“Young Man, There’s A Place You Can Go . . .” (But That Place Might Not Be Immune From Liability Under New Jersey’s Charitable Immunity Act If You Later Sue For Injuries You Suffered There)

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

These are not alternate lyrics to the the classic Village People song, YMCA, but they could be if the song were written by the Appellate Division panel that recently decided Lequerica v. Metropolitan YMCA of the Oranges.

In Lequerica, plaintiff was injured during a group strength and conditioning class at the YMCA. At one point, the instructor had the the class run toward a wall, touch it, and then return to the wall where they started. According to the Appellate Division:

On her return, plaintiff realized she was going too fast, and when she tried to stop she fell forward and hit her head "extremely hard" on the concrete wall in front of her. While running toward the wall, plaintiff was competing with a friend to see who could reach it first. Before she fell, plaintiff put her arm out in front of her friend in an effort to beat her to the wall. Plaintiff testified she was running so fast she felt she would not be able to stop at the wall, that she "tried to stop herself," and that ultimately, she "tripped."

Plaintiff suffered "a concussion, a large scalp laceration, and a left wrist fracture." She sued the YMCA and the instructor.

Defendants moved for summary judgment, arguing that (1) they were immune from liability under the Charitable Immunity Act, and (2) plaintiff could not establish a prima facie case of negligence. Plaintiff opposed the motion, arguing that the YMCA was not covered by the Charitable Immunity Act and that summary judgment was premature because discovery was not yet complete.

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Do Lawyers Have A Duty To Disclose, To The Client, Significant Errors Committed By Co-Counsel?

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

This was the question posed to the Committee on Professional Ethics of the New York State Bar Association. Its answer was a qualified yes — counsel has a duty to disclose the alleged error to the client but only if it was a significant error that could give rise to a malpractice claim.

The issue presented to the Committee was the following:

The inquirer was engaged to represent a client on the eve of trial. The client’s prior counsel is serving as co-counsel. In preparing the case, the inquirer has learned that co-counsel conducted virtually no discovery and made no document requests, although the inquirer believes correspondence and emails between the parties could be critical to the case. The inquirer believes this was a significant error or omission that may give rise to a malpractice claim against co-counsel. The outcome of the case, however, has yet to be decided. The inquirer is concerned about disclosing this situation to the client because it would undermine inquirer’s relationship with co-counsel, but the inquirer also believes it is in the client’s best interests to disclose the facts as soon as possible.

It is already established in New York (and several other jurisdictions, including New Jersey) that lawyers must report their own significant errors or omissions to clients. This requirement is based partly on Rule 1.4 and partly on Rule 1.7, each of which the Committee discussed in its opinion.

Rule 1.4 requires lawyers to keep clients informed about any material developments in their representation, and to explain issues "to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." A client may decide not to continue to retain a lawyer who makes significant errors or omissions, and the client cannot make an informed decision on this issue unless the lawyer self-reports his own errors. Accordingly, clients must self-report their own significant errors or omissions to their clients. The Committee held that this rationale applied equally to lawyers reporting significant errors or omissions committed by co-counsel because the decision facing the client in both situations was the same — whether to continue to retain the lawyer who committed the errors or omissions — and the client cannot make an informed decision on that issue without full disclosure.

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As If You Needed Reminding: Don’t Violate Protective Orders!

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

The Appellate Division recently reminded all lawyers of the importance of complying with protective orders. In Rotondi v. Dibre Auto Group, LLC, the Appellate Division affirmed a trial court's decision to disqualify plaintiff's counsel from continuing to represent plaintiff because she violated such an order.

In Rotondi, plaintiff purchased a new car from defendant car dealership. One year later, she attempted to refinance the car with the dealer, but ended up filing a class action lawsuit against the dealer and various other entities involved in the refinancing for alleged improprieties in the refinancing process. She alleged violations of the New Jersey Consumer Fraud Act and various other statutory and common law causes of action. Although filed as a putative class action, plaintiff's attempt to certify the class were eventually denied and the case, in the words of the trial court, "ultimately became simply a claim by [plaintiff] against the dealer."

As part of that lawsuit, the trial court entered a protective order that allowed the parties to designate materials as "Confidential" or "Attorneys' Eyes Only." Under the order, documents designated as "Confidential" could only be used by the "receiving party for purposes of the prosecution or defense of [the] action," and could not be used "by the receiving party for any business, commercial, competitive, or other purpose." Documents designated as "Attorneys' Eyes Only" could only be "disclosed [ ] to outside counsel for the receiving party and to such other persons as counsel for the producing party agrees in advance or as ordered by the court."

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Court Adopts Low Tech Solution to High Tech Evidence Problem

Litigation has been transformed over the past decade or so by e-discovery. An entire industry has developed around the collection and presentation of emails, text messages, social networking posts, etc. In large commercial cases, it is not unusual to have an outside vendor handling this evidence from discovery through trial. But what about a different kind of case, for example, a contested domestic violence hearing, where the victim, often acting pro se, comes to court with a smart phone containing allegedly threatening text messages, and seeks to introduce those messages into evidence. They only exist on the phone, so there is nothing that the victim can physically introduce into evidence, and therefore no documentary evidence of the messages that can be reviewed on appeal. How then does a court accept evidence from a plaintiff's cell phone into the court record?

This was precisely the question facing the court in E.C. v. R.H., a recent unpublished Law Division decision. In that case, plaintiff alleged that defendant harassed her through unwanted texts, social media posts, and voice mails. She asked the court to enter a restraining order against defendant. At the start of the hearing on her application, plaintiff sought to introduce evidence of several allegedly harassing communications that were stored on her cell phone. The court observed that the court rules, which were designed to handle tangible evidence, were not designed to handle a request like this: "[S]ome of the more traditional methods of introducing evidence into court do not address the specialized needs and practical problems which may arise when parties come into court and seek to introduce information stored on their cell phones directly into evidence." The Court further observed that this problem was exacerbated in the domestic violence context, which involves "expedited summary proceedings [and] self-represented litigants who have little or no legal training at all."

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Transfer Can Be Fraudulent Even If It Occurs Before Loan, Default, And Lawsuit Over Default On Loan

A recent Appellate Division decision should serve as a warning to anyone thinking about transferring assets and rendering themselves judgment proof before entering into a business deal. If the deal goes bad, the transfer might be deemed fraudulent and creditors might be able to look to the fraudulently transferred assets to satisfy their judgments.

In Anastasi v. Barmbatsis, defendants, husband and wife, held all of the shares in a single-purpose entity that owned and operated a Stewart's Root Beer in Franklin Park, New Jersey. Shortly before procuring a loan to open a new Stewart's location with a partner, husband transferred his interest in the entity to wife, along with nearly all of his interest in another entity that the two owned. Husband then entered into a deal with plaintiff — verbal, but "apparently sealed with a handshake" — to borrow $50,000 to use to open the new restaurant. Defendants used this money, along with other funds, to open the restaurant.

Husband agreed to repay the loan in five to seven months. This was subsequently extended but husband failed to repay the loan even with the extension. Plaintiff sued and obtained a default judgment against husband for $50,000. In post-judgment discovery, plaintiff learned about the pre-loan transfers from husband to wife. Thereafter, he sued both husband and wife alleging, among other things, that the transfers violated New Jersey's Uniform Fraudulent Transfers Act (the "UFTA"). The trial court ruled in plaintiff's favor. It held that wife was not personally responsible for paying back the loan, but plaintiff could satisfy his judgment with the interests in the two entities that husband had transferred to wife.

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