Justia Contracts Opinion SummariesArticles Posted in New Jersey Supreme Court
Manahawkin Convalescent v. O’Neill
When Frances O'Neill arranged for her mother, Elise Hopkins, to become a resident of Manahawkin Convalescent Center, she decided to pay Manahawkin's bills from Hopkins' Social Security benefits, rather than arranging for those benefits to be directly paid to the facility. When her mother was admitted to the nursing home, O'Neill signed a "Rehabilitation and Nursing Home Admission Agreement" which designated O'Neill as the "Responsible Party" for purposes of processing her mother's bills, and set forth remedies in case of a default of that obligation. Following Hopkins' death, Manahawkin demanded in writing that O'Neill pay a balance due on her mother's account. It ultimately filed a collection action against her. In a counterclaim, O'Neill asserted various causes of action, including claims based on the Nursing Home Act (NHA), the Consumer Fraud Act (CFA) and the Truth-in-Consumer Contract, Warranty, and Notice Act (TCCWNA). After the parties stipulated to the dismissal of the collection action, O'Neill reasserted her NHA, CFA and TCCWNA claims and sought class certification, which the trial court denied. The trial court granted summary judgment dismissing O'Neill's claims and construing the Admission Agreement to impose no obligation on O'Neill to devote her personal funds to her mother's care. The trial court therefore deemed the Admission Agreement to conform to the NHA, and dismissed O'Neill's remaining claims. The Appellate Division affirmed. Upon review, the Supreme Court held that the Admission Agreement met the requirements of the NHA, and that Manahawkin accordingly committed no unlawful act within the meaning of the CFA. Because Manahawkin's Admission Agreement imposed no requirements on O'Neill that contravened the NHA, and neither the Admission Agreement nor Manahawkin's collection complaint gave rise to a cause of action under the CFA or the TCCWNA, dismissal of O'Neill's claims was proper. "However, nursing homes and their counsel should ensure that each party's rights and remedies are clearly reflected in contracts and communications between facilities and individuals who arrange payment on a resident's behalf." View "Manahawkin Convalescent v. O'Neill" on Justia Law
D’Agostino v. Maldonado
Defendant Ricardo Maldonado owned a business purchasing homes from financially distressed owners, negotiating with lenders, and repairing and selling the homes. Anthony D'Agostino saw an advertisement for Maldonado's company and contacted Maldonado in 2008, at which time the estimated fair market value of plaintiffs' property was $480,000. The parties verbally agreed that plaintiffs would pay Maldonado, and he would repair the property and bring the mortgage current using rental payments. The documents Maldonado prepared and plaintiffs signed created a trust naming Maldonado the sole trustee. An option allowed plaintiffs to recover title by paying Maldonado $400,000 within one year. In March 2008, plaintiffs executed a quitclaim deed transferring full interest in the property to Maldonado. The deed stated that Maldonado paid $360,000 for the interest, though he actually paid nothing. Over the following months, Maldonado spent his own money on mortgage payments, outstanding taxes, and repairs. Anthony D'Agostino later offered $40,000 to regain title. Maldonado declined, informing plaintiffs they could repurchase the property for $400,000. Plaintiffs filed a complaint, alleging a violation of the CFA. The trial court found that plaintiffs had sustained their burden with respect to the CFA violation since the transaction was based on misleading documents that gave rise to an "unconscionable commercial practice." The trial court voided the conveyance to Maldonado, restored title to plaintiffs, awarded treble damages and attorneys' fees. The parties appealed, and the Appellate Division remanded only for a recalculation of plaintiffs' damages. After its review, the Supreme Court concluded that the trial court correctly found Maldonado's execution of the transactions at issue gave rise to an unconscionable commercial practice, and that that the trial court did not abuse its discretion in its calculation and subsequent awarding of damages. View "D'Agostino v. Maldonado" on Justia Law
Potomac Ins. Co. of Ill. v. Pa. Mfrs. Ass’n Ins. Co.
This case presented an issue of first impression for the Supreme Court: the allocation of defense costs incurred by the common insured of several carriers. Specifically, the issue was whether one insurer with an obligation to indemnify and defend the insured had a direct claim for contribution against its co-insurer for defense costs arising from continuous property damage litigation. Furthermore, the Court considered whether such a claim was extinguished when the insured gave up its claims against the co-insurer in a release negotiated and signed only by the insured and the co-insurer. The dispute arose from construction litigation brought by the Township of Evesham against a contractor, Roland Aristone Inc. for property damage. Although plaintiff, OneBeacon Insurance Company paid half of Aristone's legal fees and defense expenses, Pennsylvania Manufacturers’ Insurance Company, which also insured Aristone, initially disclaimed coverage and did not pay any of Aristone’s defense costs. The Appellate Division affirmed the portion of the trial court’s decision allocating defense costs among the several insurers. It recognized OneBeacon’s claim for contribution against PMA and affirmed the trial court’s holding that OneBeacon’s claim was not extinguished by the release negotiated by Aristone and PMA. Upon review, the Supreme Court held that, in light of each insurer’s obligation to indemnify and defend Aristone for a portion of the period in which the continuing property damage occurred, the trial court properly held that OneBeacon had a contribution claim against PMA. View "Potomac Ins. Co. of Ill. v. Pa. Mfrs. Ass'n Ins. Co." on Justia Law
Cole v. Jersey City Medical Center
Liberty Anesthesia Associates, LLC (Liberty), an independent contractor that provides anesthesia services at the Jersey City Medical Center (JCMC), contracted plaintiff Karen Cole to provide anesthesia services at JCMC. Cole's employment agreement with Liberty included an arbitration provision. After JCMC revoked Cole's work privileges, Liberty terminated Cole's employment pursuant to their agreement. Cole filed a complaint against JCMC asserting statutory and common law claims. JCMC impleaded Liberty as a third-party defendant and filed an answer to Cole's amended complaint, asserting thirty-five affirmative defenses, none of which referred to arbitration. After discovery, which included interrogatories and depositions, both Liberty and JCMC moved for summary judgment. After Cole settled her claims with JCMC, the court entered summary judgment in Liberty's favor on two of four causes of action and scheduled trial. The issue before the Supreme Court was whether a defendant could compel arbitration pursuant to an arbitration agreement after being joined and actively participating in litigation between a party and a non-party to the arbitration agreement. The Supreme Court concluded that Liberty's active participation in the litigation for twenty-one months before invoking the arbitration provision on the eve of trial constituted a waiver of its right to arbitrate. View "Cole v. Jersey City Medical Center" on Justia Law
Hirsch v. Amper Financial Services, LLC
Plaintiffs Michael Hirsch, Robyn Hirsch, and Hirsch, LLP, claimed that they lost money invested in securities that were part of a "Ponzi" scheme. In 2002, plaintiffs' accountant, EisnerAmper LLP, referred them to Marc Scudillo, a financial advisor employed by Amper Financial Services, LLC (AFS), for investment planning. Scudillo also served as a representative for Securities America, Inc. (SAI), a separate corporation that served as a broker-dealer handling securities transactions. Plaintiffs hired Scudillo and invested in a portfolio with a conservative investment strategy. Their relationship was not reduced to a written contract. On Scudillo's recommendation, plaintiffs purchased securitized notes from Medical Provider Financial Corporation (Med Cap) totaling $550,000. Plaintiffs signed two applications with SAI for the purchase of the Med Cap notes. Each SAI application contained an arbitration clause requiring disputes to be arbitrated by the Financial Industry Regulatory Authority (FINRA). The issue before the Supreme Court in this appeal was whether it was proper to compel arbitration between a non-signatory and a signatory to a contract containing an arbitration clause on the basis that the parties and claims were sufficiently intertwined to warrant application of equitable estoppel. The Supreme Court held that although traditional contract principles may in certain cases warrant compelling arbitration absent an arbitration clause, the relationship of the parties in this case and the claims in dispute here, viewed alone, was insufficient to warrant application of equitable estoppel to compel arbitration. View "Hirsch v. Amper Financial Services, LLC" on Justia Law
Shelton v. Restaurant.com, Inc.
Plaintiffs filed a complaint in Superior Court alleging that Restaurant.com's certificates violate the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA). Restaurant.com removed the matter to the federal district court, which granted its motion to dismiss. The judge concluded that certificates purchased by plaintiffs "provide an individual with a contingent right for discounted services at a selected restaurant[,]" but such a contingent right did not constitute the purchase of "property or service which is primarily for personal, family or household purposes." Therefore, plaintiffs were not "consumers" as defined by the TCCWNA and that the certificates were not "consumer contracts." Plaintiffs appealed. The United States Court of Appeals for the Third Circuit certified two questions to the New Jersey Supreme Court. (reformulated): were Restaurant.com's certificates "property" under TCCWNA; if so, were they "primarily for personal, family or household purposes;" and were they a written contract, that gave or "displayed any written consumer warranty, notice, or sign." The New Jersey Court concluded that Plaintiffs were "consumers" and the certificates were "property . . . primarily for personal, family, or household purposes." Furthermore, the certificates purchased from Restaurant.com were "consumer contracts" and the standard terms provided on the certificates are "notices" subject to the TCCWNA. View "Shelton v. Restaurant.com, Inc." on Justia Law
Sipko v. Koger, Inc.
This case presented the issue of revocability of a gift of stock in one company and the validity of stock transfers in two other companies. George Sipko and his two sons Robert and Rastislav managed Koger, Inc. George made an undocumented gift of 1.5 percent in Koger stock to each of his sons. George then formed Koger Distributed Solutions, Inc. (KDS) and Koger Professional Services, Inc. (KPS) The sons each owned fifty percent of KDS and KPS. According to Robert, George became angry after learning about a romantic relationship in which Robert was involved and threatened to physically harm Robert unless he signed certain documents. Robert signed a document transferring his stock in KDS "For Value Received." A second document, transferred Robert's KPS stock using the same language. Robert testified that he signed the KPS document on February 3, 2006, and it was backdated. At a 2006 board meeting, George conducted a purported recall of Robert's 1.5 percent share of Koger stock. George and Rastilav contended that any document signed by Robert was executed voluntarily. Robert then sued his father, Rastislav and the three companies seeking damages and equitable relief. Upon review, the Supreme Court held that George's gift of Koger stock to Robert was unconditional and therefore irrevocable. Robert's transfers of KDS and KPS stock were void for lack of consideration. View "Sipko v. Koger, Inc." on Justia Law
Selective Insurance Company of America v. Hudson East Pain Management
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.
Memorial Properties, LLC v. Zurich American Insurance Co.
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.
Fox v. Millman
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.