‘Til Death, Not Bank Levy, Do You Part: Creditor Must Prove Funds In Joint Account Belong To Debtor, Not Wife

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

A wise colleague once told me that obtaining a judgment only gets you about 60% of the way home. Collecting on judgments is a sometimes overlooked, but almost always tedious and expensive process that makes me think my colleague was optimistic with his 60% projection. The Appellate Division's decision in Banc of America Leasing and Capital, LLC v. Flethcer-Thompson Inc., offers just one example of the many nuances of collection work that make it a minefield for the unwary.

In Banc of America, plaintiff obtained a judgment against several defendants in Michigan. It domesticated the judgment in New Jersey and obtained a bank levy against a joint account held by both defendant, Kurt Baur, and his wife, who was not a party to the lawsuit. After the sheriff served the writ and froze the assets in the account, plaintiff filed a turnover motion to have the funds turned over to satisfy a portion of the judgment. Baur and his wife opposed the motion, arguing that the funds in the account were the wife's personal property and derived from her pension, earnings, and tax refunds.

Before the trial court ruled on the motion, the parties entered into a consent order, under which defendants agreed to replace the "levied funds" with "replacement funds" in an equal amount. Once the "replacement funds" were deposited, plaintiff's counsel would release the "levied funds" back to defendants. In addition, defendants agreed to pay plaintiff $25,000 per quarter and $6,000 per month until the judgment was satisfied. Unfortunately, defendants defaulted on their obligations under the consent order, and plaintiff filed a new motion to turnover the "levied funds." Baur and his wife opposed the new motion on the same grounds as they had opposed the original motion. The trial court granted plaintiff's motion. In a three-sentence opinion, the court concluded that there was an agreement reached by the parties to avoid turnover, but defendants breached that agreement, therefore turnover was justified. Defendants appealed.

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Arbitration Provision Without Clear Jury Trial Waiver Still Not Enforceable

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

In recent years, and certainly ever since the New Jersey Supreme Court decided Atalese v. U.S. Legal Services Group, L.P., there is a perception that arbitration provisions have been more difficult to enforce in New Jersey. In Scamardella v. Legal Helpers Debt Resolution, LLC, defendants tried to get around the notice requirements set forth in Atalese — namely that an arbitration provision contain a clear waiver of a party's right to a jury trial — by arguing that those requirements were against public policy. They did not succeed, partly because the Appellate Division held that there was no evidence supporting the anecdotal belief that arbitration provisions were being struck down more frequently since Atalese.

In Scamardella, plaintiff entered into an agreement with defendants to negotiate a settlement of his debts with his creditors. As part of this agreement, plaintiff was required to establish a special purpose bank account with one of the defendants. The account agreement for the account contained an arbitration provision that included the following language:

In the event of a dispute or claim relating in any way to this Agreement or our services, you agree that such a dispute shall be resolved by binding arbitration in Tulsa, Oklahoma utilizing a qualified independent arbitrator of [defendant's] choosing. The decision of an arbitrator will be final and subject to enforcement in a court of competent jurisdiction.

Plaintiff alleged that one of the defendants did not perform as agreed and sued all of them, alleging violations of the RICO, Consumer Fraud, and Debt Adjustment and Credit Counseling Acts, along with various common-law claims. The trial court concluded that these claims were not subject to arbitration because the arbitration provision did not, as required under Atalese, "at least in some general and sufficiently broad way, [ ] explain that the plaintiff [was] giving up [his] right to bring [his] claims in court or have a jury resolve the dispute." In other words, the arbitration provision did not clearly indicate that plaintiff was waiving his right to a jury trial.

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Bank Has No Duty To Report Suspected Scam Perpetrated On Customer

by: Peter J. Gallagher (@pjsgallagher)

Does a bank have a duty to tell authorities that it believes one of the bank's customers is the victim of a scam? In a recent decision — Lucca v. Wells Fargo Bank, N.A. — the Law Division held that banks can report suspected scams (and will generally be shielded from liability against the customer suspected of being scammed if they do) but are not required to do so.

In Lucca, plaintiff made approximately 27 wire transfers totaling roughly $330,000, most of which were sent to Costa Rica to recipients that plaintiff did not know and never met. She did so at the direction of an individual who called her, identified himself as a lawyer, told her that he had a way for her to win some money, and provided her with information about the wire transfers that were part of the alleged money winning proposition. Plaintiff sued her bank and the individual at the bank with whom she interacted in connection with the wire transfers, claiming, among other things, that the bank acted in bad faith when it failed to "disclose the wire transfers to the appropriate authorities." The trial court held a two-day bench trial on this claim and dismissed this claim.

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Follow The Money: Real Estate Broker’s Duty To Account To Departing Salesperson For Earned But Unpaid Commissions

by: Michael L. Rich

What happens when a commercial real estate salesperson’s affiliation with a real estate brokerage firm terminates? What duty, if any is there to account for earned but unpaid commissions as of the termination date? Regulations of the New Jersey Real Estate Commission squarely address this issue. N.J.A.C. 11:5-4.1(e) provides:

"Upon the termination of the affiliation of a salesperson with a broker, the broker shall make a complete accounting in writing of all monies due the salesperson as of the date of termination and/or which may become due in the future. In the event any sums so accounted for are not in accord with the terms of the post-termination compensation clause in the written agreement between the broker and the salesperson, the broker shall give a complete and comprehensive written explanation of any difference to the salesperson with the accounting. Such accounting shall be delivered to the salesperson not later than 30 days after termination."

Failure to comply with this accounting requirement could subject the broker to potential fines or other penalties of the Real Estate Commission, or to civil action by the salesperson for money judgment for any earned but unpaid commissions.

Besides post-termination compensation provisions, the written agreement between the broker and salesperson frequently contains post-termination restrictive covenants such as confidentiality, non-solicitation and non-competition restrictions imposed on the departing salesperson. The enforceability of those post-termination restrictions is subject to the governing state law.