Court Approves Service Of Complaint Via Facebook, No Word On How Many “Likes” It Received

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

Facebook (pd)Facebook is useful for a lot of things — humble bragging about your children, posting professionally taken candid photographs of your smiling family, announcing your engagement/marriage/pregnancy/baby's gender to several hundred of your closest friends, etc. In K.A. v. J.L., a New Jersey court added another item to this list. After observing that courts in other jurisdictions were almost evenly split on the issue, the court allowed plaintiffs in that case to serve defendant via Facebook. (When it researched the issue, I assume the court reviewed one of my prior posts about two New York courts that also allowed service via Facebook.)

K.A. involved very unusual facts. Plaintiffs sued defendant to "enjoin defendant from holding himself out as the father of their [adopted] son." Defendant, who was not the son's biological father of record, sent the son a friend request over Facebook. The son declined. Defendant then reached out to the son over Instagram, claiming that he was the son's biological father. Defendant allegedly informed the son that he knew where the son was born, and disclosed both the identity of the son's birth mother and that the son had "biological siblings at large." (Plaintiffs allege that defendant also sent a Facebook friend request to the son's sister, who, like the son, declined the invite.) Defendant also "incorporated a picture of [the son] into an image comprised of three separate photographs, each featuring a different person," and purportedly claimed that the collage was a picture of his children. Defendant shared this picture with the public on his Facebook account. Plaintiffs believe defendant obtained the image of the son from the son's Facebook account.

Plaintiffs claimed that defendant was a "complete stranger to them," and that they had no contact with him prior to the events that led to the litigation.  Plaintiffs' counsel attempted to serve cease and desist letters on defendant at his last known address via certified and regular mail. The certified letters were returned as unclaimed, but the letters sent by regular mail were never returned. Plaintiffs then sued, seeking an injunction preventing defendant from contacting their son or claiming to be his father. They sought permission from the court to serve the complaint on defendant via Facebook.

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Party Cannot Lose Its Right To Jury Trial For Violating Procedural Rules

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

Jury (pd)It is not often that a case that starts in the Special Civil Part — New Jersey's small-claims court — ends up before the New Jersey Supreme Court. But this is exactly what happened in Williams v. American Auto Logistics. It could not have been cost effective for the plaintiff to see this case through two separate bench trials, two separate appeals to the Appellate Division, and finally an appeal to the Supreme Court. But the issue in the case was so important that, notwithstanding the costs, the effort was likely worthwhile.

In Williams, plaintiff had his car shipped from Alaska to New Jersey by defendant. After he picked up the car, he discovered water damage in the trunk. Plaintiff sued in the Special Civil Part after efforts to amicably resolve the dispute failed. Plaintiff did not demand a jury trial in his complaint, but defendant did in its answer. At the pretrial conference, the trial court referred the parties to mediation, which was unsuccessful. Upon returning from mediation, defendant waived its jury demand. Plaintiff objected, but the trial court granted defendant's request. In support of its decision, the trial court noted that plaintiff had violated Rule 4:25-7 by failing to make the requisite pretrial submissions. (Among other things, Rule 4:25-7 requires parties to submit proposed voir dire questions, jury instructions, and jury verdict forms.) The trial court held that it could deny plaintiff's request for a jury trial as a sanction for this failure. Therefore, the case proceeded to a bench trial, where the trial court found no merit to plaintiff's claims.

Plaintiff appealed and the Appellate Division reversed and remanded. It held that a jury demand can only be withdrawn by consent, even when only one party demanded a jury trial and that party seeks to withdraw the demand. It further explained that "a trial judge may impose sanctions, including striking the jury demand, on a party that fails to submit the requisite pretrial information," but that the trial court in Williams erred by "allowing a single party to unilaterally waive the jury demand."

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NJ Supreme Court: LLP Cannot Be Converted To General Partnership For Failing To Maintain Liability Insurance

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

NJ Supreme Court (pd)On June 23, 2016, the New Jersey Supreme Court released its decision in Mortgage Grader, Inc. v. Ward & Olivo, LLP, a case in which I had the privilege of representing the New Jersey State Bar Association as amicus curiae. (I previously wrote about the case here.) As discussed below, the Supreme Court agreed with our arguments. 

In Mortgage Grader, a former client sued the defendant law firm and each of its partners after the firm dissolved. While the firm had maintained professional liability insurance while it was actively practicing, it did not purchase a "tail" policy to cover claims that arose after it dissolved. The trial court held that this violated Rule 1:21-1C(a)(3), which requires attorneys practicing as an LLP to "obtain and maintain in good standing one or more policies of lawyers' professional liability insurance which shall insure the [LLP] against liability imposed upon it by law for damages resulting from any claim made against the [LLP] by its clients." Accordingly, the trial court held that the individual partners were not shielded from liability as they would normally be as members of an LLP and were instead vicariously liable for their partners' negligence. In other words, the trial court effectively converted the LLP to a general partnership because it failed to maintain liability insurance. The Appellate Division reversed, holding that the trial court did not have the authority to strip the individual partners of their liability protections under either Rule 1:21-1C(a)(3) or the Uniform Partnership Act.

The NJSBA asked the New Jersey Supreme Court to affirm the Appellate Division's decision. The Supreme Court agreed, holding that: (1) the insurance requirements for LLPs did not extend to the period when a firm is "winding up" its business — i.e., when it is collecting receivables but no longer providing legal services; and (2) even if they did, an LLP could not be converted to a general partnership as a "sanction" for failing to maintain liability insurance. Justice Albin wrote a separate opinion, concurring with the judgment of the majority, but suggesting that the Court Rules be amended to provide that an LLP would lose its liability protection if it failed to meet the insurance requirements, and to require LLPs to purchase tail insurance for six years following their dissolution. 

The Supreme Court's opinion can be found here.

Refer(ral) Madness: Court Nixes Fee Sharing For Lawyer Who Referred Case To Lawyer Who Referred Case To Lawyer Who Handled Case

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

Ripped dollar (pd)
Under New Jersey law, lawyers can, in some instances, share fees with lawyers at a different firm to whom they refer a case. But what happens when Lawyer A refers a case to Lawyer B who then refers the case to Lawyer C? Can Lawyers A and B share in the recovery that Lawyer C achieves for the client? This was the question the Appellate Division faced in Weiner & Mazzei, P.C. v. The Sattiraju Law Firm, PC. The answer, in that case, was "no," but there are instances where this type of three-way sharing would be appropriate.

In Weiner & Mazzei, a lawyer was contacted by a family friend in need of advice on a possible workplace injury/change of employment case. The lawyer advised the family friend that he appeared to have a valid claim and referred the family friend to an attorney who specialized in that area of law. The first lawyer claimed that he told the family friend that the second lawyer would take the case on contingency and that the first lawyer would be paid a referral fee. The family friend denied ever being told about the referral fee.

After speaking with the first lawyer, however, the second lawyer also refused the case but agreed to refer it to defendant, a law firm with at least one certified civil trial attorney. The second lawyer had a standing referral agreement with defendant and defendant agreed to abide by the usual one-third referral fee contained in that agreement.

Defendant prosecuted the client's employment case and eventually reached a confidential settlement with the client's former employer. Plaintiffs — the first and second lawyers — sued, claiming they were jointly entitled to one-third of defendant's fee. Defendant moved for summary judgment, which was originally denied, but was later granted upon reconsideration. Plaintiffs appealed.

 

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When is an LLP not an LLP? NJ Supreme Court to Consider Whether an LLP Converts to a GP if it Fails to Maintain Malpractice Insurance

Scales (pd)
On Monday, the New Jersey Supreme Court will hear oral argument in a case – Mortgage Grader, Inc. v. Ward & Olivo, LLP — that involves insurance, court rules, and statutory interpretation, but still manages to be interesting. I have the privilege of representing the New Jersey State Bar Association as amicus curiae in the case and will be part of the oral argument. (Unlike the U.S. Supreme Court, the New Jersey Supreme Court live streams all of its oral arguments. Click here on Monday at 1 pm to watch.) 

In Mortgage Grader, a former client sued the defendant law firm and each of its partners after the firm dissolved. While the firm had maintained professional liability insurance while it was actively practicing, it did not purchase a "tail" policy to cover claims that arose after it dissolved. The trial court held that this violated Rule 1:21-1C(a)(3), which requires attorneys practicing as an LLP to "obtain and maintain in good standing one or more policies of lawyers' professional liability insurance which shall insure the [LLP] against liability imposed upon it by law for damages resulting from any claim made against the [LLP] by its clients." Accordingly, the trial court held that the individual partners were not shielded from liability as they would normally be as members of an LLP and were instead vicariously liable for their partners' negligence. The Appellate Division reversed, holding that the trial court did not have the authority to strip the individual partners of their liability protections under either Rule 1:21-1C(a)(3) or the Uniform Partnership Act.

The NJSBA has asked the New Jersey Supreme Court to affirm the Appellate Division's decision. It has further suggested that if the Supreme Court is inclined to change Rule 1:21-1C(a)(3) to require that attorneys practicing as an LLP obtain a "tail" insurance policy to cover claims that arise after they dissolve, that this change be made through the normal rule making process and not as part of a decision in Mortgage Grader.

[BONUS COVERAGE: I plan to stick around after the oral argument in Mortgage Grader to hear oral argument in Robertelli v. The New Jersey Office of Attorney Ethics, a case I blogged about here and here. Robertelli involved an ethics  grievance filed against a defense lawyer who "friended" a plaintiff on Facebook.]