New Jersey State Bar Association - The voluntary Bar Association of New Jersey, serving members since 1899.

Capitol Report

January 13, 2014

This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To obtain a complete copy of the Capitol Report and/or retrieve a former Capitol Report, please visit the state bar’s website at www.njsba.com

NEW LAW

P.L. 2013, c.171 Increases compensation for wrongful imprisonment. On Dec. 19, the bill passed in the Assembly (74-6-0). On Dec. 27, the governor signed the bill into law. S-1219 (Codey)

The New Jersey State Bar Association Board of Trustees, Legislative Committee and Criminal Law Section voted to support this legislation, believing there are many cases where people are wrongfully imprisoned because of false evidence, which, therefore, has a devastating impact on their lives. The proposed recovery would be independent of civil suit remedies available, which, if successful, could be far more than that specified in the statute.

RECENT ACTION IN TRENTON

Business Law

A-4023 (Burzichelli) (NJSBA supports) Makes certain technical corrections to the Revised Uniform Limited Liability Company Act (RULLCA). On Dec. 19, the bill passed the Assembly (80-0-0), was sent to the Senate and referred to the Senate Commerce Committee.

The New Jersey State Bar Association’s Board of Trustees, Legislative Committee and Business Law Section initiated this legislation, which was later endorsed with amendments by the Executive Committee; Legislative Committee and Real Property, Trust & Estate Law Section, because the state bar believes the proposed changes are essential to ensure the provisions in the existing RULLCA are well understood and implementation is seamless. The association believes amendments are also necessary, though, to address concerns raised by trust and estate attorneys that the 2012 law permits creditors to liquidate limited liability company (LLC) interests and reduces certain tax benefits afforded under the previous law.

Amendments have been proposed that would maintain the previous statutory assurance that an LLC interest gifted to a child will not be foreclosed upon or liquidated and would reinstate the previous tax benefits by addressing problems with the current law’s application to estate and gift taxes. The tax law requires the “fair market value” of a transferred interest be utilized for such purposes. Under the previous law, the "non-transferability" of the asset increased the marketability discount of that asset for valuation purposes. Presently, though, the asset is less transferable because it can be liquidated by a creditor, which diminishes marketability for valuation purposes. Furthermore, the present law prohibits the modification of an LLC’s operating agreement to guard against creditor liquidation. Thus, the high creditor protection once afforded by New Jersey law was inadvertently lost in RULLCA’s enactment in 2012. 

Accordingly, the NJSBA believes the present law may have negative results on the formation of LLCs in New Jersey, and thus the issue should be addressed by amending the bill.

Consumer Protection Law 

A-756 (Barnes) (NJSBA supports) Limits the forum of consumer contract disputes to New Jersey. On Dec. 19, the bill passed in the Assembly (53-26-0), was sent to the Senate and referred to the Senate Commerce Committee.

The New Jersey State Bar Association’s Board of Trustees, Legislative Committee, and Consumer Protection Law Committee voted to support this legislation, believing it promotes fairness to all parties involved in a consumer contract. As noted in the statement accompanying the bill, it has become common practice for "forum selection clauses" to be inserted in consumer contracts. The state bar believes adding forum selection clauses, forcing consumers to litigate or arbitrate in far-flung jurisdictions, generates needless litigation in the form of forum non conveniens motions and motions to dismiss. As such, these motions would be rendered unnecessary due to the clarity of the proposed legislation. The state bar believes a forum selection clause is a burden to the average citizen, where the citizen’s rights in the transaction will be governed by laws other than New Jersey's, despite the reasonable expectation that the government the citizen/taxpayer elects and pays for exists to protect New Jersey consumers from predation.

Family Law

A-321 (PDF) (Dancer) (NJSBA opposes) Establishes a four-year pilot program in Ocean County for electronic monitoring of certain domestic violence offenders; designated as Lisa's Law; appropriates $1 million. On Dec. 19, the bill was substituted for S-2910 (Sweeney). The bill was later passed in the Senate (35-0) and sent to the governor. 

The New Jersey State Bar Association’s Board of Trustees, Legislative Committee, and Family Law Section voted to oppose this legislation, believing the bill, as originally drafted, anticipated ordering electronic monitoring of a defendant based solely upon an arrest, not a conviction, for violating a temporary restraining order or final restraining order. The latest version of the bill impacts not only individuals who are convicted of a domestic violence offense, but those who are charged as well. 

A-735 (Eustace)/S-1438 (Pou) (NJSBA supports) Permits a child who moves out of a school district due to a family crisis to remain enrolled in that district until the end of the school year. On Jan. 6, the bill was recommitted to the Senate Budget and Appropriations Committee, was later released from the committee and is awaiting Senate vote.

The NJSBA Executive Committee, Legislative Committee and Family Law Section all voted to support as amended this legislation, believing it will have a minimal impact on the student/child who is going through a transition. The NJSBA does believe, however, that the bill should be amended to specifically include “divorce” as a “family crisis.”

A-2128 (Burzichelli)/S-2209 (Weinberg) (NJSBA supports) Permits freeholders and certain former mayors to solemnize marriage and civil union ceremonies. On Dec. 19, the bill was amended on the Senate floor (23-0) and is awaiting Senate vote. 

The New Jersey State Bar Association’s Board of Trustees, Legislative Committee and Family Law Section all voted to support this legislation, since it would allow freeholders and municipal clerks to perform marriage and civil union ceremonies. 

Health Law

S-2241 (Weinberg) (NJSBA supports) Prohibits Medicaid managed care organizations from reducing certain provider reimbursement rates without approval from the Department of Human Services. On Jan. 6, the bill was substituted for A-3409 (Schaer). The bill later passed in the Assembly (57-21-1) and was sent to the governor.

The New Jersey State Bar Association Board of Trustees, Legislative Committee, Elder and Disability Law Section and Health Law Section all voted to support this legislation, believing the bill would prohibit a health maintenance organization (HMO) that provides benefits under a managed care plan to persons who are eligible for Medicaid or the New Jersey Family Care Program from reducing reimbursement rates to certain categories of healthcare providers without obtaining a prior written approval to do so from the commissioner of human services. The NJSBA believes the bill is important to protect New Jersey healthcare providers from unjustified reimbursement efforts by HMOs.

Judicial Administration

A-581 (Spencer) (NJSBA supports) Authorizes the court to credit a person in default of a court-imposed financial obligation under certain circumstances. On Dec. 19, the bill was substituted for S-645 (Pou). The bill was later passed in the Assembly (35-1) and was sent to the governor.

The New Jersey State Bar Association’s Board of Trustees, Legislative Committee and Judicial Administration Committee voted to support this bill, believing it is appropriate to allow an individual to be credited with time served if he or she is an indigent and cannot afford to pay a fine. The state bar believes this is a particularly important issue given that New Jersey’s prisons continue to be overcrowded.

Special Civil Part

S-2018 (Stack) (NJSBA supports) Authorizes the award of attorney's fees and expenses in landlord-tenant actions under certain circumstances. On Dec. 19, the Assembly concurred with amendments (72-8-0) and was referred back to the Senate for vote for concurrence in Assembly amendments.

The New Jersey State Bar Association’s Board of Trustees, Legislative Committee and Special Civil Part Committee all voted to oppose this legislation, believing the bill would create an uneven playing field between landlords and tenants, by requiring that landlords pay attorney’s fees even when a breach of contract was the fault of the tenant or if the tenant cured the breach prior to the rendering of final judgment. However, the New Jersey State Bar Association supports the floor amendments, which attempt to broker a compromise by reducing the onerous nature of the legislation and providing that a tenant may only recover attorney fees if the tenant prevails in an action arising out of the lease. The NJSBA has a preference for the Senate amendments, which provide judicial discretion with regard to only the award of attorney fees for a tenant, rather than subjecting the award of attorney fees to a judge’s discretion for both a landlord and a tenant, as the Assembly amendments do.