Recent Decision Finding CTA Unconstitutional Casts Doubt on Its Fate

By Nicole D. Miller

As we recently discussed in this blog post, homeowner and condominium associations (“Community Associations”), are subject to the detailed and complicated reporting requirements of the federal Corporate Transparency Act (CTA). The compliance deadlines for Community Associations to disclose their “beneficial ownership information” are approaching. However, a March 1 decision by a U.S. district court judge in Alabama, issued just 60 days after the CTA’s effective date, has called into question the ultimate enforceability and constitutionality of the law.

In National Small Business United v. Yellen, Judge Liles C. Burke granted summary judgment in favor of the plaintiffs, finding that “the CTA is unconstitutional because it ‘exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.'”

Critically, the court’s order enjoining enforcement of the CTA applies only to the plaintiffs, including the National Small Business Association (NSBA) and its approximately 60,000 members. While the decision is limited to the plaintiffs in the case, the decision is seen as a positive one from the perspective of Community Associations as it sets groundwork for other courts to follow suit concerning enforceability. Community Associations throughout the country have serious concerns about the intrusive reporting requirements of the CTA given that those who serve on the boards of associations are volunteer homeowners. The extensive and invasive reporting requirements of the CTA are likely to deter participation on Community Association boards. This decision provides some hope to Community Associations that the law will ultimately not be enforceable and/or will be amended as to those required to report.

Unsurprisingly, the U.S. Department of Justice and FinCEN, the government agency tasked with the CTA’s implementation and enforcement, quickly filed a notice of appeal to the U.S. Court of Appeals for the Eleventh Circuit. Whatever the appellate court decides, there is a decent chance that the CTA’s fate will wind up in the hands of the U.S. Supreme Court.

Until then, or there is an amendment to the CTA, Community Associations should presume they will need to report their beneficial ownership information to FinCEN by the dates outlined in our earlier blog post

For further information and assistance with your Community Association’s CTA compliance, please contact Nicole Miller in Ansell.Law’s Community Association practice group.

Fighting Back Against Frivolous Lawsuits and Meritless Claims

By Seth M. Rosenstein

Businesses and individuals facing the prospect of litigation often ask legal counsel whether they can sue or be sued over a particular set of facts and circumstances, and the proper response is generally that “Anybody can file a lawsuit against anyone about anything.”  That is not to say that every claim or suit has merit or should be pursued; far from it.  But the reality is that the courthouse doors swing wide open for even the most absurd litigants asserting baseless and frivolous claims.

Want to sue your dentist for supposedly putting listening devices in your fillings? No one will stop you. Want to fight a lawsuit by alleging that the plaintiff’s true identity as an alien from a galaxy far, far away bars their claims?  The court clerk will accept your filing with no questions.  In both state and federal courts, the bar for filing a lawsuit or pleading is essentially non-existent.

However, once a frivolous lawsuit or claim is filed, those who must waste their time, money, and effort fighting back have powerful ways to hold such parties – and their attorneys – accountable for abusing the judicial process and help them recoup the fees and costs attendant to defending claims that lack any factual or legal merit.  Court rules at the state and federal levels include provisions specifically designed to deter and address frivolous claims and provide remedies to the parties on the receiving end.

Aggressively Fighting Back Against Frivolous Claims 

Our litigation practice group aggressively avails itself of those rules when a client is served with a meritless complaint, whether in New Jersey and New York state courts or in federal court. If we believe a suit was filed in bad faith, in violation of an attorney’s ethical obligations, or for improper purposes, we take all steps required to ensure that sanctions against the offending litigant and their attorneys can be sought to make our client whole.  We have a solid track record of success fighting back against frivolous litigation, which, as noted, is all too easy to pursue, at least initially.

There is an important distinction, however, between a frivolous claim and a weak one. In every lawsuit that goes to trial, one party will prevail, and one party will lose. Just as the two contestants who lose on each episode of “Jeopardy!” can hardly be called dumb, a claim or defense will not automatically be deemed meritless simply because it was unsuccessful. To be considered frivolous, it must meet the definition of that term in the applicable court rule.

New Jersey’s Frivolous Litigation Act

New Jersey’s Frivolous Litigation Act (FCA) and Rule 1:4-8 of the state’s Rules of Court are prime tools that empower legal counsel and the courts to address meritless lawsuits and claims.

The FCA provides that a party who prevails in a civil action, either as plaintiff or defendant, may be awarded all of its reasonable litigation costs and attorney fees if the judge finds that a complaint, counterclaim, cross-claim, or defense of the non-prevailing person was frivolous.

For a claim or defense to be considered “frivolous” such that the filing party can be held liable for the other party’s attorneys’ fees and costs, the judge must find that:

  • The complaint, counterclaim, cross-claim, or defense was commenced, used, or continued in bad faith, solely for the purpose of harassment, delay, or malicious injury; or
  • The non-prevailing party knew or should have known that the complaint, counterclaim, cross-claim, or defense was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification, or reversal of existing law.


Holding Attorneys Accountable

As “officers of the court,” attorneys have legal and ethical obligations to the judicial process.  The rules that codify these obligations and the potential penalties for violating them are designed to ensure attorneys have “skin in the game” when they file a lawsuit.

Under Rule 1:4-8 of New Jersey’s Rules of Court, an attorney must ensure, based on their reasonable investigation, that any papers they sign and submit to the court have a plausible basis in fact and law and are not being presented for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

When an attorney violates this obligation, a court can hold them accountable by imposing monetary penalties and other professional sanctions directly on them and their law firm.

New York Remedies For Meritless Lawsuits

New Jersey’s definition of frivolous litigation and the penalties a court can impose on parties and attorneys are similar to those detailed in Section 130-1.1 of New York’s court rules.

As is the case in New Jersey, a New York judge can make an award of costs or impose financial sanctions against an attorney and/or a party upon the motion of one of the parties, but can also decide to impose sanctions on its own without any such request. A judge in New York, at their discretion, can sanction an attorney or party for conduct that:

  • is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
  • is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
  • asserts material factual statements that are false.


Federal Rule 11

Rule 11 of the Federal Rules of Civil Procedure provides the mechanism through which litigants in federal court, as well as the court itself, can hold parties and their lawyers accountable for abuses of court processes and the judicial system. If the judge does not entertain the possibility of sanctions on their own, an aggrieved litigant may file a motion for the entry of appropriate sanctions pursuant to Rule 11(c)(2) that describes the specific conduct that allegedly warrants such penalties.

As with its corresponding state court rules, Rule 11 is designed not only to address the misconduct at issue but also to put future litigants on notice that they face the same possible fate for filing frivolous matters. Specifically, the rule provides that sanction imposed “must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated.” If imposed upon the motion of an aggrieved litigant and warranted for effective deterrence, sanctions can include directing payment to the movant of part or all of their reasonable attorney’s fees and other expenses directly resulting from the violation.

No matter the forum, a frivolous claim or lawsuit is a scourge upon the civil justice system that has real, tangible, and harmful impacts on the parties that must respond to such filings.  Accordingly, we do not hesitate to put opposing parties on notice of frivolous claims and pursue all available remedies on behalf of clients needlessly drawn into a bogus lawsuit.

If you believe you or your business are the target of a frivolous lawsuit, please contact Ansell.Law Litigation Partner Seth M. Rosenstein

Andrea B. White Attends 2024 New Jersey State Bar Association’s Family Law Retreat

Partner Andrea B. White recently attended the New Jersey State Bar Association 2024 Family Law Retreat in Costa Rica. Actively involved with the NJSBA, Andrea serves on the Family Law Executive Committee and took on several roles in planning events during the retreat.

Andrea moderated a panel of industry leaders to answer the questions every lawyer has about trying a case. She shared her insights and lessons learned and gave practical advice. Leveraging her enthusiasm for fitness, Andrea led an early morning Pilates class for attendees. She also hosted the large group dinner that featured live music.

A veteran family law attorney, Andrea cultivated her practice in the highly specialized discipline of divorce, custody, parenting time, child support, alimony, and domestic violence. She is certified by the Supreme Court of New Jersey as a matrimonial law attorney and is qualified, pursuant to R.1:40, to mediate family law cases.

2024 Edition of Super Lawyers and Rising Stars Recognizes Ansell.Law Attorneys

The 2024 New Jersey Super Lawyers and Rising Stars list recognizes nine Ansell Grimm & Aaron attorneys.* Fewer than 5% of New Jersey attorneys are named to the annual Super Lawyers edition. “Rising Stars” are the legal profession’s up-and-coming attorneys, either under age 40 or practicing for ten years or less. These exceptional attorneys comprise fewer than 2.5% of New Jersey lawyers. 

The attorneys appearing on the 2024 list of New Jersey Super Lawyers are:

Allison Ansell – Family Law

Mitchell Ansell – Criminal Defense, DUI-DWI, White Collar Crimes

Lawrence Shapiro – Business Litigation

Andrea White – Family Law

Attorneys recognized as 2024 Rising Stars are:

Brian Ashnault – Business Litigation

Anthony D’Artiglio – Business Litigation, Bankruptcy

Layne Feldman – General Litigation

Nicole Miller – General Litigation, Real Estate

Jonathan Sherman – Real Estate

*No aspect of this advertisement has been approved by the Supreme Court of New Jersey or the American Bar Association.

Commercial Property Owners Must Address Unique Issues Before They Lease to Cannabis Dispensaries

By Melanie J. Scroble

The cannabis industry has been legalized at the state level in New Jersey for some time now as licenses continue to be applied for and distributed. While some cannabis businesses are purchasing their own properties at which they can operate, many are seeking leases from local commercial property owners. These commercial landlords are jumping at the chance to take advantage of the lucrative opportunities in leasing their premises to cannabis businesses for rental rates much greater than market in the areas permitting this use. However, the inherent conflict and contradictions between federal and state cannabis laws, as well as other industry-specific concerns, must impact the decisions of landlords considering doing business with cannabis enterprises. 

The overwhelming majority of marijuana businesses lease their spaces rather than own them. According to the National Association of Realtors (NAR), the share of NAR members reporting purchases of real property by marijuana businesses over leasing dropped from 29% to 18% since 2021. But even as more commercial property owners become comfortable with the idea of leasing to a cannabis dispensary, they also recognize they need to carefully tailor their leases to address the legal, financial, and practical concerns unique to the cannabis industry. Failure to account for these issues could expose landlords to potential civil and criminal liability, conflicts and defaults with lenders, and the loss of substantial cash flow.

While commercial property owners should always consult with experienced counsel before leasing to a cannabis dispensary, the following are just a few of the many matters that should be addressed before signing on the dotted line.

Lender/Mortgage Concerns

If their property is secured by a mortgage, owners should carefully review their loan documents to ensure that renting their property for purposes that remain illegal under federal law does not constitute a default. Loan documents often contain language stating that the loan may be accelerated if the real property is used in connection with illegal activity. Leasing space for a federally prohibited purpose could also trigger any “bad boy” covenant in a personal guaranty and make it more difficult to refinance in the future as there could be issues finding a new lender and obtaining a loan title policy due to the federally illegal use.

Use of Premises

The lease should clearly define the permitted uses of the leased space, limiting it to the specific nature of the cannabis business allowed by the license obtained by the cannabis operator. In addition, the landlord will want to make sure that the company complies with all state and local laws, including confirming that the local municipality has approved the use. As to licensing specifically, the landlord will want to make sure that the tenant always complies with the terms of its state-issued license and continues to renew it as required by law. When it comes to the particulars of the use itself, the landlord may want to specifically prohibit the onsite use of cannabis products anywhere on the landlord’s property or other considerations based upon the nature of the property. 

Cash/Rent Payments

Robust security should be a necessity at any premises involved with the cannabis industry due to the cash-intensive operations (another consequence of the failure to modify federal banking laws to accommodate cannabis businesses). The landlord may want to limit the amount of cash that is kept at the premises at any given time or require the tenant to remove such cash from the premises at specific intervals. And that cash, derived from the sale of cannabis products, should not be used to pay rent as that could be deemed a violation of the federal Controlled Substances Act. The landlord will want to require all rental payments to be made by check or wire transfer. For similar reasons, commercial landlords should never use a percentage rent formula on their dispensary leases, as it could potentially be deemed to be income from federally illegal activities.

Termination of Lease/Surrender of Premises

The commercial landlord should require that its departing tenant remove all cannabis products remaining on the premises upon the expiration or earlier termination of the lease, as a landlord never wants to be in possession or have to dispose of illegal substances. As such, typical abandonment clauses would not be ideal in this situation. 

If possible, the landlord may also want to consider an early exit clause in the event of any changes in the current applicable federal laws and regulations that trigger an increased risk to the landlord or its ownership of the property.

As noted, these are the broad contours of only a few issues that commercial property owners need to consider and incorporate into their leases with cannabis operators. If you would like to discuss leasing your property to a cannabis business or need assistance drafting a lease, please contact Melanie Scroble at Ansell.Law.

Federal Judge Grants Petition To Intervene Filed by Ansell.Law on Behalf of Belmar Residents in Verizon Cell Tower Litigation

In a victory for residents of Belmar, New Jersey, who oppose the placement of cell towers along their seaside boardwalk, a federal judge recently granted a petition to intervene filed by Ansell.Law partner Anthony J. D’Artiglio and associate Layne A. Feldman that will allow them to join a lawsuit filed by Verizon Wireless against Monmouth County.

In this hotly contested and closely watched matter, Ansell.Law represents “Belmar Against 5G Towers,” a coalition of local residents who claim that Verizon’s proposed wireless towers along the borough’s boardwalk would “harm the aesthetic quality of their neighborhood, the local environment and, potentially, their property values,” according to an article about the case in Law360.

Verizon sued Monmouth County and its Board of Commissioners when they rejected its request to build the towers, claiming the denial was not supported by substantial evidence and breached an agreement between Verizon and Monmouth regarding placement of the towers within public right of ways controlled by the County. With the approval of the petition to intervene filed by D’Artiglio and Feldman, Belmar residents can now assert their own arguments and objections alongside those of Monmouth County to challenge the approval process advanced by Verizon.

D’Artiglio’s practice encompasses complex litigation, bankruptcy, controlled substances and regulatory law, and labor and employment. Feldman handles a diverse range of complex commercial and civil litigation matters.

Time To Go: How New Jersey Commercial Landlords Can Deal With Holdover Tenants

By Anthony J. D’Artiglio

When a houseguest overstays their welcome, a friendly hint or gentle nudge is usually enough to get them packing. When a commercial tenant overstays their welcome after the conclusion of their lease term, both the consequences and steps to get them out are more consequential and more complicated.

Holdover tenants are a common problem for commercial and residential lessors alike. But as with many other aspects of the landlord-tenant relationship, the laws that govern the eviction of commercial and residential lessees in New Jersey have significant differences. While residential tenants receive a bit more leeway than their commercial counterparts, strict compliance with the law’s requirements is essential in both cases. Failure to follow the letter of the law can further delay the departure of a commercial holdover tenant and even expose the landlord to liability in certain circumstances. 

Holdover Tenancy Defined

Typically, when a commercial lease term expires, the tenancy becomes month-to-month if neither party provides notice to terminate or renew. However, if a tenant continues to occupy the premises without the landlord’s approval after the lease ends (and no new lease or extension has been agreed to), they are considered a holdover tenant.

Given that holdover tenancies, at least for relatively brief periods, are not uncommon, most commercial leases have provisions that specifically address this situation. A landlord evaluating its options with a holdover tenant should always look first at the lease terms before deciding on a course of action. These clauses typically provide for a steep rent increase, up to 150% or 200% of the base and additional rent while treating the tenancy as month-to-month. Most also allow for the landlord to initiate eviction proceedings notwithstanding the acceptance of any amounts paid by the tenant.

Even without such provisions, New Jersey law provides that holdover tenants are liable for double the rent provided for in the lease for however long they remain in possession of the premises after being served with notice, as discussed below.

First Steps Towards Getting a Holdover Tenant Out

One of the cardinal rules for a commercial landlord dealing with a holdover tenant is not to take matters into their own hands. Certainly, the landlord can engage in communications, discussions, and negotiations with the tenant regarding their vacation of the premises. But changing the locks or otherwise denying the lessee access to the premises, removing contents, and other forms of self-help can have disastrous consequences, exposing the landlord to significant liability. Instead, the landlord should start eviction proceedings and meticulously follow the specified rules and timelines set forth in the law.

As noted, two different sets of laws apply to residential and commercial tenancies in New Jersey. While the Anti-Eviction Act governs residential leases, the Summary Dispossess Act controls how commercial evictions proceed, including those involving holdover tenants.

The first step, and a required prerequisite to initiating an eviction of a holdover tenant, is to properly serve them with a written Notice to Quit and Demand for Possession. In most situations, where the tenant stays in the premises after the lease expires and the lease is treated as month-to-month, the notice must give the tenant 30 days to vacate the space. 

The notice and demand must be personally served either upon the tenant or such person in possession by giving them a copy or leaving it at their usual place of abode with a family member above the age of 14. If service cannot be accomplished that way, the notice can be given to anyone occupying the leased premises. If that doesn’t work, service can be made by posting the notice on the door of the premises.

Initiation of Eviction Proceedings

Once 30 days have passed after proper service of the notice and demand on the tenant, the landlord can initiate an eviction case. Presuming the landlord complied with all pre-filing requirements and properly initiated the proceedings under the Summary Dispossess Act, as the name implies, the eviction action is designed to move expeditiously, in no small part to deter landlords from exercising any self-help remedies.

The eviction begins with filing a summons and complaint in the county where the leased premises are located. Once the tenant is properly served with these documents by the Court, the court will set a trial date, typically within 10 to 30 days after service.

Entry of Judgment for Possession and Exercise of Remedies

If the tenant fails to appear at the trial date, the court will enter a default judgment in favor of the landlord. If the tenant appears in Court, the judge will likely direct the parties to meet with a mediator in an effort to reach a negotiated resolution. If those negotiations do not bear fruit, and presuming the tenant has no legitimate defense, the court will enter a judgment for possession in favor of the landlord. 

Following entry of judgment, the landlord can apply for a Warrant of Removal, which gives a sheriff or constable the authority to remove the tenant from the premises. Unlike in residential cases, the officer performs the eviction immediately upon service of the Warrant for Removal, forcibly removing the tenant if required and restoring possession to the landlord. The landlord is advised to have a locksmith on site at the time of the eviction to change all the locks barring the former tenant from further entry to the premises. If the lessee leaves property in the space after their removal, the property can be considered abandoned — either by the terms of the lease or by statute after providing the appropriate notice and the waiting period elapsing — permitting the lessor to remove or liquidate such property and apply the proceeds to any back rent or other unpaid amounts.

As noted, a commercial landlord wanting to retake possession from a holdover tenant should begin serving the notices required by New Jersey law as soon as possible after the conclusion of the lease term if no other arrangements, agreements, or extensions have been agreed upon with the tenant. 

Given the critical importance of strict compliance with notice and service requirements, New Jersey commercial property owners should always retain experienced counsel before initiating efforts to regain possession from a holdover tenant — indeed, if the landlord is a corporate entity it is required to retain counsel to appear on its behalf in landlord-tenant Court. 

If you have questions or need assistance regarding a holdover commercial tenant, please contact Anthony D’Artiglio at Ansell Grimm & Aaron.

Interdepartmental Teamwork Overcomes Challenge to Client’s Use Variance Approval

In a client success, shareholder Jennifer Krimko obtained approval for the client to operate a community center and academic tutoring space in Rumson, New Jersey. On the heels of this victory, Litigation Department attorneys Anthony D’Artiglio and Layne Feldman protected that approval following an objecting neighbor’s appeal to the Superior Court. Through an aggressive defense, the approval was upheld, and the objector’s appeal was denied, allowing the clients to continue operating their business serving the local community. Collaboration with the Land Use Department provided nuanced insight into the case and helped secure another victory for the client.

Jennifer co-chairs the Firm’s Land Use Department. She devotes her practice to all areas relating to real estate, representing a wide variety of clients — from individuals to large developers — in all phases of governmental approvals before municipal, county, and state agencies.

Anthony is a partner and litigation team leader in the Firm’s Woodland Park office. His varied practice includes commercial lease disputes, class actions, Consumer Fraud Act claims, corporate/shareholder disputes, employment disputes, secured property actions, and creditors’ rights in bankruptcy matters.

As an associate in the Firm’s Commercial Litigation Department, Layne has a diverse complex commercial and civil litigation practice. She handles commercial lease disputes, Consumer Fraud Act claims, corporate/shareholder disputes, and secured property actions.

New Jersey Supreme Court Affirms Condominium’s Ability to Limit Alleged “Emotional Support Animals,” Clarifying the Process To Be Used For ESA Accommodations

By David J. Byrne

On Wednesday, March 13th, New Jersey’s Supreme Court released its long-awaited decision in the Players Place II Condominium Association v. K.P. case. In 2018, a resident claiming to be disabled for New Jersey’s Law Against Discrimination (“LAD”) adopted a dog that would ultimately weigh almost 65 lbs. despite Players Place II’s rule prohibiting dogs weighing more than 30 lbs. The association rejected the request, concluding that the resident did not need accommodation because she could have adopted a dog that weighed less than 30 lbs. (in which case, issues connected with disability and LAD would have been irrelevant). Further, the association concluded that the resident was neither “disabled” for the purposes of LAD nor was this particular 60+ lb. dog necessary to afford her equal use and enjoyment of her unit. The association prevailed at trial concerning LAD, establishing that its 30 lb. weight limit rule was reasonable and that the resident was not disabled for LAD. The association also prevailed on appeal, with the appellate court concluding that while the resident may be disabled, the particular dog in question was not necessary to afford the resident’s equal use and enjoyment of her unit.

The New Jersey Supreme Court decision focused on two (2) things. First, it clarified for everyone going forward how emotional support animal requests made by residents claiming to be disabled must be handled by both the resident and the housing provider (whether a condominium, apartment complex or otherwise). If possible, the parties should engage in a good-faith collaborative discussion before the actual adoption of the animal in question. The court set forth how LAD should be applied in these situations, what the resident must demonstrate, and what the housing provider must demonstrate. The court interpreted the relevant parts of the LAD so that relevant words, such as “disability,” are more easily understood. The court ruled that an ESA doesn’t necessarily need to have been “prescribed” by a health care professional. The court articulated the factors a housing provider must consider when deciding whether a request can be reasonably accommodated.

Second, the Supreme Court focused on the particular facts of the dispute between Players Place II and K.P.  More specifically, whether an association must always grant the accommodation request of one claiming to be disabled, how the LAD must be applied in the face of an accommodation request, and whether Players Place II’s rejection of this resident’s request constituted a violation of LAD. In this regard, the Supreme Court agreed with Players Place II that the resident bears the overall burden of proof. The resident must prove that she is, in fact, disabled as “disabled” as defined by LAD and that the accommodation desired is necessary to alleviate at least one (1) symptom of the resident’s disability. Only then must an association establish that the request cannot be reasonably accommodated. The Supreme Court concluded that the association and the resident should proceed back to the original court where another trial should take place, a trial that decides whether this resident needs this particular animal to afford equal use and enjoyment of her unit and, if so, whether Players Place II can reasonably accommodate the animal.

Ultimately, the New Jersey Supreme Court’s decision should help New Jersey’s association better understand the law and how to apply it when faced with an ESA request. The decision also confirmed that associations, depending upon the circumstance, may very well have the right to reject an ESA request. Lastly, the Supreme Court’s decision leaves open, to be decided at a 2nd trial, whether it can deny this accommodation request without violating the LAD.

Department Chair David Byrne discusses the case with Law360 (subscription required) and Bloomberg Law.

All condo and co-op boards in New Jersey should consult with experienced community association counsel to ensure compliance. If you have questions or concerns, please contact David Byrne or one of the attorneys in our Community Association Law practice group.

Law360 Interviews Judge Joseph Quinn

In a recent Law360 article, Retired Judge Joseph P. Quinn spoke about his more than 20 years serving as a judge and his deep appreciation for the American justice system. He also discussed the many benefits of alternative dispute resolution, not the least of which is its cost efficiency. Judge Quinn emphasized that successful mediators seek common ground and possess the vital ability to compromise.

Judge Quinn joined Ansell.Law’s Ocean office in early 2024 as counsel, where he will establish and lead the Firm’s mediation practice.

Click here to read the full article (subscription required).