW AND PROCEDURE – JURY CHARGES – ACCOMPLICE LIABILITY � CONSPIRACY 14-2-7818 State v. Harvey, App. Div. (per curiam) (9 pp.) The court reverses the defendant’s robbery and other convictions because the trial judge committed plain error by equating conspiracy with accomplice liability in his jury instructions. CRIMINAL LAW AND PROCEDURE – SEARCH AND SEIZURE 14-2-7819 State v. Tibby, App. Div. (per curiam) (4 pp.) On the State’s appeal, the appellate panel reverses the order of the trial court suppressing a bag of marijuana found inside the trunk of defendant’s car. The trial court correctly found that (1) the initial motor vehicle stop was lawfully made upon probable cause, based on the strong odor of marijuana, which increased in intensity as the officer got closer to the back seat hatch that provided limited entry to the car’s trunk; and (2) defendant (the driver) and his passenger were properly arrested for possession of a separate bag of marijuana found inside the passenger compartment of the vehicle. However, the court erred in further concluding that a warrant was needed to search the car’s trunk, because the police had taken possession of the car through impoundment, thereby negating any exigent circumstances ordinarily associated with the mobile nature of motor vehicles. Under the circumstances, the officer’s use of the hatch entry portal to access the bag of marijuana in the trunk was lawful. The fact that the car had been rendered immobile as a consequence of the arrests of its occupants did not detract from the inherent exigency associated with the automobile stop. FEDERAL COURT CASES BANKRUPTCY – NON-DISCHARGEABILITY – WRONGFUL DIVERSION OF FUNDS – KNOWLEDGE 42-6-7820 In re: Cooper, Debtor; Calascibetta v. Cooper, U.S. Bankruptcy Ct. (Ferguson, U.S.B.J.) (6 pp.) The Chapter 7 Trustee for Strategic Technologies, Inc. (STI) alleged that the Debtor’s husband, president and sole shareholder of STI, wrongfully diverted significant funds from the corporation to the couple’s personal use. The couple entered into, but defaulted on, a settlement agreement with the Trustee, and he obtained a final judgment against both of them for $465,000. In the Debtor’s bankruptcy proceeding, the Trustee has filed a non-dischargeability complaint as to this judgment amount, asserting that, under In re Denbleyker and Cohen, once it was established in the prior proceeding that the money at issue was obtained by fraud, any debt flowing from that is excepted from discharge, with no further inquiry. While the judge finds the Trustee’s argument facially plausible, she holds that it does not stand up when considered in the context of the full opinions. It is clear in both of the cited opinions that the courts assumed that the answer to the question of “who” obtained the money by fraud was “the debtor.” Here, the Debtor asserts that she had no knowledge of her husband’s business dealings, and was not a party to the fraud. No purpose would be served by declaring non-dischargeable funds in the hands of an innocent debtor, simply because of the funds provenance. Thus, the judge denies the Trustee’s motion for summary judgment because he has not established that the Debtor had any knowledge of or role in her husband’s fraudulent activities. [Decision dated Jun. 26, 2007.][For publication.] CONTRACTS – EMPLOYMENT – SECURITIES – BUSINESS ALTER EGOS 11-7-7821 Ross, et al. v. Celtron Intl., Inc., et al., U.S. Dist. Ct. (Cooper, U.S.D.J.) (40 pp.) This action, which involves multiple claims against several individuals and entities, arises out of an agreement pursuant to which plaintiffs were to provide technical services for a cellular credit card phone company that was yet to be formed, in consideration of receiving compensation, including certain stock ownership. Plaintiffs assert, and defendants assume, for purposes of their motions for summary judgment only, that the services described in the agreement were performed; however, plaintiffs assert that they never received any stock certificates or were actually issued any ownership of shares in the former company or its successor/alter ego company. The court denies defendants’ summary judgment motion with respect to the counts alleging breach of contract, promissory estoppel, tortious interference contract with respect to one defendant, and fraudulent conveyances, and grants the motion with respect to the counts for common law fraud, securities fraud, RICO violations and RICO conspiracy, directors’ and officers’ negligence, and tortious interference with contract with respect to another defendant. Inter alia, there are material questions of fact with respect to whether (1) Celtron PLC (PLC) continued to use the credit card-based cellular phone technology that Celtron Technologies, Inc. (CTI) developed after it liquidated its assets; (2) PLC had any assets other than the stock of CTI; (3) PLC continued to conduct business after its major asset, CTI, was liquidated; (4) Celtron Intl. (INTL) ever owned any assets previously owned by PLC; (5) INTL acquired approximately 57% of the stock of Et Voila on June 11, 2001, pursuant to a contract dated Feb. 13, 2001; (6) Et Voila acquired certain assets of either PLC or INTL under a June 20, 2001 agreement; and (7) Celtron, Inc. is a successor of INTL. [Filed Jun. 25, 2007.][For publication.] ENVIRONMENT – CLEANUP COSTS – CONTRACTUAL ALLOCATION 17-7-7822 Pharmacia Corp., etc. v. Motor Carrier Svcs. Corp., et al., U.S. Dist. Ct. (Brown, Jr., Chief U.S.D.J.) (36 pp.) The plaintiff, which manufactured chemicals on the subject property under its former name, Monsanto, from 1956-1991, agreed in 1989 to an environmental cleanup and monitoring plan with the DEP. In 1994 it sold the property to defendant Motor Carrier Svcs. Corp., which defendant CSX Corp. purchased in 1998. Under the sales contract, plaintiff argued that it agreed to remain liable for the DEP-supervised cleanup already underway; however, it asserted that the contract relieved it of liability for any subsequent cleanups, including costs associated with the EPA’s plans to clean up the lower Passaic River. The judge agrees, rejecting defense counsel’s assertions that (1) the contract only made defendant liable for substances emitted after the sale; and (2) the contract was unenforceable because plaintiff’s unilateral 2005 settlement with the EPA violated notification provisions of the contract. The judge suggests that, if defendant had taken a hand in negotiations with the EPA, it could very well have made the same settlement as plaintiff. [Filed Jun. 22, 2007.] SECURITIES – LIMITATIONS 50-8-7823 DeBenedictis, etc. v. Merrill Lynch & Co., Inc., et al., Third Cir. (Alarcón, C.J.) (27 pp.) The plaintiff’s central claim was that the defendants’ Fund Registration Statements, which are comprised of a prospectus and a separate Statement of Additional Information misled investors by failing to disclose that Class B shares were never a rational choice of investment for them and that defendants’ brokers received larger commissions on sales of such shares. In this opinion, the circuit panel rejects plaintiff’s argument that the District Court erred in determining that the Registration Statements, certain news articles, and NASD press releases constituted “storm warnings” sufficient to trigger inquiry notice to him of his claims prior to Jan. 30, 2002. Consequently, the panel affirms the decision of Judge Linares holding that each of plaintiff’s claims is time-barred. [Filed Jun. 18, 2007.][Precedential.] Opinion underlying 35-3-7815 Quinlan v. Curtiss-Wright Corp., above: LABOR AND EMPLOYMENT – GENDER DISCRIMINATION – “GLASS CEILING” – DAMAGES – TAX CONSEQUENCES 25-3-7679 Quinlan v. Curtiss-Wright Corp., Law Div. � Essex Cy. (Goldman, J.S.C.) (70 pp.) The plaintiff, who worked for defendant for 25 years and served as its chief human resources executive, asserted that the defendant violated the LAD by failing to promote her to the position of Corporate Director of Human Resources and Management Development on account of her gender. In preparation for her suit, she photocopied, in the early morning hours, approximately 1830 pages of confidential personnel files. She also came into possession, during the course of her job, of the CEO’s performance evaluation of Lewis, the man who had been given the job she coveted; she photocopied that evaluation and sent it to her attorneys. Plaintiff was fired after defendant first discovered her photocopying of the personnel records during discovery. Plaintiff added a claim of retaliation for engaging in a protected activity. The first jury trial ended in a mistrial. The second jury found in plaintiff’s favor and returned a verdict of over $4.5 million, with a punitive damages award in the same amount. In this opinion, the court: (1) considers and denies defendant’s motions for a new trial, judgment n.o.v., and remittitur; (2) grants plaintiff’s motion for an award of pre-judgment interest, counsel fees and costs; and (3) defers plaintiff’s motion for an additional award to compensate her for the increased income taxes due because of the lump sum payment � the tax gross-up – until the filing of all supplemental materials and a possible plenary hearing on this issue. The entry of final judgment will also be deferred until the tax gross-up is calculated. [Decision dated Jun. 15, 2007.][Released Jun. 15, 2007.] � Susan M. Clapp, Esq., Editor

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