Litigation

Arbitration of Business Ownership Disputes: Is It Really a Better Alternative Than Litigation?

Ansell Grimm June 12, 2023

Just as you are unlikely to find a married couple who doesn’t argue from time to time, you’d be hard-pressed to find a business where the co-owners or partners never disagree on matters relating to their company’s direction. While all business owners share the same goal of charting a course for success, they often have different visions of how to get there. And when a consequential dispute between business owners devolves into an intractable and heated conflict, the fate of their interests in the business and the company’s continued viability hang in the balance. That is why it is so important for business owners at loggerheads to find the most effective, efficient way to resolve their stalemate.

In a previous post, we discussed a variety of dispute resolution mechanisms that business owners can include in their operating agreements and bylaws to help address and resolve deadlocks. One of those options is arbitration.

Many businesses include arbitration provisions in their organizing documents because they believe arbitration is preferable to litigation. Most business owners recognize that taking matters to court, while sometimes necessary to advance or protect a party’s or the business’ interests, is usually something to avoid. While both processes involve a neutral third party who decides the outcome of the dispute, arbitration is generally perceived as a more efficient, cheaper, and less destructive way to resolve a deadlock.

While arbitration offers many benefits in business ownership disputes, it is not without its faults or potential downsides. If you are considering including an arbitration provision in your governing documents or want to submit a pending dispute to an arbitrator, here are some things to consider.

What Is Arbitration?

Arbitration is an agreed-upon process in which a third-party neutral selected by the parties considers evidence and testimony submitted by the parties and makes a decision regarding the resolution of the dispute. In this sense, arbitration is similar to traditional litigation before a judge. But there are significant distinctions in both procedure and outcome. While court proceedings are governed by rules of procedure and evidence established by the law and the judge, parties to an arbitration have much more leeway when setting the ground rules for the proceedings.

And while a judge’s ruling is definitive and conclusive, an arbitrator’s decision can be binding or non-binding. If the parties agree to the former, the arbitrator’s decision is final and can usually be enforced by a court, if necessary. In non-binding arbitration, the parties can abide by the arbitrator’s decision if they so choose but are free to ignore it as well.

Why Arbitration Is Preferable to Litigation – And Why It Isn’t

As noted above, arbitration and litigation share many characteristics but also have important distinctions. So what makes arbitration a supposedly attractive alternative to fighting things out in litigation, and what potential risks hide behind these presumed benefits?

More Control Over the Process

Civil lawsuits are governed by strict rules of evidence and procedure, as well as the judge’s rulings, which the litigants must abide by whether or not they like them. In arbitration, the parties have much more power to set their own rules. For example, litigation could involve scores of depositions, expansive document requests, and other intrusive, costly, and lengthy discovery that drain bank accounts and draw out the process for months or years longer than either party would want. In arbitration, however, the parties can agree to limit the extent of discovery, such as setting a maximum number of depositions or placing a tight deadline on when discovery must be completed.

While this ability to govern the process can benefit both sides, it may ultimately put one party at a significant disadvantage. A party may be unable to obtain the evidence and information that could be crucial to their claim or defense due to agreed-upon discovery limits. And if the parties agree to binding arbitration, the losing side forfeits the ability to challenge or change the outcome as they could in an appeal of a trial judge’s ruling.

Speedier Resolution

Protracted discovery, ongoing motion practice, and overcrowded court dockets all contribute to why lawsuits may take years before they get to trial or a judge’s dispositive ruling. None of these impediments to a speedy resolution are present in arbitration. The parties can agree that a final hearing must be held by a set deadline, such as 60 or 90 days from the date of the first meeting with the arbitrator. A limit can also be set for the length of the hearing itself.

Lower Costs

The parties’ ability to exert greater control over and place limits on the arbitration process can result in far lower costs than litigation. By restricting discovery and other aspects of the process, the parties can keep legal fees and expenses from spiraling out of control, as often happens in the endless trench warfare that litigation can devolve into. Of course, if the parties give each other as wide a berth in the agreed-upon ground rules of their arbitration as they would have in a lawsuit, any potential savings can go out the window.

For a party with greater resources or bargaining power, arbitration may cause them to inadvertently squander that advantage by leveling the playing field. With expenses limited in arbitration because of a more streamlined and restrictive process, the party with fewer resources can better afford to stay in the fight.

Keeping the Dispute Out of the Public Eye

Feuding owners are a bad look for any business, especially in the eyes of investors, other shareholders, customers, and suppliers. Since court proceedings are almost always a matter of public record, all of those critical constituencies – as well as the media – will be privy to the dispute’s ugly details. Owners can prevent their dirty laundry from being aired publicly by agreeing to keep the process and outcome of the arbitration confidential.

Sometimes, however, the threat of negative publicity for an owner or the business can give the other side leverage they would lose if they agree to confidential arbitration. This is another way arbitration can be more appealing in theory than practice.

If you have questions about arbitration or how to address disputes between business owners, please contact one of the litigation attorneys at Ansell, Grimm & Aaron.

Ansell Grimm & Aaron Grows Litigation Department With Two New Attorneys

Ansell Grimm June 1, 2023

Ansell Grimm & Aaron, PC is pleased to announce that Gabriel Blum and Anthony Sango have joined the firm as associate attorneys. Blum and Sango join the firm’s Woodland Park office.

“We’re thrilled to have Gabriel and Anthony on board,” said Managing Partner Michael V. Benedetto. “Adding two skilled litigators allows us to meet our clients’ steadily increasing legal needs. Their presence also supports our strategic growth plan, notably enhancing our capabilities.”

Blum’s practice encompasses a range of complex civil litigation matters. Licensed in New Jersey and New York, he is an experienced litigator joining from a national litigation firm. Blum earned his law degree at Benjamin N. Cardozo School of Law, where he was an articles editor for the Cardozo Journal of Law & Gender. He graduated from Yeshiva University with a Bachelor of Arts.

Sango handles a range of business and civil litigation matters. Before joining Ansell Grimm & Aaron, he was an attorney at an AmLaw 200 firm dedicated to civil defense litigation. Sango graduated from Seton Hall University School of Law and earned his undergraduate degree at SUNY Stony Brook.

About Ansell Grimm & Aaron, PC

Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve critical legal matters that are often urgent and stressful. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is one that serves the client’s needs.

Rock-Scissors-Paper Won’t Cut It: Effective Mechanisms for Resolving Deadlocks Between Business Owners

Ansell Grimm May 31, 2023

By Lawrence H. Shapiro

In sports, no one likes games to end in a tie. They are anti-climactic and disappointing. But in business, ties can have much more significant consequences. When equal shareholders in a closely held corporation, partners in a partnership, or members of a limited liability company find themselves tied – deadlocked – when making significant business decisions, it can put both the ongoing viability of the enterprise and the relationships behind the business in existential peril. And in any company where voting power or equity interests are equally divided, deadlock is always possible, if not a probability.

Management and ownership deadlocks can quickly devolve from disagreements among friends to irreconcilable differences between two soon-to-be-former business partners. Often, such disputes wind up in a courtroom where the fate of the owners and the business they bult together is left in the hands of a judge. Sometimes, litigation is necessary to protect the rights of an owner or preserve the business and its assets. In such circumstances, it is imperative that each owner retain their own experienced business litigation attorney to advise them and work to obtain a favorable outcome that, ideally, protects the business and the owner’s interests.

But litigation between deadlocked business owners can also be costly, disruptive, and lead to results that neither side wants, such as judicial dissolution and liquidation of the business. Given the foreseeability of deadlock – and the probable negative consequences of an extended stalemate among owners – it is critical that business owners have an effective mechanism in place to resolve these disputes when they arise.

For this reason, deadlock provisions should be included in a business’s foundational documents, such as an operating agreement, partnership agreement, or corporate bylaws. Even if the original versions of such documents do not contain deadlock provisions, amendments can be crafted to address a logjam should it arise. Resolving deadlocks that threaten the future of a business should not be left up to dumb luck. In fact, coming to an agreement on how to resolve a disagreement is easier while the business owners are getting along than having a court decide after the relationship falls apart.

If you have questions about ownership deadlocks or would like assistance establishing a deadlock resolution for your business, please contact one of the business law attorneys at Ansell, Grimm & Aaron.

LITIGATION DEPARTMENT REVIEW – 2022

Ansell Grimm December 21, 2022

The Ansell Grimm & Aaron (AGA) Litigation Department handled a wide variety of complex commercial disputes throughout 2022. Below we highlight several of the team’s successes.

Recovery for Landlord in Debtor’s Attempt to Escape Obligations

Partner Anthony J. D’Artiglio and Shareholder and department co-chair Joshua S. Bauchner recently secured a favorable decision from the Bankruptcy Court in the Southern District of New York in the Fairway Group Holdings Corp. matter. Our client, Debtor’s property owner, filed a multi-million-dollar cure objection asserting that Debtor had failed to repair and maintain the property in accord with its lease obligations, and thus needed to make the necessary repairs or pay for the repairs as part of the lease assumption and assignment. Debtor sought to dismiss the cure objection, arguing that the new tenant was responsible for all pre-assignment defects as part of the lease’s ongoing repair and maintenance obligations and that, because property owner did not issue a default notice pre-petition pursuant to a lease provision, property owner could not claim that a “default” existed requiring cure pursuant to the Bankruptcy Code. The Court resoundingly rejected Debtor’s arguments, holding that (i) Debtor is responsible for all necessary pre-assignment repairs pursuant to the lease because the buyer took the property “free and clear” of any and all defaults by Debtor at the time of the assignment, and (ii) landlord was not required to formally notice a “default” under the lease to seek the cost of repairs from Debtor for any pre-assignment condition in need of repair particular where, as here, Debtor was on notice upon the filing of the cure objection. As a result of this favorable ruling, our client can recover millions of dollars in repair costs.

Summary Judgment Benefitting Child’s Trust

The firm was retained by a single mother seeking to enforce a decade-old settlement agreement against her child’s wealthy father, who failed to pay substantial sums into trust for their daughter. Following lengthy litigation, including extensive motion practice and discovery, Senior Associate Seth M. Rosenstein secured summary judgment in favor of the child, ensuring that nearly $1 million in improperly withheld funds are paid into a trust to be established for her benefit. The court also awarded all costs and fees associated with establishing the trust for the child. This notable outcome ensures that the subject child is well provided for and finally has access to funds that should have been made available for her benefit many years prior.

Summary Judgement Secured in Convoluted Fraudulent Mortgage Matter

Spearheaded by Litigation Department co-chair Lawrence H. Shapiro and Attorney Layne A. Feldman, AGA was successful in obtaining summary judgment on behalf of its client in a convoluted litigation involving claims of fraudulent mortgages and satisfaction of mortgages. Stepping into the shoes of a prior counsel at the request of Plaintiffs and using the fact that the parties to the suit had attempted to litigate similar issues in prior lawsuits, AGA was able to demonstrate to the Court in 279 Veterans, LLC, et al. v. Village Green Associates, LLC, Docket No. MID-C-107-20, that preclusive doctrines applied and prevail on Plaintiffs’ declaratory judgment claim. The result of the Court’s ruling is that the Satisfaction of Mortgage filed by the Defendants will be removed from the chain of title of the property in question and is of no force and effect, preserving Plaintiffs’ Mortgage.

Protection for Landlord from Tenant Bankruptcy

Partner Anthony J. D’Artiglio and Shareholder Joshua S. Bauchner secured an extremely favorable settlement on behalf of a property owner whose tenant filed for bankruptcy after failing to make any rent payments over a prolonged period. Following our filing of an application to compel lease rejection or for relief from the automatic stay, the tenant agreed to pay outstanding rent and additional rent, our client’s attorneys’ fees and costs, and to increase the security deposit as a condition of assumption of the lease, ensuring the property owner was not harmed by the tenant’s bankruptcy filing.

Relief for Landlord from Automatic Bankruptcy Stay

Partner Anthony J. D’Artiglio and Shareholder Joshua S. Bauchner successfully secured relief from the automatic bankruptcy stay for a landlord whose tenant had sublet the property without authorization, failed to pay substantial rent, and additional rent due and owing. We successfully convinced the Court to order the tenant to make post-petition payments on an ongoing basis and to lift the automatic stay to permit the property owner to pursue the tenant for damages and eviction in State Court while the bankruptcy remained pending.

FINRA Advisor Defense

Ansell Grimm & Aaron was retained by a long-established FINRA-licensed broker dealer and its principal, in connection with litigation filed against them in the Superior Court of New Jersey, alleging causes of action relating to investment banking services provided to a technology startup. After several years of litigation, this matter was referred by counsel to Seth M. Rosenstein and Joshua Bauchner of the firm’s litigation department, in light of Mr. Rosenstein’s extensive FINRA experience and both counsel’s success in litigating matters before the Superior Court. Rosenstein and Bauchner successfully filed a motion to stay the Superior Court action and compel FINRA arbitration — seeking to invoke an investment banking agreement (IBA) containing a FINRA arbitration clause, under which the plaintiff previously sought third-party beneficiary status. The court held that plaintiff was estopped from disavowing his claimed third-party beneficiary status under the IBA to avoid arbitration, and that the parties’ dispute must be heard before a FINRA arbitration panel, among other things. The court’s decision is a remarkable result for parties seeking to enforce arbitration agreements, and for ensuring that the learned professionals sitting on FINRA arbitration panels adjudicate industry disputes.

Relief Won Against Subcontractor’s Claims for Payment

Attorney Kelsey Barber, and Shareholder Lawrence H. Shapiro, successfully had a subcontractor’s claims against a client-property owner dismissed in a complex construction litigation. Plaintiff-subcontractor sought to recover monies for work performed at AGA’s client’s property when the property owner terminated the project’s general contractor. AGA was able to demonstrate to the Court that the property owner cannot be liable to a subcontractor for a general contractor’s default and that the Plaintiff’s claims for quasi-contractual relief were unfounded under New Jersey law. The Court granted Summary judgment as to all counts in AGA’s client’s favor.

Success for Youth Community Center

Partner Anthony J. D’Artiglio and Shareholder Lawrence H. Shapiro defeated a motion for summary judgment seeking to declare that our client’s, a youth community center and academic tutoring facility, use of their property rendered an easement agreement with a neighboring property owner extinguished. The neighboring property owner filed an action seeking to declare the easement expired and challenged the Zoning Board’s approval of a use variance and bulk variance relief. We successfully convinced the Court that the motion for summary judgment was premature and relied on a flawed reading of the easement agreement, leading to the complete denial of the motion. The neighboring property owner thereafter agreed to voluntarily withdraw its claims against our client, permitting the youth community center to continue to operate.

Synagogue May Proceed with Development

Partner Anthony J. D’Artiglio and Shareholder Lawrence H. Shapiro defeated an application to stay development activities pending prosecution of a prerogative writ permitting our client to continue development activities at the property. Plaintiffs asserted claims against our client, a synagogue, claiming that the planned development activities violated a settlement agreement and that the Zoning Board improperly approved the planned developed. Plaintiffs first filed an Order to Show Cause seeking to stay the Zoning Board from acting on our client’s application and to have their claims adjudicated in a summary manner. We opposed the Order to Show Cause, culminating in the Plaintiffs withdrawing the Order. Thereafter, Plaintiffs sought to stay our client from performing any activity at the property pending disposition of Plaintiffs challenge to the Zoning Board approval. We successfully convinced the Court that no stay was warranted leading to a total denial of the stay application, permitting our client to proceed in accordance with the approvals.

About Ansell Grimm & Aaron, PC
Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve legal matters that are often urgent, stressful, and of great importance. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

The above is for informational purposes only and does not constitute legal advice. Transmission of the materials and information contained herein is not intended to create, and receipt thereof does not constitute the formation of, an attorney-client relationship. Attorney advertising.

Ansell Grimm & Aaron Welcomes Scott Jacobsen

Ansell Grimm October 28, 2022

We are pleased to welcome Scott R. Jacobsen, Esq. as an associate at Ansell Grimm & Aaron PC. Scott comes to Ansell Grimm from an established New York firm where he focused on securities class action litigation and other complex litigation, including the investigation of corporate books and records to evaluate potential claims on behalf of shareholders.
Previously, Mr. Jacobsen interned with the Office of the Inspector General for the U.S. Department of Health and Human Services and with the American Civil Liberties Union of Virginia before graduating from William & Mary Law School.

September 2022 Newsletter

Ansell Grimm September 26, 2022

Klein Helping Clients with Property Sales and Acquisitions Across the State

Jason S. Klein, Esq. (a) assisted a client in the acquisition of a 200-plus unit multifamily complex located in Morris County, through a membership interest purchase, which also included assistance with financing from a large regional bank and multiple 1031 exchanges; (b) assisted a client in the disposition of retail center on the boardwalk in Cape May county; (c) assisted a client in the sale and simultaneous disposition of a property in located on Route 22 in Somerset County; and (d) represented a client in the simultaneous acquisition of two retail properties in Monmouth County, from two (2) separate owners and assisted with negotiating and closing the acquisition financing in connection therewith with a large New Jersey-based bank.

Come See Us at the CAI Expo on October 20

The Community Association Practice Group will be exhibiting at the New Jersey Community Associations 2022 Annual Conference & Expo on October 20.
The 2022 CAI Conference & Expo will be held from 8:30 a.m. to 3 p.m. at The Event Center @ iPlay America located at 110 Schanck Road, Freehold, NJ.
CAI’s Annual Conference & Expo provides learning and networking opportunities for homeowners, managers, and business partners. Registration is free for all homeowners and community association managers and includes complimentary breakfast and lunch, educational programs, and multiple chances to win $1,000 during the show (must be present to win).
When you are at the expo, please visit us at Booth #823. You can also contact David J. Byrne, Esq. if you wish to set up a meeting with one of our attorneys while you are at the conference.

Brodsky Wins Approval for Projects Across Monmouth County

Zoning and Land Use Department co-chair Rick Brodsky, Esq. had a very productive summer winning approval for several projects before municipal boards throughout the county.

In June, the Shrewsbury Land Use Board voted unanimously to grant Use Variance and site plan approval, permitting the Applicant, Restore Hyper Wellness, to operate a health and wellness facility for customers seeking general wellness and anti-aging services and athletic recovery, including natural reduction of inflammation at 1079 Broad St. In July The Marlboro Township Zoning Board voted unanimously to grant variance and site plan approval permitting the Waitt Funeral Home to undertake significant renovations, upgrades and additions to its existing, long-standing building on Route 79.

Also in July, the Ocean Township Zoning Board, unanimously approved the application of Gold Coast Cadillac, granting site plan approval, with variances, permitting the renovation/expansion of the existing Cadillac car dealership on Route 35.

In August, the Long Branch Planning Board adopted the Resolution of Approval for its July unanimous decision to permit a four-lot Major subdivision application from Chelsea LLC.

Moin, Oliver, and Sherman Join Ansell Grimm & Aaron

Three new attorneys, Irina Moin, Esq., Jonathan Sherman, Esq., and Leigh Oliver, Esq., have joined the firm. Ms. Moin is licensed to practice in NY and NJ and will be joining both the Corporate Finance and Banking Department and Cannabis Law Department.

Ms. Oliver is a new associate in the Family Law practice and Mr. Sherman is working in the Commercial Real Estate Department.

Bauchner Receives New Jersey Law Journal Innovator of the Year Award, Appointed to NJSBA Foundation Committees

Joshua S. Bauchner, Esq. has been named one of the New Jersey Law Journal’s “Innovators of the Year” for 2022. Bauchner is one of just four attorneys in the state selected for the honor.

Bauchner also has been appointed by the New Jersey State Bar Foundation to the Publication Oversight Committee and the Editorial Advisory Board of the Respect Newsletter for 2022-23 by Foundation President Kathleen N. Fennelly, Esq.

The New Jersey State Bar Foundation is committed to the principle that public understanding of our legal system is essential to preserving the liberties that are fundamental to our democracy.

Shapiro and Barber Win Relief Against Prospective Buyer’s False Claim

Through, targeted discovery, Lawrence Shapiro, Esq. and Kelsey Barber, Esq. succeeded in having a contract buyer dismiss its complaint to enforce a contract of sale and discharge a Lis Pendens recorded against AGA’s client’s commercial property. Plaintiff Lebanon 123, LLC sought to compel Kullman Associates, LLC to sell real property known as the Kullman Corporate Campus in Lebanon, New Jersey for $13,500,000.

Kullman terminated the contract and refused to transfer title claiming that Plaintiff failed to meet its contractual obligations, including fully funding the deposit. Despite representations from the title company escrow agent that the deposit was received, AGA’s strategic discovery uncovered evidence that the deposit was never fully funded and, in fact, what had been funded was returned to Plaintiff, even before the suit was filed. AGA then moved for summary judgment and put Plaintiff on notice of their claims being frivolous which resulted in Plaintiff voluntarily dismissing its complaint and freeing the property for Kullman’s use and remarketing.

Bauchner to Moderate NJSBA Cannabis Law seminar

Joshua Bauchner, Esq. and Lisa Gora, Esq. of Epstein Becker & Green, PC will moderate a discussion on the latest developments in cannabis law at the New Jersey Law Center in New Brunswick, on October 26.

The topics covered in the seminar include:

Psychedelics — The New Cannabis
Cannabis in NJ Towns: Municipal and Local Applicant Perspectives
Diversity, Equity, and Inclusion

There will also be a Q & A session The event runs from 2-5 p.m. and a companion webcast will be available online. Attendees can receive Continuing Legal Education credit for NJ, PA, and NY. Information on the credits provided is available on the event registration page.

A happy hour will follow at the Law Center, after which the NJSBA Cannabis Law Committee, which Bauchner and Gora co-chair, will convene.

Court Case Corrects Planning Board Denial

Litigation Department co-chair Lawrence Shapiro, Esq. succeeded in overturning the Planning Board of the Borough of Rumson’s denial of an application to subdivide property into two developable lots.

In overcoming the Board’s decision on behalf of the applicant, Michael McCarty, Shapiro demonstrated that the Board had erred in siding with objecting neighbors in refusing to grant minimal variances of lot circle, front yard setback, and lot width/frontage.

Notably, the Court reversed the Board’s decision resulting in the approval of the subdivision, with variances, on behalf of the applicant. In doing so, the Court found the Board’s reasoning to be a “sham” for its desire to maintain larger lot sizes in the zone.

Rosenstein Wins Long Court Battle to Protect Client

Ansell Grimm & Aaron, PC was retained by a trucking and rigging company after one of its employees sustained substantial injuries on a jobsite. Despite the project being covered by an Owner Controlled Insurance Program (OCIP), the contractor that retained our client failed to notify our client of the OCIP and did not enroll our client in the program. Making matters worse, our client’s insurance brokers failed to identify and advise the client about an exclusion in its commercial general liability policy that contained an “Absolute Employee and Worker Injury and Liability Exclusion endorsement,” leaving our client vulnerable to the claims asserted in the action. While our client was shielded against direct liability from the plaintiffs, the employee filed an action against the other entities involved in the project — some of whom subsequently filed a third-party action against our client.

Seth Rosenstein, Esq. of AGA’s litigation practice group handled this matter, aggressively defending the action and adding the client’s insurance brokers as fourth-party defendants on the basis that but for their negligence, the client would not have been left without insurance coverage for third-party action claims. After over four years of litigation, our efforts resulted in an ideal settlement whereby our client did not contribute any funds to the settlement and received a global release from all parties involved.

NJ Medical Pot Hopefuls Say Agency Snubbed Court Ruling

Ansell Grimm February 23, 2022

Law360 recently reported on Ansell Grimm & Aaron, PC’s challenge to the New Jersey Cannabis Regulatory Commission’s decisions on remand after the Commission’s initial decisions were reversed by the Appellate Division on November 25, 2020. Below is the article.

By Sarah Jarvis

Medical marijuana permit applicants have urged a New Jersey appellate court to direct the state’s cannabis regulators to award them licenses to operate facilities, arguing the agency failed to change a single score after an appellate panel remanded the matter over the state’s flawed scoring system.

In Wednesday filings with the Superior Court of New Jersey’s Appellate Division, applicant GGB New Jersey LLC said the state’s Cannabis Regulatory Commission doubled down on previous flawed scoring and didn’t adjust any scores after GGB and other applicants made “comprehensive supplemental submissions” challenging the commission’s scores and their scoring process. The CRC also ignored concerns previously raised by the appellate court about a substantial degree of relative error “by declaring the concept inapplicable to its selection process,” GGB said.

“The commission asserted that the scoring is what it says it is and, strikingly, is beyond judicial review,” GGB said. “The commission’s cursory review also focused on only two of the numerous scoring criteria challenged by appellants, and either rehashed the same arguments that had already been rejected by this court or ignored appellants’ other arguments.”

GGB and the other appellants are seeking an order directing the CRC to award them licenses to operate alternative treatment centers, or medical marijuana dispensaries. Alternatively, they want the matter remanded to the CRC with the appointment of a special master to conduct an investigation, per the company’s filings.

Counsel for GGB called the CRC’s ruling on remand ridiculous and said the company coordinated with other appellants to file nearly identical briefs, but it wasn’t immediately clear Friday which parties had also lodged filings.

The companies had alleged in their initial appeal that the scoring process was inconsistent and arbitrary. The applications were scored on a 1000-point scale by a panel of six unnamed officials from the Department of Health and two other state departments, according to court records.

The appealing companies that received their scores after they were rejected found that the scores were hard to parse, with some judges giving full marks in sections where another judge gave zero points. The numbers were averaged, and the total score determined where the applicant fell in the ranking, so the zeroes brought the scores down dramatically, the companies said.

Once a score was awarded, there was no opportunity to challenge it, according to the companies.

In November 2020, a panel from the Superior Court of New Jersey’s Appellate Division handed down its decision in eight combined appeals from companies that failed to make the cut for the six dispensary licenses the state awarded in 2018. The panel said there were serious problems with the way regulators scored the applications and sent officials back to reconsider the applications of rejected companies, but didn’t specifically tell regulators how to handle the applications after the remand or how to change the application process.

But GGB argued Wednesday that the CRC carried out “a superficial exercise seeking only to justify its own prior, flawed conclusions without actually abiding by the court’s instructions or addressing any of the appellants’ concerns.” Last month, the CRC issued new final agency decisions reaffirming the denials issued to the appellants in the 2018 decisions.

“Despite this court’s opinion and the supplemental submissions, the commission concluded that the process this court found unacceptable had been free from error,” GGB said. “As a result, the commission continues to deprive appellants of due process and neither the public nor this court can have confidence in the commission’s licensing process and the final agency decisions it has reached.”

GGB argued among other things that a recommendation report issued last month by the CRC lacks substantive analysis of the scoring issues the appellants had raised, including “wildly divergent scores and/or zero or low scores” the appellants said were unwarranted compared to the high marks successful applicants received.

“This court should not have to act again in this matter, but the commission has proven that it cannot — and will not — conduct a full and fair review of appellants’ applications,” GGB said. “The commission has proven by its own actions that a further remand will be futile because the agency apparently regards itself as beyond the jurisdiction of this court.”

A representative of the CRC didn’t immediately respond to a request for comment Friday.

GGB New Jersey LLC is represented by Joshua S. Bauchner and Rahool Patel of Ansell Grimm & Aaron PC.

Counsel information for the CRC and other applicants wasn’t immediately available Friday.

The case is In the Matter of Application of Medicinal Marijuana Alternative Treatment Center of GGB New Jersey LLC, case number A-2219-18T4, in the Superior Court of New Jersey, Appellate Division.

–Editing by Dave Trumbore.

Ansell Grimm & Aaron 2021 Litigation Roundup

Ansell Grimm January 20, 2022

As the world continues to struggle with the coronavirus pandemic, and millions of small and mid-sized businesses continue to be confronted with unprecedented challenges, the attorneys in Ansell Grimm & Aaron’s Litigation Department assisted the Firm’s clients in protecting their businesses and livelihoods. Led by co-chairs Lawrence Shapiro and Joshua Bauchner, and assisted by attorneys Barry Capp, Anthony D’Artiglio, Stefan Erwin, Rahool Patel, Seth Rosenstein, and Ashley Whitney, the Department is pleased to share its numerous successes.

Bankruptcy Litigation & Debtor/Creditor Matters

Ansell Grimm & Aaron successfully compelled conversion of a meritless Chapter 11 Bankruptcy to a Chapter 7 and convinced the Court to vacate an extension of the automatic stay to principal’s of the Debtor company. Debtor filed a Chapter 11 petition in the District of New Jersey just before it and its principals were scheduled to face trial in the Western District of Missouri on multi-million dollar fraudulent scheme related to the sale of a business. Led by Joshua S Bauchner and Anthony J. D’Artiglio, the firm successfully convinced the Court to vacate an extension of the automatic stay to the principals of Debtor who sought to utilize the Bankruptcy to shield themselves from liability. Furthermore, we vigorously opposed confirmation of a meritless Plan of Reorganization, culminating in Debtor voluntarily converting its Chapter 11 reorganization to a Chapter 7 liquidation requiring the appointment of a Trustee to pursue our client’s and other creditors’ interests. As a result, the adversary complaint and related Bankruptcy matters were dismissed in New Jersey permitting the action to proceed to trial in Missouri.

Breach of Contract Litigation

The Ansell Grimm & Aaron team continued its efforts to recover sums owed to its clients in connection with finance agreements and contracts for the provision of certain services. We doggedly pursued our clients’ counterparties who absconded with loaned funds and enjoyed the benefit of services rendered, resulting in substantial recoveries and settlements for our dedicated and hard-working clients. By way of example, in one action brought on behalf of a trucking insurance agency that guaranteed payments for its client, the insured failed to make millions of dollars in payments under its finance agreement and created a new entity to hide its property and assets from collection. We aggressively tracked down the fraudulently transferred assets, brought the insured’s owner and his new entity into the action, and secured a favorable settlement prior to trial.

Partnership Dispute Litigation

The firm successfully obtained temporary restraints enacted to avoid continued irreparable harm to our client in a derivative action asserting claims against our client’s former business partners for, inter alia, unfair competition, fraud, and breach of fiduciary duty, based on their acts of engaging in direct competition with their shared business and allowing their family members to use the company’s proprietary information to siphon clients and profits from the business. The temporary restraints prevented all competition with our client’s business and provided the leverage necessary to negotiate a dissolution of the business which allowed our client to extricate himself and pursue independent ventures.

Real Estate Litigation

The firm works closely with real estate professionals across the region to protect their rights and put practices in place to minimize potential liability. In an action filed earlier this year on behalf of a Hudson County-based real estate broker, the Firm sued a national real estate developer after the failure to pay a referral fee offered under the developer’s agreement with local brokers. These efforts resulted in our client recovering a substantial portion of the referral fee owed to it, and the same broker subsequently engaged our team to revise their agreements used with clients — and to speak with the broker’s team of agents about mitigating risk and general best practices.

FINRA Matters

In addition to serving as a Financial Industry Resolution Authority (FINRA) Dispute Resolution Services arbitrator, associate Seth Rosenstein also practices before FINRA arbitration panels. In an arbitration filed against a national broker-dealer, the Firm sought an award requiring removal of incorrect and misleading information set forth on the broker-dealer’s Form U5 issued for our client, and for the expungement and removal of the information from FINRA’s Central Registration Depository and BrokerCheck system. Our efforts resulted in the broker-dealer issuing an amended Form U5 that removed the incorrect and misleading information, correcting an injustice that falsely besmirched our client’s reputation.

Police Benevolent Association Matters

Earlier this year, Attorney Ashley V. Whitney filed an appeal with the New Jersey Supreme Court challenging an opinion from the Appellate Division which upheld the termination of a police officer with no prior discipline for alleged violations of the Criminal Justice Information System through his use of full-disclosure vehicle registration searches despite the police department’s failure to identify a single full-disclosure search conducted without justification. The Appellate Division’s decision may have a lasting impact upon the law enforcement community as the performance of searches by police has not been significantly addressed by New Jersey Courts since the decision in State v. Donis, 157 N.J. 44 (1998). The decision is especially pertinent to the issues facing police as it comes on the heels of the Supreme Court’s decision in the matter of In re AG Law Enf’t Directive Nos. 2020-5 & 2020-6, 2021 N.J. LEXIS 486 (June 7, 2021), which upheld the New Jersey Attorney General’s Directives requiring the release of the names of police officers who receive major discipline.

Ms. Whitney continued her prior practice of the representation of police officers as a member of the PBA Legal Protection Plan at the Firm’s Woodland Park office, which included the defense of a high-ranking correctional police officer served with inflated disciplinary charges seeking termination. Following a departmental hearing and the presentation of favorable witness testimony, the employer decreased the proposed penalty from termination to suspension and we are awaiting a final decision.

Class Action Litigation

Ansell Grimm & Aaron successfully obtained dismissal of a nationwide class action in the District of New Jersey for lack of subject matter jurisdiction. Plaintiff brought claims against related to beauty products against the seller, shipper, and a host of individuals and entities. We filed a Motion to Dismiss pursuant to Federal Rule 12(b)(1) asserting the Court lacks subject matter jurisdiction as a result of a pre-litigation, full refund offer by our client to the aggrieved consumer. The Court agreed that the full refund offer made in the ordinary course of business operated to moot Plaintiff’s claims, and dismissed the entire action.

Public Entity Litigation

Ansell Grimm & Aaron successfully secured summary against Plaintiff on a multi-million dollar claim against the City of Bayonne, wherein Plaintiff alleged that Bayonne discriminated against him when it condemned and subsequently demolished a rental property he owned because it was unsafe. We successfully convinced the Court that the claims were barred by the statute of limitations, that the demolition did not constitute a taking within the meaning of 11 U.S.C. 1983, and that Plaintiff’s tort claims could not be asserted against a municipality as a matter of law, leading to dismissal of the entire case.

Ansell Grimm & Aaron Welcomes Lateral Hire to Woodland Park Office

We are pleased to announce Stefan J. Erwin, Esq. has joined Ansell Grimm & Aaron. Mr. Erwin is a Trial Attorney who came to Ansell from an established Newark practice where he represented the largest cities in New Jersey. Mr. Erwin brings nearly a decade of experience to the firm specializing in complex commercial litigation, criminal defense, appellate practice, labor and employment law, public entity, and civil rights. Mr. Erwin graduated from Rutgers University with dual degrees in Political Science and Criminal Justice, and then attended Rutgers Law School where he interned for the Honorable Noel Hillman in the United States District Court for the District of New Jersey. After law school, he clerked for the Honorable James Hely, J.S.C. of the Superior Court Law Division in Union County. He has taught public school children a course in Constitutional Law, founded a local community garden, and sat on the board of a charter school. Mr. Erwin has received several favorable jury verdicts for his clients in the Public Defender’s Office where he litigated cases from inception through appeal.

Best of the Best

It is with great pleasure that Ansell Grimm & Aaron, PC has been named “Best of the Best” Law Firm in the 2021 Official Community Choice Awards published by the Asbury Park Press. This recognition is greatly appreciated as it was not determined by the Bar or another professional organization, but rather by the community we serve on a daily basis.

Stefan J. Erwin joins Ansell Grimm & Aaron

Ansell Grimm December 7, 2021

We are pleased to welcome Stefan J. Erwin, Esq. as an associate at Ansell Grimm & Aaron PC. Stefan is a trial attorney who came to Ansell Grimm from an established Newark practice where he represented the largest cities in New Jersey. Mr. Erwin brings nearly a decade of experience to the firm and focuses on Complex Civil Litigation, Electronic Discovery, Criminal, Appellate, Labor and Employment, Public Entity and Civil Rights work. Stefan graduated from Rutgers University with dual degrees in Political Science and Criminal Justice. He thereafter went to Rutgers Law School where he interned for the Honorable Noel Hillman in Camden’s Federal District Court. Before graduating Law school, he accepted a clerkship with the Honorable James Hely, J.S.C. of the Law Division in Union County. There, he also taught public school kids a course in Constitutional Law, founded a local community garden, and sat on the board of a charter school. Mr. Erwin has received several favorable jury verdicts for his clients in the Public Defender’s Office where he litigated cases from inception through appeal.

Ansell Grimm & Aaron Round Up: June 2021

Ansell Grimm June 3, 2021

AGA Secures Dismissal Of Nationwide Class Action

Ansell Grimm & Aaron attorneys Joshua S. Bauchner and Anthony J. D’Artiglio obtained dismissal of a putative, nationwide class action for lack of subject matter jurisdiction in New Jersey federal district court. The case, Cindy Adam v. Frank V. Barone, et al., Civ. A. No.: 3:20-cv-10321-MAS-LHG, concerned claims alleging that Defendants violated various California and Federal consumer protection statutes through their online sale of natural beauty products, including seeking to certify a nationwide class alleging violations of over 40 different States’ consumer protection statutes. Following Ansell Grimm & Aaron successfully securing a transfer of the case from the Northern District of California to the District of New Jersey, Defendants filed a Motion to Dismiss arguing, among other things, that a pre-litigation offer of a full refund for the purchased products made in the ordinary course of business mooted plaintiff’s claims and divested the Court of subject matter jurisdiction.

The Court rejected plaintiff’s argument that the U.S. Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, did not moot the claims because, in that case, the Supreme Court held that an unaccepted offer of judgment or an unaccepted settlement offer could not defeat subject matter jurisdiction. Ansell Grimm & Aaron explained that Campbell-Ewald does not apply because a pre-litigation, ordinary course offer of a refund is not a “settlement offer” – a bright-line distinction between pre-litigation refunds and post-litigation settlements. The Court agreed explaining that it was declining “to extend Campbell-Ewald as Plaintiff suggests, where a refund was offered in the ordinary course of business by a representative of the company during a phone call with a customer.” As a result, the offer of a refund mooted Plaintiff’s claims such that there was no “case or controversy” permitting Article III subject matter jurisdiction for the Court. By securing dismissal at the pleading stage, Ansell Grimm & Aaron saved its clients substantial time and expense which otherwise would have been wasted defending a meritless, nationwide class action.

Ansell, Grimm & Aaron attorneys regularly engage in class action defense arising from frivolous claims and seek to obtain a similarly quick and cost-effective result for our clients. Of course, some matters do have merit, in which case our attorneys work to narrow the claims or class towards minimizing damages and obtaining a favorable settlement.

For additional information on Ansell Grimm & Aaron’s class action practice, please contact Joshua S. Bauchner, Esq . (jb@62q.f7d.myftpupload.com) or Anthony D’Artiglio, Esq. (ajd@62q.f7d.myftpupload.com) at (973) 247-9000.

AGA Attorney Testifies Before State Cannabis Regulatory Commission

Ansell Grimm & Aaron attorney Zachary L. Windham testified before the Cannabis Regulatory Commission on June 1, 2021. His testimony concerned whether limitations should be imposed on the potency of concentrates and edibles that will be sold in New Jersey marijuana dispensaries. Zachary explained: “The path of least resistance from a consumer standpoint would be to purchase all of their cannabis products from the unregulated supplier, who could provide them with a wider variety of product types.” Accordingly, Zachary recommended against restrictions favoring effective labeling and consumer education. Media coverage concerning his testimony is available here.

Our dedicated Cannabis Law Practice Group stands ready to assist applicants with ensuring they are prepared when the Request for Applications is issued for adult use cannabis, as well as for additional medical licenses. Please contact Joshua S. Bauchner, Esq. (jb@62q.f7d.myftpupload.com) or Zachary L. Windham, Esq. (zlw@62q.f7d.myftpupload.com) at (973) 247-9000 to get started today.

George A. McGowan III Joins AGA As Corporate Attorney

George A. McGowan, III, joined as counsel with the firm. His practice is concentrated in areas of corporate and commercial law (both public and private companies), technology, and transactional matters including Mergers and Acquisitions, Trusts and Estates, Financing and Real Estate. His client roster includes a major data center, a streaming media company, several international manufacturing companies, professional practices, and closely held businesses. Mr. McGowan brings our clients both his private practice expertise with Fortune 500 Company knowledge and experience.

He is a graduate of Manhattan College with a Bachelor’s of Science in two majors, Finance and Marketing. He graduated from Seton Hall University School of Law with a J.D. He clerked for the Honorable Patrick McGann, in the Chancery-General Equity Court in Monmouth County. He is admitted to practice in the State of New Jersey and its Federal Courts.

Nicholas J. Falcone Joins AGA As Counsel In The Land Use Department

Nicholas J. Falcone is counsel to the firm with the concentration of his practice relating to zoning and land use, and the representation of clients in all phases of governmental approvals for site plans, subdivisions and variances before municipal planning and zoning boards, as well as appeals therefrom. Before joining the firm Mr. Falcone represented planning boards and school districts in Monmouth County, as well as business statewide. Earlier, Mr. Falcone worked at the national law firms Fox Rothschild and the labor and employment boutique Grotta, Glassman and Hoffman, where his practice focused on labor and employment law, representing employers in state and federal courts in all aspects of civil litigation, administrative hearings, and provided HR counseling.

After law school graduation, Mr. Falcone was law clerk to the Honorable Martin L. Greenberg, Superior Court, Chancery Division: General Equity and Probate, and to Honorable Seymour Margulies and Honorable Fred J. Theemling, Jr., Superior Court, Civil Division, Hudson County, New Jersey. While in law school, Mr. Falcone worked as a law clerk at the firm of former U.S. District Court Judge Herbert J. Stern.

Mr. Falcone has had life long association with the arts. Prior to becoming an attorney, Mr. Falcone worked in the Broadway theater, including for the legendary director/producer Harold Prince, film and opera communities. Mr. Falcone served on Board of Directors of the Garden State Film Festival, 2009-2019, including as Chairman of the Board and Chairman and of the Programming Committee for the last six of those years.