CAPITOL REPORT by Lisa Chapland, Esq. @Lisac1997
This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.
Drafted NJSBA Bills to Watch
As another legislative session comes to a close, a flurry of activity is expected in the Legislature. The New Jersey State Bar Association has several bills drafted by its members that will be on the move in the upcoming months.
Professional Liability Bill (A-1982-Prieto)
As the association’s priority legislation, this bill requires professional malpractice actions against licensed professionals to be brought within two years of the malpractice or reasonable discovery of the malpractice. The Coalition of Licensed Professionals—with robust support among professionals including certified public accountants, architects, engineers, dentists, and a host of others—has met with all of the members of the Assembly Judiciary Committee and expects widespread support for the bill. Every county bar association supports the bill as well. Additional information on the coalition’s efforts can be found at www.njsba.com.
The bill not only brings malpractice actions against licensed professionals within a uniform two-year statute of limitations, similar to medical professionals, but also eliminates the fee shifting provision for prevailing parties in malpractice actions against attorneys—the only licensed professionals subject to those fees.
The bill is pending before the Assembly Judiciary Committee.
Revised Uniform Limited Liability Act (A-1786-Burzichelli/S-1748-Sarlo/Oroho)
Drafted by members of the Business Law Section, this bill amends and updates the Revised Uniform Limited Liability Act by easing the conversion process of partnerships to limited liability companies. It creates a simple process for the conversion similar to Delaware and other states where a simple form is used. The bill also updates and amends the existing law in certain aspects, including requiring that in order for a limited liability company (LLC) to use a name that is similar to that of another entity, it must submit to the filing office a signed record of consent from the entity currently using the name; eliminating the requirement that an LLC must have a member before it can be formed; and indemnifying a company agent against any debt, obligation, expense or other liability incurred by that company agent in the course of the company agent’s activities on behalf of the LLC. The bill also addresses good faith protections of members of a member-managed LLC and shortens the time following the newspaper publication of notice of the dissolution of an LLC in which a claim against the LLC must be brought before the claim is barred.
The bill is currently pending before the Senate Commerce and Assembly Commerce and Economic Development committees.
Elimination of Double Taxation of Attorney’s Fees in Certain Actions (S-789-Sarlo)
The double taxation bill, as it is commonly called, eliminates the taxation of attorney’s fees awarded in unlawful discrimination/retaliation claims and/or actions by the state. Unlike at the federal level, when a plaintiff receives the award the plaintiff is taxed on the fees even though he or she never receives them and the attorney is taxed for the fees. The bill would align New Jersey with the Civil Rights Relief Act, enacted in 2004, to eliminate such treatment. The bill calls for continuing to tax the attorney who ultimately receives the fee, and not the plaintiff, who never collects the money.
The bill is pending in the Senate Budget and Appropriations Committee.
The Professional Services Corporation Act (S-2386-Gill)
The revised Professional Services Corporations Act expands the ability of foreign professionals and professional corporations to do business in New Jersey, making the act consistent with the New Jersey Business Corporation Act. Current law requires each shareholder of a professional corporation to be licensed within the state to provide the type of professional services for which the corporation was incorporated. This bill would eliminate that requirement in favor of letting professionals who are licensed or otherwise legally authorized to provide services in other states to be shareholders of a New Jersey professional corporation, provided at least one shareholder is licensed by the state of New Jersey.
The bill also allows foreign professional corporations to do business in the state through shareholders or employees who are licensed in New Jersey—a privilege currently only available to foreign professional legal corporations. It repeals and replaces sections of the current act to require only a single director and removes the requirement that all directors and the president be licensed or otherwise legally authorized professionals as long as they do not direct or engage the professional practice. Finally, the bill broadens the categories of authorized shareholders of a professional corporation to include individuals licensed or otherwise legally authorized to practice the profession, so long as at least one individual shareholder or one individual owner of a permitted entity shareholder is licensed or otherwise authorized by the state.
The bill was heard, but not voted on, in the Senate Commerce Committee. The association is working with interested stakeholders to amend the bill to address concerns raised by the New Jersey Dental Association and the New Jersey Medical Society.
Adverse Possession (S-1609-Van Drew/A-3800-Wisniewski)
This bill would make consistent New Jersey’s adverse possession laws, which cures a conflict between an adverse possessor to acquire title of land after 30 years of uninterrupted possession of the property and a 20-year statute of limitations to bring an action to recover possession of property by a record owner. It would ultimately eliminate the confusion by clarifying that title in land vests after 20 years of adverse possession in most cases and 30 years in cases involving woodlands and uncultivated land.
The bill was passed in both houses last session, but it was vetoed by Governor Chris Christie. It is pending in the Assembly and Senate Judiciary committees.
College Expenses Bill (S-813-Weinberg/A-327-Singleton)
The bill addresses the factors necessary for the court to consider in evaluating whether to make an order for the educational expenses of an unemancipated child. The authority granted under the bill extends to undergraduate college education or professional or other training after graduation from high school. The bill codifies current case law, which contains these factors in a number of cases. By codifying the factors in one place, it provides for uniform application of the factors, which tend to change from vicinage to vicinage, depending on the court and the case law under review.