Monmouth County Bankruptcy and Consumer Lawyer Blog

Activists rejoice! The United States Bankruptcy Court supports same-sex marriage. In an unprecedented decision, on June 13, 2011, the U.S. Bankruptcy Court for the Central District of California, called the Defense of Marriage Act, 1 U.S.C. § 7 and 28 U.S.C. § 1738C ("DOMA"), unconstitutional. The case, In re Balas and Morales, Case No. 2:11-bk-17831 TD, involved two partnered gay men who attempted to file jointly on a bankruptcy petition. The ability to file jointly had been reserved only for opposite-sex married couples. The U.S. Trustee sought to have the case dismissed based on the grounds that DOMA prevented the government from recognizing same-sex marriage. However, in the 24-page decision, signed by 20 of the 25 judges in the District, the Court stated that DOMA violates equal protection rights secured under the Fifth Amendment of the United States Constitution and that "there is no valid governmental basis for DOMA."

Under DOMA, "[n]o state, territory, or possession of the United States, or Indian tribe" has to recognize same-sex marriage that is recognized or effectuated in another state. And, amongst other things, DOMA prevents the federal government from recognizing the validity of same-sex marriages.

In its ruling, the Court stated:

Although individual members of Congress have every right to express their views and the views of their constituents with respect to their religious beliefs and principles and their personal standards of who may marry whom, this court cannot conclude that Congress is entitled to solemnize such views in the laws of this nation in disregard of the views, legal status and living arrangements of a significant segment of our citizenry that includes the Debtors in this case. To do so violates the Debtors' right to equal protection of those laws embodied in the due process clause of the Fifth Amendment. This court cannot conclude from the evidence or the record in this case that any valid governmental interest is advanced by DOMA as applied to the Debtors.

So, what are the implications of this decision in New Jersey and to New Jersians?

First off, New Jersey, although not recognizing same-sex marriage, does recognize same-sex civil unions. Same-sex couples who enter into a civil union are provided almost all of the rights granted to married couples under New Jersey state law. However, under DOMA, same-sex couples in marriages, civil unions, or domestic partnerships do not have any right or entitlement to the 1,138 rights that a married couple has under federal law. Unfortunately for our gay and lesbian New Jerseyite brethren, bankruptcy is governed by federal law, not state law, making the ability for same-sex couples to file bankruptcy jointly in New Jersey unavailable, even if New Jersey allowed for same-sex marriage. However, the Balas decision gives a precedent for the US Bankruptcy Court, District of New Jersey to follow. Although not binding on the District of New Jersey court, the Balas decision is persuasive, and can give the Judges here something to consider when a like case is presented in New Jersey and can also serve as blueprint upon which the New Jersey Judges can follow.

Secondly, the decision, if adopted or followed by the US Bankruptcy Court, District of New Jersey, will make it easier for same-sex couples to file for bankruptcy. Basically, you will have a couple, with two incomes, joint assets, a mortgage, some credit card debt, some medical bills and some loans. Some of these debts will be in one person's name, while some will be in another's. However, both individuals want to restructure their debt, and the creditors want to make a deal. It can be cumbersome and complicated to attempt to unravel the tangled finances of a committed couple. As well, it requires both of them to pay separate filing fees, separate legal fees, and to calculate exactly how to split their debts and assets for the purposes of bankruptcy. On the other hand, a joint filing is a routine procedure and can be done quite easily, without the necessity of figuring out exactly who owns what.

Finally, the decision lends support to New Jersey passing a law allowing same-sex marriage within the State, which in these trying economic times, can be quite beneficial to the State coffers. . If New Jersey were to allow the marriage, not to be confused with civil unions, of same-sex couples, the State would likely experience a significant escalation in expenditures on weddings by same-sex couples who currently reside in New Jersey, as well as a surge in wedding and tourist spending by same-sex couples from other states. It is projected that sales by New Jersey's wedding and tourism-related businesses would increase by $102.5 million in each of the first three years when marriage for same-sex couples is legal. As a result, the State's gross receipt tax revenues would rise by $7.2 million per year. More money spent in the State will directly result in more jobs and less bankruptcy filings by residents.

Continue reading "The Bankruptcy Court and the Defense of Marriage Act: Not Good Bed Fellows...Even in New Jersey?" »

New Jersey is a state that is home to many fitness gurus and at some point you may find yourself joining a health club a/k/a gym. One of the hang-ups of joining a gym is the contract that many of health clubs require the health conscious consumer to sign. Many times people are very excited to join but then just days after signing the contract find that they will not utilize health club as much as they first thought they would, need to relocate or find that the health club isn't all that it was promised be by the membership sales representative. If you fall under one of these situations you will be happy to hear to you may have a way out of your contract. First, as per the Consumer Fraud Act section 56:8-42, a contract for new or increased health club services may be cancelled by the buyer for any reason at any time before midnight of the third operating day after the buyer receives a copy of the contract. In order to cancel, you must follow the following procedure to make the cancellation binding: you must notify the health club of cancellation in writing, by registered or certified mail, return receipt requested, or personal delivery, to the address specified in the contract (If no address is specified the contract is void). After cancellation all moneys paid pursuant to the cancelled contract shall be fully refunded within 30 days of receipt of the notice of cancellation. If you have executed any credit or loan agreement through the health club to pay all or part of health club services, the negotiable instrument executed must be returned to you within 30 days.

Another one of the previously mentioned reasons consumers need to cancel their contract is relocation. A health club services contract must provide that it is subject to cancellation by the consumer, by notice, sent by registered or certified mail, return receipt requested, or personally delivered, to the address of the health club specified in the contract upon the buyer's change of permanent residence to a location more than 25 miles from the health club or an affiliated health club offering the same or similar services and facilities at no additional expense to the buyer.

Continue reading "Stuck in a Gym contract in New Jersey? Here's your escape." »

Aside from being from the state in which "Jersey Shore" was filmed, New Jerseyites (or New Jerseyians) were also lucky enough to be protected by one of the most aggressive consumer protection laws in the country, the Consumer Fraud Act, N.J.S.A. §56:8-1 et seq. ("CFA"). The CFA has protected consumers from deception and fraud, even when the merchant acts in good faith. Under the CFA, "the act, use or employment by any person of any unconscionable commercial practice, deception or fraud, false pretense, false promise or misrepresentation, or the knowing concealment, suppression or omission of any material fact with the intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate...is declared to be an unlawful practice . . . ." As well, the CFA provides that "[a]ny person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act or practice declared unlawful under this act . . . may bring an action . . . . In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest . . . the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit." N.J.S.A. §56:8-19 (emphasis added).

However, our happy existence is in danger. The State legislature is seeking to pass bill A-3333. This bill is aimed at limiting the scope of the CFA, which in turn will hurt consumers. First off, the bill limits the class of plaintiffs to individuals, whereas the current CFA allows both individuals and businesses to file suit under this cause of action. Secondly, the bill now makes it a requirement that the individual must have relied on the fraud "to his detriment" to have a cause of action. Under the CFA, this is not a requirement - the plaintiff only had to show that the ascertainable loss was a result of the fraud. The CFA provides a much lower burden for the plaintiff to overcome. Thirdly, the bill now allows the judge discretion in awarding treble (triple) damages, as the proposed bill states that the court "may . . . award up to threefold the actual damages . . . ." The CFA required the court to award treble damages by using the language "shall" instead of "may," as the proposed bill postulates. As well, under the bill, in terms of attorneys fees, the court is still required to award them, but only for those costs" reasonably attributable to the prosecution of the claim brought under [the CFA] that results in the judgment . . . ." The bill further limits the award of attorney's fees and costs to the greater of $150,000 or one-third of the judgment. Finally, the bill adds a new section to the current CFA. This new section makes it so that the CFA will "apply to only to transactions that take place in the State; and not apply to actions or transactions otherwise permitted or regulated by the Federal Trade Commission or any other regulatory body or officer acting under statutory authority of this State or the United States." The CFA, as it stands does make these conditions requirements.

A-3333 benefits only companies which defraud consumers. This will protect car dealerships from consumer fraud lawsuits, allow dishonest businesses to rip off customers and then, if they were caught, simply pay back what they stole and return to their fraudulent "business as usual, " ensure that victims cannot hire a lawyer to protect themselves, as A-3333 limits attorneys' fees that the consumer side (only) may recoup in trying to right the wrong that was done to them, and result in a redistribution of wealth. If A.3333 is enacted, New Jersey's Consumer Fraud Act, currently ranked as the best in the nation, will sink to the worst. This will result in a redistribution of wealth and encourage corrupt businesses to come to New Jersey, protect car dealerships from consumer fraud lawsuits and force honest businesses to change their businesses practices.

Continue reading "New Jersey Consumer Fraud Act - Going from First to Worst!" »