AGA Partner Bob Honecker to Lead 200 Club

Posted on June 18th, 2020

Ansell Grimm & Aaron PC Partner Robert A Honecker Jr. has been named as the new President of the 200 Club of Monmouth County. Honecker succeeds former Lt. Gov. Kim Guadano as the leader of the organization which is dedicated to providing financial assistance to the families of public safety and rescue personnel in the county who are injured or die in the line of duty.

A full story on the Club’s reorganization meeting is available here:

Honecker named President of 200 Club

You can visit the organization on the web here:

Monmouth 200 Club

 

Client Alert: The Enforceability of Waivers From Automatic Bankruptcy Stays

Posted on June 16th, 2020

In light of the COVID-19 pandemic, the risk of commercial tenants filing for bankruptcy protection has risen substantially.  A concern for many commercial landlords is whether avenues exist for protecting their ability to initiate an action against tenants when they default on their lease obligations and file for bankruptcy protection.

Below is a syllabus of the lightly-developed case law addressing whether waivers from automatic bankruptcy stays are enforceable, and the means by which landlords and their tenants can enter into such agreements.  It is important to note, however, that the courts have not ruled on many cases during the pandemic and applicable case law may be in flux.

 

Enforceability of Bankruptcy Stay Waivers Contained in Forbearance Agreements

Pursuant to an Executive Order issued by New York Governor Cuomo, a statewide eviction moratorium on residential and commercial evictions has been extended to August 20, 2020, for tenants who qualify for unemployment benefits or who are experiencing a “financial hardship” as a result of COVID-19.  Landlords may serve rent demands, but cannot commence litigation against tenants, such as eviction actions.  Similarly, New Jersey Governor Murphy issued an Executive Order setting a moratorium on residential evictions and foreclosures in New Jersey — though the New Jersey Executive Order contains language clarifying that commercial tenants are not subject to the moratorium.  The New Jersey moratorium will last until two months after Governor Murphy declares an end to the COVID-19 health crisis, unless the Governor issues another Executive Order to end the moratorium sooner.

In light of the present circumstances, it may be advisable for commercial landlords to work with their tenants to enter into forbearance agreements (as opposed to lease amendments) containing a waiver from the automatic bankruptcy stay.  The agreements should make clear that the tenant is in default, that the agreement is being entered into as a result of the default, and that the landlord is deferring/forgiving rent, and forbearing from eviction (or whatever the consideration may be) in exchange for a waiver of the automatic stay.

While the case can be made that pre-bankruptcy agreements with tenants via a lease amendment may be enforceable, the more secure means to accomplish this is in the form of a forbearance agreement.  In In re Velez, the court rejected landlord’s attempt to enforce a general waiver to escape the automatic stay, distinguishing general waiver language in a lease amendment from a forbearance agreement “whereby the debtor specifically waived future protections of the automatic stay.”  In re Valez, 601 B.R. 351, 364 (Bankr. M.D. Pa. 2019).

In In re Frye, 320 B.R. 786 (Bankr. D. Vt. 2005), the court set forth certain factors to be utilized in deciding whether relief from the stay should be granted.  The court also noted that it considered additional factors in making the determination that a waiver is enforceable, including:  (1) the sophistication of the parties; (2) the presence of counsel; (3) consideration for the waiver; (4) the length of waiver period; (5) the risks and concessions assumed by lender/landlord; (6) the effect on other stakeholders in the Bankruptcy; (7) any defenses to the waiver, such as mistake or fraud; (8) the impact of the waiver on the feasibility of Debtors’ plan; (9) whether enforcement of the waiver would promote public policy of out of court settlements; (10) prejudice to landlord/lender for non-enforcement; (11) the time gap and change in circumstances between date of waiver and bankruptcy filing; and (12) whether the landlord/lender would otherwise be entitled to relief from the automatic stay. 

 

Conclusion

As many courts are closed and this is new territory, we expect the case law may evolve as litigations progress on this novel issue.  Arguments for the enforcement of waivers from automatic bankruptcy stays may be successful, depending on new rulings as they are issued and the specific language in the forbearance agreement executed by landlords and tenants.  Landlords and tenants alike are advised to consult with an attorney experienced in this area to determine viability of such plans and to protect their interests.

Bauchner Speaks With NJBiz About State’s failure on Medical Marijuana Facility Licensing

Posted on June 12th, 2020

Ansell Grimm & Aaron PC partner Josh Bauchner recently spoke to NJBiz about the ongoing battle with New Jersey to address what multiple applicants for medical marijuana facility licenses say is a technical failure on the state’s part that lead to the unjust denial of their applications.

Bauchner, who represents a number of the denied applicants told NJBiz, “The DOH is arbitrarily eliminating candidates on [the file] corruption issue. Those may very well be the best candidates, so why should they be deleted? The most fair and equitable way to resolve the whole problem [is] to allow the appellants to file any documents that were corrupt with certification that they weren’t changed and to score everyone’s application on merit.”

For the full story, visit the NJBIZ website here:

Cannabis Conundrum

 

Radburn Regulations bring new rules for Board Meetings & Minutes

Posted on June 3rd, 2020

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA. These amendments have been labeled the “Radburn Amendments”. PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”). To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations attempt to ensure that, no matter what, every “binding” decision of a board is first and only made at a board meeting open to attendance. These regulations define “binding vote” as a vote “made with a quorum of the executive board members present”. A board vote occurring at a “closed meeting” or via another forum has been expressly declared to be NOT binding. Now, owners can only be excluded for a “discussion” concerning a limited group of matters including those matters involving an unwarranted invasion of privacy and matters involving communications that should be confidential in light of the association’s attorney-client privilege. Any actual binding decisions concerning any of those matters must be first and only made at a board meeting open to attendance of owners. For every board vote, the board must provide to those in attendance a “brief explanation” of the basis for and “cost entailed” in the vote. There are a variety of strategies and arguments available to an association that hopes to minimize the burdens that the Radburn Regulations will place on associations in this regard.

The association must produce minutes concerning every board meeting open to attendance of owners. These minutes must be “legible”, noting the board members that participated. The minutes must clearly identify any “matters addressed”, any matters voted on, along with the basis for “and cost entailed in the matter which” was the “subject of the vote”. The minutes must be available to owners before the next board meeting, even if those minutes have to be identified as “draft”. Lastly, if a board elects to record its meeting, the recording must be available to owners.

New Rules for Notification of Board Meetings Under Radburn

Posted on June 2nd, 2020

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA. These amendments have been labeled the “Radburn Amendments”. PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”). To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations expressly address how “notice” of “board meetings” must be done. After the “annual meeting” – which the Radburn Regulations now make mandatory – the association has 7 days to “post, and maintain posted throughout the year, an open meeting schedule of the” board meetings. This annual schedule must identify the “time, date, and locations of each” meeting and be posted in at least 1 location identified by the Radburn Regulations. Any changes to the annual schedule of board meetings “shall be made at least 7 days prior to the scheduled date and posted and maintained” like the original schedule. Even if the association posts this “schedule” it still must give “all members” direct notice of every board meeting at least 7 days prior. This individual notice must also be posted publicly and on any “website and included in any newsletter”. Additionally, the association must provide each notice “personally” to every owner “by mail, hand-delivery, or electronic means”. Lastly, this “notice” must include certain details concerning the board meeting’s time, etc. and agenda details that note particular discussion, action, and reoccurring items. The association must even post a notice of “cancellation at the meeting site”, at a location within the association and on the website if a meeting noted on the overall annual meeting has been canceled.

The Radburn Regulations do allow a board meeting to deal with “matters of such urgency and importance that delay for the purpose of providing 7 days advance notice would” likely result in “substantial harm” if that board “meeting is limited to discussion of, and acting with respect to” the urgent and important matter. In that case, notice must be “provided as soon as possible following the calling of the meeting”. That notice must also be posted publicly, posted on any association “website” (and included in any newsletter), and provided “personally” to every owner “by mail, hand-delivery, or electronic means”. The board must make certain records vis-a-vis this meeting and respect other controls.

Important Information About the New Radburn Regulations & Elections For Associations Consisting of Less than 50 Units

Posted on June 1st, 2020

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA. These amendments have been labeled the “Radburn Amendments”. PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”). To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations expressly address “board elections” of associations with fewer than 50 units. The Radburn Regulations govern the use of proxies and absentee ballots by these small associations. If the association utilizes proxies, it must contain certain disclosures. An owner can revoke such a proxy prior to the casting of a vote. If the association utilizes proxies, it “must also make absentee ballots available”. Associations consisting of less than 50 units may permit electronic voting so long as the association can “verify the eligibility of the voters” and “count the ballots in a non-fraudulent and verifiable way”. DCA considers the following to be the “non-fraudulent and verifiable way” to count ballots:

  1. any physical location for ballots must be “secured”;
  2. ballot “tallying” must “occur publicly, with the ballots “open to inspection” for not less than 90 days from the election’s date;
  3. ballots must be “cast in an anonymous manner”; and,
  4. if the bylaws allow, and the particular member agrees, a ballot can be cast “electronically if “it is administered by a neutral 3rd party and anonymity is maintained”.

Because of the Radburn Regulations, associations of less than 50 units must provide a notice of election that includes certain information and be provided within a tight 15-day window. Every owner in “good standing” can nominate himself or another owner in “good standing” to be a candidate for election and “good standing” is the only “criterion” that can be employed concerning a nominee’s eligibility. Owners of these associations must have the chance to review each candidate’s “qualifications”. An association of less than 50 units is not required to allow for “write-in candidates”. Lastly, any owner that the association considers to be not in “good standing” must be notified of that within a specific time frame prior to the election.

Brief Discussion Re: Radburn Regulations, Elections & Associations Consisting of 50+ Units

Posted on May 29th, 2020

In 2017, New Jersey’s legislature amended New Jersey’s Planned Real Estate Development Full Disclosure Act, commonly known as PREDFDA.  These amendments have been labeled the “Radburn Amendments”.  PREDFDA has always been administered by parts of New Jersey’s Department of Community Affairs (“DCA”).  To that end, DCA has adopted regulations it claims are necessary to “implement” and/or “enable” relevant owners to “more easily and fully comply with” the Radburn Amendments. These regulations will likely be known as the “Radburn Regulations”.

The Radburn Regulations expressly address “board elections” of associations with 50+ units.  The Radburn Regulations govern the use of proxies and absentee ballots by these associations.  If the association utilizes proxies, it must contain certain disclosures.  An owner can revoke such a proxy prior to the casting of a vote. If the association utilizes proxies, it “must also make absentee ballots available”. Associations consisting of more than 50 units may permit electronic voting so long as the association can “verify the eligibility of the voters” and “count the ballots in a non-fraudulent and verifiable way”. DCA considers the following to be the “non-fraudulent and verifiable way” to count ballots:  (1) any physical location for ballots must be “secured”; (2) ballot “tallying” must “occur publicly, with the ballots “open to inspection” for not less than 90 days from the election’s date; (3) ballots must be “cast in an anonymous manner”; and, (4) if the bylaws allow, and the particular member agrees, a ballot can be cast “electronically if “it is administered by a neutral 3rd party and anonymity is maintained”.

Because of the Radburn Regulations, associations of 50+ units must employ both a notice soliciting nominations and a notice of the election itself.  The notice soliciting nominations must be provided within a tight 30-day window. Every owner in “good standing” can nominate himself or another owner in “good standing” to be a candidate for election.  Thereafter, owners have at least 14 days, counted from the notice’s mailing, to submit a nomination. “Good standing” is the only “criterion” that can be employed concerning a nominee’s eligibility. The association is prohibited from mailing “ballots or proxies” until at least 1 day has passed since the end of the “nomination period”. After the nomination period expires, each owner is entitled to another election notice, sent by “personal delivery, by mail, or electronically”. Notice by electronic means can be sent only when the owner has agreed to this in writing or when the relevant governing documents permit such notices.  This notice must “contain” a ballot. Also, if the bylaws permit, the notice must also include “an absentee ballot”. If the particular bylaws provide for a “proxy ballot”, an “absentee ballot” has to be there too. Candidates must be listed alphabetically and the “ballot” must “include space for write-in candidates for as many seats as are up for election.” Persons elected as “write-ins” also have to be in “good standing”. Lastly, any owner that the association considers to be not in “good standing” must be notified of that within a specific time frame prior to the election.

Easy Route Available for Resolving Medical Marijuana Facility Delays

Posted on May 22nd, 2020

Ansell Grimm & Aaron PC partner Josh Bauchner recently wrote a guest column for Cannabis Insider addressing issues surrounding the appeal of New Jersey’s 2019 Request for Applications to open medical marijuana facilities. The column, in full, appears below:

In the last issue of Cannabis Insider, a guest columnist purported to offer “several” solutions to the pending appeals of the 2019 RFA process, which actually yielded only two proposals, neither of which are viable.

The first, a settlement, was squarely rejected by the state Department of Health. The second, waiving oral argument, at best expedites resolution by a few weeks, and wholly ignores the appellants’ Constitutional right to due process.

That said, there is a real solution:  The DOH simply could agree to consider all applications on the merits and award licenses to the most qualified candidates. Any allegedly corrupted files would be submitted in hardcopy with a certification that they are the same as in August of 2019. Scoring could begin anew, and we’d be off to the races.

The guest columnist also noted that other applicants are suffering hardship from the delay and, of course, the New Jersey cannabis patient population is suffering the most. To expedite resolution, other applicants could join in requesting that the DOH conduct a merit-based review, perhaps convincing the powers that be that a licensing decision is better than a litigation (confident applicants should have no objection to competition!).

The issues in the appeals are real and cannot be overlooked. The primary issue is whether the DOH acted arbitrarily, capriciously, and unreasonably in disqualifying numerous applicants for a technological issue that rested wholly within the DOH itself — as confirmed by multiple IT experts. In response, the Health Department only offers the contrivance, “No applicants reported any technical issues with the electronic submission to the Department.”

The problem with this assertion is applicants could not have reported problems of which they were entirely unaware. As we all know, the DOH did not tell applicants about the problems, and, consequently, the applicants had no idea there was an issue until the Department belatedly notified them three months later.

Tellingly, the extent of the DOH’s investigation was limited to a single chat session with software maker Adobe. The Adobe representative requested additional information and documents from the DOH for his analysis, but after much delay, the DOH inexplicably replied “[w]e can close the case [because] I don’t think there is anything that we can do further.”

That single chat session represents the entirety of the DOH’s self-proclaimed “investigation” and serves as the sole basis for its self-serving conclusion “that the problem did not rest with the Department.”  The DOH likewise has tellingly failed to:

  1. Produce the IT report upon which it relied in an unsigned and undated internal memorandum regarding the corrupted file issue.
  2. Define exactly what it did to “continuously monitor the online submission system to ensure that it continued to function properly,” or identify who performed this task.
  3. Produce any of the allegedly corrupt files, which are solely in its possession.
  4. Explain why it failed to reach out to the affected applicants in an effort to determine the actual cause of the corrupted files.

Appellants simply request to be included in the general applicant pool for consideration on the merits of their applications, which were, in fact, timely and complete.

This fair request could have been granted over seven months ago — when the DOH discovered its pervasive technological error — but it refused to take a reasonable approach by affording affected applicants a hearing, or to even communicate with them, in order to get to the root of the problem and fix it through resubmission of corrupt files.

Nevertheless, that quick and easy solution remains viable today and is the only real option to address the “hardship” suffered by everyone: appellants, other applicants, and New Jersey patients alike.

Client Alert: Legislative Changes to the Family Leave Act and the WARN Act

Posted on May 4th, 2020

Earlier this month, the New Jersey Legislature made further changes to the state’s labor and employment laws in light of the COVID-19 pandemic.  In particular, the Legislature amended the Family Leave Act and the Millville Dallas Airmotive Plant Job Loss Notification Act (commonly known as the “NJ WARN Act”).  These changes directly impact the rights of both employers and employees throughout the state.  A brief summary is provided below:

 Family Leave Act

On April 14, 2020, Governor Phil Murphy signed Senate Bill S2374 (“S2374”) into law.  Among other things, S2374 amended the New Jersey Family Leave Act to provide job-protected leave when the Governor has declared a state of emergency.  In these circumstances, an employee who needs to care for a family member because of (1) an epidemic of a communicable disease, (2) a known or suspected exposure to a communicable disease, or (3) efforts to prevent the spread of a communicable disease to other members of the community is entitled to twelve (12) weeks of job-protected leave. 

The Family Leave Act defines a “family member” to mean “a child, parent, parent-in-law, sibling, grandparent, grandchild, spouse, domestic partner, or one partner in a civil union couple, or any other individual related by blood to the employee, and any other individual that the employee shows to have a close association with the employee which is the equivalent of a family relationship.”

While the Family Leave Act normally allows an employer to deny leave to the highest-paid 5% of its employees, or the seven highest paid employees (whichever is greater), subject to certain conditions being met, this exemption is suspended when the Governor declares a state of emergency and the leave requested is for one of the three reasons set forth above.  In addition, an employee may take intermittent leave for epidemic-related reasons without the employer’s consent so long as the employee (1) provides prior notice to the employer as soon as practicable and (2) makes a reasonable effort to not unduly disrupt the employer’s business operations.

The amendments to the New Jersey Family Leave Act contained within S2374 went into effect immediately and are retroactive to March 25, 2020.

NJ WARN Act

In 2019, the Legislature amended the NJ Warn Act to require that covered employers pay severance to employees that are terminated in connection with a covered event (the “2019 Amendment”).  The 2019 Amendment was scheduled to become effective on July 19, 2020.

In light of the pandemic, the Governor signed S2353 into law on April 14, 2020.  S2353 delays the effective date of the 2019 Amendment from July 19, 2020, until ninety (90) days following the termination of Executive Order 103 of 2020, wherein the Governor declared a state of emergency and a public health emergency.  At the time of publication, the Governor has indicated Executive Order 103 will not be terminated before May 15, 2020 and, therefore, the 2019 Amendment to the NJ WARN Act will not go into effect until August 15, 2020, at the earliest.

S2353 also amended the definition of a “mass layoff” to exclude layoffs “made necessary because of a fire, natural disaster, national emergency, act of war, civil disorder[,] or industrial sabotage[.]”  The definitional change is retroactive to March 9, 2020.