FAIRFAX LAWYERS KEEP YOU UPDATED ON DC METRO LAWS

A SERVICE OF GROSS & ROMANICK, PC

Friday, February 27, 2009

Employee Severance Agreements - Legal Analysis

In today’s weakened and uncertain economic climate, the sad truth is that many employers are being forced to release members of their work staff, and many employees are facing the loss of their jobs. It is the practice of many employers to present recently dismissed employees with severance packages, conditioning the receipt of any severance benefits on the execution of a severance agreement and release. These agreements require careful legal analysis on both ends – from the perspective of the former employee, and from the perspective of the employer.

EMPLOYEE

If you are an individual that has been given a severance agreement by your employer, it is imperative that you have an attorney review the agreement before you sign. These agreements (whatever they may be called) typically require an individual to waive and release many of his/her rights, including but not limited to the following:

1. The right to file a lawsuit against the employer in the future;
2. The right to seek employment with the employer and its affiliates in the future;
3. The right to seek employment with businesses that are competitive with the employer in the future;
4. The right to ownership of materials and information created by the employee while employed by the employer; and
5. The right to disclose information regarding the employer.

The above-stated list is not exclusive, and severance agreements can vary dramatically from employer to employer. However, these agreements almost always involve the release of very significant rights, which may have major implications on your ability to gain future employment. An attorney can assess your situation and advise you (1) as to what claims you may have against your employer; (2) as to whether the severance agreement complies with the law; (3) as to the rights you will release by signing the agreement (and the implications of such release on your future employment). An experienced law firm can assist you in negotiating a more favorable agreement with your employer. Many employers are sympathetic to their dismissed employees, and are willing to negotiate the terms of these severance agreements.

EMPLOYER

If you are an employer that would like to present a severance agreement to an employee, it is important that you have an attorney draft or review the agreement to make sure that it is enforceable. In order for restrictive covenants such as non-compete, non-disclosure, and non-solicitation provisions to be enforceable, they have to be carefully tailored in light of the jurisdiction’s applicable law. More importantly, for releases of legal claims to be enforceable, they have to contain certain language required by state and federal law. The failure to carefully draft the provisions of your severance agreement can result in your company having an unenforceable document.
***
If you are an employee in need of an attorney to review and advise on your severance agreement, or if you are an employer in need of an attorney to draft or review your severance agreement, the attorneys at Gross & Romanick PC are ready to assist you. Our attorneys have extensive experience in employment contract preparation, review, and negotiation. They can carefully explain the implications of the agreement in light of applicable law, and can help you to ensure that the agreement is protective of your interests. Call us today at 703-273-1400 or visit the website at www.gross.com.

© 2009, Gross & Romanick, P.C.

Wednesday, February 25, 2009

Federal Privacy Policy: Does the Gramm-Leach-Bliley Act (The GLB ACT) affect the operations of your company?

The GLB Act seeks to protect disclosure of non-public personal information about individuals to non-affiliated third parties. Such information includes names, addresses, dates of birth, social security numbers, etc. If the GLB Act applies, your company is required to give notice of its privacy policy, by July 1, 2001, to customers who have provided individual non-public personal information. In addition, your company is required to annually provide notice of its privacy policy to these customers. The GLB Act is intended to apply to banks, thrifts, credit unions and other "Financial Institutions". The term "Financial Institutions" is very broadly defined under the act. The broad definition of "Financial Institutions" may result in the GLB Act applying to your business. "Financial Institutions" under the GLB Act include those companies that are deemed to be a "lender".

DOES THE GLB ACT APPLY TO YOUR BUSINESS?

Do you regularly obtain non-public personal information about individuals? Do you extend payment terms and charge an interest component? If the answer is yes, then it is quite possible that your company may be defined as a "lender" under the GLB Act. The GLB Act does not specify how often this has to occur before your company will be deemed a lender. If you do so on rare occasions, you are probably not a "lender" subject to the GLB Act. However, if it is a normal part of the business to extend payment terms and charge interest, you may be deemed a lending institution subject to the GLB Act. The GLB Act is unlikely to apply to a situation where the interest is only charged upon the event of a default of the payment terms. However, the closer an agreement looks to be a loan of any kind, the more likely it is that the GLB Act applies to the information obtained in the transaction.

WHAT SHOULD YOUR COMPANY DO?

Even if you do not disclose to third parties the nonpublic personal information you obtain from customers, the safest route is to establish a Privacy Policy and provide a copy of it to your customers by July 1, 2001 and annually thereafter. Whether you actually fall under the Act or not, you can establish a privacy policy, prepare a Federal Privacy Disclosure Form, and send a copy of it to all of your customers. You may be able to utilize it as a marketing tool. The privacy policy will need to advise your customers of their right to "Opt Out" of your disclosure of information to third parties. Please contact us if we can help you create and effectuate a proper Privacy Policy to comply with the GLB Act.

Monday, February 23, 2009

Chapter 11 Bankruptcy - Creditors Don't Give Up Hope

A long time purchaser of your inventory has just filed bankruptcy under Chapter 11 of the Bankruptcy Code while still owing you a large sum of money. A creditor's initial reaction is often despair. They believe that it is the end of the world and that they will be lucky to recover a few cents on the dollar. Do not despair! There is some hope for recovery of your money.

Plan of Reorganization

In a Chapter 11 bankruptcy, the debtor's goal is to reorganize and reemerge as a functioning entity. This goal is accomplished by developing a business plan, which must be approved by the bankruptcy court.

A Chapter 11 bankruptcy may be beneficial to both debtors and creditors. Debtors benefit because they continue to operate their businesses while creditors cannot seize their assets. Creditors benefit because there is the possibility for recovering the debt owed and because long standing business relations can be continued. The theory behind allowing debtors to remain in possession of operations is that current management is familiar with the business dealings and is best equipped to restore it to viability.

The Automatic Stay

Debtors also benefit from the "Automatic Stay in Bankruptcy". The Automatic Stay is immediately effective, and operates to prohibit actions against property of the debtor's estate. It provides the debtor with breathing space to allow it to formulate how best to pay off its creditors and reorganize its affairs.

Debtors are also provided with additional benefits under Chapter 11 of the bankruptcy code. Under certain circumstances, debtors may sell property free and clear of liens. In addition, when appropriate, the debtor in possession may assume, reject or assign executory contracts or unexpired leases, even if the terms of the contract do not permit it. Nevertheless, creditors may be surprised to discover that the Automatic Stay not only assists the debtor, but can also serve to protect a creditor. By staying all actions against property of the debtor's estate, the assets of the debtor can be preserved and a single creditor cannot deplete all of the debtor's assets to the detriment of other creditors. The Stay allows for orderly distribution of assets to creditors and/or time for the debtor to formulate a plan to treat all of its creditors fairly.

Creditors may also obtain relief from the Automatic Stay upon a showing of cause warranting such relief, such as the proof of a lack of adequate protection for creditors or failure to pay post-filing obligations on contracts and leases. Property with no equity and that is not necessary for an effective reorganization may be subject to relief from the Stay.

Benefit to Creditors

Creditors can also benefit from a Chapter 11 reorganization if the debtor is able to reemerge as a functioning entity. A Chapter 11 reorganization plan may lead to payment of the debt. While the payment may not be immediate or in full, it is often more than what would have been received in a Chapter 7 liquidation.

Finally, creditors will have an element of control over the debtor. Upon the filing of a Chapter 11, the debtor provides the court with schedules listing all of its assets and liabilities. These schedules inform the creditor as to where all of the debtor's assets are located and what priority will apply to the creditor. The creditor can therefore monitor the debtor's reorganization and assert some control over the debtor's actions. In short, a creditor will discover that the filing of a Chapter 11 bankruptcy is not necessarily the end of the world and that the creditor as well as the debtor can actually benefit.

***

The above is not meant to replace legal counsel. To speak to one of the attorneys at Gross & Romanick, please contact the firm directly by emailing calling 703-273-2520 or emailing law@gross.com.

Recent Computer Crime Legislation

On September 26, 2008, President George W. Bush signed the Identity Theft Enforcement and Restitution Act of 2007 (“ITERA”) into law*. The ITERA targets identity theft, phishing and spam. The Act also eliminates the need to experience economic damages before the federal government can prosecute individuals for hacking and other cybercrimes.

A December survey, conducted by the Ponemon Institute discovered that 92% of responding organizations had fallen victim to some form of cybercrime. In 2007, the Federal Trade Commission reported 221,226 Internet-related fraud complaints. As a result of the new legislation, the Department of Justice is devoting significant resources to the prosecution of computer crime. A February 2009 Article in the ABA Journal quotes John Lynch, a deputy chief in the computer crime and intellectual property division of the DOJ as saying: “The Department of Justice can call on more than 200 assistant U.S. attorneys trained to work on computer crime.”

With the DOJ expanding its prosecution of computer crime, companies and individuals who are victims of computer crime may be able to get more assistance from the DOJ than in the past. It is anticipated that the DOJ will more actively pursue all manner of computer crimes than in years past. If you are the victim of a computer crime or are charged with a technology related crime, it is now more important than ever that you retain a law firm that understands computers, the issues surrounding new technology and this rapidly changing area of law.

Within the past month, Senator Cornyn and Representative Smith have proposed new legislation that would require Internet Service Providers to store information about every user and keep the data for a period of at least two years. The language of the proposed statute is exceedingly broad and, according to the February 20, 2009 issue of PC World Magazine would apply even to owners of home wireless routers. In addition, the proposed Internet Safety Act would impose stiffer penalties for activities related to child pornography.

Computer crimes against companies are often perpetrated by disgruntled former employees or youthful hackers. These hackers often gain access through unprotected internet ports discovered during a port scan, packet sniffing software or the installation of Trojan horse programs. In other cases, malware may be installed on company systems to intentionally cause damage or to access credit information or secure data.

From being one of the first law firms to have a website to now utilizing the latest technologies, the attorneys and staff of Gross & Romanick, P.C work hard to ensure that they continue to use and understand the newest issues surrounding technology. In fact, one of our attorneys teaches courses in Computer Ethics at George Mason University. Handling a case that involves computers requires retaining a law firm that understands computers and the applicable laws. Gross & Romanick, P.C. has remained at the forefront of the intersection of law and technology since its founding in 1980.



*As an aside, the ITERA was actually not passed by Congress as separate and distinct legislation. The relevant provisions of the ITERA were grafted onto the Former Vice President Protection Act of 2008 after the ITERA twice failed to pass in the House of Representatives. The Former Vice President Protection Act of 2008 was designed to provide former Vice Presidents and their families with Secret Service protection for 6 months after they leave office.



© 2009, Gross & Romanick, P.C.

Monday, February 16, 2009

Business Owner and Landlord's Liability for Criminal Assaults: How Adequate is Your Security?

A sales clerk abducted from a Northern Virginia shopping mall obtained a $360,000 settlement from the owners and operators because a former mall employee sodomized her, attempted to rape her and threatened to kill her. Yet, a woman who was attacked in a parking lot after attending a dinner theater had her favorable verdict reversed on appeal to the Virginia Supreme Court. What is the difference between these two cases? Apparently, the main distinction was that 170 crimes had occurred at the mall in the past four years, while the dinner theater had only two prior isolated acts of violence.

Duty to Foresee Imminent Danger

In the dinner theatre case (Wright v. Webb) the Court held that an owner did not have a duty to foresee acts of criminal violence and that two acts are insufficient to "lead a reasonable person ... to conclude that there was an imminent danger of criminal assault which required the invitor to take action to protect Webb." The mall which settled for $360,000 had numerous acts of violence, but hired only had one security guard to monitor the mall's interior.

Changes in Premise Liability Article

The Webb case would have a very different result if the business was the type that either "attracts" or "provides a climate" for assaultive crimes. But, what this standard means is difficult to define. Thus, a 24 hour Hardee's located in a bad neighborhood and catering to a "club crowd", which possesses guns and drugs, was not sufficient to prove that the business established a "climate" for criminal activity. On the other hand a car wash was held liable for maintaining a nuisance because of the behavior of its patrons who used and sold narcotics, consumed alcohol, littered and played loud music. Thus, we can assume that a criminal act committed by a patron of the car wash might result in liability to the owner. Nevertheless, even if the premises is permeated with criminal behavior, maintaining adequate security may still overcome liability for criminal acts against patrons.

Inadequate Security

A 1992 study indicates the average jury verdict in an inadequate security case is $3.35 million, with an average out of court settlement of $545,800. In a recent Texas case a jury awarded $17 million to a residential tenant who was raped by an intruder who had broken into the management offices and stole the woman's unit key. The victim had requested a deadbolt lock from the inside but the management company refused because the lease prohibited measures that would make the unit inaccessible to the management company, a policy which violated state law. In addition, the keys were stolen the day before the actual crime and no preventative action was taken; thus, it was foreseeable that there was danger of an imminent crime.

If a case goes to trial, the plaintiff will hire an expert who will identify the reasonable and appropriate preventative security measures which should have been taken by the owner. This same type of expert should be hired by an owner before a crime occurs in order to establish a security plan. Follow the plan, because a deviation can be used against the owner. Indiscriminate notation of problems by security personnel must be avoided; another recent large settlement resulted from the mall's personnel categorizing some teenage assaults as sexually related, as well as overdocumentation and exaggeration of many petty problems which occurred at the mall. Furthermore, failure to warn tenants of crimes that have been committed on the property and false assurances about security measures are cited as reasons for lawsuits.

In a case involving imminent danger of criminal assault, the Virginia Supreme Court reversed a judge who threw out a premises liability case. The case involved a restaurant which was sued for permitting a patron who was threatening a customer to return to the restaurant after he was initially escorted outside. Because this patron later assaulted the same customer upon reentry, the Court found sufficient evidence that the restaurant might have had notice that the assailant was likely to commit an assault o n a customer.

Standard of Care

Violation of federal, state, county and other municipal statutes, ordinances and regulations can be used by a plaintiff to establish negligence per se. The Residential Landlord Tenant Act authorizes localities to require charley bars, secondary locks on sliding glass doors and special locks on windows. Many municipalities have passed lighting requirements for parking lots, parking garages, common areas and other specific places. Virginia Code Section 9-183, et.seq. establishes licensing requirements for security guards. Follow these requirements.

The American National Standard Institute (ANSI) and other industry standards can help determine the specifications that should be followed. A focus on actual practices of comparable entities assists in discovering a standard of care. By surveying competitors an owner knows where closed circuit television cameras are normally used or how fire escape access is limited.

Conclusion

Do a realistic assessment of the likelihood of a crime being committed against your tenant or customer. Based upon that assessment, structure and follow a security plan which may include more security guards and structural solutions. Finally, do not violate any building codes designed to promote safety!

Wednesday, February 11, 2009

THE TRIALS AND TRIBULATIONS OF PURCHASING FORECLOSED PROPERTY

The news headlines are hard to miss and the statistics are staggering. Nearly one of every 200 homes will enter into foreclosure in 2009. As recently as December, 2008, fully 1% of all homes in Loudoun County were in the foreclosure process. Fairfax County courts are so overwhelmed by evictions due to bankruptcy that a special docket has been set up just to deal with these evictions. The potential upside to downturn in the housing market is that there is a large selection of quality properties available for “below-market” value. However, there may be significant legal hurdles before you can take possession of a foreclosed property.

If the property is already vacant when you purchase it, make sure that the bank’s foreclosure deed is valid and you can immediately take possession. Do not just assume that the bank and your settlement attorney went through the proper procedures. Before you pay a large sum of money: (1) check to ensure that the owner did not file for bankruptcy protection before the foreclosure deed was issued; (2) make sure that some court did not enjoin the foreclosure before the bank obtained the foreclosure deed; and (3) review the deed to be sure that it correctly names all parties (grantor and grantee) and recites the proper language. You may want to engage a lawyer to be sure that you will get clear title to the property before paying the bank.

If the property is not vacant, then you have to go through the process of evicting the current occupant. In some cases eviction can be a difficult process. A former owner or tenant may refuse to leave, forcing you file an Unlawful Detainer action and to obtain a Writ of Possession from the court so that the sheriff can perform an eviction. Many courts are overwhelmed by the sheer volume of requests for Writs of Possession, but the sheriff’s office is also backlogged with evictions. Even if you manage to wait out the court system and obtain a Writ of Possession from the court and have an eviction scheduled with the sheriff, the current occupant could obtain a stay order from a bankruptcy court. The sheriff’s office will not evict an occupant that is in bankruptcy without an order authorizing the eviction from the Bankruptcy Court. By the time you are able to get into Bankruptcy Court, the Writ of Possession entered by the General District Court may have expired, in which case, you have to restart the process. A clever former owner may then file an action in Circuit Court seeking an injunction or could appeal the order of the General District Court granting the Writ of Possession.

In other words, simply because you have purchased a foreclosed property from a bank, does not mean that you will take immediate possession of your property. If you are planning to purchase a foreclosed property or have already purchased a foreclosed property, you should speak with an attorney to ensure that you will get clear title and that you will be able to occupy your property immediately after purchase.

Monday, February 9, 2009

LANDLORD HELD LIABLE FOR ROOF LEAK DAMAGES

Virginia Supreme Court Update

In a case coming out of Fairfax County, the Virginia Supreme Court decided on January 16, 2009 that a landlord was liable for a tenant’s losses arising from a roof leak even though the landlord had no notice of the defect. The Virginia Supreme Court, in the case of Landmark HHH, LLC v. Park, held that the lease’s requirement that the landlord keep the roof in good repair imposed an affirmative duty on the landlord to maintain a “serviceable, leak-free roof”.

The landlord in the case, Landmark HHH, LLC, owned retail space located in the Plaza at Landmark. The tenant intended to operate a clothing store in the leased space, specializing in high-end imported men’s suits and related accessories. After various complaints about the roof leaking from the tenant and other occupants of the building, the landlord undertook to replace the entire roof of the shopping center and hired a consulting company to design and monitor the installation of the new roof. The new roof continued to leak and the landlord notified the installation company and the consulting company, which took corrective action, but intermittent leaks continued. One morning, after record rainfall, the tenant arrived at their premises and noticed an “unbearable stench” and damage to inventory that eventually required the tenant to shut down.

The trial court held that despite the fact that the landlord did not have sufficient notice that the newly installed roof would fail, the failure of the roof constituted a breach of the landlord’s obligations under the lease. The Virginia Supreme Court affirmed this position and went even further, holding that because the roof was under the exclusive control of the landlord, the landlord had the sole responsibility to ensure that the new roof would function despite the notice requirement in the lease.

The Supreme Court did, however, leave one bright spot for landlords, stating that the landlord could have exempted itself from liability by disclaiming liability for losses sustained by tenants as the result of “the common hazards to which the property would be subject.”

Advice to Landlords: Include language in your leases which disclaims liability for “common hazards.” Do not rely exclusively upon the notice provisions in your lease. Maintain roofs and other common areas where damage may occur.

Advice to Tenants: Include language in your lease specifically obligating your landlord to fix the roof and other common areas. Provide your landlord with prompt notice of any problems that you discover.

As an experienced landlord/tenant law firm, the law firm of Gross & Romanick, P.C. can assist both landlords and tenants in a wide variety of legal issues, including drafting your lease, litigation and general business issues.

Saturday, February 7, 2009

RESTRUCTURING LEASES IN TOUGH TIMES

The United States economy has been in a recession since December 2007; foreclosures are rampant; the stock market has tanked; and businesses across America have experienced a dramatic slowdown. The financial markets are in chaos and most businesses are having extreme difficulty getting credit from banks and financial companies as a result of the lending crisis. As a result there is a desperate need on the part of businesses to solve their cash flow problems with non-traditional solutions. One such alternative that is happening across the country is the restructuring of leases.
Lease restructures are not a novel concept. Historically they have been utilized in times of expansion such as the 1980s. But more often they occur in times of trouble like we are experiencing today. Lease restructures became popular during the Great Depression of the 1930s and again during the recession of the 1990s. When the current leasing market rates are out of synch with the existing rent rolls as they are today, the restructuring solution becomes viable.
The lease restructure solution provides benefits to both landlords and tenants in tough economic times. The benefits to the tenant may seem more obvious: lower rents; reduced space; more favorable terms and conditions; landlord paid improvements; and, the deferral of rent and lower expenses to free up cash flow to get the company through the tough times. Less obvious are the benefits to the landlord: avoiding loss of a tenant and complete loss of revenue; avoiding the costs associated with re-leasing and retrofitting such as spending on improvements and commissions; generating sufficient cash flow to avoid foreclosure; avoidance of tax recapture problems; and the enhancement of the Property’s image.
Since 1980, the lawyers at Gross & Romanick, P.C. have with written, negotiated and edited Leases, Lease Amendments and Addenda for clients throughout the United States. During the past year the law firm has been actively involved in assisting with the restructuring of leases for both landlords and tenants. It is critical to the success of a lease restructure that the document memorializing the agreement be carefully and properly drafted to accomplish the goals of both parties. The lawyer can help determine whether the document(s) should be an amendment or modification to the existing lease or a completely new lease with supporting documentation such as promissory notes.
Whether you are a landlord or a tenant, each side must recognize each other’s position and the reasons why a lease restructure may or may not make sense. The goal of a lease restructure is to accomplish a mutual benefit. The attorneys at Gross & Romanick, P.C. will help you identify the critical issues so that a restructure, if appropriate and feasible, is a win-win for everyone in these tough economic times.


Gross & Romanick, P.C. is now accepting collection cases.

Landlords! Is someone occupying your premises without paying rent? Gross & Romanick, P.C. can help you evict your bad tenants. Contact Us if you need assistance regaining possession of your Premises.

Tenants! Cash Flow problems? Rent out of proportion with the market rate? Need to Downsize? Gross & Romanick, P.C. can negotiate a Lease Restructure with your Landlord. Call us today at (703) 273-1400 or visit our website: www.gross.com.

Tuesday, February 3, 2009

What should I do if I am involved in a car accident?

Gross & Romanick recommends that you take the following steps:

1. Immediately call for medical assistance if any party to the accident, including yourself or any passengers in your vehicle, is injured. If you believe you may be injured, do not tell the other parties to the accident, the police, or any other responding parties that you are “fine” or “okay”, and do not refuse medical assistance if offered. These actions may later be used against you should you assert a claim for injuries that you actually suffered.

2. Exchange insurance information with all parties involved in the accident. Be sure to obtain the following information from each driver:

- The name of the driver;
- The name of the driver’s insurance company;
- The driver’s insurance policy number; and
- The name and phone number of the driver’s insurance agent.

3. Obtain the following information about each vehicle involved in the accident:

- The name of the owner of the vehicle;
- The license plate number of the vehicle; and
- The year, make and model of the vehicle.

4. Obtain the names, phone numbers and addresses of all passengers in the vehicles involved in the accident.

5. Obtain the names, phone numbers and addresses of all pedestrians involved in the accident and all other witnesses to the accident.

6. If possible, take pictures of the scene of the accident and the surrounding area.

7. If your vehicle is towed from the accident site, obtain the name of the towing company, its location and its phone number.

8. If police officers respond to the scene, obtain each officer’s business card, badge number and the accident report number.

9. In speaking with the other parties to the accident, witnesses, and the police, do not volunteer that the accident was your fault. You may be wrong, and this admission can later be used against you.

10. Contact your insurance carrier as soon as possible and obtain a claim number. Your carrier will begin an investigation into the accident, and you are required by your policy to cooperate with your carrier. However, if your insurance company would like a recorded statement, and you are unclear about your rights with respect to the accident or intend to hire a lawyer, you should inform them that you would first like to speak to an attorney.

11. If necessary, follow your carrier’s instructions with respect to repairing the damage to your vehicle.

12. Under no circumstances should you discuss the accident with the other parties to the accident, their insurance carriers, or any private investigators. If you are contacted by the insurance carrier of another party to the accident, you have no obligation to speak with them, and you should not do so without first consulting an attorney.

13. If you are in legitimate need of medical attention in the hours or days following the car accident, see a doctor or visit the emergency room.

14. If you have been injured, you should contact a lawyer, as it is important that you fully understand your rights and responsibilities with respect to the accident, and do not make any mistakes that can jeopardize your claim.

If you are in need of a lawyer, the experienced attorneys and staff at Gross & Romanick can clearly explain to you the claim process, can help you prepare, organize and file your claim, and can skillfully negotiate your claim to a favorable outcome. If necessary, the attorneys at Gross & Romanick are fully prepared to file a lawsuit and advocate your claim in Court.