REPORT FROM COUNSEL 

 FALL 2004 ISSUE

NEWS FROM HERTENBURSTEIN.COM

  •  It's a baby girl! Tom and Kathy Herten announced the arrival of their first grandchild, Emma Katherine. She was born on the 30th of July weighing 6 lbs. 2 oz. and 17 inches long.
    Our firm is going through a growth spurt. We are proud to announce the hiring of Marina Hoppas, Tanja J. Fagan and Damon T. Kamvosoulis. All three lawyers spent the last year clerking for New Jersey Superior Court Judges. We would also like to welcome to our office Daniel Y. Gielchinsky. Mr. Gielchinsky is a seasoned lawyer who brings years of experience to the firm.
  • On August 19th Al Burstein received the Community Spirit Award from Hudson Community Enterprises. This is a non-profit organization whose goal is to help handicapped individuals. Many years ago Al was instrumental in founding the organization.
  • The firm wants to thank our law clerks for their hard work this summer: Anthony S. Bocchi from Seton Hall University School of Law, Mark A. Fantin from New York Law School, Chris Karounos from Rutgers University School of Law, Michele Maman from Benjamin N. Cardozo School of Law and Lauren Ricigliano from Seton Hall University School of Law. Their efforts were greatly appreciated and we wish them continued success in school.
  • Jason Shafron has been named as a member of the Board of Trustees of the newly created UJA Federation of Northern New Jersey, which serves all of Bergen County and parts of Passaic, Hudson and Morris Counties. Jason has also been elected Chairman of the Personnel Committee for the Northwest Bergen County Utilities Authority.
  • Nilufer DeScherer recently obtained an important victory for municipalities in litigation involving the Mahwah Affordable Housing Council. The Honorable Marguerite Simon ruled in her favor in a case of first impression in a decision which allows municipalities to preserve affordable housing units that were at risk of being lost by foreclosure actions.
  • For your driving to work entertainment we would like to recommend Nilufer DeScherer's husband, Robert DeScherer, who can be heard every Friday morning from 6 a.m. to 9 a.m. on WFDU, 89.1 FM. His radio program includes a mixture of blues, R & B, zydeco and Cajun music. Rob has been on the air for 14 years.
  • Our office manager, David Polizzotto, has plenty of reason to be proud of his son, Matthew David Polizzotto. Dave and his wife Helen recently announced the marriage of Matthew to Jessica Ensuar on July 23, 2004. Matthew was also named to the Hopatcong High School Hall of Fame.
  • The Bergen County Bar Association continues to make use of the resources of our firm.
    Andy Cevasco was named Co-Chairman of the Elder Law Committee,
    Steven Harz was named Co-Chairman of the Labor Law Committee and a Contributing Editor to the Bergen Barrister,
  • Tom Herten was named Chairman of the Judicial Appointments Committee, while Manny Toskos was named Chairman of the Land Use Law Committee.
  • The prestigious Commerce & Industry Association of New Jersey will be making use of the employment and labor law expertise of Steven Harz. The Association has recently named him a member of its CEO Roundtable.
  • Manny Toskos has been reappointed Township Municipal Attorney and Head of the Department of Law for the Township of Mahwah on July 1, 2004 at the Township's Annual Reorganization Meeting.
  • Finally, on a sad note we have to report the passing of Eleanore Barnes. Having worked for the firm for 19 years she was a beloved fixture. Although she was 87 years old she never slowed down. Eleanore personally made sure that her snack baskets were always filled with candies, cookies and other goodies. Fiercely loyal and professional she came to work on Friday, July 30th, shopped for her goodies over the weekend and sadly passed away on Monday, August 2. She will be greatly missed.

TECHNOLOGY AND THE LAW

Lost Database Is Not Insured

"If you can't reach out and touch it, it is not insured." That was the gist of a court's ruling in a lawsuit brought by a company that lost a large amount of electronically stored data when an employee inadvertently pressed the "delete" key on a keyboard. The company looked to its insurer to cover the expenses for restoring the data and to recover lost income caused by the disruption. The insurer denied coverage on the basis of policy language that limited coverage to a "direct physical loss of or damage to" covered property.

The language from the policy was meant to be interpreted in its ordinary and popular sense. Thus, "physical" means "tangible" or capable of being touched. The information in a computerized database, in and of itself, has no material or tangible existence, unlike a storage medium for information, such as a disk, tape, or even papers in a file cabinet. The court concluded that when the employee sent the data into thin air with an unintended keystroke, there was no direct physical loss within the meaning of the insurance policy. (The court distinguished this case from another case in which the loss of a computer tape and the data on it were covered under a policy covering "physical injury or destruction of tangible property.")

Recognizing that the dictionary was not on its side, the company that lost its data also argued that public policy should weigh heavily in favor of insurance coverage. After all, loss of information in the same manner as occurred in this case is common, and our economy unquestionably is highly dependent on computers and the intangible information that they contain. However, the court declined to use public policy as an "interpretive aid." There are plenty of useful legal principles for construing insurance contracts, but using public policy to redefine the scope of coverage agreed to by parties to a contract is not one of them. The lesson: Questions of insurance coverage are to be answered solely in the language of the policies and, therefore, careful drafting of policy language is critical.
Got a Gripe? Start a Website

Joseph was planning to buy a new house from a builder until he came to the conclusion that the builder's sales representative had misled him about the availability of a particular model. In an earlier time, he might have been content to vent to a sympathetic neighbor across his backyard fence, but this is the age of cyberspace. Joseph registered an Internet name that was very similar to that of the builder and then created a website as a forum for relating the reasons for his frustration with the builder. He included a disclaimer making it clear that visitors were not on the builder's website. There was no charge to access the site and the site contained no paid advertisements. Once in a while, an e-mail intended for the builder came to Joseph's site, but he promptly forwarded it to the builder.

Also on the website was something Joseph called the "Treasure Chest," a place where readers could exchange information about contractors and tradespeople who had done good work. During the entire time the site was up and running, only one person was mentioned in the Treasure Chest. Although it was nearly empty, the Treasure Chest prompted the builder to sue Joseph under the federal Anti-Cybersquatting Consumer Protection Act (ACPA).

The ACPA only applies to someone who, with "a bad-faith intent to profit," registers or uses a domain name that is identical or confusingly similar to that owned by someone else. Everyone agreed that the part of Joseph's website in which he aired his own complaints against the builder had no profit motive or commercial aspects, but the builder tried to argue that the Treasure Chest was a mingling of commercial activities with personal gripes.
A federal court ruled in favor of Joseph. The facts of the case did not amount to the conduct that the ACPA was meant to address, that is, setting up a business whose sole purpose is to register domain names that closely resemble the names of established businesses, and then attempting to sell the names to those businesses. The fact that Joseph meant to use the Treasure Chest to draw more people to his site to read his story did not convert the site into a commercial undertaking. He took no money either for being listed on the site or for viewing it, and the absence of paid advertising or links to other sites belied any profit motive. The website, especially with its very similar name, was no doubt a source of annoyance to the builder, but it was not a source of damages under the ACPA.

IRS GETS TOUGH ON ESTATE TAX FRAUD

Prosecutions for filing a false Form 706, the federal estate tax return, have been rare. Recently, a federal prosecutor announced a guilty plea by an individual charged with estate tax fraud. The guilty plea may well be a harbinger of a new "get tough" policy by the IRS in an area that up until now has not had a reputation for vigorous criminal enforcement.

The defendant in this case was the executor of her mother's estate. She admitted that she intentionally filed a Form 706 that omitted assets worth about $400,000 that should have been included in the estate. The executor could face a term of imprisonment, followed by a term of supervised release, and a large fine.

Individuals who stand to be affected by the new emphasis from the IRS on using a carrot and a stick include executors, tax return preparers, and essentially anyone responsible for the completeness and accuracy of an estate tax return. It is important to remember that old income tax returns and other documents that the IRS can obtain in an audit often will allow it to discover assets that have gone unreported. The recently publicized guilty plea by an executor is a not-very-subtle warning by the IRS that estate tax fraud can have consequences beyond dollars and cents.