NJ Lawyers Can (Ethically) Use And Invest In Cannabis

In a recent opinion, the New Jersey Supreme Court Advisory Committee on Professional Ethics ruled that attorneys may use cannabis and operate/invest in cannabis businesses. The Committee noted that this conduct “remains technically illegal under federal law,” but does not, “as a general matter,” violate the Rules of Professional Conduct.

The Committee analyzed the issue under RPC 8.4(b), which prohibits an attorney from committing a “[1] criminal act that [2] reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer.” The Committee briefly recounted the history of cannabis regulation, both in New Jersey and on the federal level. It observed that, while legal under New Jersey law, the production, sale, and use of cannabis is still a “criminal act” under federal law. So the question before the Committee was whether this criminal act “reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer.”

The Committee held that it does not. This did not appear be a terribly difficult decision for the Committee. Instead, it succinctly concluded that “conduct that fully complies with State law” does not reflect adversely on the lawyer’s character. Moreover, although “technically illegal” under federal law, the Justice Department has “publicly taken the position that it will not enforce the federal law [criminalizing cannabis] in certain situations.” Therefore, the Committee held that “lawyers, like other New Jersey residents, may engage in this conduct.”

But the Committee cautioned that cannabis, “like alcohol, prescription medications, and certain over-the-counter drugs, can affect a lawyer’s ability to provide competent representation of clients.” So a lawyer must be careful “not to use cannabis in a manner that would impair the lawyer in the provision of legal services.”

And, as it relates to owning or investing in cannabis businesses. the Committee reminded attorneys that they must (a) “strictly comply with Rule of Professional Conduct 1.8(a),” which prohibits a lawyer from entering “into a business transaction with a client or knowingly acquir[ing] an ownership, possessory, security or other pecuniary interest adverse to a client unless” certain conditions are met, and (b) be aware of potential conflicts of interest under RPC 1.7(a)(2) if they invest in a client’s business.

New Jersey Court Answers The Burning Question: Can I Sue The Owner Of An Abandoned Church If I Slip And Fall On The Sidewalk Outside The Church?

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

The facts and legal issues in sidewalk slip and fall cases sometimes read like they are pulled from law school final exams. In New Jersey, the baseline legal rule is clear — owners of commercial properties generally have a duty to maintain, in reasonably good condition, the sidewalks abutting their property, while owners of residential properties do not. But does a property owner have a duty to maintain its sidewalks when:

the property is both residential and commercial, like a multi-family home where one unit is owner occupied and the others are rented (click here for more on that, but the short answer is that it depends on whether the property is primarily residential or primarily commercial ); or
the plaintiff is a tenant and sues the landlord after slipping on a sidewalk outside the rental property (click here for more on that, but usually, yes); or
the property is a commercial property, final judgment of foreclosure has been entered in favor of the lender, but no sheriff's sale has been scheduled (click here for more on that, but if the lender can be considered a mortgagee in possession, then yes); or
the property is owned by a condominium or common-interest community (click here for more, but generally, yes if it's a private sidewalk within the condominium, no if it's a public sidewalk abutting the condominium); or
the property is residential and the fall is caused by sweetgum spikey seed pods that fell from a tree on the defendant's property (click here, but, no).

And now one more can be added to the list thanks to the Appellate Division's decision is Ellis v. Hilton United Methodist Church, where the question presented was whether "sidewalk liability applies to an owner of a vacant church."

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Arbitration Provision Bounced Again, Even After Kindred Nursing Decision.

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

As readers of this blog know, arbitration provisions in consumer contracts are difficult to enforce in New Jersey. (Click here or here for a refresher.) There was some belief that the U.S. Supreme Court's recent decision in Kindred Nursing Centers Ltd. P'ship v. Clark might change this, but it does not appear, at least not yet, that it has. In a recent case, Defina v. Go Ahead and Jump 1, LLC d/b/a Sky Zone Indoor Trampoline Park, the Appellate Division was asked to revisit, in light of Kindred Nursing, its prior decision refusing to enforce an arbitration provision in a contract between a trampoline park and one of its customers. The Appellate Division did so, but affirmed its prior decision, holding that Kindred Nursing did not require New Jersey courts to change the manner in which they approach arbitration provisions.

I wrote about Defina in its first go-around with the Appellate Division — Bounce Around The (Court)Room: Trampoline Park's Arbitration Provision Deemed Unenforceable. The underlying facts of the case are unfortunate. A child fractured his ankle while playing "Ultimate Dodgeball" at a trampoline park. Before entering the facility, the child's father signed a document entitled, "Participation Agreement, Release and Assumption of Risk." The document contained an arbitration provision, which provided:

If there are any disputes regarding this agreement, I on behalf of myself and/or my child(ren) hereby waive any right I and/or my child(ren) may have to a trial and agree that such dispute shall be brought within one year of the date of this Agreement and will be determined by binding arbitration before one arbitrator to be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. I further agree that the arbitration will take place solely in the state of Texas and that the substantive law of Texas shall apply.

Notwithstanding this provision, the child's parents sued the trampoline park in state court, alleging tort claims for simple negligence and gross negligence, and statutory claims for alleged violations of the Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act.

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On Cloaking Devices And Usury: Lender Can Be Sued If It Uses Corporate Shell To Cloak A Personal Loan As A Business Loan

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

Cloaking devices are common in sci-fi movies like Star Trek and Star Wars. They are used to render an object, usually a spaceship, invisible to nearly all forms of detection. Although scientists are apparently working to make real-life cloaking devices, at this point they exist only in the movies and, apparently, in New Jersey courts, at least according to the Appellate Division in Amelio v. Gordon.

In Amelio, plaintiff owed an apartment building in Hoboken. He approached defendants about obtaining a loan to finish renovations on three units in the building, along with the common areas. Plaintiff claimed that defendants instructed him to create a corporate entity to obtain the loan. Plaintiff did as he was instructed, and formed a limited liability company, which obtained the loan from defendants. Plaintiff, who was identified as the managing member of the limited liability company, signed the loan documents on behalf of the company.

Plaintiff later sued, arguing that the fees and interest payments under the loan exceeded the amounts allowable under New Jersey's usury laws. He also claimed that defendants fraudulently convinced him to create a limited liability company and have that entity obtain the loan, just so they could charge him usurious fees and interest. Plaintiff sued in his individual capacity, not on behalf of the limited liability company. On the day of trial, defendants argued that the complaint had to be dismissed because plaintiff lacked standing to sue since the company was the borrower, not plaintiff. With little explanation, the trial court granted the motion and dismissed the complaint. Plaintiff appealed.

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“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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