Collecting A Corporate Debt From A Director/Officer

Many Virginia corporations fail to file their annual reports, pay the annual registration fee or maintain a registered office, causing the State Corporation Commission to terminate the corporation. After such termination directors, officers and agents, acting on behalf of the corporation may be held personally liable for the acts of the corporation. Unlike the Delaware statute, Virginia Code §13.1-754 provides for personal liability during the termination period, even if the corporation is later reinstated.

ADVICE: Do not assume that a corporation is valid! Check with the State Corporation Commission. Holding owners of a corporation liable for its debts can be difficult but not impossible. If you are an officer or director of a corporation, you may want to check the status of the corporation, so you are not exposed.

Contact Gross & Romanick's Business Law division for more information or to speak with legal counsel.

Another Happy Traffic Court Client

We just received a letter from another happy client thanking us for our services. We thought we’d share it with you. The client was involved in a traffic case in Virginia.

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Mr Dean/ Mr Romanick

Thank you for your representation. I have dealt with many attorneys in the past for a variety of reasons, and I would just like to thank you for your professionalism and what appeared to be an honest concern for your client. If I need any legal services in the future I will contact your firm.

For legal counsel for traffic offenses like DWI/DU, Reckless Driving, Driving on Suspended or Revoked License, Driving without a License, Speeding, Hit and Run, Traffic Violations Involving an Accident, and Habitual Offender Violation contact Gross & Romanick today.

Negotiate the Insurance Maze

You don't have to know much about auto insurance to know that you should resist the temptation to give in to the adjuster's persuasive offer, "If you'll just sign this release, I'll see that you get paid right away." All too often, though, the injured person may have no better understanding of what insurance coverage is actually available to him than he has of why his neck or his lower back hurts. Frequently the victim of an automobile collision needs as much help in understanding his own insurance policy as he does in knowing what he may recover from the driver at fault.

This is where a good lawyer, who is highly knowledgeable about the workings of insurance, can be most helpful to the chiropractor in leading him and his patient through what has been called "The Insurance Maze." Such an attorney will know where to look for sources of coverage that the policyholder does not know exist (and you can be sure the insurance company isn't going to tell him about them).

The auto insurance policy is a complex contract that provides policyholders with benefits of which they may not be aware. One of these benefits is coverage for medical treatment, which is essential to an accident victim, as well as to the treating doctor. Furthermore, the experienced attorney will try to maximize the client's ultimate recovery by resisting the insurance companies' efforts to recapture payments they have made for treatment. Most people do not realize that in Virginia, under most circumstances, an automobile insurance company may not attempt to recover payments made to an insured after a third-party claim has been paid. In most cases, health insurance benefits are similarly shielded from subrogation.

What about the tendency of some insurers to try to set a cap on payments for medical treatment? The standard definition of medical expense in Virginia auto policies reads in part, "... all reasonable and necessary expenses for medical, hospital, chiropractic [emphasis added], x-ray, professional nursing ... services ... incurred within three years after the date of the accident." Does that mean what it says? You bet! And the accident victim should be able to count on a savvy attorney to fight to get the full insurance benefit to which he is entitled.

Some accident victims know about uninsured motorists coverage that will compensate the insured if the party at fault is uninsured or cannot be located. But, they may not know about Virginia's "underinsured" endorsement, which allows the victim to collect from his own company even though the party at fault may be insured, when the liability limit of the negligent party's policy falls short of his own policy's uninsured motorists coverage.

It is the attorney's ultimate responsibility to locate all sources for compensating his client. The responsible party's insurance may be only one source and often is insufficient. Other potential sources may include policies held by family members, employers and individuals partly responsible for the collision.

If you need help negotiating the insurance maze, contact Gross & Romanick today. One of our attorneys will be more than happy to meet with you to discuss your case.

Common Commercial Landlord/Tenant Questions

As part of Gross & Romanick’s Commercial Landlord practice area, the firm gets a lot of commonly asked questions from both landlords and tenants. Here are the three most commonly asked questions and the firm’s answers. If you’d like legal counsel for your commercial landlord case, please contact the firm immediately for assistance.

QUESTION: Can a landlord just lock the door if a tenant does not pay the rent?

ANSWER: In a commercial landlord/tenant situation, the right of self-help does exist in Virginia. Because there are serious constraints and risks, a self-help eviction should never be attempted without the assistance and approval of an attorney. Some of the constraints include the terms of the lease, breach of peace and bankruptcy.


QUESTION: Can a landlord require payment by the tenant of its attorney's fees, even if a lawsuit is not filed?

ANSWER: The Lease and other written agreements between the landlord and tenant will decide this issue. A very carefully crafted lease provision allowing attorney's fees, even when suit is not filed, must be signed by the tenant. In fact, insufficient attention is being paid to the attorney fee provisions of many leases, causing many landlords to lose these fees when they are forced to file litigation and defend countersuits.


QUESTION: Can a landlord sue for rent at the same time it seeks possession of the premises?

ANSWER: Yes. A landlord, except in very rare circumstances, should include a suit for monetary damages at that same time that it files for eviction. The General District Court, which normally can only enter judgment up to $15,000, can enter a judgment for any amount of money so long as possession of the property is at issue in the same proceeding.

Residential Versus Commercial Tenants

Gross & Romanick publishes a number of articles on their website about their various practice areas: Bankruptcy; Business Law; Commercial Landlord; Construction Law; Litigation; Personal Injury; Technology Law; and Traffic/DWI.

Here’s an article from the Commercial Landlord section:


Residential and Commercial Tenants: Do Not Treat Them the Same!

All leases are not created equal. Commercial leases are generally governed by the specific terms of the lease agreement between landlord and tenant, but Virginia law automatically merges certain statutory terms into every residential lease. The Virginia Residential Landlord Tenant Act gives residential tenants considerably more rights than are afforded to commercial tenants.

Evictions

The differences between residential and commercial leases are most starkly apparent when a landlord attempts to evict a defaulting tenant. Commercial landlords have rights of self-help; they can, under proper circumstances, simply lockout non-paying tenants (as long as this is done with great care - see Edward Gross Report, Spring 1992). Residential landlords, however, have no such remedy. The Virginia Code Section §55.248.36 provides that "Landlord may not refuse to permit tenant access to a unit unless refusal is pursuant to a court order." Furthermore, a residential landlord is also forbidden from denying essential services to his tenant, such water, heat, or electricity, in an effort to force out that tenant. Residential tenant must be served with a 5 day "pay or quit" notice before eviction, but no such notice is required for commercial tenants (we recommend serving notice on both types of tenants).

Duty to Maintain

A commercial landlord has no duty to maintain the premises during the lease term; repairs are the responsibility of the tenant. Of course, both commercial landlords and tenants can, and often do, specifically contract to impose a duty to repair upon the landlord, but no such duty is implied in law. Conversely, the Virginia Residential Landlord Tenant Act imposes a specific affirmative duty on every residential landlord to maintain and repair the premises throughout the term of the lease. A residential landlord must keep all common areas in a clean and safe condition, must maintain all plumbing and heating, sanitary facilities, and any appliances on the premises. A residential landlord also has a general obligation to keep the premises in a "fit and habitable" condition. These duties can be transferred to the tenant, but the transfer must be in writing and done for a "good faith" purpose (something other than just an attempt by the landlord to evade his obligations).

Security Deposits

In commercial settings, the amount and disposition of security deposits are generally governed by provisions of the lease. The lease will spell out for what purposes it can be used by the landlord, and when and how the security deposit is to be returned to the tenant. Residential landlords, on the other hand, must comply with Section §55-248.11 of the Act, which provides detailed procedures and rules governing the use of residential security deposits. Among its provisions, the Act mandates that a residential security deposit cannot exceed more than two month's rent; and the landlord must provide interest at five percent per anum payable to the tenant upon termination of the lease (if the deposit is kept for over thirteen months).

The residential landlord may apply the security deposit only to the payment of accrued rent (with attendant late charges), and to offset damage to the premises caused by the tenant. The landlord must inspect the premises for damage within 72 hours from the time the tenant vacates, and the tenant has a right to be present during the inspection. After making deductions for damage, the landlord must return the remaining portion of the security deposit within thirty days after the termination of the tenancy, along with a written itemization of the damages to which the deposit was applied. If the landlord fails to comply with any of these provisions, the tenant may recover from the landlord the security deposit plus any actual damages and reasonable attorney's fees.

In the Fall, 1991 edition of the Edward Gross Report, an article discussed the possibility of losing a security deposit after foreclosure. In fact, this only applies to commercial tenants because Virginia Code Section §55-248.11 states: "The holder of the Landlord's interest at the time of termination of tenancy regardless of how that interest is acquired or transferred...shall be required to return any security deposit received by the original Landlord."

Overtime & Minimum Pay

Don’t know as much as you should about the Fair Labor Standards Act and how it affects overtime and minimum pay? Read this recent article from the Client Education section of the Gross & Romanick. If you find you need legal representation, don’t hesitate to contact Gross & Romanick’s Business Law Division. We’d be happy to discuss your case with you.


Overtime/Minimum Pay: What You Don't Know Could Be Expensive

You receive a call from a Department of Labor (DOL) investigator who wants to come to your office the next day to review your employee records. Should you panic? Maybe you should!

Very few employers understand the Fair Labor Standards Act (FLSA). Unfortunately, even inadvertent violations of the FLSA will result in an assessment by a DOL investigator, or a lawsuit by a disgruntled employee. Many employers mistakenly believe that proof of fair wages and the satisfaction of employees will succeed as defenses to an investigation or to a lawsuit. Another incorrect myth is that it is ok to the grant comp time in lieu of overtime (CPA's tell themselves this story during the tax season) Although commonly held, these beliefs evidence a fundamental misunderstanding of the purpose of the FLSA, and highlight why so many businesses unintentionally violate it.

History of Act

Adopted in 1938 during the Great Depression, the FLSA was an attempt to maximize the number of workers in the workforce through penalizing employers who work people over 40 hours rather then hiring someone else to work those extra hours. The requirement to pay overtime wages was the incentive. A minimum wage was set in order to provide a livable wage.

Exempt Employees

Most businesses are covered by the FLSA. A few very small retail or service enterprises, not engaged in any interstate commerce may be excluded; even then, some of their employees may still be covered if they engage in interstate commerce or produce goods for interstate commerce. Employers must classify each employee to determine who is exempt and who is covered. In addition, independent contractor status may not be honored by the DOL, which applies "economic reality" and a "right to control" tests along with other common law principles.

The major FLSA exemptions relate to executive and professional employees. Applying the "long test", the DOL will examine in detail the actual duties, responsibilities and obligations of an employee (job title will be ignored). The "short test", also applied by DOL, requires a high minimum salary (cannot be paid hourly). The professional exemption requires: (a) advanced learning at academic institutions (the "learned professions"); or (b) original or creative work, such as artists and inventors; or (c) teachers for schools and educational institutions.

The other exemptions are too numerous to discuss in this article. Perhaps the most common relate to the motor carrier exemption and to outside salespersons. If the employee is subject to regulation by the U.S. Department of Transportation (DOT) then the employee is exempt; DOT's jurisdiction broadly covers transportation of goods and passenger across state lines, as well as the safety of operation of motor vehicles engaged in interstate commerce.

The Investigation

Do not bother to ask the DOL investigator why they are picking on your company because the reason is completely confidential. However, with the shortage of personnel in the investigation department, you can almost assume it is a disgruntled current or former employee, or an industry-wide abuse. There is a real incentive for a former employee to complain, since they can receive the overtime pay assessed for them by the DOL without the expense of a suit, even if they received a very satisfactory wage while employed.

The investigator will inform you of the purpose of the visit and the records to be examined. These records must be made available. Either these records will be scrutinized by the investigator and/or you may be requested to compile summary data. The investigator will generally conduct interviews of employees and may send a questionnaire to past and present employees. The objective of the interviews is to test the adequacy and accuracy of employer records, to determine compliance, to give employees the opportunity to point out other violations and to examine the validity of claimed exemptions. Although these interviews are confidential, do not question or intimidate employees; in fact, it may be best not to discuss the DOL investigation with employees until after their interview.

At the conclusion of the investigation, a conference will be held with the employer. Bring your lawyer to all meetings with the investigator, especially the final conference. At this stage, the investigator will inform the employer of any violations and attempt to obtain an agreement for compliance. The amount of back pay to be paid will go to former and current employees, who were underpaid during the prior 2-year period. The agreement is subject to reasonable negotiation.

Cooperation at all times is the best rule, since the DOL has the power to assess liquidated (double) damages as well as back pay. Furthermore, a finding of a willful violation may result in a three-year assessment for back pay. Future non-compliance may now be considered willful.

Suits by Employees

Employees can sue in federal and state courts for violations of FLSA, or discrimination due to reporting or suing for an FLSA violation. The potential damage award is much harsher than generally imposed by the DOL; and, may include back pay and/or overtime, liquidated damages, prejudgment interest and attorney's fees.

An employee's right to sue ends once the DOL files suit. Additionally, employees who receive compensation from a DOL assessment, sign a release or may be considered to have waived their right to sue after cashing the check. A settlement outside a DOL-supervised settlement may not be valid, so be cautious if you try to make agreements on your own.

Summary

When the DOL investigator calls, do not hang up. If they call you at home, do not worry since live-in domestics do not have to be paid overtime, just minimum wages.

(This article was reviewed for accuracy by Cordelli & Associates, Inc., federal labor law consultants. Phone: 304-754-7294)

Slip & Fall in Virginia: Landlords Should Take Notice

The following is a recent article posted on Gross & Romanick's client education section of their personal injury website.

Virginia is one of the most difficult states in the country in which to win a slip and fall case by an injured party. Nevertheless, a jury recently awarded a Plaintiff $2.5 million against a landlord for a slip and fall. Yet, a previous jury hearing the same case presented by the same attorneys awarded $0. The vagaries of the jury system account for this stark discrepancy, but the ultimate verdict indicates that landlords need to understand their obligations to safeguard the public from injury while on their premises.

Three 1992 Virginia Supreme Court cases prevent most victims of slip & falls from succeeding. A&P Tea Co. v. Rosenberger, establishes that owners of property are not insurers or guarantors of the safety of business invitees. Colonial Stores v. Pulley states that plaintiffs must prove that the owner created the defect which caused the fall or at the very least should have known of the problem. A&P Tea Co. v. Berry instructs judges to dismiss the case if the jury must speculate in order to determine that the owner had notice of the defect.

Thus, in order to recover Plaintiffs must prove that the defendant knew or should have known of the defect which caused the fall. This standard of proof is extremely difficult since many victims do not know why they fell or cannot conclusively prove that the owner or lessor of the property actually knew a problem existed. However, violations of building codes and standards can overcome proof difficulties since many such violations are considered negligence per se with no requirement of notice.

The $2.5 million case was successful because Plaintiff introduced evidence that there was grease or greasy water on the floor of the fast food restaurant. Another case was successful because a leaky roof was not repaired after notification by a tenant. A more complex case succeeded when a succulent plant was shown to be shedding leaves because of improper care by the plant section of the department store, which also failed to sweep the area for 4 1/2 hours. In addition, a slight erosion of the owner's position is taking place regarding slip on ice cases, since the Supreme Court held that merely walking on ice or snow was not an assumption of the risk or contributory negligence.

Despite these and other cases, the landlord in Virginia has the upper hand if proper attention is paid to dangers for which there is actual notice and if proper maintenance schedules are followed.

If you are involved in a slip and fall case in Virginia, you need legal representation. Contact the attorneys at Gross & Romanick today.