In Virginia, the maximum jurisdictional limit of $15,000 in the General District Court does not apply in commercial evictions if possession and money are pursued in the same Unlawful Detainer action. However, two general district judges in Fairfax have ruled differently with regard to whether the jurisdictional limit applies if the lease guarantor is sued in the Unlawful Detainer action. One judge favorably allowed an extension of the jurisdictional limit on damages against a guarantor. Yet, another judge ruled against exceeding the $15,000 jurisdictional limit on essentially the same set of facts.
Despite this conflict in rulings, it is still worthwhile including the guarantor in your Unlawful Detainer action, since you might get the right judge. If you do, you will save a lot of money and time. If you do not, you will have to seek damages against the guarantor in the Circuit Court.
The above is not meant to replace legal counsel. If you'd like to speak to an attorney, contact Gross & Romanick directly by calling 703-273-1400 or by filling out their online information request form.
Wednesday, September 30, 2009
Thursday, September 24, 2009
Do I need a lawyer for a drug related charge?
Yes, you do! All drug charges, whether pending in state or federal court, are criminal in nature. These matters have serious financial and economic implications beyond the fines and costs assessed by the Court. For a large number of men and women, this drug charge is their first experience with the United States legal system. This is a system with complex rules and procedures. An attorney knows how to navigate the law, the rules and the court procedures. An experienced lawyer knows the law, as well as the procedures of the court.
Many drug defenses involve complex and technical issues, sometimes involving constitutional rights. A capable attorney can assess and recognize whether the prosecution can prove its case. A lawyer can advise you regarding viable defenses; help you present defenses that work; and, when appropriate, negotiate a satisfactory plea bargain. An attorney protects your rights and prevents you from being taken advantage of by an overloaded and impersonal legal system. A lawyer is your ally in a complex and often hostile system.
To speak to one of the experienced lawyers at Gross & Romanick call 703-273-1400 or fill out their online Information Request form.
Many drug defenses involve complex and technical issues, sometimes involving constitutional rights. A capable attorney can assess and recognize whether the prosecution can prove its case. A lawyer can advise you regarding viable defenses; help you present defenses that work; and, when appropriate, negotiate a satisfactory plea bargain. An attorney protects your rights and prevents you from being taken advantage of by an overloaded and impersonal legal system. A lawyer is your ally in a complex and often hostile system.
To speak to one of the experienced lawyers at Gross & Romanick call 703-273-1400 or fill out their online Information Request form.
Wednesday, September 23, 2009
The Personal Guaranty
For business owners, a common aspect of doing business is a request by a lender, the landlord or vendors for the owners to personally guarantee the debts and obligations of the company. From the creditor’s perspective, it provides additional assurance that the debt will be paid. From the business owner’s perspective, it may be necessary to close a deal or to obtain financing. However, not all business owners understand the legal significance of the personal guaranty. In many cases, owners are so eager to obtain financing, and so confident that their businesses will succeed, that they ignore the potential repercussions of the guaranty. Owners need to understand that the failure of a business, backed by a personal guaranty, can have a devastating effect on the business owner’s personal assets.
Most personal guaranty agreements are wordy documents with complex legal terminology. In most cases, the “guarantor” is agreeing to be responsible for the entire debt if the business defaults. In some cases, the guarantor may only be responsible if the creditor exhausts all collection remedies against the business first (in such case, the guarantor is called a “guarantor of collectability”). Generally, the creditor can pursue both the business and the guarantor in the same legal action, and obtain a judgment against both as jointly and severally liable, which means the creditor can pursue either party for all or part of the money owed.
If a creditor obtains a judgment against an individual owner based upon the guaranty, the creditor can enforce the judgment against the personal assets of the business owner. Methods for collection include garnishment of bank accounts and income, as well as a forced sale of real and personal property. Depending on the size of the debt, the business owner may have no choice but to seek bankruptcy protection to stop the collection process.
What should a business owner do when asked to sign a personal guaranty?
First, a business owner should fully and carefully read the guaranty and consult with an attorney about the implications and consequences. Second, a business owner should assess the risk of the personal guaranty with consideration to the following factors: (a) the debt involved; (b) the financial strength of the business and likelihood of continued success; (c) the potential impact on the business owner’s personal assets in the event of default by the company; and (d) the titling of the business owner’s principle assets such as the residence and brokerage accounts. Next, a business owner should attempt to avoid, or negotiate more favorable terms for the guaranty, such as a limitation of the guaranty to a maximum dollar amount, or alternative arrangement (i.e. secure the debt against the assets of the business or a letter of credit).
A business owner should never sign the guaranty without considering the consequences on the assumption that it is just a part of doing business.
In another article we will discuss how to protect your personal assets.
Most personal guaranty agreements are wordy documents with complex legal terminology. In most cases, the “guarantor” is agreeing to be responsible for the entire debt if the business defaults. In some cases, the guarantor may only be responsible if the creditor exhausts all collection remedies against the business first (in such case, the guarantor is called a “guarantor of collectability”). Generally, the creditor can pursue both the business and the guarantor in the same legal action, and obtain a judgment against both as jointly and severally liable, which means the creditor can pursue either party for all or part of the money owed.
If a creditor obtains a judgment against an individual owner based upon the guaranty, the creditor can enforce the judgment against the personal assets of the business owner. Methods for collection include garnishment of bank accounts and income, as well as a forced sale of real and personal property. Depending on the size of the debt, the business owner may have no choice but to seek bankruptcy protection to stop the collection process.
What should a business owner do when asked to sign a personal guaranty?
First, a business owner should fully and carefully read the guaranty and consult with an attorney about the implications and consequences. Second, a business owner should assess the risk of the personal guaranty with consideration to the following factors: (a) the debt involved; (b) the financial strength of the business and likelihood of continued success; (c) the potential impact on the business owner’s personal assets in the event of default by the company; and (d) the titling of the business owner’s principle assets such as the residence and brokerage accounts. Next, a business owner should attempt to avoid, or negotiate more favorable terms for the guaranty, such as a limitation of the guaranty to a maximum dollar amount, or alternative arrangement (i.e. secure the debt against the assets of the business or a letter of credit).
A business owner should never sign the guaranty without considering the consequences on the assumption that it is just a part of doing business.
In another article we will discuss how to protect your personal assets.
Should You Cash That Check?
You receive a check for less than the amount owed from a company. The company has stated that they owe you less than you contend is owed. Should you cash the check?
Virginia Law: In the 2002 case of Gelles & Sons General Contracting, Inc. v. Jeffrey Stack Inc., the Virginia Supreme Court for the first time interpreted Virginia Code §8.3A-311 which is a 1992 statute enacted to address the issue of cashing such checks. According to the Supreme Court opinion, the test is whether "a reasonable person" would consider the check to be a tender in full satisfaction of the claim.
Facts of Case: A general contractor ("general") and its subcontractor ("sub") dispute the amount owed by the general to the sub. The general wrote two letters to the sub setting out its position and included a check with the second letter which stated that it represented "final payment". The sub cashed the check but sued for the balance it claimed was due. The trial court found (and the Virginia Supreme Court agreed) that the letter and check was a "drop-dead letter" offer of final payment. By cashing the check, the sub could not sue for any additional sums.
Advice: If there is a question about whether a check is tendered as final payment, look at the correspondence and notations on the check to determine the intent of the maker. Cashing checks may be risky if there is some evidence for an accord and satisfaction.
The above article is not meant to replace legal counsel. If you'd like to speak to one of the attorneys at Gross & Romanick, call (703) 273-1400 or fill out their online Information Request form.
Virginia Law: In the 2002 case of Gelles & Sons General Contracting, Inc. v. Jeffrey Stack Inc., the Virginia Supreme Court for the first time interpreted Virginia Code §8.3A-311 which is a 1992 statute enacted to address the issue of cashing such checks. According to the Supreme Court opinion, the test is whether "a reasonable person" would consider the check to be a tender in full satisfaction of the claim.
Facts of Case: A general contractor ("general") and its subcontractor ("sub") dispute the amount owed by the general to the sub. The general wrote two letters to the sub setting out its position and included a check with the second letter which stated that it represented "final payment". The sub cashed the check but sued for the balance it claimed was due. The trial court found (and the Virginia Supreme Court agreed) that the letter and check was a "drop-dead letter" offer of final payment. By cashing the check, the sub could not sue for any additional sums.
Advice: If there is a question about whether a check is tendered as final payment, look at the correspondence and notations on the check to determine the intent of the maker. Cashing checks may be risky if there is some evidence for an accord and satisfaction.
The above article is not meant to replace legal counsel. If you'd like to speak to one of the attorneys at Gross & Romanick, call (703) 273-1400 or fill out their online Information Request form.
Monday, September 21, 2009
Expungement of Criminal Records
In Virginia, under certain circumstances a person charged with a criminal offense may remove the police and court records relating to the charge. An expungement of an arrest record requires filing of a petition with the Court.
An expungement can only be granted if either: (a) the individual was acquitted of the offense (i.e. found not guilty), (b) the prosecutor requested the court to dismiss the charge, or (c) the charge must have been “otherwise dismissed”. Even if the case was dismissed by the court, an expungement will not be granted if the individual pled guilty to the offense or the Court found there to be sufficient evidence for a finding of guilt.
An expungement will not be granted in cases of a “deferred disposition” in which the court dismissed a charge after an individual completes certain actions within a timeframe set by the Court (i.e. complete community service, attend ASAP class, etc.) if the deferred disposition requires a plea of guilty or the Court finds sufficient evidence for a finding of guilt. A plea of “no contest” may also prevent an expungement.
While the Commonwealth Attorney can agree or object to an expungement, it is granted at the discretion of the Court based upon “good cause” shown. In addition to meeting the criteria for expungement, the Court must also find that the continued existence and possible dissemination of information relating to the charge causes or may cause circumstances which constitute a manifest injustice to the individual. Generally the Court requires that an individual have no prior criminal record similar to the charge that is being expunged.
If an expungement is granted, the record of the arrest will be removed entirely from the records of the Court, the local/county police, and the federal Department of Criminal Justice Services
***The above article is not meant to replace legal counsel. If you'd like to speak to one of the lawyers at Gross & Romanick, please contact us by filling out our online form, emailing law@gross.com, or calling (703) 273-1400.
An expungement can only be granted if either: (a) the individual was acquitted of the offense (i.e. found not guilty), (b) the prosecutor requested the court to dismiss the charge, or (c) the charge must have been “otherwise dismissed”. Even if the case was dismissed by the court, an expungement will not be granted if the individual pled guilty to the offense or the Court found there to be sufficient evidence for a finding of guilt.
An expungement will not be granted in cases of a “deferred disposition” in which the court dismissed a charge after an individual completes certain actions within a timeframe set by the Court (i.e. complete community service, attend ASAP class, etc.) if the deferred disposition requires a plea of guilty or the Court finds sufficient evidence for a finding of guilt. A plea of “no contest” may also prevent an expungement.
While the Commonwealth Attorney can agree or object to an expungement, it is granted at the discretion of the Court based upon “good cause” shown. In addition to meeting the criteria for expungement, the Court must also find that the continued existence and possible dissemination of information relating to the charge causes or may cause circumstances which constitute a manifest injustice to the individual. Generally the Court requires that an individual have no prior criminal record similar to the charge that is being expunged.
If an expungement is granted, the record of the arrest will be removed entirely from the records of the Court, the local/county police, and the federal Department of Criminal Justice Services
***The above article is not meant to replace legal counsel. If you'd like to speak to one of the lawyers at Gross & Romanick, please contact us by filling out our online form, emailing law@gross.com, or calling (703) 273-1400.
Tuesday, September 15, 2009
Happy Clients
Here's a note that a client recently sent to Jeff Romanick of Gross & Romanick.
"Just wanted to personally thank you again for making the best out of my situation today. I couldn’t have asked for a better outcome, especially considering the charges against me. I am forever indebted to you! I wish you nothing but the best in your future legal conquests and cases."
To speak to Jeff Romanick (or any of the attorneys at Gross & Romanick) about your own situation, please contact the firm by calling 703-273-1400 or by filling out their online Information Request Form.
"Just wanted to personally thank you again for making the best out of my situation today. I couldn’t have asked for a better outcome, especially considering the charges against me. I am forever indebted to you! I wish you nothing but the best in your future legal conquests and cases."
To speak to Jeff Romanick (or any of the attorneys at Gross & Romanick) about your own situation, please contact the firm by calling 703-273-1400 or by filling out their online Information Request Form.
Tuesday, September 8, 2009
Pre-Judgment Attachment: Get It Before It Vanishes
Unfortunately, filing a lawsuit to collect a debt is often an encouragement to the debtor to move and conceal assets. This sometimes makes creditors hesitant to take early legal action. But, Virginia law has a solution: the pre-judgment attachment. Virginia law allows a creditor to bring the debtor's property into court custody at the outset of a lawsuit, thereby assuring that the property will be available to satisfy any judgment the court eventually grants.
Virtually any significant asset of a debtor can be subjected to attachment. Although real estate and business equipment are the most popular targets, a creditor can also attach bank accounts or even other monies owed to the debtor by a third party. One useful application of pre-judgment attachment occurs in construction cases, when a sub-contractor attaches payments to an out-of-state general contractor. An interesting case is the attachment of an elephant from a traveling circus; unfortunately, the creditor neglected to compute the cost of feeding the animal before taking this ill-advised action.
To secure a pre-judgment attachment the plaintiff files a sworn petition setting forth the cause of action and the grounds for the attachment. The justifications for attachment must fall within one or more of the categories allowed by Virginia Code Section 8.01-534. If the petition is approved by a judge, the creditor must post a bond of twice the amount of the claim. Upon posting of the bond a warrant will be issued ordering the sheriff to seize the property and bring it into the custody of the court. Generally, the debtor will request a hearing within twenty-one (21) days of the seizure at which time the court will determine whether the property will be released or remain in custody until the lawsuit is completed. Many attachments are dismissed at that hearing because of failure to comply with the technical requirements of Virginia attachment procedure.
Pre-judgment attachments do involve certain risks to the creditor. The bond is posted in order to compensate debtors for the improper seizure of their assets. Therefore, creditors should not use attachments for questionable claims. Nevertheless, the judicious utilization of this legal tool can be the difference between an empty judgment and a collected judgment.
Grounds for Attachment:
In summary form, it is sufficient grounds for attachment that the defendant:
Is a nonresident corporation or individual, which has assets or debts owed to it in Virginia
Is removing or about to remove out of the Commonwealth with intent to change domicile
Intends to remove, or is removing, or has removed the specific property sued for or his assets or the proceeds of the sale of his property out of the Commonwealth so that the debtor will not have therein assets sufficient to satisfy the judgment
Is converting, is about to convert or has converted his property into money, securities or debt with the intent to hinder, delay or defraud creditors
Has assigned or disposed of or is about to assign or dispose of his assets with intent to hinder, delay or defraud creditors
Has absconded or is about to abscond from the Commonwealth or has concealed himself to the injury of his creditors, or is a fugitive from justice.
***
The above article is not meant to replace legal counsel. To speak to an attorney, contact Gross & Romanick directly by calling (703) 273-1400 or by filling out their online Information Request form.
Virtually any significant asset of a debtor can be subjected to attachment. Although real estate and business equipment are the most popular targets, a creditor can also attach bank accounts or even other monies owed to the debtor by a third party. One useful application of pre-judgment attachment occurs in construction cases, when a sub-contractor attaches payments to an out-of-state general contractor. An interesting case is the attachment of an elephant from a traveling circus; unfortunately, the creditor neglected to compute the cost of feeding the animal before taking this ill-advised action.
To secure a pre-judgment attachment the plaintiff files a sworn petition setting forth the cause of action and the grounds for the attachment. The justifications for attachment must fall within one or more of the categories allowed by Virginia Code Section 8.01-534. If the petition is approved by a judge, the creditor must post a bond of twice the amount of the claim. Upon posting of the bond a warrant will be issued ordering the sheriff to seize the property and bring it into the custody of the court. Generally, the debtor will request a hearing within twenty-one (21) days of the seizure at which time the court will determine whether the property will be released or remain in custody until the lawsuit is completed. Many attachments are dismissed at that hearing because of failure to comply with the technical requirements of Virginia attachment procedure.
Pre-judgment attachments do involve certain risks to the creditor. The bond is posted in order to compensate debtors for the improper seizure of their assets. Therefore, creditors should not use attachments for questionable claims. Nevertheless, the judicious utilization of this legal tool can be the difference between an empty judgment and a collected judgment.
Grounds for Attachment:
In summary form, it is sufficient grounds for attachment that the defendant:
Is a nonresident corporation or individual, which has assets or debts owed to it in Virginia
Is removing or about to remove out of the Commonwealth with intent to change domicile
Intends to remove, or is removing, or has removed the specific property sued for or his assets or the proceeds of the sale of his property out of the Commonwealth so that the debtor will not have therein assets sufficient to satisfy the judgment
Is converting, is about to convert or has converted his property into money, securities or debt with the intent to hinder, delay or defraud creditors
Has assigned or disposed of or is about to assign or dispose of his assets with intent to hinder, delay or defraud creditors
Has absconded or is about to abscond from the Commonwealth or has concealed himself to the injury of his creditors, or is a fugitive from justice.
***
The above article is not meant to replace legal counsel. To speak to an attorney, contact Gross & Romanick directly by calling (703) 273-1400 or by filling out their online Information Request form.
Friday, September 4, 2009
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.
***
The above is not meant to replace legal counsel. If you'd like to speak to an attorney, contact Gross & Romanick directly by calling 703-273-1400 or by filling out their online information request form.
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.
***
The above is not meant to replace legal counsel. If you'd like to speak to an attorney, contact Gross & Romanick directly by calling 703-273-1400 or by filling out their online information request form.
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