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STATE COURT CASES ATTORNEY/CLIENT – FEES – LOCAL PUBLIC CONTRACTS LAW 04-2-9918 Law Offices of Gold, Albanese, et al. v. Jersey City Municipal Utilities Authority, etc., et al., App. Div. (per curiam) (9 pp.) The plaintiff law firm was retained by the defendant, with the contract specifying rates, and different fees for work pertaining to water ($25,000) and sewer ($90,000) infrastructures. Plaintiff reserved the right to have the agreement regarding the water infrastructure reviewed, in the event legal fees exceeded the contractual amount. The contracts were prepared by defendant’s staff counsel. Although plaintiff was paid at first, the Authority later stopped including their bills for approval in their agendas, despite the fact that the Authority’s counsel had approved the fees, defendant still asked plaintiff to perform legal work, and defendant had not complained of plaintiff’s services. Plaintiff eventually resigned, but continued to seek payment of its past due bills, resulting in this litigation. The trial judge granted plaintiff the difference between what it had been paid and the contractual amount of $115,000, but granted defendant summary judgment as to the $98,338 balance due, concluding that, under the public contract law, plaintiff was not entitled to payment beyond the contractual total of $115,000 in the absence of another enabling resolution; he rejected plaintiff’s promissory estoppel and implied contract arguments. The appellate panel disagrees, distinguishing the case relied upon by the trial judge and reversing for further proceedings, including discovery as to what fees plaintiff is entitled to recover. CIVIL PROCEDURE – FRIVOLOUS LITIGATION – COUNSEL FEES 07-2-9919 Mitchell’s Auto Body of Englewood, Inc. v. DeStasio, App. Div. (per curiam) (3 pp.) This case arose out of a dispute between defendant and plaintiff’s principal, Khorozian, over the cost of repairs to defendant’s car following a 1989 accident. Defendant was Khorozian’s tailor, and claims that he made various garments of clothing for Khorozian in 1990, in settlement of the monies owed plaintiff, in addition to monetary payments for the car repairs. Nevertheless, in 2006 he learned that plaintiff was going to file suit for monies allegedly due. Defendant’s counsel, who is Khorozian’s brother, notified plaintiff’s counsel that the statute of limitations had expired, and the case had been settled in 1990. Nevertheless, plaintiff filed suit. After the trial court dismissed the suit on defendant’s motion for summary judgment, defendant then sought counsel fees under the frivolous claim statute. The panel affirms the trial judge’s denial of this request, agreeing that, although the case was without merit, no sanctions were warranted under the circumstances. CONTRACTS – ASSET PURCHASE AGREEMENT – INJUNCTIVE RELIEF 11-2-9920 Riley, et al. v. Mazer, et al., App. Div. (per curiam) (5 pp.) This matter involves plaintiffs’ sale of two Exxon gasoline stations in 2000 and 2001 under two asset purchase agreements. The parties dispute whether an Exxon class action award, made pursuant to a settlement in 2005, was an asset included in the sales. The motion judge erroneously granted plaintiff summary judgment without making findings of fact and conclusions of law, and the appellate panel reverses and remands for further proceedings. The stay of the release of the award to plaintiffs, however, is vacated. Defendants have failed to show that, if the award is released, they will suffer irreparable injury without no adequate remedy at law; their legal right to their claim is settled; all material facts are uncontroverted; there is a reasonable probability of success on the merits; or that the balancing of the equities, taking into account the relative hardship to the parties, favors the entry of injunctive relief. INSURANCE – HOMEOWNERS’ COVERAGE 23-2-9921 Um, et ux. v. Cumberland Ins. Group, et al. v. RNR Contractors, Inc., et al., App. Div. (per curiam) (18 pp.) The court below aptly dismissed (1) the plaintiffs’ complaint for first party insurance coverage against defendant Cumberland, their homeowners’ insurance carrier; and (2) plaintiffs’ tort claim against the defendant RNR Contractors, Inc., which performed erosion and sedimentation control, and pipe utility and curb installation, with proper earth compaction, on an adjacent residential real estate development, on which construction began in 2002, fifteen years after plaintiff’s bought their home. Starting in Spring of 2003, plaintiffs experienced intense and continued vibrations due to the construction work, which they claimed resulted in physical damage to their home. Defendants’ experts disputed that the construction was the cause, and claimed that the damage was due to either excessive rain, and subsequent settlement of the house, or problems in its design and construction. Inter alia, the homeowners’ insurance policy was drafted to eliminate the efficient proximate cause doctrine, and excluded coverage for earth movement, from natural or man-made causes, and the type of damage plaintiffs’ home sustained. As to defendant RNR, the judge found that plaintiff’s expert rendered a net opinion. LABOR AND EMPLOYMENT – UNEMPLOYMENT COMPENSATION 25-2-9922 Mechler v. Bd. of Review, etc., et al., App. Div. (per curiam) (4 pp.) The claimant, a rural mail delivery postal worker, was justifiably denied unemployment benefits because she left work voluntarily without good cause attributable to the work. Plaintiff claimed that job stress, harassment and retaliation by her supervisor, and long hours due to her route induced medical problems. The Appeal Tribunal noted that claimant’s hours had already been reduced; she was being treated for ongoing psychiatric disorders; and her doctors recommended that she take a leave of absence. Nevertheless, she chose to resign instead, rather than continue with the grievance procedures. REAL ESTATE � COMMISSIONS – STATUTE OF FRAUDS – E-MAIL NOTICE 34-2-9923 GK Realty Svcs., LLC v. Stopar, et ux., et al., App. Div. (per curiam) (22 pp.) The Law Division properly dismissed plaintiff’s complaint seeking a real estate commission from defendants, after a jury verdict of no cause for action on the surviving claims for breach of implied contract and quantum meruit. Citing the recent appellate decision in Coldwell Banker Commercial/Feist & Feist Realty Corp. v. Blancke, P.W., which held that fax and ordinary mail notice did not meet the requirements of the Statute of Frauds, the panel rejects the plaintiff’s contention that the trial judge erred in granting the defendants’ motion for an involuntary dismissal of plaintiff’s express contract claims for failure to comply with the service requirements of the Statute of Frauds, because the Uniform Electronic Transactions Act permits service of a broker’s Statute of Frauds notice via e-mail. The panel holds that Coldwell Banker prohibits any type of notice delivery that is not contained in the statute. Further, even if e-mail had constituted proper service under the statute, plaintiff’s express contract claims would still fail because it did not establish that the e-mails had been sent as confirmation of a prior oral agreement to pay a real estate commission. The panel also rejects plaintiff’s claims that: (1) the trial judge provided the jury with an erroneous answer to the jury’s question on the second factor of plaintiff’s quantum meruit claim; and (2) the judge erred in refusing to allow plaintiff to call an expert witness as to the issue of “substantial break,” as it related to the efficient-producing-cause doctrine. REAL ESTATE – CONTRACTS – SETTLEMENTS 34-2-9924 K. Hovnanian at West Milford, L.L.C. v. Boulder Pond, L.L.C., App. Div. (per curiam) (14 pp.) The court dismisses the seller-defendant’s appeal from orders which enforced a settlement agreement in this case for breach of a real estate contract for development of a town house complex. Plaintiff ran into problems with getting a water allocation permit from the DEP, and argued that this constituted a “moratorium” under the contract, therefore extending its time to close. It also asserted that it had made additional payments for further extensions of time to close, although it had not been required to do so. It sought injunctive relief, enjoining defendant from selling the property to another party. Defendant answered and counterclaimed, asserting that plaintiff had not pursued its permit in good faith, and was estopped by its payments from seeking further extensions. Plaintiff amended its complaint to seek specific performance. After the parties settled, plaintiff still had trouble getting the DEP to act on its permit, and obtained a court order appointing a receiver to negotiate on behalf of defendant for a further extension of time to close. However, no additional settlement could be reached because defendant’s principals would not agree. The DEP was ultimately ordered to render a final decision on plaintiff’s application (which it denied). Plaintiff attempted to close one of the phases of the complex, but defendant took the position that plaintiff was in default, and rejected plaintiff’s “time-of-the-essence” closing date. Plaintiff against sought specific performance. The court noted that “equity abhors a forfeiture,” and that perhaps there would be a significant injustice to both parties if the transaction did not go forward, even though the contract clearly called for a final closing date which neither party would extend. Finding a genuine issue of material fact as to whether the master deed was complete, the judge denied plaintiff’s motion, subject to a hearing on that issue. After that hearing, the judge entered the orders enforcing the settlement, from which defendant appeals. Although the orders were clearly final, in that they resolved all open issues at the time, they no longer can be characterized as anything but interlocutory, since subsequent proceedings have occurred between the parties and the DEP. Plaintiff was granted leave to amend its complaint to assert two new causes of action, and decided it no longer had any interest in specific performance of the contract. Thus, there is no urgency in having the issues raised on appeal decided now, rather than after entry of a final judgment by the trial court. CRIMINAL LAW AND PROCEDURE � EVIDENCE � HEARSAY 14-2-9925 State v. Hill, App. Div. (per curiam) (34 pp.) The State appeals from the trial court’s denial of its motion in limine for a ruling to allow it to admit into evidence two out-of-court statements made by the co-defendant, defendant’s cousin, who the State did not intend to call as a witness at defendant’s trial. The State proffered the statements under the co-conspirator exception to the hearsay rule, but the judge ruled the statements were inadmissible because there was no independent proof of a conspiracy. She also found that defendant’s confrontation rights would be violated. The appellate panel agrees and affirms. Even if a conspiracy existed when the attempted robbery was committed, the panel finds that the statements, made six weeks later, were not “in furtherance of” or “during” the conspiracy. CRIMINAL LAW AND PROCEDURE – RIGHT TO REMAIN SILENT – CROSS-EXAMINATION 14-2-9926 State v. Noble, App. Div. (Baxter, J.A.D.) (34 pp.) The State may, consistent with a defendant’s right to remain silent, cross-examine him on the late filing of his alibi notice when such cross-examination is designed to highlight inconsistencies between the alibi notice and defendant’s testimony a mere two days later. The appellate panel concludes that here, where the cross-examination on the timing of the alibi notice served to demonstrate the unlikelihood that defendant’s recollection of the facts supporting his alibi defense would change so significantly in a two-day period, the State’s cross-examination did not constitute a prohibited evisceration of defendant’s right to remain silent. Instead, such cross-examination constituted a permitted “litigational” use of the late furnishing of an alibi notice. [Approved for publication.] FEDERAL COURT CASES BANKRUPTCY – VIOLATION OF AUTOMATIC STAY – WILLFULNESS – RECOUPMENT OF FRAUDULENTLY OBTAINED UNEMPLOYMENT BENEFITS � COUNSEL FEES 42-7-9927 I/M/O Seymoure, et ux.; I/M/O Yarbrough, Debtors, U.S. Dist. Ct. (Pisano, U.S.D.J.) (7 pp.) The Debtors in these consolidated cases filed for and received unemployment benefits from the appellant, State of N.J. Dept. of Labor (DOL). Subsequently, the DOL discovered that both Debtors were employed, that the benefits had been obtained by fraud, and that the Debtors were liable to refund the benefits improperly received. The Debtors subsequently filed Chapter 13 petitions, and the DOL filed proofs of secured claims in each proceeding. Through recoupment, the DOL recovered certain amounts from both Debtors, without having moved for relief from the automatic stay. The Bankruptcy Court found that the DOL had willfully violated the stay, even though the Debtors had obtained the benefits by fraud. It therefore ordered the DOL to pay $5,000 in attorney’s fees, plus costs, to the Debtors’ counsel. The order did not allocate the award between the two cases, nor indicate any reasons for setting the amount of the award. The District Court notes the unsettled law concerning whether recoupment of fraudulently obtained unemployment benefits constitutes a willful violation of the automatic stay, which stems from an inconsistency in this circuit as to how courts regard unemployment benefits. The Court is inclined to agree with those decisions that find that such recoupment is not a “willful” violation. However, it is nevertheless constrained to conclude that the Bankruptcy Court’s award of counsel fees was proper under the revised Code �362(k), as a “good faith” defense is no longer permissible, and the only exceptions cited in the Code section are not applicable here. Since there can be no meaningful review of the amount of the award, however, the matter is remanded for findings and conclusions. [Filed Mar. 12, 2008.] LABOR AND EMPLOYMENT – SOCIAL SECURITY APPEALS – PAYING LEGAL FEES TO PREVAILING APPELLANT OR DIRECTLY TO ATTORNEY 25-7-9928 Vargas v. Commissioner of Social Security, U.S. Dist. Ct. (Hayden, U.S.D.J.) (12 pp.) The court notes that the Social Security Administration seeks to press upon this District a new practice: routing through the claimant the legal fees payable under the Equal Access to Justice Act after a successful appeal of the denial of benefits, as opposed to paying the fee award directly to the attorney. The benefit to the successful claimant is non-existent; to the contrary, the court concludes that the practice is harmful. The benefit to the government is clear: an offset may be charged against the award should a litigant owe the government money. Although the Commissioner loses, another government agency may recover. This “Not So Fast” policy is fiercely challenged by the law firm that represents the successful claimant here, and, although the fees at issue are modest, the court notes that the issues are anything but. The court finds that such a policy would transform the successful attorney into an escrow agent, and would boost the collection power of the government, while eroding the procedural protections that keep the Debt Collection Improvement Act honest. The court is not persuaded that the analysis in Manning v. Astrue fully addresses the issues presented here. As a result, the court follows the established practice of disbursing EAJA legal fees directly to counsel. [Filed Mar. 12, 2008.] LABOR AND EMPLOYMENT – SOCIAL SECURITY DISABILITY 25-7-9929 Brown v. Astrue, etc., U.S. Dist. Ct. (Simandle, U.S.D.J.) (46 pp.) The ALJ found that appellant was not disabled with respect to the pain associated with her migraine headaches and trigeminal neuralgia. However, because the ALJ failed to address claimant’s ability to perform her past work on a regular and continuing basis in conducting the function-by-function assessment, the ALJ’s determination at Step Four of the qualifying disability test cannot be said to be supported by substantial evidence in the record, and the matter must be remanded. [Filed Mar. 12, 2008.] LABOR AND EMPLOYMENT – SOCIAL SECURITY DISABILITY 25-7-9930 Wooten v. Commissioner of Social Security Administration, U.S. Dist. Ct. (Simandle, U.S.D.J.) (31 pp.) On plaintiff’s appeal of the denial of her application for Social Security Disability benefits, the court considers whether the Commissioner properly determined that plaintiff was capable of performing work available in the national economy, and, therefore, was not disabled. The court determines that remand is necessary to the Commissioner for a re-determination of plaintiff’s residual functional capacity, taking into account all of the available medical and non-medical evidence of her physical, cognitive, and psychological limitations, especially including her panic attacks and her hallucinations. [Filed Mar. 12, 2008.] � -Susan M. Clapp, Esq., Editor � -END � -

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