Nissenbaum Law Blog

New Jersey Legislature Contemplates Setting Statute of Limitations for Residential Foreclosure Actions

Foreclosure Law:  Proposed Legislation: Currently pending in the New Jersey Legislature is bill A2263.  This bill seeks to codify previous caselaw and to solidify the appropriate statute of limitations for lenders to seek residential mortgage foreclosures.  It provides that an action must be commenced upon the earlier of: (a) six years from the date that the last payment under the mortgage was to be due; or (b) twenty years from the date that the debtor defaulted on the mortgage obligations, if he has not properly cured that default. 

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New York Court Refuses Foreclosure Action Based on Improper Assignment

Foreclosure Law:  New York Caselaw:  In an unpublished opinion, the Kings County Supreme Court recently held that Wells Fargo could not proceed to foreclose on certain real property, based on the fact that it lacked standing to bring such an action.  The Court noted that "a 'foreclosure of a mortgage may not be brought by one who has no title to it and absnet transfer of the debt, the assignment of the mortgage is a nullity.'"  In the instant case, Wells Fargo was seeking to foreclose on property based on a mortgage originally entered into by Argent Mortgage Company, LLC.  Wells Fargo apparently asserted that Argent had assigned that mortgage to Ameriquest Mortgage Company who then had assigned it to Wells Fargo.  The Court determined that these assignments were invalid, and that Wells Fargo therefore had no standing to pursue the foreclosure.  This determination was based on a few factors.  First, was that the assignments had not been recorded for more than fourteen months, and once recorded, they were recorded at the same time.  The Court also noted that the assignments were defective because they failed to include the required corporate resolution.   In addition, the Court noted that both assignments listed the same individual as the "agent," but both lacked a power of attorney showing that the individual had been granted the requisite authority to act on the companies'  behalfs. 

This case emphasizes the importance of adhereing to corporate governance procedures and ensuring that all transactions are properly "papered" in accordance with state law.  It also demonstrates a valuable defense to a foreclosure action:  we strongly recommend that all of the recorded documents relating to the subject mortgage be scrupulously reviewed to ensure that they properly meet the law's requirements.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New Jersey Appellate Court Holds that Foreclosure May Proceed Based on Defendant's Failure to Timely Respond

Foreclosure Law:  New Jersey Caselaw:  The New Jersey Appellate Court recently upheld the foreclosure of real propertylocated in Phillipsburg, New Jersey.  The foreclosure was apparently brought based on the owner's failure to pay property taxes.  The total unpaid taxes amounted to $3,281.04.  The City had apparently placed a lien on the property, and when they remained unpaid, the City then held a tax sale to recoup the amount owed.  There, the tax sale certificate was apparently sold, and a future purchaser of that certificate proceeded to commence foreclosure action to collect on the certificate.  Notably, the foreclosure action was commenced almost ten years after the accrual of the taxes for which the certificate was based. An order was entered, and the defendant then arrived to try to pay the balance at the last hour.  However, when he did so, he apparently tried to pay the balance with checks that were stale and a certified check that was in an improper amount.  Over a year later the property was foreclosed upon and title was transferred pursuant to a default judgment.  In the instant case, the defendant tried to vacate that judgment.    The Court refused to vacate the judgment, and the foreclosure stood.  This decision appears to be based primarily on the fact that the defendant was well aware of the action and had proper opportunity to address it prior to the judgment being entered, and prior to the property being sold to a new bona fide purchaser.  The lesson here is clear:  you cannot delay or otherwise ignore a foreclosure proceeding.  If you do so, you can waive your rights.  Once that has occurred, you may not be able to go back  and "fix it."  It is critical that you respond quickly and properly to a threatened foreclosure action, and to properly answer any court documents.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

Southern District of New York Reaffirms that Company Executives Can Be Personally Liable for FTC Violations

Business Law:  The Southern District of New York recently decided Federal Trade Commission v. Medical Billers Network, Inc., et. al., in which it reaffirmed the holding that an individual company executive can be held liable for the company’s acts under the Federal Trade Commission Act.  The Medical Billers case revolved around a “work at home” marketing program, where the defendant offered individuals the opportunity to purchase systems and then process medical billing claims from their homes in exchange with the promise of making “an average of $400-600 per week.”  The Federal Trade Commission (FTC) was involved when purchases of these packages requested refunds that were either refused by Medical Billers, or to which Medical Billers simply did not respond.   

The Federal Trade Commission Act (the “Act”) prohibits unfair and deceptive sales and marketing practices.  15 U.S.C. §5(a)(1).  Three elements generally need to be demonstrated: “(1) a representation, omission, or practice, that (2) is likely to mislead consumers acting reasonably under the circumstances, and (3) [that] the representation, omission, or practice is material.” 

The aspect of this case that is critical is that the FTC did not just pursue legal remedies against the corporate defendant.  Rather, it also sued the individual owners. And notably, this pursuit was successful.  In other words, the corporate shield was ineffective to protect the individual owners and officers of the company from FTC Act liability.  In reaching this decision, the Court, citing its previous holdings, articulated the following:

Individual defendants may be liable for corporate acts or practices if they (1) participated in the acts or had authority to control the corporate defendant and (2) knew of the acts or practices. . . . ‘Authority to control the company can be evidenced by active involvement in business affairs and the making of corporate policy, including assuming the duties of a corporate officer.’ (citations omitted).

The case therefore reiterates the importance of ensuring that business practices and promotional materials do not, even inadvertently, fall under the classification of false or deceptive.

We therefore recommend the following:

• Ensure that all advertising and promotional materials have been cleared by legal counsel prior to their publication and distribution.
• Implement employee training to advance sales methods that are effective, but not violative of the Federal Trade Commission Act.
• Implement management controls to verify that the recommendations and training protocols are being internally adhered to.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New York Legislature Amends Law Regarding Unlawful Discriminatory Employer Practices

Employment Law:  The New York legislature has amended the rules governing unlawful discriminatory employer practices to specifically address youthful offenders and sealed convictions for non-criminal violations. 

The law proscribes certain inquiries and/or employment decisions based on related information as unlawful discrimination.  The law specifically addresses inquiries being made of a potential employee in the interview process.  Prior to the current amendment, the law prohibited any employer, in connection with the employment of an individual, from inquiring about or acting adversely upon that individual on account of an arrest or criminal accusation, if such arrest or accusation was followed by the termination of the related criminal action or proceeding in favor of the individual. 

The amendment, effective as of November 1, 2007, extends this prohibition to inquiring about or acting adversely upon that individual on account of either:

• A youthful offender adjudication; or
• A conviction for any non-criminal violation which by statute shall remain sealed.

Notwithstanding the foregoing, an exception does apply to an arrest or accusation that is then-pending.  Also exempt from the statute are applicants for employment in any law enforcement agency.

We therefore recommend the following:

• New York employers should be extremely cautious in inquiring about or taking adverse actions against individuals based on prior arrests or accusations both in written applications as well as in interviews; 

• Any employee or interviewee questionnaires, including employment applications, should be reviewed by legal counsel;

• Employee agreements, manuals and other policies outlining corporate policies with regard to arrests or criminal accusations should be reviewed by legal counsel; and

• Employers should have training sessions and establish hiring protocols for company owners, human resource departments and other managers making employment decisions in an effort to avoid an accidental violation of the law.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New Jersey Enacts Internet Safety Dating Act

Internet Law:  The New Jersey Legislature recently passed the “Internet Safety Dating Act,” making it one of the first states to enact legislation of this nature, aimed at protecting against online predators.  Notably, the law applies to all websites that offer services to New Jersey residents.  A website, even if not based in New Jersey, must comply with the law’s edicts if it will have New Jersey residents that access or otherwise use the website.  The law became effective May 12, 2008.

The Internet Safety Dating Act requires an “Internet Dating Service,” to provide certain disclaimers on its website with regard to whether or not the site conducts criminal background screenings on website members.  Importantly, the Act defines an “Internet Dating Service” quite broadly.  Such a service is deemed to be any “person or entity directly or indirectly in the business, for a profit, of offering, promoting or providing access to dating, relationship, compatibility, matrimonial or social referral services principally on or through the Internet.”  This has been analyzed as including social networking websites.

Subject websites must provide a series of disclaimers, such as:

• Providing specific safety awareness notifications that, without limitation, include a “list and description of safety measures reasonably designed to increase awareness of safer dating practices.”  Though the Act provides some flexibility in terms of how a website can accomplish this, it provides examples and suggestions for such a notification.
• If the website will not be conducting criminal background screenings, it must disclose, clearly and conspicuously, to all New Jersey members the fact that it does not conduct such screenings.  The disclosure must be written in bold, capital letters in at least 12 point font.  The law further specifies how the disclosure needs to be sent to members, and mandates that it be sent through at least two of those forms.
• On the other hand, if the website does conduct criminal background screenings prior to allowing a member to join the site, the website needs to include that as a disclosure on the website.  Again, this disclosure must be written in bold, capital letters in at least 12 point font.  This disclosure needs to be on all website pages used when a New Jersey member signs up.
• Further, if the website does conduct such screenings, it will need to disclose whether it nevertheless allows someone who is identified as having had a criminal conviction to enter the site and communicate with New Jersey members.  The law also mandates that it also provide notice to members that all criminal background screenings are not foolproof, that they may provide a false sense of security, and other disclosures along these lines.

The Internet Safety Dating Act was enacted under New Jersey’s Consumer Fraud statute.  Accordingly, a violation of the Act constitutes a violation of the New Jersey Consumer Fraud Act, and without limitation, a violator may be subject to treble (3x) damages.

We therefore recommend the following:

• In light of the national (and international) reach of websites, we recommend that all companies that operate a website that might be construed as a dating or social networking site comply with the New Jersey law, regardless of whether it has a direct relationship to New Jersey.  Unless you are expressly prohibiting New Jersey residents from joining or using your site, arguably, by merely launching your website, you are offering your services to New Jersey residents and therefore need to comply with the Internet Safety Dating Act.
• All subject websites should immediately consult with counsel in order to have their screening protocols and disclaimers reviewed to ensure compliance with the Internet Safety Dating Act.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New Jersey Law Requires Advance Notice of Mass Employee Terminations

Employment Law:  The New Jersey Legislature recently passed the Millville Dallas Airmotive Plant Job Loss Notification Act, which will require qualified employers to provide advance notice of certain mass employee terminations.  The law is effective immediately, as of December 20, 2007.  It is essentially the New Jerseyanalog to the Federal WARN Act, 29 USC § 2101 et seq., (the Worker Adjustment and Retraining Notification Act).  The New Jersey law was essentially designed to address the Federal statute’s shortcomings. 

The Act specifically provides for required notices to employees in the event of certain termination events, including mass layoffs or a termination of operations.  In general, the statutory notice is required:

• In the event of a mass layoff consisting of the termination of employment at an establishment during any 30-day period for 500 or more full-time employees OR 50 or more of the full-time employees that represent one-third or more of the full-time employees at that establishment;
• With certain exceptions for events such as a fire, flood, court order, if a business establishment (which has been operated for more than three years) shuts down an establishment for 30 or more days, resulting in the termination of 50 or more employees; or
• If a business establishment (or operating units within an establishment) is permanently or temporarily transferred to another location, whether inside or outside of New Jersey, if such transfer results in the termination of 50 or more employees.

Upon the occurrence of any of the above-described events, the New Jersey Act imports several obligations on the employer.  Employers employing 100 or more full-time employees must provide statutory notice at least 60 days’ before the first termination of employment, termination of transfer of operations or mass layoff.  For this purpose, full-time employees are defined as employees working with the company for more than six months, and who work 20 or more hours a week.   Moreover, the notice must comport with the statute’s requirements and be submitted to:  (a) the Commissioner of Labor and Workforce Development; (b) the chief elected official of the municipality in which the business establishment is located; (c) each employee whose employment is going to be terminated; and (d) any collective bargaining units of employees working at the establishment.

The Act provides six-prongs which must be included in the written notification.  Further, the Act requires that the Commissioner of Labor and Workforce Development issue a form for notification which must be made available by March 19, 2008.  At that time, the notice must be made on that form.   

Notably, the 60-day notice period was revised per a previous gubernatorial veto, in order to match the notice period set forth in the Federal WARN Act.  However, the New Jersey legislature originally sought 90 days’ notice and the Act provides that the notice period will automatically change to match that of the Federal Act. 

In accordance with the Act, an employer who fails to provide timely and proper notice must pay each full-time employee who was terminated with severance.  The statute further provides that such severance payment shall be equal to one week of pay for each full year of employment.  The applicable pay rate is calculated as the higher of (a) the employee’s average regular rate of compensation over the past three years; or (b) the final regular rate of compensation paid to the employee.  This severance requirement is in addition to any severance that may be required under an applicable collective bargaining agreement. 

Furthermore, the Act provides for a civil remedy for the aggrieved employee. An employer who fails to timely provide the appropriate notice may be liable for damages including lost wages, benefits and attorneys’ fees. 

We therefore recommend the following:

• New Jersey employers should consult with counsel at the outset with regard to any major corporate strategy change, including closing an office or engaging in any significant termination or layoff plan; 

• Employers should ensure that their employment agreements are properly drafted to provide as much flexibility with regard to termination as the law will allow; and
• Any severance paid, whether with regard to the Act’s requirements or separate, should be paid pursuant to a severance agreement, including a release that is signed by the employee.  That severance agreement should be carefully drafted and reviewed by counsel.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

Amendment to New Jersey Uniform Construction Code Act Relating to Inspections

Construction Law:  The New Jersey legislature  recently amended the State Uniform Construction Code Act with regard to construction inspections.  With certain exceptions, the revised law provides that the same inspector must make a follow up inspection on single-family residence inspections, if he previously issued a notice of violation.  Specifically, the revised portions of the law state as follows:

When an inspector or team of inspectors finds a violation of the provisions of a construction permit, the code, or other applicable laws and regulations at an owner-occupied single family residence, and issues a notice of violation and an order to terminate the violation, the enforcing agency shall require the same inspector or team of inspectors who found the violation to undertake any subsequent reinspection thereof at the premises.  When the same inspector or team of inspectors cannot be assigned to undertake the reinspection, the enforcing agency may assign an available inspector provided the scope of the reinspection shall be limited to the violation for which the reinspection is required.

However, these requirements to not apply to violations of the plumbing or electrical subcodes, or to fire safety code violations, or to any violation of any other subcode that the Department of Community Affairs deems to be a health or safety violation.
 

Moreover, the law specifically provides that the property owner may nevertheless request a different inspector, team of inspectors, or supervisor, to perform any required reinspection.

Comments/Questions: ljm@gdnlaw.com

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New York Enacts the Truth in Music Advertising Act

Entertainment Law:  The New York State legislature enacted a new statute specifically aimed at advertising in the music industry.  The Truth in Music Advertising Act, NY Art & Cult Aff. § 34.01, et seq., was effective as of September 14, 2007 and specifically proscribes that:
                                                         

No performing group shall use, advertise or promote a live musical performance or production through the use of a false, deceptive or misleading affiliation, connection or association between a recording group and a performing group where such performing group is seeking to use the same or a substantially similar name as such recording group.

In other words, the law prohibits, with certain exceptions a musical group from misleading the public with regard to a live musical performance in New York by indicating an affiliation with another group, at least one member of which has previously released a commercial sound recording under the group’s name.  This could play out in a number of ways.  First, it would arguably prohibit a band from performing under a name that has been used by a recording group.  Likewise, the law would arguably prohibit the advertisement of a band under a name that is similar to that of a recording group.
 

The law dovetails with current State and Federal trademark and advertising laws, however it provides a specific cause of action and right for the Attorney General to seek a remedy in the proscribed wrongful behavior.  Moreover, the law provides for an assessment of civil penalties of up to $5,000.00 for a first violation, and up to $15,000.00 for subsequent violations.  This is in addition to other damages that may be available when seeking remedies under other laws, such as trademark law.  The law also specifically allows the Attorney General to obtain injunctions in relation to this conduct.

However, the challenge is the breadth of the statute.  The law does not appear to be intent-based. Moreover, the proscribed exceptions do not include the unknowing use of a recording group’s name.  It is therefore possible that a performing group could assume a name that is already in use by a recording group, and therefore be unwittingly in violation of the law.  This is compounded by the broad definition of “recording group.”  As stated, to be considered a recording group, the group need only have had one member release a commercial sound recording under that group’s name, and that sound recording can be of any nature in which the sound can be fixed, including CD, tape or computerized file.  Accordingly, a group could arguably meet this definition very easily.
 

Through the adoption of the Truth in Music Advertising Act, New York joins the over one-dozen other states that have adopted similar statutes, including New Jersey, Pennsylvania, Connecticut and Florida.  Interestingly, the New York law is aimed only at the use or advertisement of a name by a performing group.  This is a variation from other states laws.  For instance, New Jersey’s Truth in Music Advertising Act prohibits “any person” from such advertising or usage.  Accordingly, whereas the New Jersey law could arguably be used to also prohibit a venue from falsely advertising a performance by a recording group, the New York law does not appear to provide for such a violation against anyone other than the performing group itself.

Notably, these truth in advertising laws tend to be relatively new phenomena, with many of the statutes being enacted only in the past couple of years.  Accordingly, there is little case law interpreting or challenging the import of the laws.  New Jersey’s Truth in Music Advertising Act, which was adopted in January 2007 is now being challenged in the courts.  Specifically, there is a case pending in the U.S. District Court of New Jersey which represents one of the first cases to try to enforce the law’s reach.  Also pending is a current lawsuit against State Attorney General Anne Milgram challenging the enforcement of the law.

We therefore recommend the following:

• Musical groups should obtain legal counsel prior to adopting a group name in order to ensure that such name is not already in use, and in order to secure its rights to the name;
• Venues and musical groups should ensure that any and all advertising relating to their live performances in New York have been cleared by legal counsel prior to their publication and distribution; and
• Venues and musical groups alike should ensure that their contracts address this new law and the responsibilities of each party relating to the same.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

New York Legislature Amends Safety and Insurance Requirements for Construction, Excavation and Demolitions Operations

Construction Law:  The New York legislature amended the administrative code of the City of New York with respect to safety requirements during excavation and insurance obligations for construction or demolition operations.  The amendments were approved and made effective as of August 28, 2007.

Previously, distinctions were made based on whether or not the excavation was more or less than ten feet.  The new law applies equally to all excavations.  As amended, this regulation provides that whenever the safety of any adjoining building is or may be affected by an excavation, the person causing the excavation must provide safe support for the building, regardless of the depth of the excavation. To fulfill this duty, this person must, without limitation:

• Support the vertical load of the adjoining structure by proper foundations, underpinning or other equivalent means where the level of the foundations of the adjoining structure is at or above the level of the bottom of the new excavation;
• Support any increased vertical or lateral load on the existing adjoining structure by the new construction where the existing structure is below the level of the new construction; and
• Modify the foundation of the existing structure where the new construction will result in a decrease in the frost protection level for the existing structure such that it will fall below the established regulatory minimum.

The newly amended regulation also mandates that any person who obtains a permit for construction or demolition operations must, at his own expense, procure and maintain insurance to cover, for the duration of the operations, any and all adjacent property owners and their lawful occupants for all risks of loss, damage to property and injuries to or death of such persons arising out of the performance of the construction or demolition.

We therefore recommend that any individual or corporation undertaking construction, excavations or demolition operations in the City of New York make certain that they comply with the necessary support provisions and obtain proper insurance, in accordance with the amended regulations, prior to commencing operations.

Comments/Questions: ljm@gdnlaw.com Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com