WHAT IS A BUSINESS CONTRACT DISPUTE?

A business contract dispute is a disagreement between two businesses.  It can be about any of the following:

·         a breach of an oral or written contract for the sale of goods or services entered into between the businesses

·         consumer fraud or common law fraud committed by one business against another business involving the sale of goods or services

·         allegations of unfair interference with a business, such as where a business uses unfair methods to compete with its competitor

·         allegations of abuse of process or malicious prosecution, such as where one business is owed money from another business and files a criminal complaint against a president or other officer of the business that owes the money

·         efforts to enforce a no-compete clause or restrictive covenant that was entered into between businesses or between a business and one of its former employees or independent contractors.

·         collections of past due bills owed by one business to another business.

·         fraudulent transfers of money or property by a business that seeks to avoid paying a judgment entered against it.

·         franchise disputes, where a franchise purchaser and the seller of the franchise have a dispute about duties arising under the franchise agreement.

·         disputes between partners or stockholders of a business for control of the partnership or corporation or about decisions affecting the partnership or business.

This article does not attempt to discuss relief available to businesses in Chancery Division, General Equity Part.

CAN A CORPORATE OFFICER BE PERSONALLY RESPONSIBLE FOR CORPORATE MISCONDUCT?

In some situations, a corporate officer may be held liable for the corporation’s wrongdoing.  This process of holding a corporate officer liable for the corporation’s conduct is called piercing the corporate veil.  A corporation typically acts only through its agents.   New Jersey generally adheres to the basic concept of a corporation being an entity in the law separate and apart from the person or persons who own its stock.    The main reason for incorporation is the insulation of shareholders from the liabilities of the corporate enterprise.   Generally speaking, the party seeking to pierce the corporate veil bears the burden of proving that the court should disregard the corporate entity and hold the corporate officer personally liable.  The sanction of piercing the corporate veil is a severe one.  For, veil piercing is an equitable remedy whereby the protections of corporate formation are lost.  Veil piercing is normally reserved for situations where it is necessary to remedy the fundamental unfairness that shall result from a failure to disregard the corporate form.  Generally speaking, while there are exceptions to the rule, unless there is a credible showing of fraud or injustice, courts will not pierce the corporate veil to impose liability on the corporate principals.  Normally, courts reserve the application of the remedy of piercing the corporate veil to situations where corporate officers have a practical and realistic opportunity to avoid injurious consequences of corporate conduct in areas of public health and safety.  Where the dispute merely pertains to an alleged breach of contract between businesses and where the claimant has reason to know that they are dealing with a corporate entity and where that corporation allegedly executes the contract that is the subject of a dispute between the parties, the corporate veil should normally remain intact.    In some cases, a corporate officer is not even required to come forward unbidden with information bearing on the corporation’s ability to meet its obligations.  If a party is concerned about a corporation’s ability to meet its obligations, there are a variety of ways for the concerned party to try to protect itself other than holding a corporate officer personally liable on the obligation.    Reasons supporting a piercing of the corporate veil might include evidence that the corporation’s officers failed to observe corporate formalities, such as by using corporate funds only for their intended purpose, maintaining corporate records, filing annual reports, holding shareholders' meetings, paying dividends and employing officers and directors.

WHAT ARE THE REQUIREMENTS FOR AN ENFORCEABLE BUSINESS CONTRACT?

Since, a breach of contract is never presumed; rather, the burden of establishing a breach of contract rests with the party asserting the breach.   A contract is an exchange of promises and thus is the result of a “bargain,” an “exchange of equivalents.”  Corbin on Contracts, supra, Sec. 10.  See also West Caldwell v. Caldwell, 26 N.J. 9, 28 (1958).  An enforceable bilateral agreement requires an offer, an acceptance, consideration and a meeting of the minds upon all the essential terms of the agreement.    To have a valid contract, there must be a meeting of the minds, as a contract does not come into being unless the parties agree to the same terms.   Thus, an enforceable contract only results from the parties’ agreeing upon essential terms and manifesting an intention to be bound by those terms and where the parties do not agree to one or more essential terms, the agreement may be unenforceable.   Indeed, it is fundamental that the essential element to the valid consummation of a contract is a meeting of the minds of the contracting parties.  Thus, doubt or difference between the parties to an alleged contract is normally incompatible with the claim that the parties agreement to terms.   If the contemplated agreement is to be bilateral, the offeror and offeree alike must express agreement as to every term of the contract.  The offerror does this in the offer; the offeree must do it in his acceptance.  When interpreting a contract, it is not the real intent that controls but rather the intent expressed or apparent in the writing.  Further, normally it is not the court’s role to make a new contract or to supply any material stipulations or conditions which contravene the agreements of the parties.   The mere fact that a contract is somewhat harsh or unfair in its operation does not excuse the performance of same and a court cannot create contractual obligations that are not based on the expressed intention of the parties.   Indeed, a court will not normally rewrite the agreement to provide the protection which a party failed to obtain for themselves.   Instead, the judicial function of the court is normally to enforce the contract as it is written.    Moreover, where the parties are experienced businesspeople, courts generally should not tinker with a finely drawn and precise contract entered into by experienced business people that regulates their financial affairs.   Also, equitable relief is not normally available merely because enforcement of the contract causes hardship to one of the parties.     Thus, if a contract contains ambiguous or doubtful terms, the contract is generally construed against its drafter.   The interpretation of a business contract is often a legal question for the Court rather than for a jury.

WHAT IS THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING?

The law implies a requirement that each party to a contract must act in good faith and deal fairly with the other party in performing or enforcing the terms of the contract.  This implied agreement is part of the contract, just as though the contract expressly states this good faith and fair dealing require­ment.  To act in good faith and deal fairly, parties must act honestly toward one another when performing or enforcing the contract.  One party to the contract cannot do anything that will have the effect of destroying or injuring another party’s right to receive the fruits of the contract.  However, if an enforceable contract never existed between the parties a claim for violation of the covenant of good faith and fair dealing, such a claim would normally fail.   For, in the absence of a contract, there can be no breach of an implied covenant of good faith and fair dealing. 

ARE ORAL CONTRACTS ENFORCEABLE IN COURT?

An oral contract for goods or services between businesses may be enforceable in court, especially if there is proof that the terms of the contract were sufficiently definite and that the parties agreed to be bound to the oral agreement.  While there does exist a statute of frauds in New Jersey that requires that certain contracts be in writing, in certain situations, it can be overcome.

WHAT IS A RESTRICTIVE COVENANT?

A restrictive covenant is a provision in a contract which prohibits or restricts a party from performing certain actions.  Post employment restrictive covenants are not void per se in New Jersey.

ARE RESTRICTIVE COVENANTS ENFORECEABLE IN COURT?

The enforceability of restrictive covenants depends in large part upon their reasonableness under the particular circumstances.   Noncompetition agreements are looked upon unfavorably by the courts, as potential restraints on trade.   To be enforceable, a restrictive covenant must be reasonable under the circumstances in the case before the court.  Noncompete agreements will be totally or partially enforced to the extent reasonably necessary to protect the employer's legitimate interests, will cause no undue hardship on the employee and will not impair the public interest.   The Supreme Court set forth the following four pronged test for determining the reasonableness of restrictive covenants (often referred to by commentators as a three pronged test insofar as they omit the first prong):

·         The employer has a protectable interest.

·         The covenant must be no more restrictive than is necessary to protect the “legitimate interests of the employer.

·         The covenant must impose “no undue hardship on the employee.

·         The covenant must not be “injurious to the public interest.”

To be enforceable, the covenant must generally meet all 4 of the aforesaid requirements.   Moreover, the Court may seek evidence that the covenant is based on adequate consideration.

Usually, the issue of whether the covenant is enforceable amounts to a fact sensitive test, since the validity and enforceability of a covenant against competition is fact-sensitive and must be determined in light of the facts of the case.  In one case, a court enforced a post-employment restrictive covenant where the prohibition was reasonably necessary for the protection of the business of the employer, was not unreasonably restrictive in point of time or territory upon the rights of the employee and was not prejudicial to the public interests.   Since, a breach of contract is never presumed; rather, the burden of establishing a breach of contract rests with the party asserting the breach.   In appropriate cases, a Chancery court shall intervene, providing injunctive relief to prevent the breach of noncompete agreements and solicitation of an employer’s personnel and customers and shall enjoin an employee for the use or disclosure of trade secrets or confidential information acquired from a former employer.    However, where there is no express covenant between an employer and employee, absent a showing of fraud or breach of trust, the Court shall generally not enjoin an employee, after termination of his employment, from honest competition with the former employer, even to the extent of soliciting the former employer’s customers.    Indeed, unless an employee is restrained by an enforceable covenant not to compete, he or she usually may freely compete with a former employer by accepting employment with a rival or by undertaking his or her own competing business.   In this regard, an employee who is not otherwise bound by a restrictive covenant may, after termination of employment, and in the absence of any breach of trust, compete honestly with his or her former employer.  Accordingly, in such circumstances, neither the decision to compete nor the entering into competition is actionable.

In addition, it is not a court’s function to make a contract for the parties or to supply terms not previously agreed upon.  A court shall not normally relieve a party from the hardship they might have guarded against and thus, the court shall enforce the contract which the parties themselves made.  A court will not generally rewrite the agreement to provide the protection which a party failed to obtain for themselves.  For, it is not the function of a court to make a better contract for the parties or to supply terms not previously agreed upon.  If a contract’s terms are clear, a court must merely enforce them as written.  Accordingly, where a written contract is complete and unambiguous on its face, the parties are bound by the intentions they express in same.  Moreover, where a written contract contains ambiguous or doubtful terms, the contract is construed against its drafter. 

Moreover, the common law duty of loyalty does not itself necessarily preclude an employee from making arrangements to commence new employment with a competitor.  The key distinction between such arrangements and competition is usually that an employee cannot directly compete with the current employer until after employment with that employee terminates.  Whether an employee's conduct constitutes unfair competition or was merely preparatory to new employment is a matter of degree and depends upon the facts and circumstances of the case. 

However, New Jersey Courts have held that the enforcement of restrictive covenants does not depend on the existence of a written contract of employment for such contracts need not be in writing but may be evidenced by conduct rather than words.   A contract of employment may be express or implied.   A hiring contract does not require formality. While assent to the offer of employment "must be manifested in order to be legally effective, it need not be expressed in words."  The necessary assent may be expressed in words, or it may be "implied from conduct without words."  One could however argue that, while the parties’ employment contract itself need not be in writing, to satisfy the requirements of a valid restrictive covenant, the restrictive covenant itself must be in writing.

WHAT DAMAGES ARE AVAILABLE FOR BREACH OF CONTRACT?

Where two parties have made a contract, which one of them has broken, the damages which the other party ought to receive, in respect of such breach, should be such as may fairly be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.  Contract damages are generally designed to put the injured party in as good a position as if the contract had been performed.    For example, in a lease transaction, the lessee is generally entitled to recover the value of the lease term, which, in the absence of special circumstances, is the difference between the actual rental value and the rent reserved.    A party is not generally chargeable for a contract loss that the party had no reason to foresee as a probable result of the alleged breach when the contract was made.   Further, the loss must be a reasonably certain consequence of the breach. 

CAN ONE BUSINESS FORCE ANOTHER BUSINESS TO PERFORM OBLIGATIONS UNDER A CONTRACT (SPECIFIC PERFORMANCE)?

Specific performance is an equitable remedy available to a party to a lawsuit if they can establish that mere legal relief such as an award of damages would be insufficient to make the claimant whole.  Under the doctrine of specific performance, a court orders a party guilty of a breach of contract to, under the danger of court penalties, perform under the contract or if they already began to perform and stopped, to complete performance under the contract.   To establish a right to the remedy of specific performance, a business must demonstrate that the contract in question is valid and enforceable at law, that the terms of the contract are expressed in such fashion that the court can determine, with reasonable certainty, the duties of each party and the conditions under which performance is due and that an order compelling performance of the contract will not be harsh or oppressive.   The right to specific performance turns not only on whether the claimant has demonstrated a right to legal relief but also whether the performance of the contract represents an equitable result.   The remedy of specific performance is in the court’s discretion to grant or deny.   When specific performance is sought, the court is required to do more than merely determine whether the contract is valid and enforceable; the court of equity must also appraise the respective conduct and situation of the parties, the clarity of the agreement itself notwithstanding that it may be legally enforceable and the impact that an order of specific performance could have (i.e., whether such an order is harsh or oppressive to the wrongdoer or whether a denial of specific performance leaves the claimant with an adequate remedy).   In addition, the party seeking specific performance must stand in conscientious relation to his adversary – that party’s conduct in the matter must have been fair, just and equitable rather than sharp or aiming at unfair advantage.  Such weighing of equitable considerations must represent, in each case, a conscious attempt on the court’s part to render complete justice to both parties regarding their contractual relationship.  A court will often direct performance of such a contract because, when there is no excuse for the failure to perform, the law of equity regards and treats as done what in good conscience ought to be done.  However, specific performance of a contract will not be awarded where the contract is incomplete, uncertain or too indefinite in its material terms to be specifically enforced in equity. 

ARE BUSINESSES ABLE TO FILE CONSUMER FRAUD LAWSUITS?

In many but not all situations, businesses are entitled to bring claims pursuant to the Consumer Fraud Act.   For, unlawful practices can victimize businesses as surely as they can the individual consumer.  Nothing in the Consumer Fraud Act’s language specifically prevents businesses from bringing Consumer Fraud Act claims.    The Consumer Fraud Act defines the term “merchandise” as any of the following:

1.             Objects;

2.             Wares;

3.             Goods;

4.             Commodities;

5.             Services;

6.             Anything offered, directly or indirectly to the public for sale;

7.             Information services.

Further, the Consumer Fraud Act defines the term “Person” to include a partnership, corporation, company, trust, business entity or association.  Moreover, under the Consumer Fraud Act, a private claimant is defined as any person suffering any ascertainable loss of moneys or property as a result of any practice declared unlawful under the Consumer Fraud Act.  Moreover, businesses frequently act as consumers.  Additionally, it is not unusual for businesses to be victimized by a provider of services.  The simple fact that a product is not something mass produced for sale to the general public and is not a product the average person would know how to use do not permit the seller to avoid consumer fraud liability.   For, the Consumer Fraud Act is expressly not limited to the sale of items for “personal, family, or household use.”   Further, the Consumer Fraud Act does not require that “the average person walking down the street” know how to use a product for it to be considered “merchandise” under the Consumer Fraud Act.    Examples of situations where businesses successfully invoked the Consumer Fraud Act include the following: 

·                     a commercial purchased a gel coat applied to watercraft hulls.

·                     a commercial yacht purchaser. 

·                     a commercial crane purchaser. 

·                     A condominium developer that purchased prefabricated wall panels.  

·                     a corporate purchaser of computer peripherals.  

·                     The renovation of a commercially owned, unoccupied, apartment and office building.

·                     a franchisee’s claim that its franchisor engaged in fraud relative to purchase of a franchise/distributorship  offered in advertising addressed to the general public at large and that was not subject to the New Jersey Franchise Practices Act

·                     a commercial buyer of equipment that the seller did not actually own. 

WHAT IS THE NEW JERSEY CONSUMER FRAUD ACT?

The Consumer Fraud Act is a New Jersey law that regulates a very wide range of goods and services.  The New Jersey Consumer Fraud Act was intended as a response to public harm resulting from deception, misrepresentation and unconscionable practices engaged in by professional sellers seeking mass distribution of many types of consumer goods. The Consumer Fraud Act provides individuals and businesses with the right to file a lawsuit against those that cause actual harm by using deception, misrepresentation and unconscionable practices when selling certain goods or services.  The Consumer Fraud Act provides consumers with a greater level of protection than do some other remedies for fraud.  Under the Consumer Fraud Act, the burden of proof is often easier to meet and potential damages are greater, as the Consumer Fraud Act allows certain defrauded and injured individuals and businesses to recover 3 times the amount of damages plus court costs and attorney's fees. 

WHAT DAMAGES ARE AVAILABLE TO A BUSINESS THAT IS A CONSUMER FRAUD VICTIM?

If a business proves that another business violated the Consumer Fraud Act and that the business suffered ascertainable loss due to the consumer fraud, the victimized business shall be entitled to potentially recover:

·                   an injunction to stop the consumer fraud

·                   a refund of money or return of property lost as a result of the consumer fraud

·                   cancellation of a contract that is the product of consumer fraud

·                   treble damages

·                   attorney’s fees

·                   litigation costs (i.e., lawsuit filing fees, postage, service fees, etc. but not expert fees).   

In cases involving the Consumer Fraud Act in the context of a breach of contract or misrepresentation, either out-of-pocket loss or a demonstration of loss in value shall generally be enough to meet the required proof of ascertainable loss

WHAT IF MY BUSINESS IS SUED?

If your business is sued in special civil part or Law Division, Civil Part, your business shall be named to a complaint or counterclaim and must file a written response to the complaint or counterclaim, called an “answer” and a  case information statement.   Failure to do so will normally result in your being defaulted and exposes you to the risk of having a money judgment entered against you or your business and thereafter, possibly losing money or property.  You may file an answer by preparing a written answer disputing charges made against you or your business in the complaint or counterclaim and requesting that the special civil part or Law Division, Civil Part dismiss the wrong charges.  If plaintiff or someone that isn’t named in the complaint owes you money or property based on the same set of facts as those in dispute in the complaint or facts related to the dispute, in addition to filing an answer, you may also be able to file a counterclaim or third party complaint to recover the money or property (discussed below).  Forms are often available at the appropriate county court offices and via the worldwide web.  However, neither court forms, websites nor advice from court personnel are good substitutes for a competent attorney’s legal services.  Each case has its own particular legal issues and therefore, its own challenges.  It is very common for people to file inadequate or incorrect complaints that result in the complaints or answers to complaints being rejected by the special civil part or Law Division, Civil Part or being dismissed after filing and before or after trial because of procedural deficiencies.  It is important to be truthful and not to make misstatements of facts when answering complaints and counterclaims.   It is extremely important that you prepare your answer very carefully and make sure that you include in the answer a detailed list of all defenses against the complaint or counterclaim that you are responding to, since failure to do so could cause you to lose your case.  Accordingly, when your business is sued, you should seriously consider hiring an attorney to prepare your response to the complaint or counterclaim, to prepare written requests for information to the party that sued you (discussed further below) and if you can afford it, to have an attorney represent you in court.  After your answer is prepared, you must file it by either visiting the New Jersey Superior Courthouse or appropriate Court Finance Office in the county where the complaint was filed – all of which are located in the county seat of the appropriate county -- or by sending the necessary paperwork to the appropriate county office of the Superior Court of New Jersey.  You must pay a fee to file your answer that is sometimes determined based on the amount of the original dispute and the type of trial you want and whether you intend to add parties to the lawsuit (discussed below).   Only persons age 18 or older are able to file an answer for themselves (minors must file an answer through their parent or guardian).   Most cases filed in special civil part that go to trial are nonjury trials, meaning that only a judge hears the case.  For an extra fee paid only when you first file your first answer, you may demand a trial by 6 jurors.  If you are filing a complaint in Law Division, Civil Part, there is no additional fee for a jury trial but you must demand it within a specific time frame or waive the right to a jury.  Jury trials are much more complex than nonjury trials and usually require much more preparation, including extensive paperwork.  However, a jury trial demand may result in the facts of your case being decided by a jury of ordinary people rather than by a single judge.  Even where a party requests a jury trial, the legal issues in the trial are normally decided by the judge hearing the case.

WHAT IF MY BUSINESS SUED BUT SOMEONE OWES MY BUSINESS MONEY BECAUSE OF THE SITUATION THAT IS THE SUBJECT OF THE COMPLAINT FILED AGAINST MY BUSINESS?

If your business is a defendant and plaintiff or someone that isn’t named in the complaint owes you money or property based on the same set of facts as those in dispute in the complaint or facts related to the dispute, in addition to filing an answer, you may also be able to file a counterclaim or third party complaint to recover the money or property (discussed below).  If there are valid facts and legal reasons to support it, a defendant can file their own lawsuit against a plaintiff, called a “counterclaim If your business is sued and someone who is not named in the lawsuit is partially or totally responsible for the plaintiff’s damages or for damages you suffered and there are valid facts and legal reasons to support it, a defendant can file their own complaint, called a “third party complaint”.  By doing so, the defendant names parties not originally named to the complaint as additional parties to the case.  Counterclaims and third party complaints must be prepared in writing and filed with the appropriate court where the original complaint is being heard normally require extra fees above the cost of filing an answer to the original complaint.  In the case of a third party complaint, once properly filed, the special civil part normally serves it on the plaintiff.  In Law Division, Civil Part, you must have a process server serve the complaint.  Forms may be available at the appropriate office of the special civil part and via the worldwide web.  However, neither court forms, websites nor advice from court personnel are good substitutes for a competent attorney’s legal services.  Each case has its own particular legal issues and therefore, its own challenges.  It is very common for people to file inadequate or incorrect complaints or counterclaims that result in the complaints or answers to complaints or counterclaims being rejected by the special civil part or being dismissed by the special civil part after filing and before or after trial because of procedural deficiencies.  It is important to be truthful and not to make misstatements of facts when answering complaints and filing counterclaims and third party complaints.   It is extremely important that you prepare your answer, counterclaim or third party complaint carefully and make sure that you include in the documents a detailed list of all reasons why you may have a right to win your case, since failure to do so could cause you to lose your case.  Accordingly, when your business is sued and when you want to file a counterclaim or third party complaint, you should seriously consider hiring an attorney to prepare your response to the complaint or counterclaim, to prepare written requests for information to the party that sued you (discussed further below) and if you can afford it, to have an attorney represent you in court.  After your counterclaim or third party complaint is prepared, you must file it by either visiting the New Jersey Superior Courthouse or appropriate Court Finance Office in the county where the complaint was filed – all of which are located in the county seat of the appropriate county -- or by sending the necessary paperwork to the appropriate county office of the Superior Court of New Jersey.  You must pay a fee to file the document that is determined based on the amount of the original dispute and the type of trial you want and it may also be based on whether you intend to add parties to the lawsuit.  You must also decide whether to demand a jury trial within a specific timeframe or waive the right.

WHAT IF MY BUSINESS FILED A COMPLAINT AND DEFENDANT FILED A COUNTERCLAIM AGAINST MY BUSINESS?

If there are valid facts and legal reasons to support it, a defendant can file their own lawsuit against a plaintiff, called a “counterclaim”.  If you are named to a counterclaim, you must file a written answer to the counterclaim.  Failure to do so will normally result in your being defaulted and exposes you to the risk of having a money judgment entered against you or your business and thereafter, possibly losing money or property.  It is possible for plaintiffs to win on their complaint only to lose on a defendant’s counterclaim.  You may file an answer by preparing a written answer disputing charges made against you or your business in the complaint or counterclaim and requesting that the court dismiss the wrong charges.  If plaintiff or someone that isn’t named in the complaint owes you money or property based on the same set of facts as those in dispute in the complaint or facts related to the dispute, in addition to filing an answer, you may also be able to file third party complaint to recover the money or property (discussed above).  Forms may be available at the appropriate office of the special civil part or Law Division, Civil Part and via the worldwide web.  However, neither court forms, websites nor advice from court personnel are good substitutes for a competent attorney’s legal services.  Each case has its own particular legal issues and therefore, its own challenges.  It is very common for people to file inadequate or incorrect complaints that result in the complaints or answers to complaints being rejected by the special civil part or Law Division, Civil Part or being dismissed by the court after filing and before or after trial because of procedural deficiencies.  It is important to be truthful and not to make misstatements of facts when answering complaints and counterclaims.   It is extremely important that you prepare your answer very carefully and make sure that you include in the answer a detailed list of all defenses against the complaint or counterclaim that you are responding to, since failure to do so could cause you to lose your case.  Accordingly, when your business is sued, you should seriously consider hiring an attorney to prepare your response to the complaint or counterclaim, to prepare written requests for information to the party that sued you (discussed further below) and if you can afford it, to have an attorney represent you in court.  After your answer is prepared, you must file it by either visiting the New Jersey Superior Courthouse or appropriate Court Finance Office in the county where the complaint was filed – all of which are located in the county seat of the appropriate county -- or by sending the necessary paperwork to the appropriate county office of the Superior Court of New Jersey.  You must pay a fee to file your answer that is determined based on the amount of the original dispute and the type of trial you want and whether you intend to add parties to the lawsuit (discussed below).   Only persons age 18 or older are able to file an answer for themselves (minors must file an answer through their parent or guardian).  Most cases filed in special civil part that go to trial are nonjury trials, meaning that only a judge hears the case.  For an extra fee paid only when you first file your first answer, you may demand a trial by 6 jurors.  In Law Division, Civil Part, there is n no additional fee for a jury trial but you must demand it within a certain time period or waive your right to a jury.  Jury trials are much more complex than nonjury trials and usually require much more preparation, including extensive paperwork.  However, a jury trial demand may result in the facts of your case being decided by a jury of ordinary people rather than by a single judge.  Even where a party requests a jury trial, the legal issues in the trial are normally decided by the judge hearing the case.

IF THE OTHER SIDE HIRES AN ATTORNEY, SHOULD I DEAL WITH THE ATTORNEY OR THEIR CLIENTS?

If a party is represented by an attorney in a civil part dispute, you must generally avoid having oral or written contact regarding the case with the represented party and instead, must make all communications involving the case through the represented party’s attorney.

WHAT HAPPENS AFTER THE COMPLAINT IS FILED?

After the complaint is filed, in small claims proceedings, court staff shall serve the complaint on the defendants, usually by mailing it by certified and regular mail.  In Law Division, Civil Part cases, a plaintiff or third party plaintiff normally uses a process server to serve the complaints upon their adversaries.  A defendant has 35 days following service of a complaint to file an answer.  The summons should state the date on which the complaint was served.  If a defendant fails to file a written answer to the complaint, in special civil part the clerk should automatically enter a default on the special civil part’s docket.  The special civil part normally mails the plaintiff a notice stating the date on which cases are automatically defaulted (35 days after service of the answer).  If a defendant files a written answer and pays the necessary fee, the special civil part normally sends a notice of that an answer was filed.  In Law Division, Civil Part, once the time for a defendant to answer expires, if no answer is filed, the plaintiff must file a request for entry of default.  Once a complaint and answer are filed in the case, whenever one party sends any kind of paperwork to the court, they must generally send complete copies of the paperwork to all other parties involved in their case (or if they are represented, to the parties’ attorneys).  If a party fails to follow this procedure, they may be punished by the court for the failure and any relief they ask for and receive from the court can often be reversed for the failure.  The parties may engage in discovery – a factfinding process during which each party tries to find out more about the other party’s position.  Discovery often involves parties serving each other with written requests for information called interrogatories, notices to produce (sometimes also called requests for production of documents) and requests for admissions.  These requests are served by you and not the special civil part by mailing the documents via regular and certified mail, return receipt requested (if the other party is unrepresented) on the other parties or by regular mail only on the other parties’ attorney, if they are represented by an attorney.  However, it is often best to send all documents to any opponent by regular main and also by certified mail, return receipt requested to make sure you have proof that the documents were received by your opponent.  If either party fails to answer these requests in writing or fails to answer the requests with sufficient thoroughness, the special civil part may punish the delinquent party, such as by throwing their complaint out of court or suppressing their answer.  At some point after the complaint is filed and answered, the special civil part sends the parties a notice stating the trial date.   Failure to carefully prepare and serve thorough written requests for information could result in your losing your case, since you may be in the dark about what the other party intends to do at trial.  If a case is coming up for trial and you never received responses to your written requests for information, you may have a right to get more time from the special civil part to get the requests answered.  Discovery can be a very tricky and important part of the case and to make sure that it is conducted right, you should seriously consider hiring an attorney to prepare your written requests for information to your opponents or to other parties involved in the case or even to witnesses and if you can afford it, to have an attorney represent you in court.

WHAT HAPPENS IF DEFENDANT IS DEFAULTED?

If a defendant is automatically defaulted by the special civil part or in a Law Division, Civil Part case, if a plaintiff files the necessary paperwork for a default and it is entered, then no trial will occur (unless the court vacates the default) and the plaintiff has a certain number of months from the date of the entry of default to file additional paperwork with the court to seek a default judgment against a defendant.  In some cases, securing a default judgment only requires the plaintiff to submit paperwork, while in other cases, the plaintiff has to prepare and file a motion and the court may require the plaintiff and defendant to appear at a court hearing – a “proof hearing”.

WHAT HAPPENS IF A DEFAULT JUDGMENT IS ENTERED AGAINST YOU OR YOUR BUSINESS AND YOU IGNORE IT?

If you ignore a judgment, your bank account may be frozen and money in it turned over to the judgment holder, some of your wages may be taken from you, your personal property may be seized by the sheriff and sold to satisfy the judgment and/or a lien may be put against a house you own.  Often people wait until their bank account is frozen or until their wages are attached to take action – at that point it is difficult and sometimes too late to do anything to successfully stop those collection efforts.  It is not uncommon to refuse to help such latecomers from taking issue with the collection efforts unless they file papers with the court for relief.  However, once a judgment is entered against you or your business, you may ask the court to remove or “vacate” the judgment (discussed below).

DO I NEED AN EXPERT WITNESS TO PROVE MY CASE?

Often to prove one’s case or to successfully defend against a complaint, it is necessary to hire an expert witness to prepare a proper expert report and to testify regarding another party’s misconduct and the damages sustained as a result of the misconduct.  If scientific, technical, or other specialized knowledge will assist the factfinder at trial to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.  To be considered by the special civil part, an expert’s opinion must meet three basic requirements:   (1) the intended testimony must concern a subject matter that is beyond the knowledge of the average juror; (2) the subject testified to must be at a state of the art such that an expert’s testimony could be sufficiently reliable; and (3) the witness must have sufficient expertise to offer the intended testimony.  To meet the element of whether expert testimony is sufficiently reliable, the party offering the expert testimony must demonstrate that the expert’s opinion or theory is generally accepted within the scientific community.   An expert's opinion must be supported by facts or data either in the record or of a type usually relied upon by experts in the field.  Bare conclusions of an expert that are not supported by factual evidence are inadmissible.  Likewise, expert conclusions based on discredited or improperly performed diagnostic tools are suspect.  An expert's trial testimony is confined to the opinion reflected in his or her report.  Many expert opinions are never admitted into evidence and experts are thereby prevented from testifying at trial because the court finds the reports unreliable and/or inadequate.  Therefore, simply hiring an expert does not assure that you shall get their testimony into evidence.  Professional experts usually charge a fee to inspect your property and write a report – sometimes they bill by the hour and sometimes via a flat fee arrangement linked to each service they are to perform.  The expert normally sends a copy of their report to the party who hired the expert.  If your case requires expert testimony and the matter goes all the way to trial, it shall be necessary to have the expert appear at and testify at same.  The expert usually charges additional fees for the time during which they must appear at trial but you may get the expert to include such services as part of the fee to perform inspections and to write reports.  While there are some exceptions, normally, courts do not allow people to show up at trial to introduce into evidence estimates, expert reports and other documents that they never prepared and witnesses are often necessary to prove one’s case, especially when it comes to the party’s damages.  

WHAT HAPPENS AT TRIAL?

On the day that your case goes to trial you must appear at court.  Usually, many cases are heard on the day that your case is called for trial and it is not uncommon for many people to wait in a single courtroom for their case to be called.  You must be on time to avoid losing your case!  If a plaintiff fails to appear when their case is called, the special civil part is likely to dismiss the complaint.  If a defendant fails to appear when the case is called, the special civil part shall likely enter a default.  If a default is entered, you shall have to prepare and file paperwork with the court asking the court to enter a default judgment in your favor.  If no default is entered, you must be prepared to present your case or defense.  It is not uncommon for judges to get very frustrated by an unrepresented party’s lack of preparation or ignorance of the facts or law of the case.  A court has the power to punish unprepared parties, such as by throwing their case out of court or limiting what they can present at trial.  You must bring all documents, photographs, videos and other items with you to the trial that are necessary to prove your case (preferably originals).  Even if you bring such documents and items to court, a judge may refuse to allow you to use them at your trial.  New Jersey has published cases, laws, regulations, court rules and rules of evidence that are very tricky and that can be used to prevent you from doing much of what you want to do at trial.  Accordingly, before trial, you must consult all of these rules to determine how you intend to get your documents and items into evidence or how to properly use them at trial.  Hearsay rules of evidence are particularly troublesome and you should study them carefully before trial.  For example, it is very common for courts to refuse to allow a party to use or refer to documents or items that the person themselves never prepared.  Often parties stumble into special civil part with a video, photograph, bill or affidavit or other form of written statement, thinking they are going to use it as proof that they lost money or that they are not responsible for someone else’s damages, only to have a judge tell the parties that it is not going to even consider such items or documents.  Without the proper preparation, items and documents may never be considered by the court.  Also, if there are any legal issues to be dealt with at trial, you must be prepared to argue them, which may require you to refer to court rules, evidence rules, laws, regulations or published cases.  If you have any witnesses that you need to testify for you at trial, then in advance of the trial and as required by court rules, laws and published cases, you must prepare a written subpoena (or subpoenas if the case is adjourned).   Such a subpoena must normally be personally served by a process server rather than by mail.  If you want to force one of the parties to the case to testify as part of your case, since they might not show up at the trial (it is possible that only their attorney will show up), you should serve them with a notice in lieu of subpoena.  If you think that you could have problems getting someone to show up to provide testimony at trial, you should have a process server serve them with a subpoena or  if they are a party to the dispute, a notice in lieu of subpoena.  Without witnesses to testify at trial (especially experts, discussed above), you may lose your case.  Trials can be very complex and time consuming – sometimes they take all day or more than one day to complete.  Also, it is very common for trials to get adjourned because someone is not ready to present their case for a valid reason (but you can never expect that you shall automatically get an adjournment and you must always be fully ready to try your case on the date that the trial is scheduled since courts often refuse adjournment requests and dismiss cases if parties are not prepared to proceed with their case or defense on the trial date).  It is best to have your questions for any witnesses prepared in advance.  At the end of trial, the court normally enters a judgment for or against you or your business.  The court may also withhold or “reserve” judgment for a later date, which normally results in the judge hearing the case taking time to write up its reasons for its decision and mailing it to the parties’ last known addresses (or to their attorneys, if they are represented). 

IS IT POSSIBLE TO SETTLE MY CASE?

Parties may voluntarily agree to settle their case but preparing the proper settlement agreement requires great care.  Normally, at any trial proceeding, the special civil part has settlement forms for the parties to complete.  However, neither court forms, websites nor advice from court personnel are good substitutes for a competent attorney’s legal services.  Each case has its own particular legal issues and therefore, its own challenges.   For example, what if you don’t include protections to yourself in the agreement?   A court may refuse to enforce a settlement agreement if it is unclear what the parties agreed to.  Also, if a party fails to honor a settlement, you may have to return to court if you want to enforce the settlement, which normally requires you to file a motion.  If you can afford an attorney, it is best to have the attorney prepare the settlement agreement so that they can try to make the other parties agree to the best settlement terms for you.  If you do settle your case yourself, you should notify the special civil part as soon as possible – with a phone call and then followed up in writing.  If the case is settled before trial, you should make every effort to advise the court before the trial occurs.

WHAT HAPPENS IF I GET A JUDGMENT?

Once you get a judgment, you become a judgment creditor and you may decide to do nothing or more likely, you may decide to try to collect it.  To collect a special civil part judgment, special civil part officers may be of assistance in taking steps to collect it, but they cannot provide legal advice.  To collect a law division, civil part judgment, you must often use a sheriff.  Normally, to collect on a judgment, you need to know the whereabouts of the debtor’s assets and you need to fill out paperwork to direct the court officer to try to recover the judgment from those assets.  The collection process is often difficult and if a debtor files for bankruptcy, you may never collect your judgment.  The court normally has forms available at the courthouse and on the worldwide web.  However, neither court forms, websites nor advice from court personnel are good substitutes for a competent attorney’s legal services.  Each case has its own particular legal issues and therefore, its own challenges.   If you can afford an attorney, it is best to have the attorney perform the steps necessary to collect any judgment. 

TAKING APPEALS -- WHAT IF I LOSE MY TRIAL OR THE COURT REFUSES TO VACATE A DEFAULT JUDGMENT?

If you disagree with the special civil part's decision, such as a judgment entered against you or your business at trial or the denial of a motion to vacate a default judgment, you may appeal the case to a higher court -- the Appellate Division of the Superior Court.  There are very strict deadlines for filing appeals.   To appeal a final judgment that resolves all issues in the case, you may file a notice of appeal and other required documents with the Appellate Division within 45 days from the date of judgment and pay a fee to the Appellate Division – special civil part appeals and Law Division, Civil Part appeals are not heard by the special civil part or Law Division, Civil Part and you should not try to file appellate papers with either of those courts!   As part of your appeal, you usually must also prepare a written court transcript request and order a court transcript from the appropriate court that decided the matter against you or your business and pay a fee for it.  Appeals are some of the most complex proceedings in the court system.  The court normally has forms available on the worldwide web.  However, neither court forms, websites nor advice from court personnel are good substitutes for a competent attorney’s legal services.  Each case has its own particular legal issues and therefore, its own challenges.   If you can afford an attorney, it is best to have the attorney perform the steps necessary to take an appeal.  Appeals from orders or judgments that are not final are called “interlocutory appeals” and the procedure for such appeals is somewhat different than those for appeals from final judgments or orders.

CAN I HANDLE A CASE MYSELF?

Many people can and do successfully handle special civil part cases from filing the first paperwork to the collection of a judgment and some people likewise handle Law Division, Civil Part cases themselves.  However, many other people also make mistakes that lead to the dismissal of their cases or that result in the entry of a money judgment against them.  The greater the money at stake, the greater the reason to consider using the services of a competent attorney licensed to practice law in New Jersey to handle part or all of the case.  The following are reasons to use an attorney to handle part or all of your case:

·                     court fees often change

·                     court rules often change

·                     court employees cannot give you “free” legal advice and a judge may refuse to let you claim that you were right in taking an action (or in deciding not to take action) because you relied on advice from such employees

·                     court forms available on websites may not cover every situation you may face in court

·                     each case has its own particular legal issues and therefore, its own challenges

·                     it is very common for people to file inadequate or incorrect complaints that result in the complaints or answers to complaints being rejected by the court or being dismissed by the court after filing and before or after trial because of procedural deficiencies.  

·                     it is not uncommon for judges to get very frustrated by an unrepresented party’s lack of preparation or ignorance of the facts or law of the case. 

·                     a court has the power to punish unprepared parties, such as by throwing their case out of court or limiting what they can present at trial. 

·                     New Jersey has many published cases, laws, regulations, court rules and rules of evidence that are very tricky and that can be used to prevent you from doing much of what you want to do at trial. 

·                     it is very common for courts to refuse to allow a party to use or refer to documents or items at trial that the person themselves never prepared.  Often parties stumble into court with a video, photograph, bill or affidavit or other form of written statement, thinking they are going to use it as proof that they lost money or that they are not responsible for someone else’s damages, only to have a judge tell the parties that it is not going to even consider such items or documents. 

·                     without the proper preparation, items and documents may never be considered by the court.  Also, if there are any legal issues to be dealt with at trial, you must be prepared to argue them, which may require you to refer to court rules, evidence rules, laws, regulations or published cases. 

·                     you cannot show up at special civil part expecting the judge hearing your case to explain court rules, evidence rules, court procedure or the details of the law that applies to your case.  The judge hearing your case is not permitted to give you legal advice.

It is important to remember that even if you have an attorney, you could lose your case.  Hiring an attorney to handle part or all of your case does not guarantee your success.  However, it may provide what is needed to win your case or to avoid certain mistakes.

WHAT IF I DON’T HAVE ENOUGH MONEY TO HIRE AN ATTORNEY TO HANDLE MY CASE FROM BEGINNING TO END?

In many situations, the Law Office of Paul DePetris offers alternatives to handling cases for an hourly fee, such as by offering to prepare the court paperwork for you or helping you handle your claim by yourself (assuming the Court permits you to represent yourself, since there are limits to certain businesses representing themselves in certain courts).  Such flexible methods may allow you to keep the amount legal fees you spend on your case to a fixed sum, while providing you the help you need to handle your case.  For a no cost phone consultation about what the Firm might be able to do for you, call or write an email to Mr. DePetris.