Do You Need to Occupy a Residential Development in Order for the Residential Consumer Fraud Act Regulations to Apply?

Are residential structures that are not occupied, nor intended to be, protected under the home improvement regulations of the Consumer Fraud Act? This question was addressed in the recent case of Luma Enterprises, L.L.C. v Hunter Homes & Remodeling, L.L.C., Superior Court of New Jersey, Appellate Division, Docket No. A-6094-11T3. (July 1, 2013) [READ CASE HERE]
In that case, plaintiff contracted with defendant to renovate a structure into a daycare facility. Plaintiff agreed to pay the contract price in installments. Both parties agreed that failure to make an installment payment within ten days of its due date would result in a material breach. During renovation, plaintiff made two untimely payments, but defendant continued to work on the project without protest. After receipt of a third late payment, defendant stopped working on the project. Plaintiff filed a complaint and alleged
·         Consumer fraud; and
·         Breach of contract.
The Court dismissed the consumer fraud complaint. It found that the Consumer Fraud Act (“CFA”) did not apply due to the building was not occupied as a residence. Plaintiff appealed.
Plaintiff argued that the property’s residential zoning gave it an inherent residential use and thus was considered a “home improvement” under CFA regulations. The Court, however, held that plaintiff never intended the structure to be used as a home or place of residence – and indeed, no residents were living there – therefore the CFA was not applicable.
This holding meant that the Contractor was not held liable under the Consumer Fraud Act.

What Happens When a Pay-on-Death Account Holder Mistakenly Appoints the Wrong Person As Its Beneficiary?

In Stephenson v. Spiegle, Jack M. Murray (“Murray”) executed a Will prepared by an attorney, William E. Spiegle, III (“Attorney”).  See Stephenson v. Spiegle, 429 NJ Super 378 (App. Div. 2013) at 380. The Will left his estate to his family. It stated that any assets he had – whether owned by him directly or through a trust that he might create for the benefit of his family – should pass to his family.

The Pay-On-Death Account

About two months later, Murray went to a bank and opened a pay-on-death account (“Account”). Id. A pay-on-death account is one that directs who will receive its balance when the account-holder dies, the beneficiary. Initially, Murray wanted his family trust to be the beneficiary of the Account. That would have meant that the balance would go to the trust and in turn (as stated in the Will), to his family members. Id.  Unfortunately, a bank representative dissuaded Murray from including this instruction because he did not have the trust documents with him at that time. Id.  Accordingly, Murray took the interim step of naming his Attorney as the beneficiary, with the intent that Murray would change it to the trust at a later time. Id.

Unfortunately, Murray did not do so before he passed away less than a year later. Murray left approximately one-third of his estate, $143,151.26 (“Balance”), in the Account. Id.  This meant that  the Attorney – rather than Murray’s family – was technically entitled to receive the Balance.

The executor (“Executor”) of Murray’s estate (the person in charge of distributing Murray’s estate assets) discovered the Account. Id.  He contacted the Attorney who understandably took the position that the Attorney was the Account’s sole beneficiary.

I have no idea why this [Account] was established. It was established approximately six weeks after [Murray] executed his will in my office, which leads me to believe the intent of this [Account] was clearly to take it outside the estate itself. I have no idea what motivated this action. I was completely unaware that this had occurred. I had not seen nor talked with [Murray] since the day he left my office December 16, 2006. I can only surmise that something happened on his way to Florida or after he got to Florida for him to take this action…

…I have looked at this situation from various points of view seeking to fathom the intent of this [Account]. I come back to the only conclusion that I can draw, which is—for whatever reason—[Murray] wanted me to have [the Balance].

Id. at 381.

The Executor disagreed. He initiated a lawsuit in the Chancery Division of the Superior Court of New Jersey (“Chancery Court”) to preclude the Attorney from receiving the Balance and to ensure that it was utilized for the benefit of Murray’s family. Id.  The Executor argued that Murray made a mistake when he named Attorney as the beneficiary of the Account Id.

The Court’s Ruling

The Chancery Court agreed,findingthat it was “virtually inconceivable” that Murray intended to benefit Attorney rather than his family. Id. at 383.  In support of that position, the Chancery Court specifically pointed to the fact that Murray made a Will that left his entire estate to his family members less than two months prior. This showed his intent to care for his family. Id. at 382-383.

Accordingly, the Chancery Court held that notions of fairness required it to grant rescission of the Account. Id. at Id. at 381. Rescission is a legal remedy rendering a contract (in this case the one governing the Account) null and void. In this case, rescission of the Account allowed the Balance to go directly to Murray’s estate and hence, his family.

The Attorney appealed the Chancery Court’s decision to the Appellate Division of the New Jersey Superior Court (“Appellate Court”) claiming that the grant of rescission of the Account was improper. Id.  The Appellate Court disagreed. Id. at 387.

The Appellate Court explained that it was proper for the Chancery Court to grant rescission of the Account because it was clear that Murray created the Account to pass to his family members and mistakenly thought that designating his attorney as the “pay-on-death” beneficiary would accomplish that. Id. at 384-385.  In other words, regardless of the mistaken idea that designating the attorney would effectively mean the money would go to his family, the obvious intent was that Murray wanted his family to receive the Account balance.  Id.

Accordingly, the Appellate Court upheld the Chancery Court’s rescission of the Account. Id. at 387. Therefore, despite the fact that Attorney was technically named as the beneficiary of the Account, the Balance was given to Murray’s family members instead of Attorney. Id.


© 2013 Nissenbaum Law Group, LLC


Does Property Located Outside of the United States Count Toward a Surviving Spouse’s Elective Share Under the NJ Statute 3B:8–1?

In In re Estate of Pakdee B. Peck, a deceased spouse (“Decedent”) had signed two wills: one in New Jersey (“NJ Will”) and one in Thailand (“Thailand Will”). The NJ Will stated that it was Decedent’s “[e]xpress wish and desire that [Decedent’s] husband, Robert M. Peck [“Husband”] receive only his elective share of [Decedent’s] estate as defined in N.J.S.A. 3B:8-1.” In re Estate of Pakdee B. Peck, 429 N.J. Super. 409 (Ch. Div. 2012) at 411. The question was whether that elective share would include property outside the United States.

The Definition of the Term “Elective Share”

What does the term elective share (“Elective Share”) mean when it is used in relation to  a spouse’s estate? That question is answered in New Jersey Statute 3B:8-1, which states:

If a married person or person in a domestic partnership dies domiciled in this State, on or after May 28, 1980, the surviving spouse or domestic partner has a right of election to take an elective share of one-third of the augmented estateunder the limitations and conditions hereinafter stated, provided that at the time of death the decedent and the surviving spouse or domestic partner had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce or nullity of marriage to a decedent prior to his death under the laws of this State.

Id.; emphasis added.

In other words, the Elective Share prevents a surviving spouse from being completely disinherited; at the very least, he or she will have the right to one-third (1/3) of the decedent’s augmented estate. It should be noted that the decedent’s property that falls outside of the augmented estate is not included in the one-third (1/3) calculation of the surviving spouse’s share.

What is an Augmented Estate?

A decedent’s augmented estate generally includes the property that she left in her will plus certain other property of the decedent such as certain gifts and joint bank accounts.  Specifically, “augmented estate” is defined in N.J.S.A. 3B:8-3, which states:

The “augmented estate” means the estate reduced by funeral and administration expenses, and enforceable claims, to which is added the value of property transferred by the decedent at any time during marriage, or during a domestic partnership, to or for the benefit of any person other than the surviving spouse or domestic partner, to the extent that the decedent did not receive adequate and full consideration in money or money’s worth for the transfer, if the transfer is of any of the following types:

  1. Any transfer made after May 28, 1980, under which thedecedent retained at the time of his death the possession or enjoyment of, or right to income from, the property;

Id.; emphasis added.

Is property outside the U.S. counted as part of the Elective Share?

In In re Estate of Pakdee B. Peck, the Husband filed a lawsuit asking for his elective share of Decedent’s augmented estate. Id. at 412. He claimed that the real property, bank accounts and investments owned by the Decedent in Thailand (“Thailand Property”) should all have been counted as part of the Decedent’s augmented estate.  Id. In other words, he claimed that his elective share included not only 1/3 of the property owned by Decedent in New Jersey but also 1/3 of the Thailand Property. Id.

The attorney for the deceased wife’s estate argued that Decedent’s augmented estate did not include the Thailand Property. Therefore, the Husband had no right to it.

The Estate’s legal position was that this was the deceased wife’s probable intent. Id.  It based this on the following:

  • The NJ Will did not refer to any previous wills or property located outside of the United States. 411.
  • Decedent advised the attorney that drew up her will that “she had prepared and signed a previous will in Thailand relating to property owned [by  her] in Thailand and [that she] did not wish to make a specific reference to preserving the terms of that will the [NJ Will] for the reasons discussed.” Id. at 411-412.
  • At the same time the deceased wife signed her NJ Will, she also signed a separate document witnessed by two people and acknowledged by a notary public, in which she ratified the provisions of the Thailand Will disposing of all of her property in Thailand. 412.
  • The Decedent expressed her intention to the attorney that drafted the NJ Will that the NJ Will dispose only of the property that she owned within the United States. Id.

Despite all this evidence that Decedent did not want her husband to receive 1/3 Elective Share of the Thailand Property, the Court held, in favor of Husband. This meant that the Thailand Property was to be included in Decedent’s augmented estate. 415. The Court stated the basis of its holding as follows:

  • There was no evidence establishing that at the time of Decedent’s death she did not retain possession or enjoyment of the real and personal property in Thailand. 414.
  • It is of no significance that the property was located in a foreign country because—pursuant to N.J.S.A. 3B:8-2— the augmented estate “includes real property to the same extent as it would be included if it were located in New Jersey.” Id.; See also N.J.S.A. 3B:8-2.
  • It did not matter whether the Decedent wanted her surviving spouse to have a one-third 1/3 right to her Thailand property because the Elective Share statute was enacted with the purpose of prohibiting the disinheritance of a surviving spouse who needs continuous support. 415 Therefore, the elective share was not created to carry out the decedent’s probable intent but rather to ignore it in order to protect the surviving spouse. Id.

Accordingly, the Court held that the Thailand Property was to be included as a part of the Decedent’s augmented estate. Therefore, it was included in the calculation of Husband’s 1/3 share of the Decedent’s estate. Id.


The Court’s holding articulated two important principles:

    1. Under certain circumstances, foreign property may be included in a decedent’s augmented estate; and


  • A surviving spouse’s right to his elective share may sometimes overshadow the deceased spouse’s probable intent.



© 2013 Nissenbaum Law Group, LLC

If a Person Donates for a Specific Purpose to a Charity, May the Charity Use the Money for a Different Purpose?

If a person donates a “conditional gift” (a gift that can only be used for the stated purpose) to a charity, may the charity ignore that restriction and use it for another purpose? The Court in  Adler v. Save, was confronted with that very issue. In that case, Bernard and Jeanne Adler (the “Adlers”) donated fifty thousand dollars ($50,000.00) (“Donation”) to SAVE. (See Adler v. Save, 432 N.J. Super. 101 (App. Div. 2013) at 111. The Adlers made the Donation to SAVE based upon its representations that the money would be utilized to construct and run a new animal shelter facility (“New Facility”).  Unfortunately, after accepting the Donation, SAVE decided that it no longer wanted to build the New Facility. The question presented to the Court was whether SAVE would be required to return the Donation to the Adlers.


SAVE was a charitable organization with a self-proclaimed mission to provide for the rescue, shelter, veterinary care, and adoption of stray companion animals. SAVE was located in the Borough of Princeton, New Jersey (“Princeton”). Id at 105.

Prior to agreeing to make the Donation, SAVE informed the Adlers of the original plans for the New Facility which encompassed the following:

    • a large facility approximately thirty-five thousand (35,000) square feet;
    • separate living areas for cats and dogs;
    • areas designed for isolation and rehabilitation;
    • areas for spaying and neutering, including an on-site veterinary clinic with x-ray equipment for treatment and triage of sick and injured animals;
    • accommodations for larger dogs, designed as “dog living rooms.”

The Adlers informed SAVE that the purpose for their agreement to make the Donation was “to have rooms for large dogs and older cats that are not easily adopted and specifically for the naming rights for those rooms at that facility [in Princeton].” Id at 113-114. According to Mrs. Adler, SAVE told her that, in recognition and appreciation for the Donation, it would designate two rooms in the New Facility; one for the care of large dogs and the other for the care of older cats. SAVE also told them that the Adlers would have nameplates outside of each of those rooms. Id.

However, after receiving the Donation, SAVE announced to its donors (including the Adlers) that instead of proceeding with its construction of the New Facility, it had decided to merge with another charitable foundation. As a result, SAVE decided that it would not construct its new shelter at its original location in Princeton. Id at 114.  The newly formed “merged charity” would transfer all of its operations to a location in Montgomery Township, New Jersey. Id.  According to the new plans, SAVE decided to construct a new animal shelter that was significantly smaller than the New Facility and did not include two rooms specifically designated for the long-term care of large dogs and older cats. Id. at 114-120.

The Lawsuit

As a result of SAVE’s new plans, the Adlers demanded the return of the Donation. Id at 116. SAVE refused. Id.  Accordingly, the Adlers filed suit in the Law Division of the Superior Court of New Jersey (“Trial Court”) seeking the return of the Donation. Id at 115. They argued that SAVE violated the material aspect of their gift by deciding, without their knowledge or approval, to use the Donation to construct a facility that did not meet their expressed animal-care conditions and would be located in an area outside of Princeton. Id at 115-116.  Accordingly, the Adlers argued that they were entitled to the return of the Donation because it was a conditional gift and SAVE failed to meet its conditions. Id.

The Trial Court confirmed that this was a conditional gift. That means that the gift was one in which the recipient must comply with certain conditions in order to keep it. Normally, if the recipient fails to do so, it must return the gift to the donor upon the donor’s request.

The Trial Court went on to explain that the Donation made by the Adlers was motivated by their desire to provide better conditions for large dogs and older cats. Id at 121. Thus — since SAVE was no longer building a facility that would serve those goals — the Trial Court ruled in favor of the Adlers, finding that they were entitled to the return of the Donation. Id at 120-121.

SAVE appealed to the Appellate Division of the Superior Court of New Jersey (“Appellate Court”). Id at 121.  The Appellate Court explained that SAVE was under a fiduciary obligation to return the Donation to the Adlers if it could not meet the conditions they imposed upon it. Specifically, when a donor places trust and confidence in a recipient who is in a dominant or superior position, the recipient assumes a fiduciary duty to the donor. Id at 125. In this case, the Adlers placed their trust in SAVE to meet the conditions of their gift. By virtue of SAVE’s control of the funds, it was required to either meet the Adlers’ conditions or obtain their consent to rededicate the funds to another purpose acceptable to them. Otherwise, SAVE had a fiduciary duty to return the Donation to the Adlers.  Id.


In sum, the Appellate Court held in favor of the Adlers based upon the “unquestionable realization” that SAVE accepted the Donation fully aware of the Adlers’ conditions and did not express any reservation to them about SAVE’s ability to meet any of those conditions. Therefore, even though SAVE no longer wanted to build the New Facility, SAVE had to return the Donation to the Adlers since it failed to meet those original conditions.  Id at 124.

Should Intentional Infliction of Emotional Distress Cases Be Treated Differently Depending on Whether or Not They Take Place at Work?

Should a claim of intention infliction of emotional distress be treated differently if it occurs in the workplace as opposed to a non-employment situation? This question was answered in Ingraham v. Ortho-McNeill, 422 NJ. Super. 12 (App. Div. 2011)
Plaintiff Cecelia Mavica Ingraham was employed by defendant Ortho-McNeil Pharmaceutical between 1994 and 2006. The plaintiff had one child, Tatiana, who was diagnosed with acute lymphocytic leukemia in 2003. At the time, Tatiana was a junior in high school and a member of several honors societies; a student at the New Jersey School of Ballet; and was planning on attending Cornell University to study biology.  Unfortunately in 2005, Tatiana contracted an infection and passed away.
In remembrance of her daughter, plaintiff kept pictures of her as well as her ballet shoes in her work space.  Although sympathetic, many of her co-workers felt uncomfortable with the frequency of conversations plaintiff initiated involving the death of her daughter.  A year and a half later, a supervisor confronted plaintiff and asked her to stop.
Plaintiff quit and sued, alleging that she suffered emotional distress along with heart palpitations from the abuse.  She filed a three-count complaint alleging a violation of
  1. New Jersey Law Against Discrimination N.J.S.A. 10:5-1 to -49 (“LAD”)
  2. Intentional infliction of emotional distress and
  3. Constructive discharge
The court reasoned that in order for a plaintiff to prove intentional infliction of emotional distress, he or she must prove that
  1. defendant acted intentionally or recklessly;
  2. defendant’s conduct was extreme and outrageous;
  3. defendant’s conduct was the proximate cause of plaintiff’s emotional distress; and
  4. the emotional distress suffered by plaintiff was so severe that no reasonable [person] could be expected to endure it.
Id. at 366-67.
Defendants argued that the plaintiff could not prove the first or second elements as a matter of law. The court agreed, stating:

The law provides no different standard of proof that applies in the workplace from other places where emotional distress might result. The employer-employee relationship is no more special and conductive to emotional distress than, for example, a doctor-patent relationship, or the relationship of a husband and wife in a hostile divorce.

Id. at 1196.
The court also stated that “[i]t is extremely rare to find conduct in the employment context that will rise to the level of outrageousness necessary to provide a basis for recovery for the tort of intentional infliction of emotional distress.”
Id. at 23-24.
The court concluded that the evidence provided by the plaintiff was not sufficient to support a cause of action for intentional infliction of emotional distress. Moreover, it held that intentional infliction of emotional distress cases that arise in the workplace are analyzed the same way as they would in non-employment settings. The conduct must be exceptionally egregious. In this case, it was not.

May Courts Unilaterally Modify the Terms of an Oral Settlement Agreement to Which the Parties Agreed on the Record?

In Highland Capital Corp., v. Donna P. Denier M.D., P.C. et al., No. A-4832-10T4 (N.J. Super.  App. Div. 2013), Donna Denier, M.D. (“Defendant”) entered into a lease with Digirad Corporation (“Lease”) for a piece of equipment named “Cardius 1”. Id. at 2.  Highland Capital Corp., (“Plaintiff”) was the party that financed the Lease. Id.
This dispute arose when Defendant stopped making the agreed upon payments to Plaintiff. Id.  As a result of Defendant’s failure, Plaintiff sued her for breach of contract in the Law Division of the New Jersey Supreme Court (“Lower Court”). Id. Instead of proceeding with litigation, the parties entered into a settlement agreement. Id. at 3. Following discussions among each party’s counsel and the Law Division Judge, the parties orally placed the terms of their settlement on the record (“Settlement”). Id. Some of the main points of the Settlement were as follows:

1.      Defendant is to make monthly payments to Plaintiff in the amount of $2,778.00 plus tax for 36 months; and
2.      If Defendant made all monthly payments, at the end of the 36 months Plaintiff will transfer ownership of Cardius 1 to Defendant.

However, the parties were unable to agree on how best to put the terms of the Settlement in writing. Id. at 5.Unable to come to an agreement, the parties participated in a telephone conference with the Lower Court. Id. at 6. Based upon this conference, Plaintiff submitted a proposed written agreement to the Lower Court for signature. Id.  The Defendant objected, stating that it did not accept the terms of Plaintiff’s proposed written agreement. The Defendant argued that it encompassed different terms than those placed on the record (“Proposed Agreement”). Id. Nonetheless, the Lower Court signed Plaintiff’s Proposed Agreement. This meant that the Plaintiff’s terms of the agreement, which were not agreed to by Defendant, were now enforceable against Defendant. Id.
Defendant appealed to the Appellate Division of the Supreme Court of New Jersey (“Appellate Court”). Id. at 7.  In its appeal, the Defendant argued that the Lower Court did not have the authority to sign the agreement because she never consented to it and it “materially changed the terms of the settlement placed on the record.” Id.
In its analysis the Appellate Court explained that as a matter of public policy, New Jersey courts favor the enforcement of settlement agreements. Id. at 8.  This policy acknowledges the notion that the parties to a dispute are in the best position to determine how to resolve a contested matter in a way that is least disadvantageous to everyone. Id. Thus, courts strain to give effect to the terms of a settlement agreement wherever possible. Id.  Importantly, the Appellate Court noted that a settlement agreement does not have to be in writing to be enforceable “…the fact that an agreement is oral, rather than written, ‘is of no consequence.’” Id.
However, the Appellate Court explained that settlement agreements are contractual in nature. Id. at 9. Thus, no settlement agreement exists unless the parties agree to the essential terms of the agreement and manifest an intention to be bound by those terms. Id.  Appellate Courts do not have the power to modify and/or add to the terms of the settlement agreement. “It is not the court’s function to make a contract for the parties or to supply terms that have not been agreed upon.” Id. at 10.
The Appellate Court explained that the terms of the Proposed Agreement was not an accurate representation of the Settlement the parties agreed to on the record. Id. at 12. For instance, under the Proposed Agreement, the Plaintiff was permitted to retain title to Cardius 1 and all proceeds of sale even if Defendant made all payments to Plaintiff in accordance with the Settlement. Id.  To the contrary, the Settlement indicated that the Defendant would retain ownership of Cardius 1, provided she made all payments to Plaintiff in accordance to its terms. The Appellate Court stated that the Lower Court unilaterally modified the terms of the Settlement. Id. The Lower Court’s improper modification of the Settlement clearly benefited the Plaintiff and harmed the Defendant.  Id.
Accordingly, the Appellate Court reversed the Lower Court’s approval of the Proposed Agreement. Id. at 13. In that regard, the Appellate Court directed the Lower Court to either form an agreement to which both parties agreed or, if the parties are unable to come to an agreement, simply to dismiss the case and enforce the terms of the original oral Settlement.   Id.

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