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In this issue: Letters to the Editor In case you haven’t received the word, The Free Press has instituted a "Letters to the Editor" column. If you don’t want to take time out of your busy schedule to do research for a scholarly article, if you have a suggestion, recommendation, or constructive criticism to direct to the Section leadership or the Free Press editorial board, or if you just want to "vent" (in a non-abusive manner, of course), you will now have a forum. You can submit a letter any time it suits your fancy, and you need not wait until just prior to the publication of an edition of the Free Press. Submissions will be kept on file for future publication. Please submit your letters to Nicholas D. Krawec, co-chair of the CRS Newsletter Committee. The Free Press ? Best Feature Article Award The Creditors' Rights Section will annually recognize outstanding articles submitted to The Free Press, with a "Best Feature Article Award" to be presented to the author of the winning article, at the Creditors’ Rights Section general membership meeting at the CLLA Eastern Regional Meeting in New York. Articles submitted for the Fall, Spring and Summer editions of The Free Press will be eligible for the award and will be considered for the award if so requested by the author. Any articles submitted for the Summer edition of the Free Press for consideration for the Best Feature Article Award must be submitted to the Free Press by May 15, and judging of all articles submitted for the Award will take place over the summer. Each year, the Best Feature Article Award will be presented in New York, for the best feature article submitted within the previous year. The following criteria should be adhered to for articles submitted for consideration for the Award: 1. Article subjects should be educational in nature, on a creditors’ rights, debt collection, bankruptcy or creditors’ rights practice management related topic. 2. Authors must be a member of the CLLA. 3. Articles must be original to The Free Press. Reprints will not be accepted. 4. Each author may submit one article for consideration during any award year. However, authors awarded the Best Feature Article Award the previous year may submit a new article for consideration the following year. 5. All entries will be judged, and at least three (3) entries must be received for the award to be given. If less than three (3) entries are received, honorable mention certificates will be distributed to the participating authors. 6. All submissions are final, and no additions or changes are permitted to the entry after receipt by The Free Press editors. 7. All articles must be submitted in Word formal, via e-mail to nkrawec@bernsteinlaw.com. Any questions may be directed to Nick Krawec, (412) 456-8103, or Brenda Majewski, (414) 276-0435. Your subscription You have been subscribed to this list as part of your membership in the Creditors Rights Section of the Commercial Law League of America. Changes to your e-mail address and all other comments can be sent to crs@clla.org CLLA 70 East Lake Street, Suite 630 Phone: 312-781-2000 Newsletter design by: |
Report From The ChairBy Robert A. Bernstein, Esquire • Passion - it’s a quality almost all of us have at some time in our lives. Many of us had a passion for the law when we entered, and hopefully when we graduated, from law school and began our life’s work in this profession. Most of us envisioned that we would use our knowledge of the law to help mankind and make a difference in the world - and it wouldn’t hurt to make a comfortable living while doing so. Few imagined that we’d be spending a great deal of our time dealing with recalcitrant debtors, difficult clients, office staffing problems, and demanding judges and court personnel - and for us older attorneys, we certainly never anticipated the concept of computer hardware and software problems. As the practice of law has evolved, the passion of the practice of law may have waned, as the reality of making a living and running a successful practice force us to cope with everyday pressure associated with the practice. It has often been said that one gets out of an organization in proportion to that which he or she puts into it. The antidote for a lack of passion is to get involved in a worthwhile endeavor. As Chair of the Creditors Rights Section, I invite you to rekindle your passion through involvement with our Section. The past and present leaders of our Section invest significant time and effort to promote the welfare of our fellow CRS members and our clients through the presentation of excellent educational programs, monitoring legislation and court decisions affecting creditors’ rights, and sharing among our members significant information affecting the creditors’ rights practice. As always, the health of the organization is only as strong as the dedicated members willing to step up and take a leadership role in leading us into the future. If you have been a silent member for a while, we invite you to step up and help us as we help shape the creditors’ rights practice of the future. If you are a newer member, we welcome you and encourage you to actively participate to keep our organization vibrant and dynamic. Plan on attending the meeting of the CRS Executive Council in Chicago. Due to special educational programming, the CRS Executive Council meeting has been moved from its normal Saturday time slot during the Chicago convention. The Executive Council will meet at 4:00 p.m. on Thursday, April 27; the welcoming cocktail party will follow the meeting, so join us on Thursday afternoon.
• If you think things have been quiet since we adjourned our general meeting in New York, you are mistaken! • Two of the goals of the this CRS year were to coordinate the educational programming to prevent competing educational seminars, and to work together with, rather than in opposition to, the other Sections of the League. The Education Committee has worked toward these goals in assembling a top-notch slate of programs for Chicago. On Friday morning, we are co-sponsoring a program with the Bankruptcy Section, and participating in a program with the Agency Section. On Friday afternoon, we are sponsoring an FDCPA program. The headline presentation in Chicago will be a program on Saturday featuring James McElhaney, one of the most respected lecturers in the country. Be sure and read the report of the Education Committee for details on the programs available in Chicago. Kudos to Matt Burkinshaw and Marc Bressler for their efforts in coordinating this programming! • The CRS submitted an amicus brief in an appellate case arising in Indiana, seeking to set aside a fraudulent grant of a security interest in debtor’s assets. The Court upheld the position advocated by the CRS, and held that the credit counseling service had fraudulently obtained the security interest. The defendant in that litigation is a credit counseling service which has been using this tactic on a national basis to avoid the claims of creditors, so you may be able to use this legal precedent to assist in the recovery of assets for your client in your jurisdiction. Be sure and read the report from former chair Christine Hayes Hickey in this edition of The Free Press. • We are assembling a library of forms, which can be of use to our members in their practices. Tony Picheca and Rick White are seeking submissions of standard pleadings from each state, which we will save in an electronic forms bank and make available to our membership. If you have some standard pleading forms, which have proved useful in your practice, please consider sharing them with us so that we can compile a comprehensive bank of pleadings for use by our membership. Letters to the EditorDear Editors:
Dear Editors:
Attorney Matt Richburg, CRS Chair Bobby Bernstein, The Free Press co-editor Brenda Majewski at one of the NY receptions Washington Legislative ReportBy David P. Goch, Esq. A. Pension Surcharge On February 8, 2006, President Bush signed S.1932 (Pub. Law 109-171), the Deficit Reduction Act of 2005, which includes a bankruptcy pension surcharge, imposing a $1250 employer-paid plan termination premium, assessed per plan participant for three consecutive years for companies that terminate their pension plans. The premium provision will sunset after five years. The Statement of Managers accompanying the conference report also directs that the GAO study the effect of the surcharge on plan sponsors and members. The report is due back to Congress in 2007. The measure also increases bankruptcy filing fees, effective two months after enactment. Chapter 7 fees would be increased to $245, and Chapter 13 fees would be increased to $235. B. Asbestos Cap Despite some broad and diverse support, the asbestos bankruptcy trust funds (contained in several bills, including S. 852), creating a $140 billion national trust fund to compensate workers exposed to asbestos, was killed in the Senate in late February. Despite Senate Majority Leader Frist's (R-TN) assertion that it will come back, is unlikely to re-emerge in this Congress. C. Personal bankruptcy and health care A study, entitled: "Medical Bankruptcy: Myth Versus Fact," released last week on the Health Affairs website, a health policy journal, refutes previous findings that medical debt contributes to a majority of personal bankruptcies. The study said medical debt is a contributing factor in 17 percent of personal bankruptcies. The study was in response to the February 2005 study, "Illness And Injury as Contributors to Bankruptcy," by David Himmelstein of Harvard Medical School, along with Elizabeth Warren, Deborah Thorne and Steffie Woolhandler, that also appeared on the Health Affairs Website, which concluded that medical debt contributes to 54.5 percent of personal bankruptcies. Spotlight on the Creditors’ Rights Section ChairInterview by Nicholas D. Krawec, Esq.
Outgoing chair Jeff Rubin administers the oath of office to incoming chair Robert Bernstein Name: Robert A. Bernstein Residence/Hometown: Charleston, South Carolina Education: University of South Carolina - BS, Business Administration 1980; Juris Doctor 1983 Work History: Family: Wife - Mary Deann Phillips Bernstein; Areas of practice and specialties: Business litigation, bankruptcy, commercial collections What year did you join CLLA? 1992 What other offices have you held in the CLLA and Creditors’ Rights Section? CRS: Chair-Elect, Treasurer, Secretary, Executive Council member, Editor of Free Press, Chair of Directory Committee Tell us about your family and your family interests and activities... Mary Deann and I met while I was in law school, and we married in 1983, just after I took the bar exam. Her full time job since then has been putting up with me and the kids, which is more than any one person should have to bear. Though many can remember my active little (?) kids from the summer conventions over the years, both are now in college and hopefully progressing to self dependence. Like most of us, most of my time is spent in the practice of law; it truly is a jealous mistress. What qualities do you feel that you bring to the job of Chair of the Creditors’ Rights’ Section? Although it may take a while to get accomplished, I usually complete a project I set out to accomplish. With the multitude of projects undertaken by the CRS, it’s impossible for one person to do it alone; we’re very fortunate to have a group of hard working, dedicated professionals with the same ability to accomplish their appointed tasks. What goals would you like to achieve during your term as Chair of the Creditors’ Rights Section? I don’t know if you can call not messing it up a goal; we have been so fortunate to have dynamic and forward thinking leadership within the Section over the past years. Prior chairs have started many worthwhile programs which have yet to be completed, and I intend to continue to push those initiatives. We are consolidating some of the educational programs offered at the conventions so that our membership can attend and benefit from the programs, rather than have to choose from several programs being offered at the same time. Finally, I think we need to make a conscious effort to work in tandem with all the other Sections of the League to further the common interests of the membership of the League, rather than to emphasize the individual interests of each constituency. If a new attorney member of the CLLA is considering joining the CRS, what would you tell him or her about the benefits of Section membership? The CRS provides a wonderful opportunity to grow in the commercial practice of law. The CRS promotes first class educational programming at the conventions, and we are in the process of compiling a forms bank and list serve which will provide valuable assistance to our membership in the competent and ethical practice of their professions. In addition to the fine educational opportunities available through the Section, participation in the CRS has paid off in referral legal work from other attorneys, as well as the establishment of strong friendships which will last long after I’m no longer able to practice. When you’re not practicing law, or tending to League matters, what do you do for fun and relaxation? Riding my motorcycle is my newest passion, rekindling an interest I had as a teenager. I love to listen to music, go to sporting events and undertake home improvement projects. If you did not become a lawyer, what do you think would have become your life’s work? Since my father was an attorney, it was always what I wanted to do when I grew up. One of these days, when I do grow up, I may choose something else. Although I have a business degree, I could not see myself in sales or business middle management. What one thing do you think we would be surprised to know about you that most people don’t already know? What is your favorite quote, or words to live by? There has never been a better guide than the golden rule: Do unto others as you would have them do unto you. Did you have any role models when you were growing up and in your career in practicing law thus far? If so, who are they and why were they your role models? Of course, my father was my principal role model. U.S. District Judge Clyde Hamilton was my first role model in the practice of law; his thorough approach to each aspect of a case was a great foundation upon which to base my practice thereafter. I have immense respect for those who led the fight for equal rights in the ‘60s: John Kennedy, Lyndon Johnson, Martin Luther King, Thurgood Marshall, etc. Their courage to stand by their convictions for human rights in the face of enormous opposition is inspiring. What is your favorite: Car: Any one I have which doesn’t require repairs Food: Just about any seafood Vacation spot: What’s a vacation? Actress/Actor: Meg Ryan / Al Pacino Movie: Animal House Holiday: Thanksgiving Musical group/Singer: Bruce Springsteen/Melissa Etheridge Book: The Truth by Al Franken Sports figure: Jerry West; Brooks Robinson Congratulations to the 2006 CRS Officers and Executive Council members elected at the New York meeting: Chair Elect: Beau Hays Secretary: Mark Sheriff Treasurer: Ed Friedman Past Chair: Jeff Rubin New Executive Council Members: Liviu Vogel, Richard White, Matt Burkinshaw & John Guerini
John Guerini and Matt Burkinshaw - celebrating their election in NY to the CRS Executive Council
Richard White and Liviu Vogel - also celebrating their victory in NY
Co-editor Nick Krawec presents Attorney Joe Maker with the Best Feature Article 2005 Award in New York
Committee ReportsTHE UNIFORM LAWS COMMITTEE REPORT SECRETARY’S REPORT EDUCATION COMMITTEE REPORT
CRS education programs pack the room in NY The Education Committee is very pleased with the extensive education programs that are planned for the 76th Annual Midwest Meeting in Chicago. Our featured program, co-sponsored by the Commercial Law Foundation, the Midwest Region and the DuPage County Bar Association, will be a day-long session on Saturday April 29 presented by Prof. James McElhaney on Trial Techniques and Evidence. Professor McElhaney is a nationally acclaimed author and speaker in the trial advocacy field. This will be a popular seminar, so plan to arrive early for a good seat! The CRS is also co-sponsoring another 4.5 hours of education on Friday April 28 in Chicago. We are co-sponsoring with the FDCPA Committee another in our series of FDCPA Update programs which will focus on the issues involved in the decision whether to fight or settle an FDCPA claim. The CRS and Bankruptcy Section are co-sponsoring a session on Assignments for the Benefit of Creditors as an alternative to Chapter 11 filings. The section will also participate in the roundtable discussion program sponsored by the Agency Section on improving efficiency and earnings in legal forwarding and receiving. We are in the planning stages right now for programs for the fall in New York, including a program on privacy issues facing law firms and collection agencies. The Committee welcomes input on past, present and future education programs from all CRS members. We encourage you to approach us with an idea for a program or to volunteer to speak at an upcoming convention. Speaking at a convention is a great way to raise your profile in the League which can in turn lead to more business for you and your firm. Please feel free to contact one of us with your ideas.
Mock trial "witness", "plaintiff", attorney and judge
Attorney Manual Newburger confers with the judge during the Mock Trial
CRS members David Gamache, Jeff Rubin and Bobby Bernstein review jury instructions during the Mock Trial
How much do you know about the history of the Creditors' Rights Section?A LOOK BACK, A LOOK TO THE FUTURE Compiled from historical information contributed by Richard A. Sugarmann, Esquire Did you know that: Prior to and in the 1970’s:
In the 1980’s:
In the 1990’s:
In 2006 -- Fast forward – 11 years later:
Indiana Court of Appeals Declares Transfers to CCCS FraudulentBy: Christine Hayes Hickey, Esquire On January 13, 2006, the Indiana Court of Appeals rendered a significant ruling for creditors in the case of Commercial Credit Counseling Services, Inc. vs. W.W. Grainger, Inc., 840 N.E.2d 843 (Inc. Ct. App. 2006). In that case, the Court of Appeals affirmed two separate lower court rulings declaring transfers to Commercial Credit Counseling Services, Inc. (“CCCS”) fraudulent as to executing post-judgment creditors (“Creditors”). The facts of this case are likely familiar to creditors’ rights attorneys. CCCS entered into debt restructuring agreements with the debtors against whom the Creditors held judgments. The CCCS agreement required debtors to submit funds to CCCS in installments, purportedly to be used to settle debts with creditors generally. As part of the agreement, CCCS sought to retain a security interest in the debtors’ assets, which was then used as leverage to force creditors to accept settlement or payment on terms favorable to the debtor. Creditors choosing to reject the offers were forced to litigate a priority dispute with CCCS. The Creditors in this case attempted to attach funds being held by CCCS in post-judgment proceedings. In response, CCCS asserted a prior perfected security interest in the funds; claimed that the funds belonged neither to CCCS nor the debtors prior to disbursement (which the Appellate Court rejected as illogical); and argued that there was no evidence of actual intent to defraud Creditors. The facts of the case disclosed that of the approximately $36,000 paid to CCCS by the debtors, less than $1,200 was actually paid out to creditors, with the rest being retained by CCCS as its fee. In separate consolidated opinions, the trial courts each held that the transfers of funds to CCCS were null and void as fraudulent, concluding that the transfers from debtors to CCCS violated the Indiana Uniform Fraudulent Transfer Act as “made for the express purpose of hindering and delaying the efforts of creditors from realizing upon the property of the debtor in satisfaction of claims.” The trial courts noted of the CCCS arrangement, “[i]t is taken too far . . . when the agent becomes a ‘straw man’ of his principal for purposes of shielding assets from creditors.” The Court of Appeals agreed, finding that the transfers were “intended to prevent some creditors from obtaining remuneration to which they were legally and equitably entitled.” The Appellate Court went on to state that “[t]he trial courts’ conclusion that CCCS utilized its purported security interests as a shield to protect the assets of [the debtors] from [Creditors] by concealing them in plain sight is supported by the record.” In addition to declaring such an arrangement void as fraudulent, the court also undertook a good discussion pertaining to the alleged security interest and the minimal value that CCCS could have given in exchange for the transfers. The court properly held that an unfulfilled promise of future performance (i.e. to negotiate with creditors to obtain a favorable settlement) could not serve as the consideration necessary to support the transfer of assets. Accordingly, the purported security interest failed to attach, CCCS did not have a superior interest in the assets, and the transfer of property was avoidable. Clearly, this opinion is a victory for creditors’ rights attorneys. No longer will a creditor be forced to accept a less-than-favorable settlement on a take-it-or-leave-it basis when confronted with an alleged security interest in transferred assets such as that asserted by CCCS. The law firm of Rubin & Levin, P.C. represented the Creditors in the case at the trial court level and on appeal, and the Creditors’ Rights Section of the League funded an Amicus brief in the case on appeal. CREDITOR FRAUD: A cause of action or a category of claimsBy Joseph A. Marino, Esq. Recently a new cause of action referred to as Creditor Fraud has appeared in cases where an attorney has advised and facilitated a debtor to fraudulently convey property and/or hide assets to delay, hinder and avoid creditors. Do we need a new cause of action? Or has the term Creditor Fraud referred to a variety of traditional causes of action? On June 27, 2005, the Supreme Court of New Jersey, in a 7-0 decision in Banco Popular North America vs. Gandi, 184 N.J. 161, 876 A.2d 253 (2005), written by Justice Long, held, inter alia, that, the alleged cause of action called “Creditor Fraud,” does not exist under New Jersey law, abrogating the holdings of two recent Appellate decisions: Karo Marketing Corp. v. Playdrome America, 331 N.J.Super. 430, 752 A.2d 341 (2000) and Jugan v. Friedman, 275 N.J.Super. 556, 646 A.2d 1112, (1994). A brief summary of the underlying facts is as follows: During the late 1990’s, Gandi operated three (3) fast food restaurants under Arby's and Burger King franchises, under separate corporations: “Echelon”, “Priya I” and “Priya II”. In May of 1997, the Bank loaned Priya I $550,000, guaranteed by Gandi, who jointly owned two homes with his wife, along with securities in a mutual fund. At some point, Gandi became enmeshed in a dispute with Arby's. He retained Attorney Freedman to represent him. According to Gandi, Freedman advised him to transfer all of his assets into his wife's name in order to place them beyond Arby's reach. Thus, the asset transfer was deemed to be a fraudulent transfer. (The Courts in Karo and Jugan previously cited such attorney advice to be “Creditor Fraud”). On April 20, 1998, Freedman, “assisted” by Gandi, prepared the deeds for both parcels of property owned by Gandi and the other documents that effectuated the transfer. Subsequently, the Bank in June 1998, issued another loan to Priya I for $15,000 and $750,000 loan to Priya II. The loans went into default and the Bank sued Gandi and Freedman, under the claim of Creditor Fraud, for his misconduct (advice and deed preparation) in assisting Gandi. The Bank contended that Creditor Fraud is a legitimate cause of action that is “simply the tort of fraud adapted to address the misconduct of improperly thwarting a creditor,” i.e., that Freedman triggered that tort by orchestrating the transfer of assets and facilitating the Bank's issuance of the $750,000 loan with an opinion letter that he addressed to the Bank. The New Jersey Supreme Court addressing the Appellate Division’s reinstatement of the Bank's claim for Creditor Fraud, noted that the Appellate Division’s earlier decisions in Karo Marketing Corp. v. Playdrome America, 331 N.J.Super. 430, 752 A.2d 341 (App.Div.), certif. denied, 165 N.J. 603, 762 A.2d 217 (2000), and Jugan v. Friedman, 275 N.J.Super. 556, 646 A.2d 1112 (App.Div.), certif. denied, 138 N.J. 271, 649 A.2d 1291 (1994), suggested that such a claim could be advanced when “actions have been taken for the purpose of defrauding a creditor.” Banco Popular, supra, 360 N.J.Super. at 423, 823 A.2d 809 (quoting Karo, supra, 331 N.J.Super. at 441, 752 A.2d 341). The Appellate Division had stated: “We agree with Banco Popular that in neither Jugan nor Karo was there a ‘misrepresentation’ as that term is commonly understood in the context of fraud but we had no hesitancy in permitting plaintiffs' claims to proceed in each case. Indeed, we said in Karo,‘[i]t is not necessary for plaintiff to show a classic case of legal fraud in order to have a viable cause of action when it is otherwise demonstrated that actions have been taken for the purpose of defrauding a creditor.’ 331 N.J.Super. at 441, 752 A.2d 341. Further, it is not material that the challenged transfers were allegedly completed with an eye on Arby's, not Banco Popular. Jugan, supra, 275 N.J.Super. at 571, 646 A.2d 1112; N.J.S.A. 25:2‑25.” The New Jersey Supreme Court addressed the Appellate Division’s progressive effort to recognize a “new cause of action” in an effort to grant relief (in the interest of justice) in Banco Popular and Jugan and Karo, where there was no element of “misrepresentation.” The New Jersey Supreme Court, strictly following “stare decisis,” recited that to establish common‑law fraud, a plaintiff must prove the five (5) substantive elements: “(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages.” Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610, 691 A.2d 350 (1997). The Court noted that the facts from the Banco Popular record below showed that two (2) essential substantive elements of fraud, i.e., a “misrepresentation” and “reliance,” were missing and therefore, negated any claim of Creditor Fraud against Freedman. The Court further stated that although the word “fraud” is used in common parlance to connote any practice involving shady or underhanded dealing, in the law it is a term of art with a clear definition. It held that an amorphous Creditor Fraud claim that requires plaintiffs to prove neither reliance nor misrepresentation does not exist in New Jersey. The Supreme Court noted that the absence of this new Creditor Fraud cause of action would not leave plaintiffs without remedies. Other causes of action centered on the “Uniform Fraudulent Transfer Act” (UFTA) enacted in forty‑three (43) other jurisdictions, together with civil conspiracy, are available alternative sources of remedies. The Court further noted that remedies available to a successful claimant under the UFTA are broad. Obviously, avoidance of the transfer is primary. N.J.S.A. 25:2‑29(a)(1). Other remedies include attachment against the asset transferred or other property of the transferee, N.J.S.A. 25:2‑29(a)(2); a money judgment against the transferee where the transfer cannot be undone, N.J.S.A. 25:2‑30(a), (b); and injunctive relief. N.J.S.A. 25:2‑29(a)(3)(a). The statute also contains a catch‑all provision, affording a creditor “[a]ny other relief the circumstances may require.” N.J.S.A. 25:2‑29(a)(3)(c). The UFTA was designed as a vehicle by which creditors may recover from debtors and others who hinder their collection efforts. Yet, in enacting the UFTA, the Legislature specifically opted not to preclude related causes of action. N.J.S.A. 25:2‑32 states, “Unless displaced by the provisions of this article, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement its provisions.” Thus, to the extent that the facts undergirding a UFTA claim also establish other recognized causes of action, for example, breach of contract, negligence, or common‑law fraud, a creditor may pursue such claims as well. The New Jersey Supreme Court therefore held that the Bank had a valid claim of civil conspiracy against guarantor's attorney, Freedman; that the Bank failed to state a valid claim of negligent misrepresentation regarding the attorney's advice to the guarantor; and that the Bank had a valid claim of negligent misrepresentation in alleging that the attorney knowingly breached a duty to the Bank. Heretofore, the cause of action known as “Creditor Fraud” alleged that a defendant removed or eliminated a debtor's assets to avoid a creditor's claims, and did not require a plaintiff to prove either of the traditional substantive elements of fraud, “reliance” or “misrepresentation.” However, the New Jersey Supreme Court concluded that such a cause of action does not exist under New Jersey law, given that other recognized causes of action exist to provide a remedy, thus abrogating Karo, supra and Jugan, supra. It appears that the New Jersey Supreme Court holding was following a strict construction of stare decisis, while other Courts have been more progressive in the adoption of Creditor Fraud. See Morganroth & Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d 406 (3d Cir. 2003). The New Jersey Supreme Court, in its rationale, recognized that each of the claimants in Banco Popular and Jugan and Karo, sought relief under a theory of fraud without the salient substantive element of “misrepresentation.” Thus, the legally sufficient articulation of a cause of action becomes crucial, especially when claims of cheating, deception and trickery are involved in such a cause of action. Under the Federal and most States’ Rules of Court, parties are permitted to aver generally a claim for relief, but are required to particularize the facts in support of claims of fraud. Each of the claimants in Banco Popular, Jugan and Karo, however, appears to have failed to articulate adequately all the particular common law torts and/or statutory violations involving acts of dishonesty, cheating and deception, where the creditor was being defrauded by a sophisticated and clandestine scheme of a debtor aided by an attorney. Some courts have fashioned a remedy and/or justified a finding of culpability, “in the interests of justice”, where a clear injustice appears to have occurred. However, caution and the tradition of “stare decisis” must be adhered to, in order to enable a “progressive” court to reach a just result for creditors. While our traditional formulas for proving a tort may not adequately lend themselves to the provable facts in a Creditor’s Fraud case, in some instances, sidestepping those formulas in order to rationalize a just result, shortchanges the system and may cause more harm than good. Some courts have justified their holdings by citing various causes of action, such as, “equitable fraud” or “constructive fraud” without explanation. Others courts have relied upon the common law causes of actions of Aiding and Abetting; Bad Faith and Failure to Engage in Fair Dealing, even where not pleaded. It was the New Jersey Supreme Court’s look at the Karo rationale, i.e., “it is not necessary for plaintiff to show a classic case of legal fraud in order to have a viable cause of action when it is otherwise demonstrated that actions have been taken for the purpose of defrauding a creditor.” Karo, 331 N.J.Super. at 441, 752 A.2d 341, that gave rise to this correction in New Jersey law. “Due Process” requires “notice” and an “opportunity to be heard.” Thus, fundamental fairness requires even a “crook” to have a clear notice of the substantive elements of a cause of action and to require a plaintiff to sustain his burden of proof. History has shown that people, including dishonest ones, adapt by employing more complex and sophisticated schemes to thwart traditional causes of action. The question as to whether the cause of action known as Creditor Fraud will evolve and be adequately defined as a viable cause of action has yet to be determined. As a general category among various other traditional causes of action, it appears to have taken root. View from the List: Critical Thinking is an Essential Part of Any BusinessCompiled by: Gary Tier, Services Manager
The ability to think critically is something many of us were taught in college and use everyday in the workplace. If we don’t use critical thinking skills in decision making, no matter how significant (or insignificant) the decisions may seem, we can fall into a dangerous pattern of making decisions that aren’t well thought out, which can eventually damage our business relationships. To make good decisions, a critical thinker relies on six points: 1. Listen and think carefully 2. Consider strong and weak points 3. Don’t let emotions get in the way 4. Make sense of things 5. Know when to act 6. Examine the evidence, consider the source The Critical Difference The basic difference between The Critical Thinker and The Uncritical Thinker is that critical thinkers are good listeners. They take their time to assess a situation; they don’t make rash decisions. Critical Thinkers know what they know and more importantly, what they do not know, whereas Uncritical Thinkers think they know everything! We have to be open-minded, not jump to conclusions, and pay attention to those who don’t agree with us. Those who think differently might be making points that we hadn’t previously thought about critically. We’d like to know more about you In our office we often talk about the importance of leadership and listening in the workplace. Recently we’ve added critical thinking to the mix because it is essential to good leadership and to effective listening. At Forwarders List, we like to think of ourselves as good listeners and critical thinkers. What we do know is that we provide the best service in the business. What we don’t know is enough about you and we’re ready to listen.
Award of ExcellenceNomination Form CRS Award of Excellence Nomination
Calendar of 2006 EventsApril 27-30, 2006 May 26-29, 2006 July 6-9, 2006 |
