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Monday, March 30, 2009

Personal Injury & Wrongful Death in Virginia, DC, and Maryland

The lawyers at Gross & Romanick are poised to help you with your personal injury and wrongful death case. We've helped hundreds of Virginians involved in automobile collisions, truck accidents, bike and motorcycle accidents, pedestrians who've been hit by a car and drivers who've hit pedestrians, personal injury, wrongful death, head injuries and other serious injuries.

To find out if we can help you, contact our offices today by emailing law@gross.com or by calling 703-273-1400.

Friday, March 20, 2009

Liquidated Damages

Liquidated Damages is a dollar amount stipulated in a contract which the parties agree is a reasonable estimation of the damages that would be owed to one party in the event of a breach by the other party. Companies often rely on liquidated damages clauses to assure performance of the contract.

Since the amount of damages is often difficult to ascertain when there is a breach, a liquidated damages provision attempts to fix the amount. Even if the parties agree to a liquidated damages clause, the Court will only award the actual damages suffered if they can be ascertained. In theory, the clause also saves litigation time and legal fees.

WHEN VALID: The Commonwealth of Virginia recognizes liquidated damages clauses in contracts as valid under the following conditions: (1) The figure must be a reasonable amount contemplated at the time of contract to be the probable loss to the non-breaching party in the event of a breach; (2) The amount cannot be punishing or punitive damages, grossly in excess of the actual damages; and (3) The damages must not be susceptible of a definite measurement.

The Court examines the conditions at different times of the contracting parties' relationship. When looking at the first and third conditions, the court examines them from the time of the contract. The second is examined at the time of breach.

ACTION ADVICE: In order to improve the likelihood of enforcement of a liquidated damages provision, a contract clause should state that the opposing party waives their right to contest the enforceability of the liquidated damages clause. In Gordonsville Energy v. PEPCO (1999) the Virginia Supreme Court upheld such a waiver of rights provision.

INTERESTING NOTE: Virginia § 6.1-330.63 allows credit card companies to charge any amount of liquidated damages as late fees.

This brief article is only meant to provide a very broad overview and cannot be relied upon as a substitute for legal advise. Contact Gross & Romanick if you need information about your specific situation.

Wednesday, March 18, 2009

Construction Law: Payment Bonds

If your company is a subcontractor or supplier to a government project, you need to understand payment bonds. Some private jobs also utilize payment bonds. The federal statute generally applicable to payment bonds on federal projects is the Miller Act, with state and local statutes termed Little Miller Acts.

Payment Bonds Defined

Payment bonds are required on almost all federal, state and local construction projects. Federal and state laws require these bonds on public projects for the protection of the subcontractors, materialmen and suppliers against insolvent or defaulting contractors and subcontractors. Although no legal requirement exists regarding privately owned construction projects, payment bonds are frequently required by owners and lenders.

The bonding relationship is as follows: The "principal" is the general contractor or the subcontractor whose work is being bonded. The "surety" is usually an insurance company that is standing behind the principal. If the general contractor is the principal, the "obligee" is the owner of the project. If the subcontractor is the principal, the "obligee" is the general contractor. The "claimant" is the subcontractor, materialman or supplier seeking payment from the bond.

Who is Covered, and What is Covered

Payments bonds posted by a general contractor will always cover the subcontractors, materialmen and suppliers who have a direct relationship with that general contractor. On public projects, a general contractor may be required to have its subcontractors post payment bonds; in such a case, sub-subcontractors, materialmen and suppliers to those subcontracts will then be covered by the bonds of those subcontracts. In addition, on both public and private projects, the terms of a payment bond itself might extend coverage to include suppliers and materialmen who would not generally be covered.

The terms of a payment bond along with any applicable statutes define the extent of the bond's coverage. The typical payment bond coverage is for labor and materials furnished for use on contract projects. Numerous factors are considered by the courts in determining coverage, including the relationship of the parties, the nature of the product or labor provided and the cost of the work or materials relative to the overall project. Such an analysis is complex.

Notice Requirements

Notice of a bond claim to the principal and surety needs to be done within prescribed time limitations in order to pursue a claim. The terms of the payment bonds on both public and private projects typically contain strict time requirements for giving notice, as well as time limitations on when suit must be filed. Furthermore, federal, state and municipal statutes will set strict time deadlines.

For state projects in Virginia, the applicable statute is Virginia Code Section 11-60B. This section bars suits or actions under certain circumstances on a payment bond unless the claimant had given written notice to the principal and surety within 180 days after it performed the last of the work or labor or furnished the last of the materials for which the claim was made.

Summary

Before you begin a job, get a copy of the bond that covers the project in order to determine whether you are covered and how to enforce your rights. Notices of your claim must exactly track the bond and applicable statutes. Legal enforcement is never simple, since the principals and sureties typically assert every available defense.

This brief article is only meant to provide a very broad overview of the complex area involving payment bonds and cannot be relied upon as a substitute for legal advise. Contact Gross & Romanick directly if you need information about your specific situation.

Monday, March 2, 2009

Cyberbullying: A Destructive Computer Activity

The latest “trend” in destructive computer activity does not appear to be hacking or phishing (although statistics indicate that these behaviors are on the rise); but rather, the often overlooked (although occasionally sensationalized) issue of cyber-bullying.

In the summer of 2008, a 49 year old mother in Los Angeles was indicted on charges of conspiracy and unauthorized access to a computer for assisting her daughter manufacture a phony profile of a 16 year old boy on the popular social networking site MySpace. The purpose of the profile was to harass and humiliate one of the daughter’s former classmates by engaging in a flirtatious online relationship with the classmate, and then psychologically abusing the 14 year old classmate by rejecting her. Unfortunately, the classmate took the rejection much harder than anybody anticipated and ended up hanging herself in her bedroom closet. In November of 2008, the mother was convicted of three misdemeanor counts of illegally accessing computers by violating the MySpace terms of service. More recently, Australia has experienced what is being termed an “epidemic” of cyber-bullying as 10 teenagers have killed themselves after being bullied by people online, primarily at social networking sites like MySpace and Facebook. The issue has become so prevalent that the school board in Bozeman, Montana is looking into adding cyber-bulling to its list of anti-bullying policy.

VIRGINIA COMPUTER CRIMES ACT

Virginia has enacted a Computer Crimes Act which contains specific laws that that prohibit causing physical injury to another through the use of a computer or computer network. See, e.g., Va. Code § 18.2-152.7. In addition, Virginia has statutes that create a civil action for violations of the Computer Crimes Act. See, e.g., Va. Code § 18.2-152.12. Moreover, the settlement of the civil cases related to the Virginia Tech massacre indicates that schools may have an obligation to ensure the safety of their students, at least when the students are on school property. It seems that the short lesson from all of these tragic stories is that the legal system does have a role to play in addressing the growing problem of cyber-bullying.

There are potential civil and criminal remedies available for the victims of a “cyber-bully”, which means that there are serious consequences for engaging in “cyber-bullying”. The internet is no longer anonymous and, as seen in the MySpace case, violations of terms of service agreements can result in criminal liability. These types of situations are rife with cutting-edge legal theories; so if you want to ensure that your rights are protected, you need a law firm that has extensive experience handling criminal charges and personal injury claims. The law firm needs to be on the cutting-edge of the intersection of law and technology.

LEGAL ASSISTANCE

The attorneys at Gross & Romanick, P.C. are experienced in the criminal defense of cybercrimes such as hacking, cracking, phreaking, phishing, pornography and spamming. The firm’s attorneys understand the law and also understand the technology. The firm also can assert the victim’s rights in a civil suit for damages. Cyber-bullying has real victims that feel the effects outside of cyberspace and it is imperative that victims seeking to recover damages have a lawyer that understands the intersection of law and technology. Call us today at (703) 273-1400 or visit our website at www.gross.com.

© 2009, Gross & Romanick, P.C.

Accelerated Rent: Dead or Alive

Can businesses negotiate uncertain damages?

In tenBraak v. Waffle Shops, the Fourth Circuit Court of Appeals upheld the proposition that commercial leases could provide for the recovery of future rents even though such recovery was not available under the common law. It seemed the attitude of the court was to permit businesses to negotiate their respective default rights. After all, the actual losses to the landlord when the default takes place are very difficult to determine, and the landlord should not have to spend a lot of money litigating damages when the parties have agreed to a formula. When the Virginia Supreme Court addressed several cases involving acceleration provisions in commercial leases, they upheld by implication the principle that these clauses were enforceable. Unfortunately, no case on appeal has clearly and unequivocally found that these clauses can be enforced, even if the amount required to be paid would exceed the actual damages suffered by the Landlord.

Are acceleration damages a penalty?

In the Fairfax County Circuit Court case of Teachers Retirement Sys. v. American Title Guar., Judge Thomas S. Kenny struck down an acceleration clause as unenforceable because "it calls for damages in excess of Plaintiff's actual damages." Judge Kenny under the facts of the case deemed the acceleration sums sought to be a "potential windfall" and an "unenforceable penalty." Judge Kenny indicated that the landlord's actual damages was the difference between the amount that should have been paid by the tenant and the amount of rent actually collected if the premises is relet, plus cost associated with reletting. However, the lease was so poorly drafted that Judge Kenny declined to rewrite the lease in order to provide some amount for future losses caused by the default. Thus, the landlord received no award for future damages.

Practical Advice

Mandatory acceleration provisions or damages grossly in excess of actual losses will be problematic. The remedies portion of the Lease needs to be carefully crafted to permit the landlord several options in the event of default. If the losses will be uncertain and difficult to ascertain, then the entire lease should support the proposition that an advance stipulation of damages is needed. The Lease could contain a provision which requires an independent appraiser to set the amount of damages, whose decision would be difficult to dispute.

When attempting to obtain a judgment after default, the landlord should calculate realistic actual and projected losses. If such a calculation is not possible, it may be better to utilize Virginia Code §8.01-128 which permits a landlord to evict a tenant without losing the right to recover for any later deficiency in rent after making an effort to minimize the damages by renting to another tenant; under this statute a landlord can come back to court for later judgments as the damages accrue.

Final Advice

The above is not meant to replace legal counsel. Have a Landlord/Tenant lawyer draft or review all commercial leases. To speak to an attorney, please contact Gross & Romanick directly by calling 703-273-1400 or filling out their online form.