Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

By Fredrick P. Niemann, Esq. New Jersey Business Lawyer

What actions can be brought against a management employee and officer of a corporation who secretly forms a competing business while employed by the corporation?

ANSWER
New Jersey courts have found that if a management employee secretly forms a competing corporation, then the management employee may be liable for a breach of duty of loyalty to the employer which can also be imputed to the newly formed competing corporation.

In a recent case, a vice president/director and his wife formed two businesses while still employed at Vibra-Tech. One of these businesses was in direct competition for the same customer base. The other business sold equipment to Vibra-Tech. Vibra-Tech had no knowledge that one of their own executives was competing with the corporation. A suit was brought against the defendants for unfair competition and breach of fiduciary duty. The defendants moved for summary judgment, arguing that there were no fiduciary duties that the two companies owed Vibra-Tech.

The court discussed earlier New Jersey case law on fiduciary duty and stated that “A hallmark of a fiduciary relationship is one party’s placement of “trust and confidence in another.” This relationship is generally one of unequal terms, where one party is dependent on the advice and care of another. This is the duty that management and directors customarily owe their employees. Directors and officers of a corporation also have both a duty of care and/or a duty of loyalty to the best interests of the business entity. Competitors of a business entity contract in their own self interest and have no such fiduciary duty.

The attorney for the defendants argued that the two businesses of the defendant had no fiduciary duty since they had no direct relationship with the plaintiff.

The court agreed that there was no direct fiduciary duty between the businesses, but found that New Jersey courts had in similar cases,” imputed the individual defendants’ conduct to the corporation and held it liable for breach of the fiduciary duty of loyalty.”   Since the proof of a breach of imputed fiduciary duty of loyalty involves an intensive inquiry into the facts, and an inquiry as to whether the individual utilized the corporate veil to facilitate a breach of duties, the court denied summary judgment, since the facts before the court were either missing or disputed.

Contact me personally today to discuss your business law matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.

By Fredrick P. Niemann, Esq. a New Jersey Partnership Attorney

Partnership Disputes are fairly common in the world of business. Trade secrets, embezzlement, conversion and business disparagement are some of the most common causes of partnership disputes. If you suspect that something like that has occurred in your business, you should consult with a qualified partnership dispute attorney in New Jersey.

If you suspect that one of your partners has engaged in some form of wrongdoing, it is important that you investigate immediately. If you fail to do so, this can lead to a more serious dispute. Your partner may be profiting while your business is losing money. That is why is it important for you to consider litigation so that your business is protected from further loss.

A qualified partnership dispute attorney can help your business in several ways. He or she will provide the legal representation that you need to protect your business’s investments and profits. First, the attorney will investigate the breach so that the rights and integrity of your business are protected. After the investigation is complete, he or she will file a claim on your behalf. In order to make sure that your claim will have a successful outcome, the attorney will enlist the help of private investigators, accountants and financial experts. If you decide to dissolve your partnership, he or she will be there to assist you with that. Additionally, an attorney will also be able to help your business recover its losses.

If you suspect that suspicious activity is going on within your partnership, you do not want to wait around because your business could be losing money. Call a qualified partnership dispute attorney in New Jersey so that this issue can be resolved right away.  Contact me personally today to discuss your partnership dispute matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.

By Fredrick P. Niemann, Esq. a New Jersey Accredited Veteran’s Benefit Lawyer
The first cost-of-living adjustment since 2008 has recently been made, bringing a 3.6% increase in benefits starting in 2012.  The cost-of-living adjustments are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers.  If you have any questions regarding veteran’s pension benefits, contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com.

By Fredrick P. Niemann, Esq., a New Jersey LLC Attorney

LLCs often involve a small number of shareholders who comprise ownership of the business. Business direction and decisions are typically dictated by those who are majority members, those owning more than 50% of the certificates (commonly misidentified as “share”), since they own the biggest piece of the company. This leaves those owning less than 50% of the certificates, known as minority members, as part-owners of businesses which they sometimes have little to contribute. This can present an unfortunate situation for those minority members, an LLC who are unhappy with company decisions being made, but who are unable to sell their interests in the company. Luckily, New Jersey law offers protection to minority members of an LLC, mainly the right against “oppression”.

Oppression is defined as an act directed at a minority member that personally frustrates their reasonable expectations of the role they play in the management, operation, and other general affairs of the company. Simply put, an oppressed minority member is one who does not get along with majority members, but is stuck owning shares in the company based on the majority’s refusal to buy them out. New Jersey statutes prohibit this type of behavior by the majority members. The law states that company’s and majority members may not act in a way that is detrimental to the interests of minority members.

Proving you are an oppressed minority member and entitled to relief from New Jersey Courts involves a two-step process. First, you must show misconduct committed by the company or majority members that is considered oppression. Courts will evaluate the misconduct in each case on an individual basis. Second, you must show that as a minority member, your interests or reasonable expectations in the company were harmed by the misconduct. Without proving a connection between the oppressive acts and the harm you suffered, you will unable to win an oppression case against your company and/or its majority members. It is also important to keep in mind that the harm you suffer can be a monetary interest, but does not have to be. Non-monetary interests such as being consistently silenced in all business decisions can be considered harm in certain situations. Remember, every situation is unique and the New Jersey Courts will consider each on a case-by-case basis.

If you are a minority member in a New Jersey LLC and believe your interests are being oppressed, call Fredrick P. Niemann, Esq., an experienced NJ LLC Attorney today. He welcomes the opportunity to speak with you about your situation and answer any questions you may have. Mr. Niemann can be reached toll-free at 855-376-5291 or by email at fniemann@hnlawfirm.com. He hopes to hear from you shortly.

By Fredrick P. Niemann, Esq., a NJ Passing on Your Business Attorney

Business owners work hard to create a successful business. They often look forward to retiring and passing along their business to their children. This is a proud time, where a parent gets to sit back, relax, and let their child flourish. Unfortunately, more and more businesses today are making the mistake of not planning for this business transfer. The results have been harsh, with many parents being unable to pass their businesses on to their children due to unforeseen taxation issues that arise upon this transfer. Planning for this business transfer can significantly increase the odds of successfully passing your business along.

Most individuals misunderstand the complicated logistics in passing a business to a successor. Business owners often have the impression that since they have a child willing to take over the company, they can simply take a back seat one day and give the child the business. Unfortunately, finding a successor for the business often turns out to be the least of a business owner’s worries.

Taxation can present one of the most significant obstacles to family business owners wishing to pass their business along. Depending on how you plan on passing your business to your child, whether it be through gifting it at some point during your life, passing it through your estate upon your death, or placing the assets of the business in a trust and passing the business along via the trust, different tax implications will ultimately arise. One must consider these tax implications when determining how and when the appropriate time is to pass their business along. Businesses often collapse because their owners are not prepared for the significant taxes that they are forced to pay when transferring the business. A knowledgeable Business Succession Planning Attorney can guide you as to the best method of transfer and most appropriate time period to transfer. 

Business owners may also face other obstacles when attempting to transfer their business, making consultation with a Business Succession Planning Attorney even more important. Some of these challenges include lack of teamwork among children whom the business is being passed to, second-thoughts about letting go by the business owners themselves, and lack of planning as to the direction of the business. Business Succession Planning attorneys are aware of the significant challenges presented to business owners. They can guide you as to what you can expect when the time comes for you to finally pass your business along. Please call Fredrick P. Niemann, Esq., a NJ Business Succession Planning Attorney today. He can be reached toll-free at 855-376-5291 or by email at fniemann@hnlawfirm.com. He looks forward to discussing this important subject with you.

By: Fredrick P. Niemann, a NJ Accredited Veterans Benefits Attorney

You may be eligible for a monthly check from the VA in many cases of between $985.00 and $1959.00 per month (or more) for military services you (or your spouse) performed for our country many years (even decades) ago.

If you want the bottom line and you want  to find out if its likely you’re eligible for a monthly check from the VA (I say likely eligible because of course the VA makes that decision), then the quickest way to find out is to call my office at (732)863-9900.

Then, after scheduling a brief in person meeting or phone conversation with me, I’ll be able to give you an understanding of what benefits may, or may not, be available through the VA.

If there are things we can do to help you get qualified, we’ll let you know.  And if there is nothing to do or no steps to take we’ll let you know that too.

Wouldn’t it be nice to have a trusted guide, someone who has been on this path many times before, shine a light and show you where to go and what pitfalls to avoid? That’s what I do for my clients as I take them towards VA benefit eligibility.

If you would like to discover if you are eligible for a VA benefit, call me at (888)800-7442.  Or, if you would prefer, email me at fniemann@hnlawfirm.com and ask me to follow up with you.  That way, if you need answers you have got a place to turn to.  And I am happy to help you right away if you would like.

In the meantime, here is the information I promised you:

So if you want to know about the veteran’s pension benefits maze?  I know if looks daunting!  This is exactly why at our firm we call it a “maze”.  Take a quick look now, but don’t worry-we are going to walk you through all of this in plain old English during our consultation… and there may well be a very big payoff for you and your loved ones by the time we finish going through the VA maze.

Benefits Chart 2011 Figures

Service Pension Rates (The veteran is alive):

Service Pension
Maximum Annual Pension Rate - $985.00
Monthly MAPR - $11,830.00
With one dependent:
Maximum Annual Pension Rate - $1,291.00
Monthly MAPR - $15,493.00

Housebound
Maximum Annual Pension Rate - $1,205.00
Monthly MAPR - $14,457.00
With one dependent:
Maximum Annual Pension Rate - $1,510.00
Monthly MAPR - $18,120.00

Aid and Attendance
Maximum Annual Pension Rate - $1,645.00
Monthly MAPR - $19,736.00
With one dependent:
Maximum Annual Pension Rate - $1,959.00
Monthly MAPR - $23,396.00

For each additional dependent child:
Maximum Annual Pension Rate - $168.00
Monthly MAPR - $2,020.00

Death Pension Rate: (The Veteran is not alive):

Death Pension
Maximum Annual Pension Rate - $661.00
Monthly MAPR - $7,933.00
With one dependent child:
Maximum Annual Pension Rate - $865.00
Monthly MAPR - $10,385.00

Housebound
Maximum Annual Pension Rate - $808.00
Monthly MAPR - $9,696.00
With one dependent child:
Maximum Annual Pension Rate - $1,012.00
Monthly MAPR - $12,144.00

Aid & Attendance
Maximum Annual Pension Rate - $1,100.00
Monthly MAPR- $13,195.00
With one dependent child:
Maximum Annual Pension Rate - $1,261.00
Monthly MAPR - $15,128.00

For each additional dependent child:
Maximum Annual Pension Rate - $168.00
Monthly MAPR - $2,020.00
Well that’s a lot to absorb.  But here’s the point, if you qualify you can receive between $600 and almost $2,000 per month in what is known as an Aid and Attendance Pension Benefit.

 
If you have any questions with regard to Veterans Pension Benefits, contact Fredrick P. Niemann, Esq; an experienced Veterans Benefits attorney toll-free at 888 800-7442 or e-mail him at fniemann@hnlawfirm.com today.

By Christopher J. Hanlon, Esq. an attorney protecting the rights of the landlord

Don’t assume knowledge of a violation of a lease provision will allow you to avoid eviction.  A recent NJ decision involving a commercial landlord and tenant is significant, in part, because it originates from the Appellate Division and therefore it is binding statewide.   The Court considered a judgment entered by the lower court for possession in favor of the landlord.   The lease specifically prohibited the tenant from assigning or subletting any portion of its space and the adjacent exterior parking space without the written consent of the landlord.   The landlord alleged that the tenant subleased part of its space to an unrelated third party business without its knowledge or consent.   The tenant alleged that the landlord knew that the third party was an unrelated business co-occupying the space since the beginning of the lease and therefore, was chargeable with knowledge of the lease and thereby waived the enforceability of the “no-subleasing or assignment” provision in the lease.  The Court ruled (based on the facts of the case), that the landlord was entitled to evict the tenant for a material breach of the lease by failing to get his permission to sublease or assign this space.  

This case stands for the proposition that if a lease requires that the tenant or landlord give notice or perform an affirmative obligation in writing, each side better be able to prove that written notice was given to other.

For more information on this decision, contact Christopher Hanlon toll free at (888) 800-7442 or e-mail him at chanlon@hnlawfirm.com.

New Jersey law is very biased against Landlords.  One unintended and innocent mistake can be devastating to you financially and result in a dismissal of your case.

1. When the Clerk or Judge calls the calendar of all matters scheduled, if the landlord is present in the courtroom and the tenant is not, the tenant will be “in default.” In that case, a judgment granting the landlord possession of the leased property may be entered against the tenant after the landlord has filed an affidavit proving a right to possession.  If the tenant is present in the courtroom and the landlord is not, the landlord’s complaint will be dismissed without prejudice, meaning it will have to be filed again without penalty.

2. In non-payment of rent cases, the tenant has the right to pay the full amount of rent into court (or with the clerk) by the close of the business day that the trial is set for. Then the case will be dismissed.

3. A landlord may not evict a tenant based upon failure to pay any attorneys’ fees, costs or late charges, unless there is a lease provision which states that such fees are collectible as rent. Even if the lease allows such charges to be collected, the amount due as rent may be limited by a rent control ordinance, or in the case of public or federally-assisted housing, by federal law.

4. A landlord may decide to settle a case before court, but the decision is entirely voluntary. Any settlement should be reduced to writing and filed with the court. This will protect both parties in the event of a breach by the other. Most Courts require that the terms of the agreement be “placed on the record,” in open court. This is for the protection of both parties as well. A settlement agreement should be placed “on the record” as a matter of course if there are complex terms, or if the tenant is agreeing to vacate. An experienced landlord attorney like Christopher J. Hanlon should be present to protect you during any settlement.

5. If the tenant wishes to challenge the allegations or accuracy of anything stated in the complaint, including the amount of rent due and owing, the tenant has a right to a trial before a judge.

6. The entry of a judgment for possession means that a landlord may request the court clerk issue a Warrant for Removal to a Court Constable and the tenant can be evicted.

7. If a judgment for possession is entered, a Warrant for Removal may not be issued until three days later. The Warrant for Removal authorizes a Special Civil Part Officer (Constable) to lock out the tenant three days after the Warrant has been served on the tenant. Service of the Warrant is generally accomplished by the Officer leaving a copy at the tenant’s apartment. The lock out may not occur on a weekend or on a judicial holiday. Also, weekends and holidays are not counted in calculating the number of days before the Warrant can be signed or issued. This means that the tenant will be locked out at a minimum of eight days from the day judgment of possession is entered.

8. If a judgment for possession is entered after a trial, or because a tenant did not appear in court, or because the tenant agreed with the landlord to the entry of a judgment, a tenant has the right to apply to the court for a hardship stay at any time up to ten (10) days after the Warrant for removal has been executed (door locked!) The court may grant or deny the stay and the landlord has a right to be heard at the hearing on the application. A stay of the judgment means that the tenant will not be removed for as long as the stay is in effect. The court may grant a stay for up to a maximum of 6 months. During the period of the stay, the tenant must pay all back rent, pay the future rent on time, not disturb the neighborhood, and not damage the property. After the stay is over, the tenant may be evicted by the landlord through the Constable without any further judicial action unless the Court grants an extension not to exceed 6 months from the date of judgment.

9. The Court provides a list of social service agencies that may be able to help tenants find other housing or provide grant monies.

10. If a landlord and tenant agree to an eviction, a consent judgment for possession must be prepared. When this happens, the landlord must also submit, in writing, a sworn statement that one of the causes for eviction authorized in the eviction statute has occurred. This sworn statement must be filed before the court will accept the consent judgment. The sworn statement must also state that all fees and charges sought by the landlord are allowed by federal, state and local law, as well as the lease.

Are you a New Jersey landlord?  Do you have an eviction that requires legal assistance?  Then contact Christopher J. Hanlon toll-free at (888) 800-7442 or e-mail him at chanlon@hnlawfirm.com today to protect your interests.

By Christopher J. Hanlon, Esq. an experienced attorney for Landlords.

Commercial Landlords: Four Important Questions to Ask When a Tenant Files for Bankruptcy

With the downturn in the residential and commercial real estate market, a number of commercial tenants are experiencing financial difficulties. In turn, this can lead to problems for commercial landlords, most importantly, the tenant staying current with lease payments. This may then lead to the tenant filing for bankruptcy protection. If your commercial tenant files for bankruptcy, it is wise to have a strategy in place to not only minimize the time of non-payment, but also maximize the ability to receive rents and damages allowed under the Bankruptcy Code. 

Following are four (4) questions for a commercial landlord to consider whenever a commercial tenant files for bankruptcy protection:
1.    Have You Filed a Proof of Claim(s)?  As soon as the tenant/debtor files for bankruptcy protection, commercial landlords should ensure their rights to payment(s) by filing appropriate proofs of claim.  It is advisable to review with your attorney the current account history and lease to ensure all fees are being accounted. Landlords may be able to file up to three (3) different types of claims:
    a.    Pre-petition Claim. Section 502 of the Bankruptcy Code provides that creditors are permitted to file a proof of claim for all pre-petition charges and assessments owed.  If a tenant files for bankruptcy, the landlord is permitted to file a proof of claim for all fees and charges incurred prior to the filing date;
    b.    Post-Petition Administrative Claim.  Section 503(b)(1) of the Bankruptcy Code provides a creditor a priority claim for all “actual, necessary costs and expenses of preserving the estate”.  If the tenant remains in the premises after the bankruptcy and does not reject the lease, the commercial landlord may be allowed payment  ahead of other creditors for amounts incurred during this period; and
     c.    Post-Rejection Damage Claim. Section 503(b)(7) of the Bankruptcy Code provides a commercial landlord the right to be paid for “post bankruptcy rejection” damages. If the tenant rejects the lease, certain damages incurred and the remainder of the lease may be permitted priority before payment of certain claims.
 2.    Is the Debtor/Tenant Assuming or Rejecting the Lease?  Landlords should inquire whether the debtor/tenant intends to assume or reject the lease.  Bankruptcy Code Section 365 provides that tenants are permitted to assume a commercial lease, as long as they cure all post-petition defaults. If they reject the lease, then the landlord may be able to proceed with an eviction action to remove the tenant. However, landlords should know that the Bankruptcy Code permits the debtor 120 days to decide whether to assume or reject the lease, with an additional 90 day extension.  All told, this can leave the landlord sitting around for more than 7 months without payment.  If you’re not being paid, it may be advisable to have the Bankruptcy Court allow you to proceed with an eviction action. 
 

3.    Should you File a Motion for Stay Relief to Proceed with an Eviction?   The debtor/tenant may not advise their intent to assume or reject the lease.  As noted, during this time, the debtor/tenant can use the premises without paying anything.  The landlord is permitted to file a motion for “Relief from the Automatic Stay”.  This Motion, if granted, permits the landlord to resume or commence with a state court eviction action.

4.    What to Do with Items Left by a Tenant?  If the debtor/tenant leaves equipment, inventory or equipment at the premises, can you just throw it away? Does anyone have an interest in the left over items, like the debtor/tenants’ bank?   Can you recover storage fees? When a tenant/debtor files for bankruptcy, these left over items may be part of the bankruptcy estate. Gaining proper approval from the Bankruptcy Court, before disposing of the left over “junk” is essential to limiting liability.  For instance, the left over property may be secured by a bank, financial institution or creditor. You may want to have a UCC Search conducted to ascertain whether any security interest exists.  If security interests are discovered, it is advisable to give notice to those entities, possibly through a motion with the Bankruptcy Court.

These are just a few of the questions a New Jersey landlord should ask when a debtor files for bankruptcy.  By asking these questions at the start of the bankruptcy, landlords can limit the loss or liability; as well ensure their right to payment through the Bankruptcy Code. For more information and assistance contact Christopher J. Hanlon, Esq. toll-free at (888)800-7442 or e-mail him chanlon@hnlawfirm.com.  Act today!

By Fredrick P. Niemann, Esq. a New Jersey Franchise Lawyer

Although the FTC-required disclosure documents are mandatory for first-time purchasers of a franchise, there are no required government disclosure documents that must be furnished to the buyer of an existing franchise business. The seller of the franchise is not required to provide the would-be buyer with the franchiser’s disclosure document.

You will want to very carefully study the terms of the existing franchise contract between the existing franchise and the franchiser. How long is its remaining term? Is the price reasonable? Will the operator compete with you afterwards? How does it compare with new franchises the franchiser sells to others? Will you be acceptable to the franchiser? Franchisers invariably have right to approve the transfer or sale of a franchise, or even to negotiate the right to buy back the franchise, and you don’t want to be a seller’s stalking horse.

An investment in a franchise is a substantial commitment of your money, your time, and your reputation. Our advice is to retain a lawyer to assist you in the process. It usually pays for itself many times over.

If you have any questions, contact Fredrick P. Niemann, Esq. toll free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com.  He is happy to answer your inquiries.