Lease Survives Bankruptcy Rejection

An individual who owned a business filed a personal Chapter 7 Bankruptcy. The business remained at the premises and continued to pay the rent, but the bankruptcy trustee failed to accept the Lease. Under bankruptcy rules such failure is an automatic rejection of the Lease. The Landlord filed a Motion to Lift Stay to eject the business from the space based upon the rejection of the Lease.

The Court ruled that the rejection of the Lease on behalf of the bankruptcy estate was not a termination of the Lease. So long as the debtor did not default on the Lease, the Landlord could not evict the business. Federal Realty Investment Trust v. Park, U.S. Bankruptcy Court for the Eastern District of Virginia (2002)

The above article is not meant to replace legal counsel. If you'd like to speak to one of the attorneys at Gross & Romanick, please call 703-273-1400 or email law@gross.com.

Commercial Landlord & Collections

Gross and Romanick recently helped a client with a commercial property. Despite all the client’s efforts, the tenant refused to pay his rent and finally cut off all communication. Gross & Romanick sent a letter, filed the eviction action, and then called the tenant. Since the firm’s threats were backed by legal action, the tenant agreed to pay without us having to go to court.

The client wrote to us, saying, “Thanks, and GOOD JOB, ED, getting xxxxxxxxxxx to pay!”

If you are a landlord and need help with your collections, contact Gross & Romanick at 703-273-1400 or visit our website at www.gross.com.

Business Conspiracy and Employee's Fiduciary Duties

FACTS: Feddeman & Co offered a group of its employees the opportunity to buy out the main stockholder, creating an employee owned corporation. During the negotiations, the buy-out began to seem unattainable to the employees, so these employees and directors of Feddeman met with a competitor (Langan Associates). The employees discussed the possibility of employment with Langan Associates, and used the threat of resignation as a leverage.

Feddeman then sued Langan and Feddeman's former employees for conspiring to ruin Feddeman's business, usurpation of Feddeman's business opportunities and breach of fiduciary duties.

In order to legally leave Feddeman the employees followed the advice of an attorney, who was also Langan's lawyer.

JURY RULING: An Alexandria Circuit Court jury awarded 3.3 million dollars to Feddeman.

COURT RULING: The judge set aside the 3.3 million dollar verdict in part because the "employee Defendants scrupulously adhered to the advise of counsel as to how to prepare to leave". The case has been appealed to the Supreme Court of Virginia.

SUPREME COURT RULING: The Virginia Supreme Court found that there was not basis to set aside the verdict because defendant employees and defendant directors did more than merely prepare to resign and advise others of a plan to leave. Credible evidence supported the jury determination that the conduct fell below the required standard of good faith and loyalty, and was sufficient to constituted a breach of fiduciary duty. The Court reinstated the 3.3 million dollar verdict.

ACTION ADVISE: When making an important business decision, hire a lawyer that does not have a conflict-of-interest. Conspiring against an employer with a competitor may be considered a breach of good faith and loyalty, as well as a breach of fiduciary duty.

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The above is not meant to replace legal counsel. If you'd like to speak to one of our attorneys here at Gross & Romanick, please call 703-273-1400 or fill out our online Information Request Form.

Terminating A Residential Lease

Recently, Gross & Romanick assisted a client with terminating his residential lease and helped him obtain monetary damages due to mold in the rental apartment.

After receiving the check the client wrote to the firm to say: “Thank you so much for your help. I am very happy with the way this all turned out and the way you handled my case. I will use you in the future if I need a lawyer”.

For more information about how the attorneys at Gross & Romanick can help you with traffic offenses and criminal law, personal injury & wrongful death, or business law & commercial landlord cases, call 703-273-1400 or fill out their online Information Request form now.