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STATE COURT CASES
CIVIL PROCEDURE — DISCOVERY SANCTIONS 07-2-8128 Scarboro v. Ganser, et al., App. Div. (per curiam) (7 pp.) The trial court justifiably denied plaintiff’s motion to vacate the dismissal of her automobile negligence case and to reinstate the complaint, based on her counsel’s repeated failure to comply with court rules and discovery. Whether through inability or recalcitrance, plaintiff has never complied with discovery and there is no indication that she ever will. CIVIL PROCEDURE — SANCTIONS 07-2-8129 Bakman, et ux. v. Gordon, et vir., App. Div. (per curiam) (4 pp.) While plaintiff’s counsel was less than candid with the trial court as to her reasons for requesting an initial adjournment of the trial date, and the sanctions imposed (dismissal without prejudice) for this dereliction of responsibility were entirely proper, and although counsel’s failure to appear on the return date of her own motion to reinstate the complaint appears to be equally indefensible, the appellate panel is troubled by the court’s imposition of the ultimate sanction of dismissal with prejudice without affording counsel an opportunity to justify her absence, and reverses. At that time, the court may also request that counsel provide a legal basis for admitting an expert report which appears to have been prepared and served on defendant long after the discovery end date. CONSUMER FRAUD — AUTOMOBILE REPAIR 09-2-8130 Ollendorf v. Monk, App. Div. (per curiam) (20 pp.) The trial judge mistakenly determined that plaintiff’s primary claim in this case was for rescission of the repair contract and not a claim for consequential damages caused by defendant’s deceptive business practices. The appellate panel is satisfied that plaintiff proved a prima facie claim for consequential damages proximately caused by defendant’s breach of contract and deceptive business practice by making a deceptive or misleading statement or false promise of a character likely to induce the plaintiff to authorize the engine repair in his automobile. Defendant indicated that he would completely rebuild the engine, making the vehicle like new; however, the proofs established that he did not completely rebuild the engine, failed to install a new oil pump as promised, and caused the engine to fail before the rest of the automobile. Plaintiff was entitled to compensatory damages for defendant’s failure to properly perform those repairs, and such damages constitute an ascertainable loss under the Consumer Fraud Act, proximately flowing from defendant’s misrepresentations. The panel also concludes that plaintiff established a prima facie claim for defendant’s unauthorized use of his vehicle, driving it 800 miles without permission; by using the IRS mileage allowance, plaintiff is entitled to damages as an ascertainable loss for this deceptive business practice. The trial judge correctly denied plaintiff’s request for the cost of a municipal transcript from an unrelated proceeding and denied plaintiff’s request for insurance costs during the period that defendant had possession of the vehicle. CORPORATIONS — DERIVATIVE SHAREHOLDER ACTIONS — DEMAND AND DEMAND FUTILITY 12-4-8131 Fagin, et al., etc. v. Gilmartin, et al., Chancery Div.–Somerset Cy. (Derman, P.J.Ch.) (28 pp.) Plaintiffs allege that Merck and Medco Health Solutions, Inc., a Merck subsidiary, acted improperly in recognizing approximately $14 billion in retail prescription drug co-payments as revenue despite the fact that neither Merck nor Medco bills for the co-payments, is billed for the payments or otherwise has any contact with such co-payments. They allege that this misstatement of revenue affected the compensation packages of Merck’s senior executives, which are based in part on reported revenues. Plaintiffs only made a demand on Merck’s Board of Directors (“the Board”) regarding the alleged overstatement of revenue. The action was removed to federal court. Plaintiffs filed an amended complaint on July 2003 in federal court to include a qui tam claim against Medco and Merck with regard to the False Claims Act, 31 U.S.C. � 3729, et seq. Plaintiffs did not demand that Merck or Medco pursue either qui tam claim. Likewise, Plaintiffs made no demand on Medco’s Board related to the co-payment claim. Plaintiffs claimed that any demand with respect to these three claims would have been futile. The court here grants defendants’ motions and (1) dismisses all counts against Medco and the qui tam claim against Merck; and (2) grants summary judgment in favor of Merck on the demand refused co-payment claim. Inter alia, conducting an analysis of the Aronson test on the demand futility issue, the court finds that demand is not excused as plaintiffs have not articulated particularized facts creating reasonable doubt that the directors were disinterested and independent. They have also not shown that either defendant received notices or demands from federal regulators or internal or external reports from accountants or auditors alerting the Board to the existence of a problem with sufficient “red flags” that would demonstrate the kind of extreme indifference or conscious disregard that excused demand in Abbott. As to the summary judgment motion on the demand refused claim, the evidence demonstrates that the Board made a considered business judgment in good faith to refuse based on a thorough review of a report prepared by outside counsel, which provided a reasonable basis for the conclusion that plaintiffs’ demand should be rejected. [Decision dated Jul. 19, 2007.] FAMILY LAW — ALIMONY — EQUITABLE DISTRIBUTION — PARENTING TIME 20-2-8132 Hyduk v. Hyduk, App. Div. (per curiam) (27 pp.) On defendant’s appeal from various provisions of the final judgment of divorce, the appellate court first affirms the Family Part judge’s designation of the plaintiff-mother as the parent of primary residence and his award of parenting time to the defendant-father. Although plaintiff was the working spouse and defendant nominally fulfilled the traditional role of homemaker, the judge’s determination that plaintiff was still the primary caretaker of the parties’ son is amply supported by the record, as is his best interest evaluation. As to the equitable distribution determinations, the court affirms in part and reverses in part. Inter alia, the judge aptly found that defendant failed to show that his life insurance policy was exempt because he did not show that money from the family assets was not used to pay the premiums on that policy. Remand is required for reconsideration of the exclusion of plaintiff’s Treasury Direct and Merrill Lynch accounts. As to the exclusion of an account established by plaintiff from her annual bonus for the son’s education, the court need not address defendant’s contention that the asset is distributable, since he has represented that his share would also be used for the son’s education; that restriction shall be imposed on the account on remand. On remand, the judge will also address defendant’s contention that certain marital funds that were improperly utilized by plaintiff for the defendant’s pendente lite expenses and her attorney’s fees; defendant is entitled to a share of those funds used by plaintiff for her own purposes. The court rejects defendant’s assertions that the judge erred in valuing plaintiff’s pension and in other distributions of assets. Although defendant sought to portray himself as having contributed substantially in non-financial ways to the home, the judge, as was his right, chose not to credit that testimony. As to alimony, the judge addressed all of the appropriate factors in awarding permanent and limited duration alimony to defendant. However, the appellate court remands to afford the trial judge the opportunity to explain why limited duration, as opposed to rehabilitative alimony, is appropriate here. [Decision dated Aug. 1, 2007.] FAMILY LAW — CHILD SUPPORT 20-2-8133 Caputa v. Caputa, App. Div. (per curiam) (9 pp.) The Family Part judge aptly denied defendant’s motion to reduce his child support payments and arrears, since defendant failed to demonstrate a sufficient change in circumstances to warrant such relief. Inter alia, defendant did not provide the judge with a current C.I.S. and failed to explain the circumstances that resulted in a dramatic increase in his weekly salary. It was entirely appropriate for the trial judge to consider defendant’s earning capacity “over the long haul.” FAMILY LAW — WITHDRAWAL OF COUNSEL 20-2-8134 Rizzolo v. Rizzolo, App. Div. (per curiam) (9 pp.) The trial judge erred in denying defendant’s counsel’s request to be relieved, and should have allowed defendant thirty to sixty days to secure counsel of her choice, rather than press counsel, who admitted he was not prepared, to trial. Although the appellate court appreciates the trial judge’s attempt to manage the calendar, he erred in pressing this thirteen-month old case to trial under the circumstances. Defendant has now secured able and diligent new counsel to pursue her claims. A new trial shall be conducted on remand. GOVERNMENT — PETITIONS 21-2-8135 Hernandez-Turner, et al. v. Adams, etc., et al., App. Div. (per curiam) (12 pp.) The plaintiffs circulated a petition objecting to the passage of two municipal ordinances — one providing for a full-time City Council President and one a salary ordinance providing for pay raises for certain officials — and sought that both questions be put on the ballot. The defendant City Clerk rejected the petition for procedural deficiencies, but the trial judge correctly applied N.J.S.A. 40A:9-165 in finding that plaintiffs’ petition contained the requisite number of signatures and was valid. The court rejects the defendants’ alternative argument that the petition should nevertheless have been rejected as a matter of public policy because it contained “many blatant false statements�” completely misstating the purpose behind the salary ordinance. As the trial judge noted, the petition was drafted by a lay person; she found the lack of perfect wording to be a harmless oversight, due in part to the fact that the intent of the petition was clear — namely, that plaintiffs wanted a proposition for the ratification of the salary increases to be put before the voters. There was no basis to conclude that plaintiffs “lied” to intentionally deceive the public. HEALTH — MEDICAID — ADMINISTRATIVE RECORD PROBLEMS 22-2-8136 J.A. v. Div. of Medical Assistance and Health Svcs., App. Div. (per curiam) (11 pp.) The appellate court remands for further proceedings the defendant’s determination that the petitioner-appellant does not currently meet Medicaid requirements for skilled care in a nursing facility. Due to his mental conditions, the Director agreed with the ALJ’s factual findings that petitioner is incapable of caring of himself and lacks personal resources to provide for the care and supervision he requires. The issue is the type of supervision he requires. The Director found that petitioner was independent in respect of most of the activities of daily living, but the appellate panel notes that the only expert witness testified differently. Without countervailing medical testimony, and with no reason given for rejecting the expert’s testimony, the Director’s decision is not adequately grounded in the record. Accordingly, the matter is remanded for a new hearing and updated reports on petitioner’s current condition, now two years later. The panel also notes the incomplete and virtually worthless transcript of the administrative proceedings below because of tape malfunctions and failures, and urges the OAL to frequently test its portable equipment or take other steps so that the appellate court is not hampered with incomplete records on critical issues and the OAL is not faced with a too-frequent need to re-hear matters because of equipment failure. INSURANCE — UNDERINSURED MOTORIST COVERAGE 23-2-8137 Amabile v. State Farm Indemnity Co., App. Div. (per curiam) (4 pp.) The trial court erred in denying the defendant carrier’s motion for summary judgment on plaintiff’s claim for UIM benefits under her former fianc�/now-husband’s automobile insurance policy, where the clear and unambiguous terms of the policy expressly limited such benefits to the insured, his spouse, and resident relatives, and plaintiff did not fit into any of those categories at the time of the accident. LABOR AND EMPLOYMENT — UNEMPLOYMENT COMPENSATION 25-2-8138 Buonsanto v. Bd. of Review, et al., App. Div. (per curiam) (2 pp.) The claimant was justifiably denied unemployment benefits because he left work voluntarily without good cause attributable to the work, the Appeal Tribunal justifiably rejecting claimant’s contention that his work exposed him to unacceptable danger. Claimant failed to establish that his fear of physical harm was reasonable and based upon circumstances or events related to his job. TORTS — DEFAMATION — ONLINE POSTINGS — JURISDICTION 36-2-8139 Goldhaber, et vir. v. Kohlenberg, App. Div. (Wefing, P.J.A.D.) (17 pp.) New Jersey may exercise jurisdiction over defendant, a California resident with no contacts in New Jersey, who allegedly posted defamatory messages about plaintiffs, New Jersey residents, on an online news group. [Approved for publication.] TORTS — MALICIOUS USE AND ABUSE OF PROCESS — EMOTIONAL DISTRESS — MALICIOUS USE OF PROCESS BY AN ATTORNEY 36-2-8140 LoBiondo, Jr., et ux., etc., et al. v. Schwartz, et al. v. Giordano Halleran & Ciesla, P.C., et al., App. Div. (per curiam) (19 pp.) The plaintiff owned a modest, one-story beach club across the street from defendant Schwartz’s property. Defendant objected to plaintiff’s attempts to increase the size of the club and plaintiff sued defendant for defamation and other torts. Defendant counterclaimed, alleging, inter alia, malicious use and abuse of process and intentional infliction of emotional distress. The jury found for plaintiff but the appellate panel reversed, and concluded that the facts were sufficient to find in defendant’s favor. Plaintiff’s complaint was dismissed with prejudice, and the counterclaims were remanded for further proceedings. The motion judge dismissed all claims and defendant appealed. The motion judge found that, although the appellate court had concluded that defendant made a sufficient prima facie showing of malicious use of process by plaintiff, the claim should be dismissed because of the “advice of counsel” defense. The appellate court reverses, believing that a jury question was presented as to the existence of the necessary conditions for that defense. The court affirms the judge’s dismissal of the malicious abuse of process claim against plaintiff. An offer of settlement cannot constitute the needed element of such a claim, and the court perceives no difference between an offer to dismiss one suit in return for the dismissal of another and the offer to dismiss one suit in return for the cessation of behavior deemed objectionable. The other actions taken in the litigation are, at most, an attempt to utilize evidence that may ultimately be rejected or to obtain information through the use of extensive requests. The judge did not set forth his analysis with respect to the dismissal of the emotional distress claim, which must be done on remand. Finally, the court considers what appears to be an issue of first impression — defendant’s claim that plaintiff’s counsel, in pursuing plaintiff’s lawsuit, committed malicious use of process against defendant. The court concludes that the Restatement approach best resolves the competing interests of insuring representation for marginal claims and preventing counsel from filing baseless claims or furthering the attorney’s own improper ends. To be liable, an attorney must know the client’s claim is baseless and either (1) know the client is litigating for an improper purpose which furthers the attorney’s improper purpose or (b) litigate for the attorney’s own improper purpose. Here, the claim was properly dismissed. Even assuming that plaintiff’s counsel could have been found to know that plaintiff was litigating for an improper purpose, which is doubtful, no reasonable fact-finder could determine that counsel pursued this litigation with the intent to further his own illegitimate purpose or that he had adopted an illegitimate purpose of the client. [Decision dated Aug. 1, 2007.]
FEDERAL COURT CASES
PENSIONS — FORMER EMPLOYEES — STANDING TO SUE — E.R.I.S.A. 56-8-8141 Graden, etc. v. Conexant Systems, Inc., et al., Third Cir. (Ambro, C.J.) (26 pp.) The circuit panel considers whether ERISA gives an ostensibly cashed-out former employee the right to sue the administrator of his former employer’s 401(k) plan for allegedly mismanaging plan assets and thus reducing his share of benefits. Because ERISA includes such a plaintiff in its definition of “participant,” the panel concludes that he has statutory standing to assert his claim. The panel holds that, when determining participant standing under ERISA, the relevant inquiry is whether the plaintiff alleges that his benefit payment was deficient on the day it was paid under the terms of the plan and the statute. If so, he states a claim for benefits, which, if colorable, makes him a participant with standing to sue. If, on the other hand, he seeks extra-contractual damages or benefits that never vested, then he is not a participant, and a federal court cannot entertain his suit. Here, because plaintiff merely sought the full amount of benefits owed him given defendant’s alleged breach of its duty of prudent investment, he has standing to maintain this suit, and the panel therefore vacates the District Court’s order dismissing plaintiff’s complaint for lack of statutory standing and remands for further proceedings. [Filed Jul. 31, 2007.][Precedential.] CRIMINAL LAW AND PROCEDURE — SENTENCING 14-8-8142 U.S.A. v. Hankerson, Third Cir. (Garth, C.J.) (14 pp.) Engaging in the three-pronged inquiry articulated by U.S. v. Cooper, the circuit panel affirms the 121-month sentence imposed on appellant by the District Court, and rejects his contention that it should be vacated because it is unreasonable and because he received ineffective assistance of counsel by the lawyer who handled his sentencing in violation of his rights under the Sixth Amendment to the United States Constitution. Inter alia, the panel rejects appellant’s contention that Judge Linares failed to give meaningful consideration to the kinds of sentences available; to his history and circumstances; to what he terms the “rehabilitative purpose of sentencing”; and to the instruction of 18 U.S.C. � 3553(a) that the court “shall impose a sentence sufficient, but not greater than necessary” to serve the listed purposes of sentencing. [Filed Jul. 31, 2007.][Precedential.] —Susan M. Clapp, Esq., Editor

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