Justia Business Law Opinion Summaries

Articles Posted in Supreme Court of New Jersey
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The case revolves around the University Hospital's decision to award a contract for the design, construction, and operation of an on-site pharmacy to a bidder other than Sumukha LLC. Sumukha challenged the decision, but the hospital's hearing officer denied the protest. Sumukha then appealed to the Appellate Division. While the appeal was pending, Sumukha filed a second protest challenging the decision to change the pharmacy's planned location. When the hospital failed to respond, Sumukha filed a second appeal in the Appellate Division.The Appellate Division dismissed the appeal from Sumukha’s first protest, concluding that University Hospital’s determination was not directly appealable to the Appellate Division. It later dismissed Sumukha’s second appeal. Both dismissals were without prejudice to Sumukha’s right to file an action in the Law Division. The Court granted certification and consolidated the appeals.The Supreme Court of New Jersey found no evidence in University Hospital’s enabling statute that the Legislature intended the Hospital to be a “state administrative agency” under Rule 2:2-3(a)(2). The court held that University Hospital’s decisions and actions may not be directly appealed to the Appellate Division. The court affirmed the dismissal of the appeals, without prejudice to Sumukha’s right to file actions in the Law Division. View "In re Protest of Contract for Retail Pharmacy Design, Construction, Start-Up and Operation, Request for Proposal No. UH-P20-006" on Justia Law

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The American Civil Liberties Union of New Jersey (ACLU) sought to obtain records from the County Prosecutors Association of New Jersey (CPANJ), a nonprofit association whose members are the twenty-one county prosecutors. The ACLU claimed that CPANJ is a public agency required to disclose records under the Open Public Records Act (OPRA) and a public entity subject to the common law right of access. CPANJ denied the request, asserting that it is not a public agency for purposes of OPRA and is not a public entity subject to the common law right of access. The ACLU filed a lawsuit, but the trial court dismissed the complaint, holding that CPANJ is not a public agency within the meaning of OPRA and that CPANJ’s records do not constitute public records for purposes of the common law right of access. The Appellate Division affirmed the trial court's decision.The Supreme Court of New Jersey agreed with the lower courts, holding that CPANJ is neither a public agency under OPRA nor a public entity subject to the common law right of access. The court found that the ACLU’s factual allegations did not support a claim against CPANJ under OPRA or the common law. The court concluded that a county prosecutor, who is a constitutional officer, is not the alter ego of the county itself, and does not constitute a “political subdivision” as that term is used in OPRA. Therefore, CPANJ, an organization in which the county prosecutors are members, is not a public agency for purposes of OPRA. The court also found that the ACLU did not allege facts suggesting that CPANJ is an entity upon which a common law right of access request for documents may properly be served. The judgment of the Appellate Division was affirmed. View "American Civil Liberties Union of New Jersey v. County Prosecutors Association of New Jersey" on Justia Law

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A group of neurosurgeons and their practice group, Comprehensive Neurosurgical, P.C., sued The Valley Hospital after the hospital granted another group of neurosurgeons exclusive privileges in areas where the plaintiffs had previously held privileges. The plaintiffs claimed that the hospital did not deal with them fairly or act in good faith when it granted these exclusive privileges. The plaintiffs had joined the hospital's medical staff in 2003 and had helped grow the hospital's neurosurgical programs and facilities. They primarily derived their practice from treating "unassigned" ER patients and also received "specialized privileges" to use certain equipment. In 2015, the hospital granted a different group of neurosurgeons exclusive rights to use this equipment and to treat "unassigned" ER patients, thereby revoking the plaintiffs' privileges in those areas.The plaintiffs filed a complaint against the hospital. Following summary judgment motions, two claims reached the jury: a breach of contract claim and a breach of the implied covenant of good faith and fair dealing claim. The jury found no cause of action on the breach of contract claim but awarded damages based on the breach of implied covenant claim. The hospital appealed, and the Appellate Division affirmed both the denial of summary judgment and the jury’s verdict. The hospital then petitioned for certification.The Supreme Court of New Jersey held that the plaintiffs’ good faith and fair dealing claim properly survived summary judgment, but the jury was not correctly charged or asked to rule on that claim. The court found that the trial judge failed to instruct the jury that the only underlying contract to which the implied covenant could attach had to be one beyond the rights afforded by the Bylaws. The court also found that the improper admission into evidence of privileged emails and the improper remarks by plaintiffs’ attorney had the capacity to lead the jury to reach a verdict it would not have otherwise reached and thus deprived the hospital of a fair trial. The court reversed the verdict on the implied covenant claim, vacated it, and remanded the matter for further proceedings. View "Comprehensive Neurosurgical, P.C. v. The Valley Hospital" on Justia Law

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This insurance coverage dispute between a public entity joint insurance fund (JIF) and Star Insurance Company (Star), a commercial general liability insurance company, turned on whether the JIF provided “insurance” to its members or, instead, the JIF members protect against liability through “self-insurance.” That distinction was pertinent here because Star’s insurance policy included a clause under which its coverage obligations began only after coverage available through “other insurance” has been exhausted; the clause, however, did not mention “self-insurance.” Star argued the JIF provided insurance and therefore Star’s coverage was excess to the JIF; the JIF disagreed, contending that because its members were instead “self-insured,” Star’s coverage was primary. The New Jersey Supreme Court found that under the plain language of N.J.S.A. 40A:10-48, a JIF “was not an insurance company or an insurer under New Jersey law, and its “authorized activities . . . do not constitute the transaction of insurance nor doing an insurance business.” By the statute’s plain terms, JIFs cannot provide insurance in exchange for premiums, as insurance companies typically do; instead, JIF members reduce insurance costs by pooling financial resources, distributing and retaining risk, and paying claims through member assessments. Therefore, JIFs protect members against liability through “self-insurance.” “Self-insurance” is not insurance. The Court affirmed the grant of summary judgment to the JIF and denial of summary judgment to Star. View "Statewide Insurance Fund v. Star Insurance Company" on Justia Law

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The issue this appeal presented for the New Jersey Supreme Court’s review centered on an exclusionary clause in a commercial general liability insurance policy issued by Admiral Insurance Company (Admiral) to Richfield Window Coverings, LLC (Richfield). Richfield sold window coverage products, including blinds, to national retailers like Home Depot and provided retailers with machines to cut the blinds to meet the specifications of the retailers’ customers. Colleen Lorito, an employee of a Home Depot located in Nassau County, was injured while operating the blind cutting machine. She and her husband filed a civil action against Richfield, asserting claims for product liability, breach of warranty, and loss of spousal services. Admiral denied any obligation to defend or indemnify, asserting the claims were not covered under the policy based on the Designated New York Counties Exclusion of the insurance policy. Richfield filed a declaratory judgment action seeking to compel Admiral to defend it in the Lorito case and, if necessary, indemnify it against any monetary damages awarded to the plaintiffs. The Law Division granted summary judgment in favor of Admiral. The Appellate Division reversed, finding that “Richfield’s limited activities and operations have no causal relationship to the causes of action or allegations.” The Supreme Court found that the policy’s broad and unambiguous language made clear that a causal relationship was not required in order for the exclusionary clause to apply; rather, any claim “in any way connected with” the insured’s operations or activities in a county identified in the exclusionary clause was not covered under the policy. Richfield’s operations in an excluded county were alleged to be connected with the injuries for which recovery was sought, so the exclusion applied. Admiral had no duty to defend a claim that it is not contractually obligated to indemnify. View "Norman International, Inc. v. Admiral Insurance Company " on Justia Law

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East Bay Drywall, LLC was a drywall installation business that hired on a per-job basis. Once a builder accepts East Bay’s bid for a particular project, East Bay contacts workers -- whom it alleged to be subcontractors -- to see who is available. Workers are free to accept or decline East Bay’s offer of employment, and some workers have left mid-installation if they found a better job. In this appeal, the issue this case presented for the New Jersey Supreme Court was whether those workers were properly classified as employees or independent contractors under the Unemployment Compensation Law, which set forth a test -- commonly referred to as the “ABC test” -- to determine whether an individual serves as an employee. On June 30, 2013, East Bay, a business registered as an employer up to that point, ceased reporting wages to the Department of Labor and Workforce Development. Consequently, an auditor for the Department conducted a status audit that reviewed the workers East Bay hired between 2013 and 2016 to determine whether they were independent contractors, as defined by the ABC test. The auditor ultimately found that approximately half of the alleged subcontractors working for East Bay between 2013 and 2016 -- four individuals and twelve business entities -- should have been classified as employees. The Department informed East Bay that it owed $42,120.79 in unpaid unemployment and temporary disability contributions. The Supreme Court was satisfied that all sixteen workers in question were properly classified as employees, but it remanded the case back to the Department for calculation of the appropriate back-owed contributions. View "East Bay Drywall, LLC v. Department of Labor and Workforce Development " on Justia Law

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In 2013, the New Jersey Supreme Court affirmed the Appellate Division’s holding that Koger Distributed Solutions, Inc. (KDS) and Koger Professional Services, Inc. (KPS) had value as independent entities rather than being solely dependent on their parent company, Koger Inc. (Koger). The Court also held that Robert Sipko’s relinquishment of his 50 percent interests in KDS and KPS in 2006 was void for lack of consideration. The matter was remanded the trial court to determine what, if any, remedy was appropriate to compensate Robert for his interests in KDS and KPS -- companies that were rendered valueless by the time the matter reached the Supreme Court. In 2016, the trial court held that the appropriate remedy was a buyout of Robert’s interests in the companies given the court’s finding that George and Rastislav Sipko deliberately stripped the companies of value for the specific purpose of putting the money beyond Robert’s reach. The trial court accepted Robert’s expert’s valuation of the companies and found that KDS and KPS, at the time Robert filed the complaint in 2007, were worth approximately $1.5 million and $34.9 million, respectively. Accordingly, Robert’s 50 percent ownership in both companies totaled over $18 million, plus interest. On appeal, the Appellate Division agreed that a buyout was the appropriate remedy given the record. The court, however, remanded the matter for the trial court to determine whether a marketability discount should be applied. In light of all the defendants’ conduct regarding KDS and KPS to strip Robert of his rightful interests, “equity cannot abide imposing a marketability discount to the benefit of defendants.” The trial court’s acceptance of Robert’s expert’s valuation of the company fell within its broad discretion and was fully supported by the record. Defendants were given the opportunity to present an expert valuation of the companies on remand but made the strategic decision not to do so. Therefore, the Supreme Court declined to provide defendants with “another bite of this thoroughly chewed apple,” and reinstated the judgment of the trial court. View "Sipko v. Koger, Inc." on Justia Law

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Plaintiff Aleice Jeter filed a negligence claim against Sam’s Club after sustaining injuries when she slipped on one or more grapes. Plaintiff stated that she fell while walking away from the checkout area, “halfway past” the fruit and vegetable aisle. Sam’s Club asserted several defenses, including lack of actual or constructive notice of the hazardous condition -- loose grapes on the floor. The trial court, after acknowledging that no party had moved for summary judgment, sua sponte conducted an N.J.R.E. 104(a) hearing to determine whether the "mode of operation" rule applied and, if not, whether plaintiff could provide some evidence of actual or constructive notice. The court agreed with Sam’s Club that the mode of operation rule did not apply, then proceeded to analyze the case under traditional negligence principles that require actual or constructive notice of the dangerous condition -- grapes on the floor. Finding that there was no evidence as to “how long this particular grape [was] on the floor,” the court held that plaintiff failed to meet her burden of proving actual or constructive notice and dismissed the case with prejudice. Finding no reversible error in the trial court's judgment, the New Jersey Supreme Court affirmed. View "Jeter v. Sam's Club" on Justia Law

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Plaintiff Graphnet, Inc. and defendant Retarus, Inc. were considered industry competitors -- they each provided, among other things, cloud-based facsimile services. In 2014, Retarus published a brochure containing allegedly defamatory statements about Graphnet. Graphnet representatives received a copy of the brochure at a May 2016 event. In August 2016, Graphnet filed a complaint against Retarus. Throughout discovery, Graphnet failed to produce requested documents and took no depositions. Based on Graphnet’s failure to present supporting evidence, the trial court dismissed all claims except for the defamation and slander claims. The trial court and the parties agreed that the court would charge the jury pursuant to Model Civil Jury Charge 8.46, “Defamation Damages (Private or Public),” which instructed a jury on the elements of defamation. The trial court’s instructions tracked the model charge closely, including Section D, which is devoted to “Nominal Damages for Slander Per Se or Libel.” In this appeal, the issue presented for the New Jersey Supreme Court's consideration was whether a new trial on all damages was required when the jury was improperly instructed on nominal damages and a plaintiff opposes remittitur. Graphnet argued the trial court erred as a matter of law by ordering remittitur without Graphnet’s consent. The Appellate Division affirmed in part, reversed in part, recognizing the jury’s $800,000 nominal damages award was “shockingly excessive and cannot stand” but concluded that the trial court improperly awarded Graphnet $500 in nominal damages in violation of the doctrine of remittitur. The appellate court remanded for a new trial on nominal damages only. As the Appellate Division found, the Supreme Court found remittitur was improper without Graphnet’s consent. But this matter required a new trial on all damages in which the jury was properly instructed on actual and nominal damages. The Supreme Court also referred Model Civil Jury Charge 8.46D to the Committee on Model Civil Jury Charges to be amended. View "Graphnet, Inc. v. Retarus, Inc." on Justia Law

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Dr. Dominick Lembo employed Arlene Marchese in his dental practice as his office manager, and Karen Wright, a dental hygienist. Sometime before December 2011, Marchese and Wright unlawfully took possession of numerous checks totaling several hundred thousand dollars, forged Lembo’s indorsement on the checks, and deposited the proceeds from the forged checks into their personal accounts at TD Bank. In February 2015, Lembo filed a complaint against TD Bank, alleging that “TD Bank knew or should have known that Marchese and/or Wright were not permitted to negotiate checks made payable to [Lembo].” The complaint also alleged that by permitting them to negotiate checks with forged indorsements, TD Bank “aided and abetted Marchese and Wright in their fraudulent scheme and conduct.” The complaint did not assert that Lembo had a banking relationship with TD Bank. And Lembo did not file an action for conversion under the Uniform Commercial Code (UCC) within the three-year limitations period. Had Lembo done so, TD Bank would have been strictly liable for depositing or cashing those checks, subject to the defenses in N.J.S.A. 12A:3-405 or N.J.S.A. 12A:3-406. The trial court granted the Bank's motion to dismiss, finding that the UCC governed Lembo's remedies against the Bank, and “common law negligence is not such a remedy” in the absence of a “special relationship” between Lembo and the bank. The court also rejected Lembo’s argument that the Uniform Fiduciaries Law (UFL) provided an affirmative cause of action against the bank. The Appellate Division reversed, reading into the complaint the basis for an affirmative UFL claim, and remanded to allow Lembo to amend the complaint to assert such a claim. The New Jersey Supreme Court concluded the Appellate Division misconstrued the purpose of the UFL, finding the Legislature enacted the UFL not to create an affirmative cause of action against a bank but to provide a defense when the bank is sued for failing to take notice of and action on the breach of a fiduciary’s obligation. "The UFL confers a limited immunity on a bank, unless the bank acts in bad faith or has actual knowledge of a fiduciary breach." The Supreme Court found no affirmative cause of action arose under the statute; whether a UFL claim was adequately pled was therefore moot. Recognizing the predominant role the UCC plays in assigning liability for the handling of checks, the Supreme Court also found Lembo had no “special relationship” with the bank to sustain the common law causes of action. View "Lembo v. Marchese" on Justia Law