CSG RSS Feedhttp://csglaw.wiseadmin.biz/?t=39&format=xml&stylesheet=rss2_New&directive=0&records=20en-us27 Jan 2023 00:00:00 -0800firmwisehttp://blogs.law.harvard.edu/tech/rssNJICLE: No Need To Wait 'Til 2025 in Vacant Land Adjustment Townshttp://csglaw.wiseadmin.biz/?t=40&an=131218&format=xml<a href="https://www.csglaw.com/biographies/thomas-trautner">Thomas J. Trautner Jr.</a>, a Member in the CSG Law Real Estate, Development &amp; Land Use Group, will speak at an upcoming New Jersey State Bar Association webcast, &quot;No Need To Wait 'Til 2025 in Vacant Land Adjustment Towns.&quot; Mr. Trautner, along with additional panelists, will analyze the recent Drew University v. Madison case and address the question of what &ldquo;settlement&rdquo; means for vacant land adjustment towns. In addition, this webinar will discuss related issues concerning the fourth-round case, which commences in 2025. For additional information or to register, click <a href="https://tcms.njsba.com/PersonifyEbusiness/Default.aspx?TabID=1699&amp;productId=86923942">here</a>.Event10 Feb 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=131218&format=xmlHuman Resource Association of Southern New Jersey: Conducting Effective Internal Investigations & a Legal Updatehttp://csglaw.wiseadmin.biz/?t=40&an=130143&format=xml<p><a href="https://www.csglaw.com/biographies/lindsay-dischley">Lindsay A. Dischley</a>, a Member of the CSG Law Employment Law Group, and <a href="https://www.csglaw.com/biographies/melissa-salimbene">Melissa A. Salimbene</a>, Practice Group Leader of the CSG Law Employment Law Group, will speak at the Human Resource Association of Southern New Jersey's upcoming breakfast roundtable, &quot;Conducting Effective Internal Investigations &amp; a Legal Update.&quot;</p> <p>Their legal update will cover some of the significant laws in 2022 and insight for 2023, as well as a review of New Jersey marijuana laws and regulations. The &quot;Conducting Effective Internal Investigations&quot; portion of the discussion will focus on the do's and don'ts that could help or hinder you if you wind up in litigation.</p> <p>For additional information or to register, click <a href="https://hrasnj.shrm.org/events/2023/01/conducting-effective-internal-investigations-legal-update">here</a>.</p>Event25 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130143&format=xmlCSG Law Alert: Qualified Small Business Stock Owners Can Save Millions in Taxeshttp://csglaw.wiseadmin.biz/?t=40&an=130205&format=xml<p>Originally enacted in 1993 to incentivize investment in certain start-ups and small businesses, Section 1202 of the Internal Revenue Code (the &ldquo;Code&rdquo;) provides significant tax planning opportunities for owners of qualified small business stock (&ldquo;QSBS&rdquo;). Depending on when the QSBS was acquired, taxpayers may be able to exclude up to 100% of the gain (capped at the greater of $10 million or 10 times the QSBS&rsquo; adjusted basis) from the sale of QSBS after holding such QSBS for more than five years.</p> <p><strong>Overview</strong></p> <p>In general, QSBS is stock obtained via an original issuance after August 11, 1993, in a qualified small business (&ldquo;QSB&rdquo;) that satisfies the active business requirement for substantially all of the taxpayer&rsquo;s holding period. A QSB is a domestic C corporation that agrees to submit reports as required by the Secretary of the Treasury and whose aggregate gross assets are no greater than $50 million both before and immediately after the issuance. With limited exceptions, the QSBS must have been acquired in an original issuance in exchange for money or property&mdash;not including stock&mdash;or as compensation for services, other than underwriting services provided in connection with the issuance. One exception to this rule is if the taxpayer receives QSBS via certain tax-free exchanges, such as a gift from a separate taxpayer who already satisfied the original issuance requirement.</p> <p>To satisfy the active business requirement, a QSB must be an &ldquo;eligible corporation&rdquo; and at least 80% of its aggregate gross assets must be used in a &ldquo;qualified trade or business.&rdquo; An eligible corporation is any domestic corporation other than a domestic international sales corporation, regulated investment company, real estate investment trust, real estate mortgage investment conduit, or cooperative. A certain amount of working capital assets and computer software royalties may count towards the 80% asset test: however, a QSB will be disqualified for any period in which (1) greater than 10% of its assets consist of real property not used in a qualified trade or business; or (2) greater than 10% of its assets (in excess of liabilities and not including working capital assets) are comprised of stocks or securities in non-subsidiary corporations.</p> <p><strong>What is a Qualified Trade or Business?</strong></p> <p>A qualified trade or business is defined by exclusion as any trade or business other than the following:</p> <ul> <li>Any trade or business involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees,</li> <li>Any banking, insurance, financing, leasing, investing, or similar business,</li> <li>Any farming business (including the business of raising or harvesting trees),</li> <li>Any business involving the production or extraction of products of a character with respect to which a deduction is allowable under section&nbsp;613&nbsp;or&nbsp;613A, and</li> <li>Any business of operating a hotel, motel, restaurant, or similar business.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li> </ul> <p>Section 1202 and its limited regulations do not provide definitions for the above terms and the IRS has indicated that it will define these terms <i>broadly</i> to limit taxpayers&rsquo; eligibility for gain exclusion. Therefore, whether a taxpayer&rsquo;s business will be eligible for Section 1202&rsquo;s benefits will depend on a focused analysis of all the facts and circumstances.</p> <p><strong>Rollover Opportunities</strong></p> <p>While QSBS must be held for more than five years before being eligible for gain-exclusion, Section 1045 allows taxpayers to take advantage of Section 1202&rsquo;s benefits in the future by using the sale proceeds to purchase new QSBS within 60 days of the sale. No gain will be recognized to the extent that the sale proceeds do not exceed the cost of the newly acquired QSBS (accounting for any previous Section 1045 transactions applied towards said QSBS). Instead, the gain will &ldquo;rollover&rdquo; into the new QSBS which will have a basis equal to the purchase price, reduced by the unrecognized gain from the earlier sale. To qualify under Section 1045, taxpayers must (1) not be a corporation; (2) sell QSBS; (3) have held the QSBS for more than six months prior to the sale; and (4) elect Section 1045 treatment in their tax filings. Finally, Section 1045 treatment is also available to partnerships and partners that comply with additional rules found in regulations.</p> <p><strong>Takeaway</strong></p> <p>Sections 1202 and 1045 offer potentially rewarding tax planning opportunities to holders of QSBS. While this overview highlights the sections&rsquo; main elements, taxpayers must carefully consider their individual circumstances when applying the complex (and often subjective) rules and exceptions.</p> <p>If you would like to discuss your personal situation and options, please contact your CSG Law attorney.</p>Client Alert25 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130205&format=xmlCSG Law Alert: Can You Disinherit Your Spouse?http://csglaw.wiseadmin.biz/?t=40&an=130206&format=xml<p>In New Jersey and New York, like in most states, a spouse cannot be disinherited unless there is an express waiver through a prenuptial agreement or postnuptial agreement. Absent an express waiver, the surviving spouse may have the right to claim a portion of the decedent&rsquo;s estate known as the elective share.</p> <p><b>New Jersey</b></p> <p>Under New Jersey law, a surviving spouse or domestic partner (both are referred to as &ldquo;spouse&rdquo; in this article) is entitled to one-third of the decedent&rsquo;s &ldquo;<i>augmented estate.&rdquo;</i> Simplified, the augmented estate is the probate estate, less funeral and administrative expenses and enforceable claims, plus the value of certain lifetime transfers made for less than fair value and non-probate transfers to others, plus the value of lifetime transfers and non-probate transfers to the surviving spouse.</p> <p>Surviving spouses do not get to pick and choose which assets they will receive from the estate. The elective share is first reduced by the value of the surviving spouse&rsquo;s own assets and certain lifetime transfers. The amount is then further reduced by the value of any probate and non-probate assets received from the decedent upon death. The outstanding balance of the elective share is satisfied from the remaining augmented estate.</p> <p>Not all New Jersey spouses may claim an elective share. No election can be made if the decedent and the surviving spouse had been living separate and apart or had ceased to cohabit under circumstances which would have given rise to a cause of action for divorce or nullity of marriage at the time of the decedent&rsquo;s death. Also, as mentioned above, the right may be waived by agreement.&nbsp;</p> <p><b>New York</b></p> <p>Under New York law, a surviving spouse&rsquo;s elective share is the greater of $50,000 or one-third of the decedent&rsquo;s &ldquo;<i>net estate,&rdquo;</i>&nbsp;unless the decedent and the surviving spouse were legally separated or if the surviving spouse had abandoned the decedent at the time of the decedent&rsquo;s death. Like New Jersey, New Yorkers can waive the elective share right by agreement.</p> <p>The net estate is calculated by adding the value of (i) certain transfers made by the decedent during the decedent&rsquo;s lifetime, (ii) the decedent&rsquo;s jointly owned property, (iii)&nbsp;property over which the decedent had an exercisable general power of appointment, and (iv) the decedent's probate estate less funeral, administration expenses, and debts.</p> <p>The surviving spouse's share of one-third of the net estate is first satisfied by applying property acquired by the surviving spouse as a result of the decedent's death. This would include assets that pass to the surviving spouse by the decedent&rsquo;s will, operation of law or contract. The remainder of the elective share is satisfied from the remaining property in the net estate. The value of the surviving spouse&rsquo;s interest in a trust for purposes of the elective share calculation is zero.</p> <p><b>Example</b>&nbsp;</p> <p>John and Jane were married and cohabitating at John&rsquo;s death. John does not leave anything to Jane in his Last Will and Testament.&nbsp; John&rsquo;s will leaves his net probate estate to his disabled brother. Neither John nor Jane have waived their elective share rights.</p> <p><u>John&rsquo;s Probate Estate Less Expenses and Debts</u></p> <p>1. Cash and Securities that pass to John&rsquo;s brother: $5,000,000&nbsp;</p> <p><u>John&rsquo;s Non-Probate Estate</u></p> <p>2. Retirement account that named a marital trust for Jane as the beneficiary: $1,000,000</p> <p>3. John has a general power of appointment over a trust established by his father with a fair market value of $2,000,000&nbsp;</p> <p><u>Jointly Owned Assets</u></p> <p>4. Marital Home Purchased by John: $1,000,000&nbsp;</p> <p><u>Jane&rsquo;s Assets</u></p> <p>5. Cash and Securities: $500,000</p> <p>Under New Jersey law, the augmented estate would be determined by adding 1, 2 and 4 above ($5,000,000 + $1,000,000 + $1,000,000 = $7,000,000). One third of the augmented estate would be $2,333,333 ($7,000,000/3). Because Jane receives $1 million as a result of John&rsquo;s death (the marital home), along with the equivalent of $500,000 from the marital trust, and has $500,000 in her sole name for a total of $2 million, the remainder owed toward the elective share (i.e., $333,333) would be paid from the estate&rsquo;s remaining assets. If Jane died first and disinherited John, the elective share amount would be satisfied from John&rsquo;s own assets so he would receive nothing from Jane&rsquo;s estate.</p> <p>Under New York law, the net estate would be determined by adding 1, 2, 3 and 4 above ($5,000,000 + $1,000,000 + $2,000,000 + $1,000,000 = $9,000,000). One third of the net estate would be $3 million ($9,000,000/3). &nbsp;Because Jane receives $1 million as a result of John&rsquo;s death (the marital home) and the equivalent of $0 from the marital trust, Jane would receive the remaining $2 million from John&rsquo;s estate. This means that John&rsquo;s brother will receive $3 million. If Jane dies first, John would be entitled to about $166,666 ($500,000/3) from Jane&rsquo;s estate.</p> <p>As illustrated in the example above, the calculation of the elective share can vary greatly in different states and can be complicated. &nbsp;Additionally, the time in which you may file an elective share claim is limited. The CSG Law Trusts &amp; Estates Group can help you navigate the elective share rules as part of your estate planning or can assist with elective share claims.</p>Client Alert25 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130206&format=xmlCSG Law Alert: Back to Basic Series: Don't be Caught Dead in High Tax Stateshttp://csglaw.wiseadmin.biz/?t=40&an=130207&format=xml<p>Unfortunately, many seniors must choose where they call home based upon affordability and not simply on where they prefer to reside. Thus, many retirees choose the state with the friendliest tax environment. In this article, we will cover the basics about death taxes imposed in New Jersey, New York, and Pennsylvania.</p> <p>New Jersey and Pennsylvania do not impose an estate tax; however, both New Jersey and Pennsylvania have an inheritance tax. Conversely, New York has an estate tax but no inheritance tax. These costly death taxes often cause retirees to move to a tax friendly state such as Florida, which does not have an estate tax, inheritance tax, or individual income tax.</p> <p>The burden of the Pennsylvania Inheritance Tax is based on the relationship of the recipient to the decedent. Transfers to a surviving spouse and children 21 or younger are taxed at a rate of 0%, which effectively means no tax.&nbsp; The decedent&rsquo;s other descendants and lineal ancestors are taxed at a rate of 4.5%, and the decedent&rsquo;s siblings are taxed at a rate of 12%.&nbsp; All others are taxed at a rate of 15% (except charitable organizations, exempt institutions, and government entities, all of which are exempt from tax). Pennsylvania does not impose its inheritance tax upon a non-resident decedent&rsquo;s intangible property, but the commonwealth does so on real estate and tangible property located there.</p> <p>New Jersey&rsquo;s estate tax was eliminated as of January 1, 2018, as part of 2016 legislation that increased the state&rsquo;s gasoline tax significantly. &nbsp;Although New Jersey did not repeal its inheritance tax, property received by &ldquo;Class A&rdquo; beneficiaries (i.e., spouses, civil union partners, domestic partners, descendants, parents, and grandparents) and &ldquo;Class E&rdquo; beneficiaries (i.e., religious, educational, medical, non-profit benevolent, or scientific institutions, qualified charities, or the State of New Jersey or any of its political subdivisions) is exempt from the tax, which means that most estates will not owe any inheritance tax.</p> <p>A &ldquo;Class C&rdquo; beneficiary (brother, sister, spouse of a child, etc.) has a $25,000 exemption from the tax, but amounts over $25,000 are subject to tax at rates from 11% to 16% depending on the value of the transfer. A &ldquo;Class D&rdquo; beneficiary (i.e., anyone else) is subject to tax at a rate of either 15% (for the first $700,000) or 16% (for amounts over $700,000). Nonresidents of New Jersey only pay an inheritance tax on real estate or tangible property in the state passing to a Class C or D beneficiary.</p> <p>The New York estate tax applies to New York residents and to real estate and tangible property located in New York owned by a non-resident. &nbsp;New York has a &ldquo;cliff&rdquo; estate tax: once the value of the taxable estate exceeds the New York exemption (currently $6.11 million) by 5% or more, the estate tax is imposed on the entire estate.&nbsp; The tax owed for the New York estate tax for the estates of decedents dying on or after January 1, 2014 increases based on the size of the estate, and estate tax rates range from 3.06% to 16%.</p> <p>New York, New Jersey, and Pennsylvania do not have a gift tax (but there is a 3-year look back period), so you should consider making gifts during your lifetime to avoid death taxes.&nbsp; This is particularly true for small bequests made by New Jersey residents. For example, if you leave $1,000 to your niece and the rest of your assets to your children, inheritance tax will be owed on the amount given to your niece, and the estate would need to file an inheritance tax return.&nbsp; This return can be costly to prepare and can delay the administration of an estate if tax waivers (the form issued by New Jersey required to transfer a decedent&rsquo;s assets) must be requested on the return.&nbsp; If instead you gift $1,000 to your niece now (and you survive the lookback period), no inheritance tax would be owed, and an inheritance tax return would not need to be prepared and filed.</p> <p>For New York residents whose estate is close to the &ldquo;cliff&rdquo; amount, lifetime gifting (subject to a 3-year claw back) and/or charitable bequests can help avoid the loss of the estate tax exemption.</p>Client Alert25 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130207&format=xmlCSG Law Alert: "Mirror, Mirror" - Not for Allhttp://csglaw.wiseadmin.biz/?t=40&an=130208&format=xml<p>A carefully constructed trust is the cornerstone of mindful legacy planning that can protect assets from many risks and minimize tax burdens. Married clients commonly create two trusts that mirror each other for the benefit of the other spouse and their descendants funded by lifetime gifts between the two spouses. By creating these mirror trusts, married clients reduce their tax burden by removing assets from their taxable estate thereby shielding the trust assets from estate tax.</p> <p>However, drafters beware! As the old saying goes, &ldquo;all that glitters, isn&rsquo;t gold,&rdquo; and drafters of these types of trusts should familiarize themselves with the risks associated with this type of estate planning to avoid running afoul of the &ldquo;reciprocal trust doctrine,&rdquo; which can unravel a client&rsquo;s carefully laid estate plans and result in large, unintended estate tax consequences.</p> <p style="text-align: left;"><strong>Why would an individual make a lifetime gift to a trust?</strong></p> <p>Clients seek to make lifetime gifts to a trust for many reasons. Minimizing estate tax is one major benefit of making a lifetime gift to a trust. Once assets are contributed into the trust, they grow free of estate tax if the donor of the gifted assets generally has no control over or beneficial interest in the trust. Depending on the terms of the trust and how the gifts to the trust were reported to the Internal Revenue Service, assets in the trust may also be excluded from a beneficiary&rsquo;s taxable estate and can therefore pass down generation to generation without any estate taxes. Because the lifetime federal gift and estate tax exemption is currently $12.06 million for individuals ($24.12 million for married couples), clients can easily gift assets into a trust and lock in the current generous lifetime exemption.<sup>1</sup></p> <p style="text-align: left;"><strong>What is the reciprocal trust doctrine?</strong></p> <p>Reciprocal trusts are created when two parties&rsquo; separate trusts contain identical mirror terms in the trust instrument and name each spouse as a beneficiary of the other&rsquo;s trust. The court, however, may consider a mirror trust a tool to circumvent paying estate taxes, which is where the reciprocal trust doctrine comes into play.</p> <p>Reciprocal trusts do not only apply to married couples. In fact, the first case that gave rise to the reciprocal trust doctrine involved two brothers who created two mirror trusts to benefit each other.<sup>2</sup> The trusts&rsquo; identical terms granted each brother an income interest, the right to withdraw $150,000, and provided that the remainder of the trusts would go to the grantor-brother&rsquo;s descendants.<sup>3</sup> As a result, the U.S. Court of Appeals for the Second Circuit uncrossed the trusts when the first brother died and held that the money the deceased brother could withdraw from the trusts ($150,000) be included in his taxable estate.<sup>4</sup></p> <p style="text-align: left;"><strong>What exactly was the problem with the Lehmann brothers&rsquo; trusts?</strong></p> <p>Mirror trusts represent a reciprocal arrangement between two parties who make interrelated trusts in which each party becomes the beneficiary of the other party&rsquo;s trust. The two mirror trusts in <i>Lehmann</i> functioned like a payment to the other, set up for their own individual benefit, which undermines the purpose of a completed gift to a trust.</p> <p>Parties&rsquo; intentions do not matter for the purpose of determining whether two reciprocal trusts have breached the reciprocal trust doctrine. The leading case concerning the reciprocal trust doctrine,<i> United States v. Grace</i><sup>5</sup>, resolved this question. In this case, two spouses established mirror trusts for the benefit of the other within two weeks of each other. Here, the Supreme Court addressed the question of whether the parties&rsquo; motive factored into whether the doctrine applied and held that it does not. The Supreme Court held that the doctrine only applies in situations where two interrelated trusts &ldquo;leave[&hellip;] the settlors in approximately the same economic position as they would have been in had they created trusts naming themselves as life beneficiaries.&rdquo;<sup>6</sup></p> <p>While there is no bright line rule to avoid the resulting tax consequences the Lehmann brothers and the Grace spouses faced, <i>Grace</i> articulated two essential principles to consider in whether the reciprocal trust doctrine applies to interconnected, mirror trusts: (i) the interrelatedness between the two trusts, and (ii) whether the parties establishing the trusts have maintained the same economic position by retaining a &ldquo;mutual economic value.&rdquo;<sup>7</sup>&nbsp;These two standards still apply today.</p> <p style="text-align: left;"><strong>What happens when courts apply the reciprocal trust doctrine?</strong></p> <p>When the terms of two interrelated trusts result in leaving the parties in the same economic position that they would have otherwise been in had they not engaged in the transaction, a court will &ldquo;uncross&rdquo; the trusts. This means that the assets that were removed from an individual&rsquo;s taxable estate for the purposes of funding the trust will now be included in their taxable estate when they die. Uncrossing the two reciprocal trusts could pose disastrous tax consequences for a client. Therefore, it is critical that interconnected, mirror trusts be prepared with this in mind.</p> <p style="text-align: left;"><strong>How can drafters avoid triggering the reciprocal trust doctrine?</strong></p> <p>Navigating the reciprocal trust doctrine can be tricky. In some cases, courts have found that naming the other spouse as trustee was enough to trigger the reciprocal trust doctrine.<sup>8</sup></p> <p>Although no hard and fast rule exists that triggers the reciprocal trust doctrine, prudent drafters can draft language around it by making the trusts as different as reasonably possible. A few ways to accomplish this include:</p> <ul> <li>Changing the trustees between the two trusts;</li> <li>Varying the beneficiaries of the two trusts;</li> <li>Providing for different powers of appointment within the two trusts;</li> <li>Providing for different trustee removal powers between the two trusts;</li> <li>Signing and funding the two trusts at different times, preferably during different tax years to provide enough variation between gift tax returns;</li> <li>Contributing different types of assets or different amounts to the trusts; and/or</li> <li>Altering distribution standards.</li> </ul> <p>No single suggestion guarantees that the reciprocal trust doctrine will be avoided. Depending on a client&rsquo;s needs and circumstances, drafters should use a variety of techniques to sufficiently vary the terms of the trusts between two parties. Otherwise, &ldquo;mirror, mirror&rdquo; &ndash; it could be your estate plan&rsquo;s downfall.</p> <hr /> <p><sup>1</sup> The federal gift and estate tax exemption is due to sunset in 2026.</p> <p><sup>2</sup>&nbsp;<i>Lehman v. Comm&rsquo;r</i>, 109 F.2d 99 (2d Cir. 1940).</p> <p><sup>3</sup>&nbsp;<i>Id.</i> at 100.</p> <p><sup>4</sup>&nbsp;<i>Id.</i></p> <p><sup>5</sup>&nbsp;<i>United States v. Grace</i>, 395 U.S. 316 (1969)</p> <p><sup>6</sup>&nbsp;<i>Id.</i> at 324.</p> <p><sup>7</sup>&nbsp;<i>Id.</i></p> <p><sup>8</sup>&nbsp;<i>See Estate of Bischoff v. Comm&rsquo;r</i>, 69 T.C. 32 (1977).</p>Client Alert25 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130208&format=xmlCIANJ: Real Estate 2023 Forecast and Legislative Updatehttp://csglaw.wiseadmin.biz/?t=40&an=130142&format=xml<a href="https://www.csglaw.com/biographies/gemma-m-giantomasi">Gemma M. Giantomasi</a>, Practice Group Leader of the CSG Law Real Estate, Development &amp; Land Use Group, will speak at the upcoming CIANJ &quot;Real Estate 2023 Forecast and Legislative Update&quot; Conference. Ms. Giantomasi, along with additional panelists, will discuss the following topics: <ul> <li>Supply Chain &amp; Costs</li> <li>Permitting and Licensing</li> <li>Environmental Justice</li> <li>Green Economy &amp; Clean Energy Impact</li> <li>Impact of the Federal Infrastructure Bill</li> </ul> <p>For additional information or to register, click <a href="https://web.cianj.org/events/RealEstate%202023%20Forecast%20and%20Legislative%20Update-1014/details">here</a>.</p>Event20 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130142&format=xmlExecutive Exchange Inc. Meeting: Cyber & Privacy Concerns for the New Yearhttp://csglaw.wiseadmin.biz/?t=40&an=130144&format=xmlOn January 11,&nbsp; <a href="https://www.csglaw.com/biographies/michelle-schaap">Michelle A. Schaap</a>, a Member of the CSG Law Privacy &amp; Data Security Group, presented, &quot;Cyber and Privacy Concerns for the New Year&quot; at an Executive Exchange Inc. (EEI) Conference. Ms. Schaap focused her discussion on cyber and data security and privacy concerns facing businesses in 2023, including supply chain risks and mitigation strategies; employee risks, watchdogs and anomalies; wire fraud; breach notification obligations and planning; and cyber insurance.Event11 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130144&format=xmlCSG Law Alert: Self-Help For Developers When Municipal Enforcing Agency Fails To Inspecthttp://csglaw.wiseadmin.biz/?t=40&an=130092&format=xml<p><strong>New Amendments to the New Jersey Uniform Contruction Code Act Allow Developers to Contract with Private Inspection Agencies</strong></p> <p>On January 5, 2023, Governor Phil Murphy signed, Assembly Bill 573 (&ldquo;A573&rdquo;), amending the New Jersey Uniform Construction Code Act (the &ldquo;Act&rdquo;), to provide for expedited construction inspections and the use of private inspection agencies. Prior to the amendments, developers were forced to compete for inspection time slots issued by municipal construction and subcode officials (the &ldquo;Enforcing Agency&rdquo;), causing unnecessary delays in construction activity. The amendments are intended to decrease both construction delays and project costs thanks to an expedited timeframe for Enforcing Agencies to conduct inspections and the option of developers to use private inspection agencies to perform the work.&nbsp;</p> <p>Below is an overview of the key amendments to the Act:</p> <ul type="disc"> <li><strong>9 to 5&hellip;and beyond: </strong>All inspections are no longer limited to the hours of 9 a.m. to 5 p.m. on business days and may be conducted at another time agreed upon by the developer, and the relevant inspection agency&mdash;be that the Enforcing Agency, the New Jersey Department of Community Affairs (the &ldquo;Department&rdquo;), or a private inspection agency.</li> <li><strong>Three or less: </strong>When the work is ready for inspection, the developer shall provide at least twenty-four (24) hours&rsquo; written notice to the Enforcing Agency of the date and time when the developer is requesting an inspection and, in turn, the Enforcing Agency must complete the inspection within three (3) business days of such date. <ul type="circle"> <li>If the Enforcing Agency cannot complete the inspection within three (3) business days of the date requested, it must provide written notice to the developer within twenty-four (24) hours of receiving the request for inspection.</li> <li>The developer and Enforcing Agency may agree to a different date and time for the inspection, which shall be committed to writing.</li> <li>If the developer and Enforcing Agency are unable to agree on a date and time for inspection, then, through written notice to the Enforcing Agency, the developer may choose to contract with a private inspection agency authorized by the Department to conduct the inspection.</li> </ul> </li> <li><strong>Continuing inspections:</strong> Once a private inspection agency is authorized, the developer may choose to use it to conduct all subsequent inspections for the project.</li> <li><strong>Reconciliation fee:</strong> The Enforcing Agency shall, if warranted, reimburse the developer for the cost of the private inspection at the end of the project, if the private inspection was conducted as a result of a missed Enforcing Agency inspection.</li> <li><strong>Establishing a process:</strong> Each Enforcing Agency is required to establish a process for ensuring inspections are performed within three (3) business days, which may include the use of supplemental shared services agreements with other municipalities or Enforcing Agencies, or contracting with private inspection agencies.</li> <li><strong>Corrective action and penalties: </strong>The Enforcement Agency shall notify the Department within fifteen (15) business days of any instance where it is unable to meet a deadline or obligation under the Act, and in turn, the Commissioner of the Department may order corrective action or issue penalties to the Enforcement Agency, as may be necessary.</li> </ul> <p>This legislation is an important win for the construction industry. It sets definitive timeframes for the Enforcement Agency to conduct inspections and provides developers with a remedy to hire private inspection agencies where the Enforcement Agency fails to act. Developers have suffered unnecessary project delays and costs due to the inability to obtain prompt inspections for far too long. Thankfully, with the help of this legislation, those days are in the past.&nbsp;</p> <p>If you have questions or concerns about the new amendment to the Uniform Construction Code Act, please contact your CSG Law attorney or one of the authors below.</p>Client Alert11 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130092&format=xmlCSG Law Alert: FTC Set to Strike Down Existing and Future Non-Compete Clauseshttp://csglaw.wiseadmin.biz/?t=40&an=130064&format=xml<p>On January 5, 2023, the Federal Trade Commission (&ldquo;FTC&rdquo;) announced a proposed rule that would prevent employers from entering into non-compete clauses with workers and require employers to rescind existing non-compete clauses.<sup>1</sup> Because it is federal law, the proposed rule would supersede any state law or regulation that would contradict or would otherwise be inconsistent with the proposed rule.<sup>2</sup></p> <blockquote> <p>In its current form, the proposed rule bans most non-compete clauses:</p> <p>It is an unfair method of competition for an <i>employer</i> to enter into or attempt to enter into a <i>non-compete clause</i> with a worker; maintain with a <i>worker</i> a non-compete clause; or represent to a worker that the worker is subject to a non-compete clause where the employer has no good faith basis to believe that the worker is subject to an enforceable non-compete clause.<sup>3</sup></p> </blockquote> <p>The proposed rule defines a <i>non-compete clause</i> as &ldquo;a contractual term between an <i>employer</i> and a <i>worker </i>that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker&rsquo;s employment with the employer.&rdquo;<sup>4</sup>&nbsp;The proposed rule broadly includes within the definition of an <i>employer</i> any natural person, partnership, corporation, association, or other legal entity &ldquo;that hires or contracts with a <i>worker</i>[.]&rdquo;<sup>5</sup> The proposed rule broadly defines a <i>worker </i>as &ldquo;a natural person who works, whether paid or unpaid, for an employer,&rdquo; which expressly includes the following persons who provide a service to a client or customer: employees; an individual classified as an independent contractor; externs; interns; volunteers; apprentices; and &nbsp;sole proprietors.<sup>6</sup>&nbsp;Notably, however, the rule explicitly permits a covenant not to compete in the context of the sale of a business.<sup>7</sup></p> <p>Under the proposed rule a contractual term is deemed a non-compete clause if &ldquo;it has the effect of prohibiting the worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker&rsquo;s employment with the employer.&rdquo;<sup>8</sup>&nbsp;Irrespective of what the agreement is titled or how the language may be phrased, the proposed rule would prohibit and negate<i> any</i> contractual language that would otherwise limit a worker&rsquo;s ability to find and secure their subsequent position of employment.&nbsp;The proposed rule focuses on what the clause does and its effect on the employee, rather than how it is defined in the applicable agreement.</p> <p>Further, the FTC distinguished non-competes from non-solicitation provisions, which are typically used to prevent workers from recruiting their employer&rsquo;s employees, customers, and/or vendors.<sup>9</sup>&nbsp;To this end, the FTC recognizes that non-solicitation provisions &ldquo;generally do not prevent a worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker&rsquo;s employment with the employer,&rdquo; whereby such provisions would not fit the criteria of a non-compete clause.<sup>10</sup>&nbsp;However, if such provisions fall within the criteria established by the proposed rule and have the effective of restricting a worker&rsquo;s future employment, such contractual language may be barred.<sup>11</sup>&nbsp;</p> <p>For employers, the requirements of the proposed rule would impact both future and existing contractual agreements containing non-compete clauses.&nbsp;The proposed rule specifically requires that an employer rescind an existing non-compete clause entered into between an employer and worker no later than the compliance date.<sup>12</sup>&nbsp;Within forty-five (45) days of rescinding the non-compete clause, an employer must provide individualized notice to the current or former employee that the non-compete clause is no longer in effect and may not be enforced against the worker.<sup>13</sup>&nbsp;The proposed rule provides model language for employers to use for such a notice, but employers are free to use different language so long as the employer effectively communicates that the worker&rsquo;s non-compete clause (a) is no longer effective and (b) may not be enforced by the employer.<sup>14&nbsp;15</sup>&nbsp;The proposed rule contains a safe harbor, whereby an employer will be deemed to have complied with the recission requirements if the employer provides individualized and adequate notice to the worker.<sup>16</sup></p> <p>Procedurally, the proposed rule is subject to public comment, whereby the FTC will consider such comments in making potential changes and rendering its final rule.&nbsp;The public comment period will be open soon and will be due sixty (60) days after the Federal Register publishes the proposed rule.&nbsp;The compliance date in which employers will be required to comply with the final rule will be one hundred eighty (180) days after issuance of the final rule.&nbsp;If the proposed rule is adopted in its current form, it will likely be challenged in court (probably on grounds that the FTC has overstepped its authority and that a new statute is needed to enact the new rule), which could create uncertainty as to when and how such requirements may take final form and effect.&nbsp;</p> <p><b><i>Best practices for employers if the rules are adopted</i></b></p> <ul> <li>Review and amend contractual agreements with workers (as defined in the rule) containing non-compete clauses;</li> <li>Prepare individualized, particularized and timely notice for <i>each</i> worker (either current or former) advising that the non-compete clause is no longer in effect and may not be enforced;</li> <li>Review and revise non-solicitation provisions to ensure that such provisions do not have the effect of preventing or restricting a worker from competing against the employer.</li> </ul> <p>Contact your CSG counsel to take action in anticipation of the adoption of the proposed rule and to submit comments to the FTC for consideration.&nbsp;Chiesa Shahinian &amp; Giantomasi PC will continue to track this proposed rule and provide updates. If you have any questions about taking steps relating to this rule and/or responding to employee concerns, please feel free to reach out to your CSG attorney or the authors listed here.</p> <hr /> <p><sup>1</sup> Non-Compete Clause Rulemaking, Fed. Trade Comm&rsquo;n (Jan. 5, 2023); Notice of Proposed Rulemaking, Fed. Trade Comm&rsquo;n (last visited Jan. 6, 2023).</p> <p><sup>2</sup> <i>See </i>proposed&sect; 910.4.</p> <p><sup>3</sup> <i>See </i>proposed&sect; 910.2(a).</p> <p><sup>4</sup> <i>See</i> proposed &sect; 910.1(b)(1).</p> <p><sup>5</sup> <i>See </i>proposed &sect; 910.1(c); <i>see also </i>15 U.S.C. 57b-1(a)(6).</p> <p><sup>6</sup> <i>See</i> proposed &sect; 910.1(f).</p> <p><sup>7</sup> <i>See </i>proposed&sect; 910.3.</p> <p><sup>8</sup> <i>See </i>proposed &sect; 910.1(b)(2).</p> <p><sup>9</sup> <i>See </i>Notice of Proposed Rulemaking at 4.</p> <p><sup>10</sup> <i>Id.</i></p> <p><sup>11</sup> <i>Id.</i></p> <p><sup>12</sup> <i>See </i>proposed &sect; 910.2(b)(1).</p> <p><sup>13</sup> <i>See </i>proposed &sect; 910.2(b)(2).</p> <p><sup>14</sup> <i>See</i> proposed&sect; 910.2(b)(2)(C).</p> <p><sup>15</sup> <i>Id.</i></p> <p><sup>16</sup> <i>See</i> proposed&sect; 910.2(b)(3).</p>Client Alert09 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130064&format=xmlCSG Law Alert: IRS Issues Transitional Digital Asset Reporting Guidancehttp://csglaw.wiseadmin.biz/?t=40&an=130037&format=xml<p>On December 23, 2022, the Internal Revenue Service (the &ldquo;IRS&rdquo;) issued transitional guidance in Announcement 2023-2 for reporting digital asset (e.g., cryptocurrency) information under sections 6045 and 6045A of the Internal Revenue Code.</p> <p>By way of background, the Infrastructure Investment and Jobs Act (the &ldquo;Act&rdquo;), enacted in 2021, amended sections 6045 and 6045A to create additional digital asset reporting requirements for brokers. For example, under the Act, the definition of a broker was modified to include &ldquo;any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.&rdquo; Additionally, the definition for &ldquo;specified securities&rdquo; under section 6045(g) was modified to include digital assets which were also required to be included in basis reporting as &ldquo;covered securities&rdquo; if acquired after December 31, 2022. While the changes to digital asset reporting requirements were significant, to date, the IRS has provided limited guidance regarding implementation.</p> <p>Announcement 2023-2 provides temporary relief for brokers from having to report digital asset information under sections 6045 and 6045A. The IRS and Department of the Treasury intend to implement sections 6045 and 6045A&rsquo;s provisions regarding digital asset reporting by publishing regulations and providing brokers with new reporting forms and instructions. Until then, brokers may both (1) report gross proceeds and basis; and (2) furnish statements on transfers of covered securities, &ldquo;as required under existing law and regulations as of December 23, 2022.&rdquo; To be clear, brokers will <u>not</u> be required to (1) report or furnish additional information with respect to dispositions of digital assets under section 6045; (2) issue additional statements under section 6045A; or (3) file returns reporting transfers of digital assets under section 6045A(d), until the contemplated regulations are issued. Please note that Announcement 2023-2 only applies to information required to be reported by brokers and that taxpayers are still required to report income received from any transaction involving digital assets.</p>Publication04 Jan 2023 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130037&format=xmlCSG Law Alert: New Law Ends COVID-19 Statute of Limitations Suspensions & Implements Other Changeshttp://csglaw.wiseadmin.biz/?t=40&an=130015&format=xml<p>On December 22, 2022, Governor Murphy signed into law Bill A-4295/S-2876 (the &ldquo;Act&rdquo;). The Act (1) ends tax-related COVID-19 statute of limitation suspensions; (2) adopts the Multistate Tax Commission&rsquo;s model statute for implementing adjustments resulting from the federal partnership audit regime; and (3) removes the requirement for corporations that are federally recognized as S Corporations to have to separately elect S Corporation status under New Jersey law.</p> <p><strong>I. COVID-19 Statute of Limitations</strong></p> <p>Pursuant to the 2020 COVID-19 Fiscal Mitigation Act, enacted on April 14, 2020, New Jersey suspended the statute of limitations (&ldquo;SOL&rdquo;) on tax assessments and also suspended the requirement that New Jersey pay interest to taxpayers on tax overpayments. The SOL suspension for tax assessments was set to end 90 days following the end of the New Jersey state of emergency declared by the Governor in Executive Order No. 103 of 2020, or any extension thereof. The suspension related to interest paid on overpayments was set to end on the later of (a) 90 days after the end of the state of emergency, or any extension thereof; or (b) six months after the return is filed. To date, the state of emergency has not been lifted.</p> <p>The SOL for taxpayers to apply for a refund on taxes paid to New Jersey was suspended by Executive Order 170, but this suspension was set to end 90 days following the end of the <strong><em>public health emergency</em></strong>, not the state of emergency. The public health emergency ended on June 4, 2021, pursuant to Executive Order No. 244, but the SOL for taxpayers to file a claim for a refund or credit was extended until April 1, 2022. This meant that taxpayers could be assessed additional taxes on tax returns for which they were no longer able to claim a refund or credit or receive interest on overpayments.</p> <p>The Act ends the SOL suspension for assessments and interest on overpayments as of December 22, 2022. Any assessments made on or after that date that otherwise would have been barred by the applicable SOL but for the suspension will be voided, and any collected amounts will be refunded to the taxpayer.</p> <p><strong>II. Federal Partnership Audit Regime Adaptation</strong></p> <p>The Bipartisan Budget Act of 2015 (the &ldquo;BBA&rdquo;) created a federal centralized partnership audit regime wherein the Internal Revenue Service (the &ldquo;IRS&rdquo;) performs tax adjustments at the partnership level (unless an eligible partnership timely opts out) beginning with returns filed for tax year 2018. The Act amends portions of the New Jersey Gross Income Tax Act and the Corporation Business Tax Act to adapt the BBA&rsquo;s audit regime to state law by adopting a model statute drafted by the Multistate Tax Commission.</p> <p>Some of the Act&rsquo;s most critical provisions relate to reporting requirements arising from a federal partnership-level audit. Reporting timelines commence at the &ldquo;final determination date&rdquo; of a &ldquo;federal adjustment.&rdquo; A federal adjustment is defined as &ldquo;any change to an item or amount determined under the Internal Revenue Code&rdquo; that affects a taxpayer&rsquo;s New Jersey gross income or corporation business taxes. These changes can arise from an IRS audit or from the partnership filing an amended tax return, refund claim, or administrative adjustment request. For federal adjustments arising from IRS audits or other actions (including with respect to composite and combined return filings), the final determination date is defined as the first day on which all federal adjustments have been finally determined, including after all rights of appeal have been waived or exhausted. For federal adjustments arising from a federal amended return, refund claim, or administrative adjustment request, the final determination date is the date that such return or request is filed with the IRS. A federal adjustment becomes a &ldquo;final federal adjustment&rdquo; after the final determination date has passed.</p> <p>Unless an exception applies, the state partnership representative must perform the following actions within 90 days of the final determination date of federal adjustments resulting from a partnership-level audit or administrative adjustment request:</p> <p>1. File the final federal adjustment report to the Director; <br /> 2. Notify direct partners of their distributive share of the final federal adjustment; and<br /> 3. File an amended New Jersey Form 1065 and/or composite return, paying the amounts that would have been due if the returns were originally filed with the final federal adjustments properly reported.</p> <p>Within 180 days of the final determination date, each direct partner of the partnership must file its federal adjustments report with the Division of Taxation to report its distributive share of partnership adjustments and pay any additional taxes, penalties and interest. Alternatively, the partnership can elect to make payments, calculated using statutory formulas, on behalf of its partners (a &ldquo;Partnership Pays&rdquo; election). This election must be made within 90 days of the final determination date and the payment must still be made within 180 days of the final determination date.</p> <p>In addition to the procedures highlighted above, the Act adds comprehensive provisions addressing items such as the statute of limitations for Division assessments after a final federal adjustment is made, state partnership representative elections, allocation and apportionment for federal adjustments, and rules for tiered partnerships, to adapt state procedure to the federal regime. These provisions take effect immediately and apply to any federal adjustments to a taxpayer&rsquo;s income made on or after January 1, 2020.</p> <p><strong>III. New Jersey S Corporation Elections</strong></p> <p>Previously, a corporation that elected to be taxed as an S Corporation at the federal level had to make a separate S election to be taxed as an S Corporation by New Jersey. The Act ends this requirement, providing that a corporation that has made a valid federal S election will, by default, be recognized as an S Corporation for New Jersey purposes unless the relevant shareholders unanimously elect to be treated otherwise. This critical change applies to tax years and privilege periods beginning after December 22, 2022.</p> <p><strong>If you have questions or concerns about this new law, please contact your CSG Law attorney or one of the authors below.</strong></p>Client Alert30 Dec 2022 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130015&format=xmlThe National Association of Dealer Counsel's Newsletter - Defender: What's the Rush? An Analysis of a Time of the Essence Clause in a Buy-Sell Agreementhttp://csglaw.wiseadmin.biz/?t=40&an=130003&format=xml<p>This article examines the meaning and consequences of a time of the essence clause in a buy-sell agreement for an automobile dealership. The intent of the article is not to make recommendations or dispense legal advice&mdash;which require knowledge of the facts and circumstances of a particular transaction and the parties to the transaction--but rather to underscore the need for careful analysis before accepting or demanding a time of the essence clause on behalf of a client.</p> <p><b>The Law of Substantial Performance</b></p> <p>Before analyzing a time of the essence clause in the context of an asset purchase agreement for a dealership, a simple illustration will be illuminating.&nbsp; Consider a contract governing a teenage child&rsquo;s allowance and the chores she has to perform to earn it.&nbsp; One such chore is to take out the garbage on Tuesday evening each week, as trash collection by the town occurs on Wednesday morning.&nbsp; On a recent Tuesday night, the teenager was cramming for a calculus test and forgot to take out the garbage.&nbsp; However, the next morning, she arose 15 minutes earlier than normal and pulled out the garbage cans on Wednesday in time for the collection.&nbsp; Mission accomplished but is she entitled to her allowance?</p> <p>Most people would agree that she did, indeed, earn her allowance, as the ultimate goal&mdash;to dispose of the trash on Wednesday morning through the customary collection process&mdash;was achieved.&nbsp; This conclusion recognizes the realities that people are imperfect, contracts are not always formulated with precision, and absolute adherence to the terms of a contract typically is not necessary for the other party to realize the benefit of its bargain.&nbsp; In other words, substantial performance is all that is normally required for a party to comply with its obligations under a contract.</p> <p>Contract law in many states adopts the theory of substantial performance.&nbsp; For example, in <u>Green Tree Servicing, LLC v. Milam</u>, a Florida court examined relevant precedent, concluding that &ldquo;[i]n Florida, a party's adherence to contractual conditions precedent is evaluated for substantial compliance or substantial performance.&rdquo; 177 So. 3d 7, 13 (Fla. Dist. Ct. App. 2015).&nbsp; Likewise, in <u>Winfield Mut. Hous. Corp. v. Middlesex Concrete Prods. &amp; Excavating Corp.</u>, 39 N.J. Super. 92, 97 (App. Div. 1956), a New Jersey appeals court found that where there is substantial performance of a building contract, even though attended by minor shortcomings, &ldquo;the contract price may be recovered, less a fair allowance to the owner to make good the defects.&rdquo;&nbsp; A similar conclusion was reached in the New York case of <u>Khiterer v. Bell</u>, 800 N.Y.S.2d 348 (Civ. Ct. 2005), where the court acknowledged that the substantial performance doctrine allows the contractor to recover or retain the contract price for the work, with a deduction for the cost of completion or correction to contract requirements.&nbsp;</p> <p>Similarly, Connecticut courts have acknowledged that &ldquo;&lsquo;[t]he general rule with respect to compliance with contract terms . . . is not one of strict compliance, but substantial compliance.&rsquo;&rdquo;&nbsp; <u>Pack 2000, Inc. v. Cushman</u>, 89 A.3d 869, 878 (Conn. 2014).&nbsp; The <u>Pack 2000, Inc.</u> court noted that &ldquo;[t]he doctrine of substantial compliance is closely intertwined with the doctrine of substantial performance&rdquo; and further explained that &ldquo;[t[he doctrine of substantial performance shields contracting parties from the harsh effects of being held to the letter of their agreements.&rdquo;&nbsp; 89 A.3d at 878; <u>see also State Coll. Manor, Ltd. v. Commonwealth, Dep't of Pub. Welfare</u>, 498 A.2d 996, 998 (Pa. Commw. Ct. 1985) (the court acknowledged the doctrine of substantial performance as &ldquo;the protection and relief of those who have faithfully and honestly endeavored to perform their contract in all material and substantial particulars, so that their right to compensation would not be forfeited by reason of merely technical, inadvertent or unimportant omissions or defects&rdquo;).</p> <p>Thus, performing substantially in accordance with the terms of a contract will often suffice.</p> <p><b>Consequences of Time of the Essence Clause</b></p> <p>Returning to our hypothetical, consider the contrary view, which is that the teenager did not perform her chore in a timely fashion as a result of which she forfeited her right to an allowance that week.&nbsp; Wagging a disapproving finger at their daughter, the parents maintained that she was obligated to pull out the garbage Tuesday night, she failed to do so, and she therefore gets no allowance.&nbsp; The daughter pleads her case, explaining that the garbage was taken out and collected on time and that Tuesday night performance is a sensible safety net but not an essential element of the contract; she performed substantially as she was required to do.&nbsp; The parents hold firm and withhold the daughter&rsquo;s allowance.&nbsp; This result strikes us as punitive and offends our sense of fair play.</p> <p>Counterpoised to the illustration involving the teenager and the inconsequential delay in her performance is the family that makes a 8:00 p.m. dinner reservation at a favorite restaurant.&nbsp; When the father calls to make the reservation, the hostess reminds him that the kitchen closes promptly at 9:00 p.m., so the last seating is at 8:00 p.m.&nbsp; The hostess therefore suggests a 7:30 p.m. reservation in an abundance of caution, but the father is adamant about keeping the reservation at 8:00 p.m.&nbsp; Unanticipated delays cause the family to arrive at the restaurant at 8:25 p.m. that evening.&nbsp; While sympathetic to the family&rsquo;s plight, the hostess refuses to seat them as doing so would require keeping the entire kitchen staff and wait staff on for an extra half hour, a cost and inconvenience the restaurant owner is not prepared to absorb.</p> <p>In this illustration, we understand the position taken by the restaurant in strictly enforcing the time element of the reservation &ldquo;contract.&rdquo;&nbsp; The 8:00 p.m. deadline was not simply a &ldquo;nice to have&rdquo; condition but a critical component of the parties&rsquo; agreement.&nbsp; The failure to abide by that term was significant and justified the restaurant in disavowing the reservation.&nbsp; Time was of the essence of the parties&rsquo; agreement.</p> <p><b>Example of Time of the Essence Clause</b></p> <p>While the precise language used to make one or more parties&rsquo; performance time of the essence will vary from contract to contract and may also depend upon the dictates of the state law governing the contract, a sample clause is as follows:</p> <p><em>Time is of the essence with respect to all dates and time periods set forth or referred to in this agreement.</em></p> <p>It is also worth noting that a contract may make only certain events or deadlines time of the essence, the most frequent event being the closing date for a transaction.</p> <p><b>Legal Effect of Making Time of the Essence</b></p> <p>A time of the essence clause transforms the customary rule of substantial performance into one of strict or absolute performance, insofar as contractual time periods or dates are concerned.&nbsp; Any non-compliance with the temporal requirements of a contract in which time is of the essence constitutes a material breach giving rise to remedies for the non-breaching party, which may include the right to terminate.</p> <p>New Jersey courts have noted that the commercial law governing the sale of goods leaves it to the parties to agree on time requirements; in the absence of an agreement the law will imply a provision in the contract requiring delivery within a reasonable time. <u>Koolvent Aluminum Awning Co. of N. J. v. Sperling</u>, 16 N.J. Super. 444, 446 (App. Div. 1951); <u>see N.J.S.A.</u> 12A:2-309(1). The court in <u>Koolvent Aluminum</u> noted that if time was of the essence then the breach was material and plaintiff had a right to cancel.&nbsp; 16 N.J. Super. at 446; <u>see also Kahle v. Amtorg Trading Corporation</u>, 93 F.Supp. 405, 407 (D.N.J. 1950).&nbsp; Likewise, in <u>Sublime, Inc. v. Boardman's Inc.</u>, the Florida court of appeals discussed precedent in which performance by a time or date certain was an essential and vital part of the bargain, rendering late performance, such as payment of a debt due, a material breach.&nbsp; 849 So. 2d 470, 471 (Fla. Dist. Ct. App. 2003).&nbsp; In <u>Morrell v. Broadbent</u>, a Pennsylvania court explained that failure to pay money on a particular day is not such material departure from the terms of a contract as to justify a rescission by the other party, unless the parties have expressly agreed that time should be treated as of the essence of the contract. Where this situation exists, the courts will ordinarily accept the agreement as made and refuse to decree performance in the event of failure to make payment within the stipulated time.&nbsp; 291 Pa. 503, 506, 140 A. 500, 501 (1928).</p> <p><b>Time of the Essence in a Buy-Sell Agreement</b></p> <p>There are circumstances in which time is of the essence under a buy-sell agreement for an auto dealership.&nbsp; From a seller&rsquo;s standpoint, closing before the effective date of a change in the tax laws may underlie a time of the essence closing date.&nbsp; Similarly, a seller who is out of trust and is under a forbearance agreement with its lender may be living on borrowed time, impelling a prompt closing.&nbsp; Another example of a critical time deadline under an asset purchase agreement is the expiration of the due diligence period, as the conduct of due diligence poses a risk that employees will learn of the impending sale and because purchasers typically have a walkaway right during the due diligence period.&nbsp;&nbsp; From the perspective of a buyer that is a fund, the window in which the fund is authorized to make investments may be closing, so the fund has to consummate the transaction by a date certain or lose its ability to do so.&nbsp; Under all of these circumstances, a time of the essence clause is justified by a business imperative.</p> <p>In contrast, consider some of the other deadlines and time periods for performance under a buy-sell agreement.&nbsp; Oftentimes, schedules to an asset purchase agreement must be delivered by a seller within 10 days after the effective date of the agreement.&nbsp; If the asset purchase agreement affords the purchaser a due diligence period of 60 days&mdash;during which the purchaser may terminate and receive back its deposit for any or no reason&mdash;should the delivery of the schedules 13 days after the effective date constitute a material breach of the agreement?&nbsp; Likewise, if the outside closing date is fixed as the date that is 30 days after factory approval has been obtained, should a buyer or seller have the right to terminate because the approval of a third-party landlord is not obtained until 33 days after factory approval?&nbsp; Other dates or deadlines for performance often designated in an asset purchase agreement concern obtaining factory approval, valuing spare parts inventory, and generating a list of used vehicles for consideration by the purchaser, strict adherence to any of which may not be an essential element of the transaction.</p> <p><b>Conclusion</b></p> <p>The takeaway from this article is that a time of the essence clause in a buy-sell agreement for an automobile dealership should not be blithely demanded or accepted.&nbsp; It must be carefully considered in light of the totality of the circumstances involving your client, whether you represent the buyer or the seller.&nbsp; If the decision is made to include a time of the essence clause in the agreement, practitioners should analyze how its effects may be mitigated in circumstances where the time for performance is not mission critical.&nbsp; The goal should be adequately addressing business imperatives without providing either side with an unintended escape hatch.</p> <hr /> <p align="center">Reprinted with permission from the November/December 2022 issue of the NADC <i>Defender</i>. &copy; 2022 National Association of Dealer Counsel. Further duplication without permission is prohibited. All rights reserved.&nbsp;</p>Publication26 Dec 2022 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=130003&format=xmlCSG Law Announces 2023 Promotionshttp://csglaw.wiseadmin.biz/?t=40&an=129950&format=xml<p>Chiesa Shahinian &amp; Giantomasi PC (&ldquo;CSG Law&rdquo;) is pleased to announce eleven attorney promotions, six to Member and five to Counsel, effective January 1, 2023.</p> <p>&ldquo;The CSG Law team is excited about what the future holds for the firm and buoyed by the contributions of our newly elevated attorneys,&rdquo; said Managing Member Patricia K. Costello. &ldquo;From the addition of new attorneys to our rosters, to our employees&rsquo; return to the office three days a week earlier this year, to our eagerly anticipated move to our new state-of-the-art headquarters in Roseland, none of this could have happened without the extraordinary determination, skill and efforts of the CSG Law team, which, throughout it all, has continued to place our valued clients at the forefront.&rdquo;</p> <p>Promotions to Member are as follows:</p> <p><a href="https://www.csglaw.com/biographies/stephen-cordaro">Stephen G. Cordaro</a> is in the firm&rsquo;s Corporate &amp; Securities Group and practices primarily in the areas of corporate, mergers and acquisitions, securities, private equity and venture capital. Steve&rsquo;s general corporate and securities law experience includes counseling small, closely held businesses, as well as large corporations and their management, on day-to-day business matters and specialized transactions. Steve earned his J.D. from Fordham University School of Law and graduated <i>magna cum laude</i> from Fordham University.</p> <p><a href="https://www.csglaw.com/biographies/michael-cross">Michael Cross</a> is in the firm&rsquo;s Litigation and Real Estate, Development &amp; Land Use Groups, focusing on both federal and state court litigation in diverse subjects. Michael has extensive experience in managing and litigating complex commercial matters for both business entities and individual clients, contract disputes, environmental issues, employment and labor-related issues, insurance coverage disputes, ERISA and ERISA withdrawal liability issues, and generic pharmaceutical patent cases. Michael earned his J.D. from Seton Hall University School of Law, where he worked as a Research Assistant in their Center for Social Justice Clinic, and his B.A. in Finance from James Madison University.</p> <p><a href="https://www.csglaw.com/biographies/anthony-j-marchese">Anthony J. Marchese</a> practices with firm&rsquo;s Property Taxation Group and represents corporations, municipalities and individuals in all aspects of tax appeal litigation. Anthony earned his J.D. from Western New England University School of Law, and his B.A. in Political Science from Rutgers University.</p> <p><a href="https://www.csglaw.com/biographies/amanda-miceli">Amanda Miceli</a> is in the firm&rsquo;s Fidelity &amp; Surety Group where she litigates commercial and contract surety matters in both New Jersey and New York. She works closely with clients in developing and executing complex settlement strategies. Outside of litigation, Amanda advises clients regarding claim investigation, contract issues and risk management. Amanda is a frequent presenter at national surety conferences and regularly authors articles related to fidelity and surety law. She earned her J.D. from Seton Hall University School of Law, where she was a teaching fellow for the Academic Success Program, and her B.A. in Philosophy from Franklin and Marshall College.</p> <p><a href="https://www.csglaw.com/biographies/brian-oneill">Brian P. O&rsquo;Neill</a> is a litigator whose practice focuses on complex civil litigation and white-collar criminal defense. In his civil practice, Brian has handled a wide variety of commercial matters, including shareholder and partnership disputes, real estate litigation, professional liability actions, and public contract challenges. He has represented many clients in business divorces, including cases involving misappropriation of trade secrets, restrictive covenants, employee raiding, and claims under the New Jersey Computer Related Offenses Act. Brian earned his J.D. from Seton Hall University School of Law, where he graduated <i>magna cum laude</i>, and his B.A. from Villanova University.</p> <p><a href="https://www.csglaw.com/biographies/adelina-m-sklyar">Adelina M. Sklyar</a> is in the firm's Real Estate, Development &amp; Land Use Group where she manages and directs commercial transactions, real estate, corporate and business law practice. Adelina has extensive experience in all aspects of real estate transactions, including sale and purchase transactions, development acquisitions, commercial real estate structured financing, mortgage financing, mezzanine financing and real estate management. Adelina earned her J.D. from New York Law School and her B.A. in English and Philosophy from New York University.</p> <p>Promotions to Counsel are as follows:</p> <p><a href="https://www.csglaw.com/biographies/michelle-j-delaney">Michelle J. Delaney</a> is in the firm&rsquo;s Corporate &amp; Securities Group where she handles a range of corporate matters, including private M&amp;A, venture capital, debt and equity financings and general corporate matters including business formation, governance and compliance. Michelle earned her J.D., <i>cum laude,</i> from Rutgers Law School and her B.A. in Criminal Justice from the University of Delaware.</p> <p><a href="https://www.csglaw.com/biographies/danielle-m-federico">Danielle M. Federico</a> is in the firm&rsquo;s Real Estate, Development &amp; Land Use Group, where she represents residential, commercial and industrial developers and redevelopers. Her experience includes drafting redevelopment agreements, developer&rsquo;s agreements, financial agreements, subdivision deeds, easements and resolutions for governing bodies and municipal planning and zoning boards. Danielle earned her J.D. and Environmental Law Certificate from Pace University Elisabeth Haub School of Law, and her B.A. in Political Science, <i>magna cum laude</i>, from State University at Albany.</p> <p><a href="https://www.csglaw.com/biographies/chelsea-p-jasnoff">Chelsea P. Jasnoff</a> is a litigator who focuses on complex commercial litigation, including shareholder disputes, contract matters, business torts and commercial real estate disputes. Chelsea also has experience defending both public and private employers against wage and hour, discrimination and wrongful discharge claims. She earned her J.D., <i>magna cum laude, </i> from Seton Hall University School of Law, and her B.A. in Psychology from the University of Delaware.</p> <p><a href="https://www.csglaw.com/biographies/michael-j-mouridy">Michael J. Mouridy</a> is in the firm&rsquo;s Real Estate, Development &amp; Land Use Group and has significant experience representing major institutional and commercial lenders in real estate loan transactions involving a wide variety of financial structures, including acquisition, bridge, construction, and permanent financing. Michael also has experience representing construction lenders for affordable multifamily housing and economic development projects, as well as financial institutions in warehouse lending transactions, structured as master repurchase facilities. Michael earned his J.D., <i>cum laude</i>, from Seton Hall University School of Law and his B.B.A. in Business Administration, <i>cum laude</i>, from Loyola University Maryland.</p> <p><a href="https://www.csglaw.com/biographies/daniel-j-tyrrell">Daniel J. Tyrrell</a> is in the firm&rsquo;s Litigation and White Collar Defense &amp; Investigations Groups. His practice focuses on the defense of individuals and companies in white collar criminal investigations, governmental and regulatory inquiries, internal investigations, and complex civil litigation. Before CSG Law, he was an Assistant District Attorney with the New York County District Attorney&rsquo;s Office where he served as the lead prosecutor in more than 175 felony cases handling all aspects of litigation. Daniel earned his J.D. from Fordham University School of Law and his B.A. in Philosophy, Politics &amp; Economics from the University of Pennsylvania.</p>News21 Dec 2022 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=129950&format=xmlNJICLE: Legal Issues Surrounding Name, Image, and Likeness (NIL) in Amateur & College Sports: An Essential Updatehttp://csglaw.wiseadmin.biz/?t=40&an=129381&format=xml<p>CSG Law&rsquo;s Managing Member, <a href="https://www.csglaw.com/biographies/patricia-costello">Patricia Costello</a>, and Member of the Intellectual Property Group, <a href="https://www.csglaw.com/biographies/abigail-remore">Abigail Remore</a>, will both&nbsp;participate in the New Jersey Institute for Continuing Legal Education webcast&nbsp;on Thursday, December 15 held at the New Jersey Law Center in New Brunswick, NJ.</p> <p>There will be a panel discussion from 5:00 - 8:00 PM in which Pat (moderator/speaker) and Abby (speaker) will discuss, &quot;Legal Issues Surrounding Name, Image, and Likeness (NIL) in Amateur &amp; College Sports: An Essential Update.&quot; This course will explore the legal tactics and cases that led to the NCAA&rsquo;s ruling, including the ethical underpinnings of the decision.<br /> <br /> For more information on the panel and registration details, please click <a href="https://tcms.njsba.com/PersonifyEbusiness/Default.aspx?TabID=1699&amp;productId=84294311">here</a>.&nbsp;<br /> &nbsp;</p>Event15 Dec 2022 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=129381&format=xmlMitchell S. Berkey, Francis J. Giantomasi and Thomas J. Trautner Jr. Named 2022 Real Estate Influencers by ROI-NJhttp://csglaw.wiseadmin.biz/?t=40&an=129891&format=xml<p><a href="https://www.csglaw.com/biographies/mitchell-berkey">Mitchell S. Berkey</a>, <a href="https://www.csglaw.com/biographies/francis-j-giantomasi">Francis J. Giantomasi</a> and <a href="https://www.csglaw.com/biographies/thomas-trautner">Thomas J. Trautner Jr.</a> with Chiesa Shahinian &amp; Giantomasi PC&rsquo;s (&ldquo;CSG Law&rdquo;) Real Estate, Development &amp; Land Use Group, have been named among <i>ROI-NJ&rsquo;s</i> 2022 Real Estate Influencers.</p> <p>Mitch chairs the Real Estate Group, Frank is a member of CSG Law&rsquo;s Executive Committee, and Tom is the co-chair of Urban Land Institute Northern New Jersey. Mitch and Frank are mainstays among <i>ROI-NJ</i>&rsquo;s Influencer list and this is Tom&rsquo;s first appearance on the list. The trio embodies the top-tier talent at CSG Law, which last year earned <i>New Jersey Law Journal</i>&rsquo;s Law Firm of the Year Award. Additionally, the Real Estate Group also earned first place in <i>New Jersey Law Journal</i>&rsquo;s Best Of Survey earlier this year and, in 2021, Dealmakers of the Year Award.</p> <p>Mitch, in his role as chair, has been a key player in attracting extraordinary talents from high-profile roles within the private and public sectors. As noted by <i>ROI-NJ</i>, &ldquo;His extensive background spans all asset types, including office, industrial, multifamily, retail, hospitality and mixed-use properties in markets locally, regionally and across the nation.&quot; Earlier this year, Mitch was recognized with <i>NJBIZ</i>&rsquo;s Icon Honors award, which distinguishes New Jersey business leaders for their notable success and demonstration of leadership throughout their careers.</p> <p>Frank, who often appears in <i>ROI-NJ</i>&rsquo;s Power List, was again named to the publication&rsquo;s Health Care Influencer list in his capacity as in his capacity as Chair of the Board of Trustees of Newark Beth Israel Medical Center and Children&rsquo;s Hospital of New Jersey. Frank &ldquo;is recognized as a leader in planning, zoning and development law, including tax abatement law for the city of Newark and urban areas,&rdquo; the publication said.</p> <p>Tom, according to <em>ROI-NJ</em>, &ldquo;is one of the most respected real estate attorneys in the state, with deep expertise in redevelopment and land use, eminent domain, affordable housing, community associations and real estate litigation.&rdquo;</p> <p>To view the full <i>ROI-NJ</i> 2022 Influencers: Real Estate list, please <a href="https://www.roi-nj.com/2022/12/05/roi-influencers/real-estate/2022-real-estate/roi-nj-presents-the-roi-influencers-real-estate-2022/">click here</a>.</p> <hr /> <p align="center">Visit <a href="https://www.csglaw.com/award-methodology">csglaw.com/award-methodology</a> for additional details on the selection process for the above-mentioned recognitions.</p>News14 Dec 2022 00:00:00 -0800http://csglaw.wiseadmin.biz/?t=40&an=129891&format=xml