The Americans with Disabilities Act (the “ADA”) was enacted into law by Congress in 1990. Title I of the ADA prevents employers from discriminating against a person with a disability, on the basis of that disability, with respect to job application procedures, hiring, advancement, discharge, compensation and other terms or conditions of employment. In 2008, after a series of U.S. Supreme Court decisions narrowed the definition of a “disability” so as to significantly limit the scope of the ADA, Congress passed the ADA Amendments Act. The purpose of the ADAAA was to broaden the definition of “disability” and thus provide coverage to a wider group of individuals.
The term “disability” means, with respect to an individual, a physical or mental impairment that substantially limits one or more of the “major life activities” of such individual. “Major life activities” include, but are not limited to, caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating and working.
The ADA requires an employer with 15 or more employees to provide “reasonable accommodation” for individuals with disabilities. A “reasonable accommodation” is any change in the work environment, or in the way things are customarily done, that enables an individual with a disability to enjoy equal employment opportunities. A reasonable accommodation need not be provided if it would impose an “undue hardship” on the operation of the business of the employer. However, an employer may not refuse to provide an accommodation just because it involves some cost. Examples of reasonable accommodations include the following:
› making existing facilities accessible;
› part-time or modified work schedules;
› reassignment to a vacant position
› acquiring or modifying equipment; and
› changing tests, training materials, or policies.
Monday, December 5, 2011
Wednesday, November 30, 2011
A Summary Explanation of the Doctrine of Charitable Immunity
Charitable immunity is perhaps one of the most misunderstood concepts in the law. Many charities are under the mistaken assumption that they are immune from any lawsuit simply because they operate as a non-profit and for a charitable purpose. This is a misunderstanding that can have unfortunate consequences.
In Virginia, “[a] charitable institution is immune from liability to its beneficiaries for [ordinary] negligence arising from acts of its servants and agents, but only if due care has been exercised in their selection and retention.” Ola v. YMCA of South Hampton Roads, Inc., 270 Va. 550 (2005). This statement obviously merits further analysis.
First, in order to obtain charitable immunity, the organization must be a charitable institution. To determine whether an institution is charitable, Virginia courts “apply a two-part test, examining (1) whether the organization’s articles of incorporation have a charitable or eleemosynary purpose and (2) whether the organization is in fact operated consistent with that purpose.” Davidson v. The Colonial Williamsburg Found., 817 F.Supp. 611 (E.D. Va. 1993). It is therefore imperative that non-profit organizations operating as charitable or public benefit organizations not only draft articles of incorporation that reflect their mission, but that they also operate in a manner wholly consistent with that mission.
Second, a charitable institution is immune from liability only to its beneficiaries. In Virginia, charities are not immune from liability to legal strangers. A beneficiary is someone that receives something of value, which the organization, through its charitable purposes, undertakes to provide. Egerton v. R.E. Lee Memorial Church, 395 F.2d 381 (4th Cir. 1968). As an example, the recipient of an in-home meal from a charity providing in-home meals to the sick or disabled would be considered a beneficiary of the organization’s charitable purpose. However, the victim of an automobile accident occurring on the roads while the same charity was delivering a meal would not be a beneficiary.
In Virginia, “[a] charitable institution is immune from liability to its beneficiaries for [ordinary] negligence arising from acts of its servants and agents, but only if due care has been exercised in their selection and retention.” Ola v. YMCA of South Hampton Roads, Inc., 270 Va. 550 (2005). This statement obviously merits further analysis.
First, in order to obtain charitable immunity, the organization must be a charitable institution. To determine whether an institution is charitable, Virginia courts “apply a two-part test, examining (1) whether the organization’s articles of incorporation have a charitable or eleemosynary purpose and (2) whether the organization is in fact operated consistent with that purpose.” Davidson v. The Colonial Williamsburg Found., 817 F.Supp. 611 (E.D. Va. 1993). It is therefore imperative that non-profit organizations operating as charitable or public benefit organizations not only draft articles of incorporation that reflect their mission, but that they also operate in a manner wholly consistent with that mission.
Second, a charitable institution is immune from liability only to its beneficiaries. In Virginia, charities are not immune from liability to legal strangers. A beneficiary is someone that receives something of value, which the organization, through its charitable purposes, undertakes to provide. Egerton v. R.E. Lee Memorial Church, 395 F.2d 381 (4th Cir. 1968). As an example, the recipient of an in-home meal from a charity providing in-home meals to the sick or disabled would be considered a beneficiary of the organization’s charitable purpose. However, the victim of an automobile accident occurring on the roads while the same charity was delivering a meal would not be a beneficiary.
Monday, November 28, 2011
Non-compete Provision - Revisited and Reversed by Virginia Supreme Court
On November 4, 2011, the Virginia Supreme Court issued an important opinion on the enforceability of non-compete agreements in Virginia. In Home Paramount Pest Control Companies, Inc. v. Shaffer, et al., the Supreme Court affirmed the Fairfax County Circuit Court's prior determination that a non-compete provision in a former employee's employment agreement was overbroad and, therefore, unenforceable.
In 1989, in a case involving the same employer, the Supreme Court ruled that an identical provision in an employment agreement was enforceable. Accordingly, the Supreme Court reversed its previous stance, demonstrating the shift in the law that has occurred over the last 22 years. The Supreme Court justified its decision on the basis of several other cases that have been decided since 1989, which cases clarified the law and created the framework from which the 2011 case was decided.
The Supreme Court explained that non-compete provisions are only enforceable if they are narrowly drawn to protect the employer's legitimate business interest, are not unreasonably burdensome on an employee's ability to earn a livelihood and are not against public policy. The employer bears the burden of proving each of these factors. Virginia Courts will consider the function, geographic scope and duration elements of the non-compete when evaluating whether the employer has met its burden. In assessing the "function" element, a Virginia Court will determine whether the prohibited activity is of the same type as that actually engaged in by the former employee while employed by the employer.
In 1989, in a case involving the same employer, the Supreme Court ruled that an identical provision in an employment agreement was enforceable. Accordingly, the Supreme Court reversed its previous stance, demonstrating the shift in the law that has occurred over the last 22 years. The Supreme Court justified its decision on the basis of several other cases that have been decided since 1989, which cases clarified the law and created the framework from which the 2011 case was decided.
The Supreme Court explained that non-compete provisions are only enforceable if they are narrowly drawn to protect the employer's legitimate business interest, are not unreasonably burdensome on an employee's ability to earn a livelihood and are not against public policy. The employer bears the burden of proving each of these factors. Virginia Courts will consider the function, geographic scope and duration elements of the non-compete when evaluating whether the employer has met its burden. In assessing the "function" element, a Virginia Court will determine whether the prohibited activity is of the same type as that actually engaged in by the former employee while employed by the employer.
Tuesday, November 22, 2011
Successful Defenses to Virginia DWI/DUI
A November 7, 2011 article in the Fairfax News shows that “some 32,760 drunken driving arrests were made across Virginia in 2010, which resulted in 29,063 convictions.” Based upon these statistics, the statewide conviction rate for individuals charged with DWI is approximately 88.7%. This, of course, begs the question: what happens in the other 11.3% of cases.
Presumably, some of the 3,697 remaining cases resulted in plea bargains to lesser offenses such as reckless driving. Others were certainly dismissed after trial upon a finding of not guilty. How did these individuals manage to defy the odds and avoid a conviction for DWI after being charged?
There are a number of reasons why an individual may be found not guilty of a DWI. The situation may be such that the individual charged with DWI was in an accident, the police did not witness the accident and the other driver involved in the accident fails to appear in court. In this situation, if the defendant did not make any statements, there is no evidence that the defendant was driving the vehicle.
In order to stop a vehicle on the highways, police must have reasonable suspicion that the vehicle is involved in criminal activity or has committed a traffic violation. If the police stop a vehicle because they have nothing more than a hunch that the driver may be intoxicated, the traffic stop itself is unlawful and everything that follows will be suppressed by a court, including the arrest for DWI.
Presumably, some of the 3,697 remaining cases resulted in plea bargains to lesser offenses such as reckless driving. Others were certainly dismissed after trial upon a finding of not guilty. How did these individuals manage to defy the odds and avoid a conviction for DWI after being charged?
There are a number of reasons why an individual may be found not guilty of a DWI. The situation may be such that the individual charged with DWI was in an accident, the police did not witness the accident and the other driver involved in the accident fails to appear in court. In this situation, if the defendant did not make any statements, there is no evidence that the defendant was driving the vehicle.
In order to stop a vehicle on the highways, police must have reasonable suspicion that the vehicle is involved in criminal activity or has committed a traffic violation. If the police stop a vehicle because they have nothing more than a hunch that the driver may be intoxicated, the traffic stop itself is unlawful and everything that follows will be suppressed by a court, including the arrest for DWI.
Monday, November 21, 2011
The Importance of By-Laws to Resolve Governance Battles
Non-profit organizations need to have a clear governance structure. One reason is that it is not uncommon for the members, officers and/or directors of non-profit organizations to engage in power struggles, particularly if the organization has grown from a small, cohesive group to a larger, loosely organized membership. In some cases, a single member or a small group of members who disagree with the organization’s current management or general objectives can create a significant rift in the organization by publicly denouncing the current administration (or worse, purporting to assert control over the organization). As in any organization, a certain amount of turnover and change can be very positive, but a power struggle may destroy the organization itself. In order to minimize governance battles, the organization’s governing documents need to be strong enough to prevent dissention amongst the members, officers or directors from crippling the organization’s stated purpose (and perhaps, its existence).
The best way to proactively eliminate the risk of organizational anarchy is for the organization to adopt clear, coherent and thorough by-laws. In our experience, many non-profit organizations fail to adopt by-laws with mechanisms designed to provide clear power demarcations and methods for resolution of control issues. In addition, many organizations are using outdated by-laws which were not written for the organization as it is currently structured and operated, or for the technological age, when e-mails and social media can improve communication but can also facilitate membership dissention on a very public platform.
At a minimum, the by-laws of every non-profit organization should clearly set out the following:
The best way to proactively eliminate the risk of organizational anarchy is for the organization to adopt clear, coherent and thorough by-laws. In our experience, many non-profit organizations fail to adopt by-laws with mechanisms designed to provide clear power demarcations and methods for resolution of control issues. In addition, many organizations are using outdated by-laws which were not written for the organization as it is currently structured and operated, or for the technological age, when e-mails and social media can improve communication but can also facilitate membership dissention on a very public platform.
At a minimum, the by-laws of every non-profit organization should clearly set out the following:
Tuesday, September 27, 2011
“Non-Profit” Does Not Equal “Tax-Exempt”: Applying for Federal Tax-Exempt Status
Many individuals who start a “non-profit” organization incorrectly assume that setting up a “non-profit” entity (i.e. a “non-stock corporation” in Virginia) will automatically make that entity exempt from federal, state and local taxes, and will permit donors to take a charitable deduction on their individual tax statements. A full discussion of tax law applicable to non-profit organization is beyond the scope of this article. However, we want to impart some general knowledge regarding how to set up a non-profit organization in Virginia and some general information regarding applying for tax-exempt status with the Internal Revenue Service.
In Virginia, a non-profit organization is usually a non-stock corporation, which is a form of entity that does not issue stock and is governed by the by-laws adopted by the members of the organization. There are many ways to organize the governance of the corporation, but generally, it is run by a board of directors that is elected by members of the organization. How a person becomes a member of the organization is determined in accordance with the rules set out in the by-laws. Of course, the members or the board of directors can elect a CEO or President to run the day to day operations of the organization.
Becoming a non-profit entity under Virginia state law permits certain exemption from various state and local taxes, but does not automatically result in exemption from federal income tax. The first step to gaining federal tax-exempt status is to determine which type of tax-exempt organization the entity is. The most common categories of tax-exempt entities are: (1) Charitable and religious organizations; (2) Business leagues; (3) Labor organizations; (4) Social welfare organizations; and (5) Agricultural/horticultural organizations. The two most common types of tax-exempt organizations that Gross & Romanick helps to establish are charitable/religious organizations and business leagues.
In Virginia, a non-profit organization is usually a non-stock corporation, which is a form of entity that does not issue stock and is governed by the by-laws adopted by the members of the organization. There are many ways to organize the governance of the corporation, but generally, it is run by a board of directors that is elected by members of the organization. How a person becomes a member of the organization is determined in accordance with the rules set out in the by-laws. Of course, the members or the board of directors can elect a CEO or President to run the day to day operations of the organization.
Becoming a non-profit entity under Virginia state law permits certain exemption from various state and local taxes, but does not automatically result in exemption from federal income tax. The first step to gaining federal tax-exempt status is to determine which type of tax-exempt organization the entity is. The most common categories of tax-exempt entities are: (1) Charitable and religious organizations; (2) Business leagues; (3) Labor organizations; (4) Social welfare organizations; and (5) Agricultural/horticultural organizations. The two most common types of tax-exempt organizations that Gross & Romanick helps to establish are charitable/religious organizations and business leagues.
Withdrawal Provisions in Organizational Documents
One important issue that individuals organizing a new business entity must consider is what will happen in the event one of the owners wants to voluntarily withdraw from ownership in the entity. By “withdraw”, we mean that the owner wishes to return the ownership interest (stock for a corporation or membership interest for a limited liability company) to the company or to the other owners in exchange for some form of compensation. This issue is commonly overlooked in the organizing process, perhaps because the ambitious and optimistic organizer is not mindful of the fact that one day he/she may want to leave. As a result, many new entities do not enter into written agreements dealing with this important issue.
It is essential that the owners consider this issue as part of the organizing process. Some common reasons for an owner wanting to withdraw are the following:
1. Disagreement with the business direction of the entity;
2. A falling out with the other owner(s);
3. Relocation, medical problems or other personal reasons;
4. Desire to cash in the investment or the need for money.
The place to insert a withdrawal provision for a limited liability company is the company’s operating agreement. For a corporation, it is a shareholder agreement. Here are a few common ways to handle a voluntary withdrawal:
It is essential that the owners consider this issue as part of the organizing process. Some common reasons for an owner wanting to withdraw are the following:
1. Disagreement with the business direction of the entity;
2. A falling out with the other owner(s);
3. Relocation, medical problems or other personal reasons;
4. Desire to cash in the investment or the need for money.
The place to insert a withdrawal provision for a limited liability company is the company’s operating agreement. For a corporation, it is a shareholder agreement. Here are a few common ways to handle a voluntary withdrawal:
COVENANTS NOT TO COMPETE – DIFFICULT TO ENFORCE IN VIRGINIA
In Virginia, it is very difficult to enforce a covenant not to compete against an ex-employee. The Virginia Courts will only enforce a covenant not to compete if: (a) it is narrowly drawn to protect the employer's legitimate business interest, (b) it is not unduly burdensome on the employee's ability to earn a living, and (c) it is not against public policy. In each case, the Court will evaluate the covenant not to compete on its own merits, balancing the terms of the covenant with the circumstances of the businesses and employees involved.
In a recent case before the Fairfax County Circuit Court, Daston Corp. v. MiCore Solutions, Inc., et al., the Court declined to enforce a covenant not to compete which, on its face, appeared to be reasonable.
In that case, two employees (with identical employment agreements) of Daston Corp., a business that develops, markets, sells and manages applications for Google pursuant to a nationwide license, left their employment and accepted employment with MiCore Solutions, Inc., a business which provides a range of consulting and information technology services based on Google applications.
The covenant not to compete in each employee’s employment agreement with Daston read as follows:
In a recent case before the Fairfax County Circuit Court, Daston Corp. v. MiCore Solutions, Inc., et al., the Court declined to enforce a covenant not to compete which, on its face, appeared to be reasonable.
In that case, two employees (with identical employment agreements) of Daston Corp., a business that develops, markets, sells and manages applications for Google pursuant to a nationwide license, left their employment and accepted employment with MiCore Solutions, Inc., a business which provides a range of consulting and information technology services based on Google applications.
The covenant not to compete in each employee’s employment agreement with Daston read as follows:
Thursday, August 25, 2011
Statutory Lien
Whatever difficulties a doctor may encounter in collecting a bill owed by a patient who was negligently injured, he is assured of as much as $500 under Virginia law. Section § 8.01-66.2 of the Virginia code provides for a lien for his "just and reasonable charge" up to that amount on the claim of an injured person whose injuries are alleged to have been caused by another's negligence.
In order to assert your lien, send copies of your bills to the attorney representing the patient. If the attorney is uncooperative (refusing to sign a lien/assignment), it might be prudent to send copies to the negligent party's insurance company.
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's personal injury lawyers, please call us today at 703-273-1400 or fill out our online information request form here.
In order to assert your lien, send copies of your bills to the attorney representing the patient. If the attorney is uncooperative (refusing to sign a lien/assignment), it might be prudent to send copies to the negligent party's insurance company.
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's personal injury lawyers, please call us today at 703-273-1400 or fill out our online information request form here.
Thursday, August 18, 2011
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 is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, please contact us by calling 703-273-1400 or by filling out this 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 is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, please contact us by calling 703-273-1400 or by filling out this Information Request form.
Thursday, July 21, 2011
The Car Accident Patient: Getting Paid.
Many doctors who have treated personal injury victims have themselves become victims due to nonpayment of the medical bills. The desire of physicians to help the personal injury patient is often peppered with the fear that the mounting bills will not be paid or may not be paid for several years. However, there are ways to significantly reduce the risk of delayed or nonpayment for this type of care. In fact, the automobile injury case affords the doctor many avenues of insurance coverage not available in other types of case.
This article will discuss the best means of protecting your rights to be paid, utilizing available insurance and avoiding the pitfalls inherent in these cases.
Know Your Patient's Attorney
Contrary to political grandstanding, not all injuries are compensated by the court system through awards of millions of dollars. In fact, a great number of juries render verdicts for the defendant and give no money to the injured party. Ask the patient's attorney for an evaluation of the likelihood of success, especially if you are asked to wait for your money until after settlement or trial. Your bill is an extension of credit and you are entitled to consider whether you should invest in this case. A skilled attorney will want to cooperate with the doctor for many reasons including the need for medical reports and expert testimony at trial.
The good attorney should search for and help process insurance in order to pay the medical bills as they accumulate. Unfortunately, many attorneys believe that their only obligation is to handle the legal case without regard to payment of the medical bills. Even worse, many lawyers will help clients obtain the insurance coverage payments and advise them that they are entitled to keep this money even if it means a failure to pay the doctor.
While competent counsel cannot guarantee a win at trial, an inexperienced or ineffective attorney will have a difficult task contending with the high-caliber law firms hired by the insurance companies. Even if no suit is filed, an attorney who does not specialize in this area of law will generally not obtain the same level of settlements as experienced counsel. Finally, be extremely skeptical of the patients who are handling their own personal injury cases; insurance companies will take advantage of this situation. Doctors treating self-help patients should insist on "pay as you go" or refer them to a lawyer.
Medical Payments Coverage
Most automobile insurance policies have medical payments coverage, which is a "no-fault" source of payment for medical bills. If this type of coverage is included in a Virginia policy, there must be a minimum of $2,000 available (typical coverage is $5,000) over a maximum period of 3 years treatment. Policies issued in other States have similar provisions. The medical office should process these bills to obtain direct payment to the office. Allowing the patient, to process these bills may result in loss of this income. Before you rely on the attorney, find out his philosophy in this respect because many attorneys consider this money to be the property of the client. The patient's insurance agent can explain the amount of coverage available.
Do not expect the insurance company to offer information regarding the availability of coverage. Quite often, the insurance company will tell you to go to the liable party's insurance even when there is medical payments coverage. An attorney's call or letter should overcome this difficulty.
Reimbursement is only required for "reasonable and necessary expenses." Under this standard the insurance companies regularly claim that the treatment was excessive, that certain procedures were not needed or that the bills were abnormally high for the type of injury. They will request the medical records, narratives and other proof; give them what is reasonable, but do not accept a determination not to pay. The doctor's office must often advocate on behalf of the patient and should get the lawyer to insist on payment.
Do not assume a lack of coverage. Medical expense coverage may be available to many unexpected parties, such as relatives of policyholders even when they are in someone else's vehicle or are pedestrians. Read the policy. Ask the lawyer to make inquiries.
Health Insurance
Under Virginia law, medical bills must be paid by the health insurance carrier even if there is a personal injury-third party claim. Health insurance should be handled in the normal manner.
The medical office should not agree to any reimbursement to the health insurance company by way of assignment, subrogation or other type of pay back. Except in limited circumstances, health insurance policies issued in Virginia cannot require repayment to the insurance company. Therefore, do not reimburse any insurance company for payment received on a paid bill without the specific permission of the patient, as this may cause tremendous problems in obtaining return of this money by the patient from the insurance company.
Lien or Assignment
The patient and the lawyer should always be required to sign a lien/assignment form which requires the lawyer to pay the medical office out of the patient's portion of any settlement or judgment. Be sure the form is sent to the law firm. Current billing should be sent in order to be sure that the latest amount is paid.
Oral promises to pay out of settlement are not enforceable. Just sending the bills to the law firm will only amount to a total lien of $300 under the Virginia Code. Do not send this billing and medical records information directly to the insurance companies, unless instructed to do so by the law firm.
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, please call 703-273-1400 or fill out our online Information Request form here.
This article will discuss the best means of protecting your rights to be paid, utilizing available insurance and avoiding the pitfalls inherent in these cases.
Know Your Patient's Attorney
Contrary to political grandstanding, not all injuries are compensated by the court system through awards of millions of dollars. In fact, a great number of juries render verdicts for the defendant and give no money to the injured party. Ask the patient's attorney for an evaluation of the likelihood of success, especially if you are asked to wait for your money until after settlement or trial. Your bill is an extension of credit and you are entitled to consider whether you should invest in this case. A skilled attorney will want to cooperate with the doctor for many reasons including the need for medical reports and expert testimony at trial.
The good attorney should search for and help process insurance in order to pay the medical bills as they accumulate. Unfortunately, many attorneys believe that their only obligation is to handle the legal case without regard to payment of the medical bills. Even worse, many lawyers will help clients obtain the insurance coverage payments and advise them that they are entitled to keep this money even if it means a failure to pay the doctor.
While competent counsel cannot guarantee a win at trial, an inexperienced or ineffective attorney will have a difficult task contending with the high-caliber law firms hired by the insurance companies. Even if no suit is filed, an attorney who does not specialize in this area of law will generally not obtain the same level of settlements as experienced counsel. Finally, be extremely skeptical of the patients who are handling their own personal injury cases; insurance companies will take advantage of this situation. Doctors treating self-help patients should insist on "pay as you go" or refer them to a lawyer.
Medical Payments Coverage
Most automobile insurance policies have medical payments coverage, which is a "no-fault" source of payment for medical bills. If this type of coverage is included in a Virginia policy, there must be a minimum of $2,000 available (typical coverage is $5,000) over a maximum period of 3 years treatment. Policies issued in other States have similar provisions. The medical office should process these bills to obtain direct payment to the office. Allowing the patient, to process these bills may result in loss of this income. Before you rely on the attorney, find out his philosophy in this respect because many attorneys consider this money to be the property of the client. The patient's insurance agent can explain the amount of coverage available.
Do not expect the insurance company to offer information regarding the availability of coverage. Quite often, the insurance company will tell you to go to the liable party's insurance even when there is medical payments coverage. An attorney's call or letter should overcome this difficulty.
Reimbursement is only required for "reasonable and necessary expenses." Under this standard the insurance companies regularly claim that the treatment was excessive, that certain procedures were not needed or that the bills were abnormally high for the type of injury. They will request the medical records, narratives and other proof; give them what is reasonable, but do not accept a determination not to pay. The doctor's office must often advocate on behalf of the patient and should get the lawyer to insist on payment.
Do not assume a lack of coverage. Medical expense coverage may be available to many unexpected parties, such as relatives of policyholders even when they are in someone else's vehicle or are pedestrians. Read the policy. Ask the lawyer to make inquiries.
Health Insurance
Under Virginia law, medical bills must be paid by the health insurance carrier even if there is a personal injury-third party claim. Health insurance should be handled in the normal manner.
The medical office should not agree to any reimbursement to the health insurance company by way of assignment, subrogation or other type of pay back. Except in limited circumstances, health insurance policies issued in Virginia cannot require repayment to the insurance company. Therefore, do not reimburse any insurance company for payment received on a paid bill without the specific permission of the patient, as this may cause tremendous problems in obtaining return of this money by the patient from the insurance company.
Lien or Assignment
The patient and the lawyer should always be required to sign a lien/assignment form which requires the lawyer to pay the medical office out of the patient's portion of any settlement or judgment. Be sure the form is sent to the law firm. Current billing should be sent in order to be sure that the latest amount is paid.
Oral promises to pay out of settlement are not enforceable. Just sending the bills to the law firm will only amount to a total lien of $300 under the Virginia Code. Do not send this billing and medical records information directly to the insurance companies, unless instructed to do so by the law firm.
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, please call 703-273-1400 or fill out our online Information Request form here.
Tuesday, June 21, 2011
Statute Of Frauds
Based on its name you might think that the Statute of Frauds has something to do with criminal or civil fraud, but it doesn't. The name "Statute of Frauds" actually refers to a law passed by the British Parliament in 1677, and the name has been retained through the centuries. It specifies which kinds of contracts must be in writing in order to be enforceable. Its purpose is to prevent the setting up of supposed agreements and then supporting them by perjury.
The most common applications of the Statute of Frauds are as follows:
Holding a person responsible for the promise to pay the debt of another
Contracts for the sale of real estate
Leases for real estate over 1 year
Agreements which cannot be performed within 1 year
Sale of personal property over $5,000
Sale of goods over $500, unless the buyer accepts the goods
Agency agreements
While the Statute requires a written agreement, almost any writing sufficient to indicate some kind of agreement between the parties will suffice. However, the "writing" must be signed by the party who is being charged. Thus, the venerable Statute of Frauds is still an important and influential part of modern law.
***
The above is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact us at 703-273-1400 or by filling out our online information request form.
The most common applications of the Statute of Frauds are as follows:
Holding a person responsible for the promise to pay the debt of another
Contracts for the sale of real estate
Leases for real estate over 1 year
Agreements which cannot be performed within 1 year
Sale of personal property over $5,000
Sale of goods over $500, unless the buyer accepts the goods
Agency agreements
While the Statute requires a written agreement, almost any writing sufficient to indicate some kind of agreement between the parties will suffice. However, the "writing" must be signed by the party who is being charged. Thus, the venerable Statute of Frauds is still an important and influential part of modern law.
***
The above is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact us at 703-273-1400 or by filling out our online information request form.
Monday, May 16, 2011
Legal Implications of IP Addresses
A plethora of recent legal issues ranging from the prosecution of child pornography to the enforcement of civil copyrights have relied upon the IP address of a computer to identify individuals. However, an IP address is not an individual according to the United States District Court of the Central District of Illinois. Prompted by a recent MSNBC article, the legal system is beginning to realize that an IP address does not necessarily link an individual to certain computer use; in fact, the same IP address can be used by many individuals with access to the computer in question, or by visitors with access to the same wireless router. VPR Int'l v. Does 1 - 1017, Case No. 11-2068 (C.D. Ill. 2011).
An IP address (or Internet Protocol Address) is, at its most basic, a series of 4 numbers ranging from 0 to 255, each separated by a period (.). These numbers are used to uniquely identify each and every computer connected to the internet in much the same way that a physical address is used to uniquely identify each and every physical location in the world. When information is sent out over the internet or when information is received on the internet, it is labeled with both the IP address of the sender and of the recipient. Much like a letter is addressed with both the address of the recipient and the return address of the sender.
Complicating this issue is the concept of a subnet. For the sake of simplicity, think of a subnet as the city and state of an address. Every router connected to the internet has a unique IP address within one subnet and then each computer connected to that router has a unique IP address within the router’s subnet. Typically, it is not the IP address of an individual computer that is broadcast over the internet to send and receive information, but rather the IP address of the router. The router, as the name implies, then routes the requested information to the computer that requested it. Think of a router as the mailroom for a large business. All of the employees of the business have access to the mailbox and can receive mail at the business address and the mailroom sorts the mail to go to individual employees.
Of course, this architecture leads to a situation where the IP address visible on the internet as downloading illegal content such as child pornography or posting vicious hate filled threats on Facebook could belong to multiple computers. An internet service provider would only be able to identify the IP address of the router that passed on an individual computer’s request for information; the service provider would be unable to identify the individual computer.
Most households own a wireless router. Many wireless routers are “unsecured”. This means that any person with a laptop, iPad or Wi-Fi device can utilize another person’s wireless router without the use of a password. An unsecured router is like an unlocked mailroom; anyone in the building can go in and send a package or take a package, even if it is a package that is not intended for them.
Imagine trying to identify the sender of a mail bomb based solely on the address of the unlocked mailroom for a large business. Any of the employees of the business are suspects as are any person that could have walked into the mailroom when the package was sent. This is exactly the problem involved in tracking down copyright infringers or child pornographers on the internet. A subpoena directed to an internet service provider to identify the owner of an IP address can only identify the router that requested the information. If the router is unsecured, then the suspects could include all the users of the router, together with the neighbors that are in range of the router’s wireless signal and all the cars that could have been parked nearby or driven through. Even if the router is secured, the suspects include anyone with knowledge of the router’s password and anyone that could have stolen the router’s password.
Therefore, without some other information, such as statements, admissions or other physical evidence, it is nearly impossible to identify the individual that was sitting in the computer chair at the time that the illicit content was downloaded or at the time that the harassing message was posted to Facebook.
An IP address (or Internet Protocol Address) is, at its most basic, a series of 4 numbers ranging from 0 to 255, each separated by a period (.). These numbers are used to uniquely identify each and every computer connected to the internet in much the same way that a physical address is used to uniquely identify each and every physical location in the world. When information is sent out over the internet or when information is received on the internet, it is labeled with both the IP address of the sender and of the recipient. Much like a letter is addressed with both the address of the recipient and the return address of the sender.
Complicating this issue is the concept of a subnet. For the sake of simplicity, think of a subnet as the city and state of an address. Every router connected to the internet has a unique IP address within one subnet and then each computer connected to that router has a unique IP address within the router’s subnet. Typically, it is not the IP address of an individual computer that is broadcast over the internet to send and receive information, but rather the IP address of the router. The router, as the name implies, then routes the requested information to the computer that requested it. Think of a router as the mailroom for a large business. All of the employees of the business have access to the mailbox and can receive mail at the business address and the mailroom sorts the mail to go to individual employees.
Of course, this architecture leads to a situation where the IP address visible on the internet as downloading illegal content such as child pornography or posting vicious hate filled threats on Facebook could belong to multiple computers. An internet service provider would only be able to identify the IP address of the router that passed on an individual computer’s request for information; the service provider would be unable to identify the individual computer.
Most households own a wireless router. Many wireless routers are “unsecured”. This means that any person with a laptop, iPad or Wi-Fi device can utilize another person’s wireless router without the use of a password. An unsecured router is like an unlocked mailroom; anyone in the building can go in and send a package or take a package, even if it is a package that is not intended for them.
Imagine trying to identify the sender of a mail bomb based solely on the address of the unlocked mailroom for a large business. Any of the employees of the business are suspects as are any person that could have walked into the mailroom when the package was sent. This is exactly the problem involved in tracking down copyright infringers or child pornographers on the internet. A subpoena directed to an internet service provider to identify the owner of an IP address can only identify the router that requested the information. If the router is unsecured, then the suspects could include all the users of the router, together with the neighbors that are in range of the router’s wireless signal and all the cars that could have been parked nearby or driven through. Even if the router is secured, the suspects include anyone with knowledge of the router’s password and anyone that could have stolen the router’s password.
Therefore, without some other information, such as statements, admissions or other physical evidence, it is nearly impossible to identify the individual that was sitting in the computer chair at the time that the illicit content was downloaded or at the time that the harassing message was posted to Facebook.
Civil Remedies for Online Harassment and Cyber-Bullying
While victims of online harassment or cyber-bullying may find a lack of criminal statutes that protect victims, there are civil remedies for the victims of computer harassment or computer trespass.
The Virginia Computer Crimes Act creates a civil cause of action for criminal violations of Computer Harrassment, Computer Trespass and Computer Invasion of Privacy. See, e.g., Va. Code § 18.2-152.12. This means that individuals aggrieved by online harassment can sue and potentially recover damages from the individuals engaged in the harassment. Obviously, the ability to sue and recover money damages depends upon locating the individuals that engaged in the criminal behavior and those individuals having sufficient assets to pay a judgment against them.
When the online harassment is motivated by racial, religious or ethnic animosity, an aggrieved individual can sue for damages, and can also seek an injunction, punitive damages and recovery of their attorneys’ fees and costs. See, Va. Code § 8.01-42.1. In this way, the civil process does provide a means for individuals to act as a kind of private attorney general and prosecute offensive conduct. While a civil case will not result in the incarceration of the responsible individuals, it may result in the victim recovering tangible assets from the responsible party.
In addition, where the online harassment is motivated by racial, religious or ethnic animosity, the incident is likely to be reported to the Virginia State Police, which maintains a central repository for the collection and analysis of hate crimes. Va. Code § 52-8.5.
Under the right set of facts victims may also utilize traditional civil theories against perpetrators, including defamation, business conspiracy, intentional interference in contracts and other applicable claims.
The attorneys at Gross & Romanick, P.C. have considerable experience in this new and developing area of law. Having handled matters ranging from the defense of copyright violations charged by the Recording Industry of America to criminal matters involving illicit computer content, we are well positioned at the intersection of law and technology to assist our clients in all manner of cases.
The Virginia Computer Crimes Act creates a civil cause of action for criminal violations of Computer Harrassment, Computer Trespass and Computer Invasion of Privacy. See, e.g., Va. Code § 18.2-152.12. This means that individuals aggrieved by online harassment can sue and potentially recover damages from the individuals engaged in the harassment. Obviously, the ability to sue and recover money damages depends upon locating the individuals that engaged in the criminal behavior and those individuals having sufficient assets to pay a judgment against them.
When the online harassment is motivated by racial, religious or ethnic animosity, an aggrieved individual can sue for damages, and can also seek an injunction, punitive damages and recovery of their attorneys’ fees and costs. See, Va. Code § 8.01-42.1. In this way, the civil process does provide a means for individuals to act as a kind of private attorney general and prosecute offensive conduct. While a civil case will not result in the incarceration of the responsible individuals, it may result in the victim recovering tangible assets from the responsible party.
In addition, where the online harassment is motivated by racial, religious or ethnic animosity, the incident is likely to be reported to the Virginia State Police, which maintains a central repository for the collection and analysis of hate crimes. Va. Code § 52-8.5.
Under the right set of facts victims may also utilize traditional civil theories against perpetrators, including defamation, business conspiracy, intentional interference in contracts and other applicable claims.
The attorneys at Gross & Romanick, P.C. have considerable experience in this new and developing area of law. Having handled matters ranging from the defense of copyright violations charged by the Recording Industry of America to criminal matters involving illicit computer content, we are well positioned at the intersection of law and technology to assist our clients in all manner of cases.
Thursday, May 12, 2011
Gross & Romanick Attorney Appears On Fox 5 News
A. Charles Dean, an attorney at Gross & Romanick, appeared on Fox News last night during a story about a Northern Virginia hair care business whose Facebook page was inundated with racist rants, images and videos.
Dean noted, ""Most laws are written for someone who gets beat up because of racial reasons or because of gender orientation reasons. They're not written for problems on the internet because most laws were written before the age of the internet."
To read the full story, click here.
To contact Gross & Romanick call 703-273-1400 or fill out our online Information Request form.
Dean noted, ""Most laws are written for someone who gets beat up because of racial reasons or because of gender orientation reasons. They're not written for problems on the internet because most laws were written before the age of the internet."
To read the full story, click here.
To contact Gross & Romanick call 703-273-1400 or fill out our online Information Request form.
Wednesday, May 11, 2011
Buildout Allowance - Landlord Gets Slammed
FACTS: Tenant leased property from a commercial Landlord. Part of the lease agreement was a building allowance of $699,000 to be paid by Landlord for improvements. Tenant hired a contractor to do the improvements to the property. The Contractor accidentally demolished an unoccupied improvement on the property. Upon noticing their mistake - the same day, The Contractor offered to remedy by either rebuilding the improvements or allowing for a credit for the value of the improvements. Instead of accepting one of the offered remedies the Landlord decided to withhold $301,000 of Tenant's allowance. When Tenant and Contractor sued for the allowance, the Landlord counter-claimed for lost rent and replacement of the improvement even though the Landlord did not have a tenant for the demolished space and did not replace the demolished improvement.
COURT RULING: The Court determined that the Landlord's counter-claims were without merit; and that the Landlord and its counsel should have known of the meritless nature of the claim. Judgment was entered against the Landlord for $351,057.65 for the withheld allowance plus interest. The Court also sanctioned the Landlord the sum of $251,018.16 for attorney's fees and costs for the baseless counter-claim and defenses, which prolonged the litigation (Va. Code � 8.01-271.1).
ACTION ADVISE: A building allowance is an enforceable right of the tenant. If the landlord withholds payment for the allowance, it will need good cause to do so. Furthermore, if a landlord does not have a tenant for the demolished or damaged space, it should not withhold a building allowance on the basis of lost rent. If the landlord has no intention of rebuilding the damaged improvements, the landlord is not acting in good faith by charging the contractor for the repair cost. Finally, asserting baseless claims in a court proceeding can result in sanctions. Try to resolve these disputes out of court!
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The above is not meant to replace legal counsel. If you'd like to speak to one of the lawyers at Gross & Romanick about building allowances of commercial property law, please fill out our online Information Request form or call 703-273-1400.
COURT RULING: The Court determined that the Landlord's counter-claims were without merit; and that the Landlord and its counsel should have known of the meritless nature of the claim. Judgment was entered against the Landlord for $351,057.65 for the withheld allowance plus interest. The Court also sanctioned the Landlord the sum of $251,018.16 for attorney's fees and costs for the baseless counter-claim and defenses, which prolonged the litigation (Va. Code � 8.01-271.1).
ACTION ADVISE: A building allowance is an enforceable right of the tenant. If the landlord withholds payment for the allowance, it will need good cause to do so. Furthermore, if a landlord does not have a tenant for the demolished or damaged space, it should not withhold a building allowance on the basis of lost rent. If the landlord has no intention of rebuilding the damaged improvements, the landlord is not acting in good faith by charging the contractor for the repair cost. Finally, asserting baseless claims in a court proceeding can result in sanctions. Try to resolve these disputes out of court!
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The above is not meant to replace legal counsel. If you'd like to speak to one of the lawyers at Gross & Romanick about building allowances of commercial property law, please fill out our online Information Request form or call 703-273-1400.
Friday, April 22, 2011
Restricting Competition Following A Business Sale
A Purchaser of an existing business must not overlook the need to restrict the selling parties from competing with the newly acquired business after the sale. Because the seller has access to all existing contacts and customers of the business (as well as knowledge of the business’ trade secrets, methods and know-how), the seller poses a true competitive threat to the business after the sale. To diminish the threat of such competition, a covenant not to compete must be included in the terms of the sale. A covenant not to compete will restrict the seller from engaging in business practices that are competitive to the buyer’s newly acquired business. It is important that the seller, all of its owners and key employees execute a non-compete agreement.
Drafting an enforceable covenant not to compete is no easy task. In Virginia, courts will enforce a covenant not to compete only if it is: (a) narrowly drawn to protect the business interests of the protected party, (b) not unduly burdensome on the restricted parties' ability to earn a living, and (c) not against public policy. Courts will evaluate the covenant not to compete on its own merits on a case by case basis, taking into account the circumstances of the businesses and individuals involved. A covenant will not be enforced if it is deemed by the Court to be too broad in duration, geographic range or restricted activities. Thus, the broad, boilerplate non-compete language found on many standard form buy-sell agreements, may not work.
The attorneys at Gross & Romanick, P.C. have considerable experience drafting non-compete agreements. We know the law, we know the cases, and we know how to protect the buyer’s interests.
Drafting an enforceable covenant not to compete is no easy task. In Virginia, courts will enforce a covenant not to compete only if it is: (a) narrowly drawn to protect the business interests of the protected party, (b) not unduly burdensome on the restricted parties' ability to earn a living, and (c) not against public policy. Courts will evaluate the covenant not to compete on its own merits on a case by case basis, taking into account the circumstances of the businesses and individuals involved. A covenant will not be enforced if it is deemed by the Court to be too broad in duration, geographic range or restricted activities. Thus, the broad, boilerplate non-compete language found on many standard form buy-sell agreements, may not work.
The attorneys at Gross & Romanick, P.C. have considerable experience drafting non-compete agreements. We know the law, we know the cases, and we know how to protect the buyer’s interests.
Stock Purchase or Asset Purchase?
There are two principal methods for buying or selling an existing business: a stock purchase and an asset purchase. The advantages and disadvantages of each method should be assessed in every business sale. The purpose of this article is to explain in very general terms how these methods (and the resulting implications) differ. You may also want to view our YouTube video on asset purchases at: http://www.youtube.com/watch?v=UtM8GXiOSwE
In the stock purchase, the buyer purchases the existing ownership interests of the business. If the business is a corporation, the buyer is purchasing stock. If the business is a limited liability company, the buyer is purchasing membership interests. By making such a purchase, the buyer acquires an ownership interest of the existing business and assumes all rights and responsibilities which come with such ownership. Typically, such rights and responsibilities are set forth in the by-laws or shareholder agreements of a corporation, or the operating agreement of a limited liability company. The stock purchase is typically used when the existing business has valuable contracts or licenses that cannot be transferred.
In the asset purchase, the buyer purchases the existing assets of the business, but does not purchase any ownership interest in the seller’s business entity. Oftentimes, the selling entity will be terminated after the asset purchase. The asset purchase is typically used so that the buyer can acquire the business and assets of the selling entity without paying or assuming all of the selling entity’s debts. In some cases, the trade name of the seller is one of the assets purchased by the buyer, and the buyer will operate under the same as the seller after the sale; by this process, the buyer purchases the brand and existing goodwill of the seller, but does not assume the selling entity’s liabilities. Transferring the name without transferring the liabilities can be very complex and should only be handled by an experienced lawyer, or the buyer may assume responsibility for disclosed and undisclosed liabilities of the seller.
In every sale, the parties should consider the advantages and disadvantages of both methods. Typically, the buyer will choose the method of purchase after commencing a due diligence investigation of the business. A proper due diligence investigation will reveal the corporate organization and registration of the seller, the specific assets owned by the seller, the existing contracts and obligations of the seller and the history of seller’s taxes, liens and legal disputes, etc. This information will oftentimes determine how the buyer wishes to proceed. A more detailed explanation of the issues a purchaser should investigate can be found here.
The attorneys at Gross & Romanick, P.C. have substantial experience in preparing and negotiating both stock purchase transactions and asset purchase transactions. They understand the implications of each method on both the buyer and the seller, and can artfully draft the sale documents to protect the best interests of their clients.
In the stock purchase, the buyer purchases the existing ownership interests of the business. If the business is a corporation, the buyer is purchasing stock. If the business is a limited liability company, the buyer is purchasing membership interests. By making such a purchase, the buyer acquires an ownership interest of the existing business and assumes all rights and responsibilities which come with such ownership. Typically, such rights and responsibilities are set forth in the by-laws or shareholder agreements of a corporation, or the operating agreement of a limited liability company. The stock purchase is typically used when the existing business has valuable contracts or licenses that cannot be transferred.
In the asset purchase, the buyer purchases the existing assets of the business, but does not purchase any ownership interest in the seller’s business entity. Oftentimes, the selling entity will be terminated after the asset purchase. The asset purchase is typically used so that the buyer can acquire the business and assets of the selling entity without paying or assuming all of the selling entity’s debts. In some cases, the trade name of the seller is one of the assets purchased by the buyer, and the buyer will operate under the same as the seller after the sale; by this process, the buyer purchases the brand and existing goodwill of the seller, but does not assume the selling entity’s liabilities. Transferring the name without transferring the liabilities can be very complex and should only be handled by an experienced lawyer, or the buyer may assume responsibility for disclosed and undisclosed liabilities of the seller.
In every sale, the parties should consider the advantages and disadvantages of both methods. Typically, the buyer will choose the method of purchase after commencing a due diligence investigation of the business. A proper due diligence investigation will reveal the corporate organization and registration of the seller, the specific assets owned by the seller, the existing contracts and obligations of the seller and the history of seller’s taxes, liens and legal disputes, etc. This information will oftentimes determine how the buyer wishes to proceed. A more detailed explanation of the issues a purchaser should investigate can be found here.
The attorneys at Gross & Romanick, P.C. have substantial experience in preparing and negotiating both stock purchase transactions and asset purchase transactions. They understand the implications of each method on both the buyer and the seller, and can artfully draft the sale documents to protect the best interests of their clients.
Purchasing a Business: Legal Due Diligence
Purchasing an existing business can be a complicated process with several stages. Perhaps the most important stage is the completion of the “due diligence” study by the purchaser. Oftentimes, the due diligence study reveals areas of concern and areas of seller mismanagement that the purchaser is unaware of during the “courting” stage of the process. Thus, regardless of the structure of the purchase transaction (asset purchase, stock purchase, membership interest purchase, merger, etc.), it is imperative that the purchaser conducts a thorough review of the business, both from a financial perspective and from a legal perspective. While an experienced attorney can provide guidance for the financial review, engagement of a CPA is the better course of action. Hiring an experienced attorney is critical, however, for the legal review. The attorney will investigate the various legal issues that most purchasers overlook or do not even consider while focusing on the big picture deal. Based upon the findings of the due diligence review, the attorney will make recommendations to the purchaser and will attempt to structure the deal to protect the purchaser’s best interests. Some of the issues that are most commonly overlooked by purchasers include, but are not limited to, the following:
1. Formal business organization.
What type of entity is the business? LLC, Corporation or other type? Who are the owners? What agreements exist between the owners? Who are the managing members, directors or officers? What approvals are required for the sale to take place?
2. Registration, permits and licenses.
Where is the business registered? Is the business in good standing in all places where it is registered? Does the business need to be registered elsewhere? What permits and licenses are required to operate the business? Are the existing permits and licenses transferable?
3. Asset review.
What assets are owned by the business? What assets does the business finance or lease? Where are the assets located? Are there recorded and/or unrecorded liens on the assets? Which assets are going to transfer in the deal? Which assets are not going to transfer? Are the assets transferable?
4. Contract review.
What existing contracts is the business a party to? Are the contracts transferable? How must the contracts be transferred? Does the business sale result in a breach of any contract? What contractual obligations will the purchaser be bound to following the sale?
5. Employee issues.
Who are the existing employees and independent contractors? Will they remain with the company after the sale? Are there existing employment contracts? Will the purchaser want employees and independent contractors to execute new agreements? Is there an employee handbook? Are there employee benefit plans in place? Are there any disclosed or undisclosed employment disputes or potential violations of employment laws?
6. Existing Lawsuits and Judgments.
Are there existing lawsuits against the business? Are there outstanding claims against the business or its owners? Are there existing judgments against the business that have not been satisfied and released? Are there potential lawsuits or administrative claims?
7. Taxes.
What types of tax is the business required to pay? Have all prior taxes been paid? Are there any outstanding tax liens or assessments? Have all employee taxes been properly paid? Is there some contingent liability such as employees being improperly classified as exempt or non-exempt?
8. Creditor Issues.
Who are the creditors of the business? How much debt exists? Is the debt going to be assumed? Are creditors going to be paid out of the purchase price?
9. Other Issues
Insurance coverage; Franchise considerations; Environmental concerns; Customer relations; Intellectual property matters; etc.
The information learned from a thorough due diligence review will be critical to the purchaser’s decision of whether or not to go forward with the purchase. In some cases, the anticipated structure of the deal will change based on the information that the attorney discovers, as the purchase agreement must be designed to protect the purchaser from expected and unexpected legal problems following the sale.
Some ambitious (and imprudent) business purchasers believe that hiring an attorney to conduct legal due diligence will only “throw cold water” on the deal that the parties want to consummate. However, some of the most commonly litigated issues that arise following a business sale (including fraud and breach of contract) can often be eliminated by having an attorney complete a legal due diligence review prior to the closing of the deal. Thus, a small investment prior to closing the sale may eliminate substantial legal expenses (and perhaps worse) after completion of the sale.
The attorneys at Gross & Romanick, P.C. have substantial experience representing clients throughout the process of acquiring a business. They understand the issues that the purchaser must investigate and consider, and know how to structure the deal to protect the purchaser’s best interests. Gross & Romanick, P.C. also represents sellers, who have other issues to consider in the course of a business sale (which issues will be the subject of another article).
1. Formal business organization.
What type of entity is the business? LLC, Corporation or other type? Who are the owners? What agreements exist between the owners? Who are the managing members, directors or officers? What approvals are required for the sale to take place?
2. Registration, permits and licenses.
Where is the business registered? Is the business in good standing in all places where it is registered? Does the business need to be registered elsewhere? What permits and licenses are required to operate the business? Are the existing permits and licenses transferable?
3. Asset review.
What assets are owned by the business? What assets does the business finance or lease? Where are the assets located? Are there recorded and/or unrecorded liens on the assets? Which assets are going to transfer in the deal? Which assets are not going to transfer? Are the assets transferable?
4. Contract review.
What existing contracts is the business a party to? Are the contracts transferable? How must the contracts be transferred? Does the business sale result in a breach of any contract? What contractual obligations will the purchaser be bound to following the sale?
5. Employee issues.
Who are the existing employees and independent contractors? Will they remain with the company after the sale? Are there existing employment contracts? Will the purchaser want employees and independent contractors to execute new agreements? Is there an employee handbook? Are there employee benefit plans in place? Are there any disclosed or undisclosed employment disputes or potential violations of employment laws?
6. Existing Lawsuits and Judgments.
Are there existing lawsuits against the business? Are there outstanding claims against the business or its owners? Are there existing judgments against the business that have not been satisfied and released? Are there potential lawsuits or administrative claims?
7. Taxes.
What types of tax is the business required to pay? Have all prior taxes been paid? Are there any outstanding tax liens or assessments? Have all employee taxes been properly paid? Is there some contingent liability such as employees being improperly classified as exempt or non-exempt?
8. Creditor Issues.
Who are the creditors of the business? How much debt exists? Is the debt going to be assumed? Are creditors going to be paid out of the purchase price?
9. Other Issues
Insurance coverage; Franchise considerations; Environmental concerns; Customer relations; Intellectual property matters; etc.
The information learned from a thorough due diligence review will be critical to the purchaser’s decision of whether or not to go forward with the purchase. In some cases, the anticipated structure of the deal will change based on the information that the attorney discovers, as the purchase agreement must be designed to protect the purchaser from expected and unexpected legal problems following the sale.
Some ambitious (and imprudent) business purchasers believe that hiring an attorney to conduct legal due diligence will only “throw cold water” on the deal that the parties want to consummate. However, some of the most commonly litigated issues that arise following a business sale (including fraud and breach of contract) can often be eliminated by having an attorney complete a legal due diligence review prior to the closing of the deal. Thus, a small investment prior to closing the sale may eliminate substantial legal expenses (and perhaps worse) after completion of the sale.
The attorneys at Gross & Romanick, P.C. have substantial experience representing clients throughout the process of acquiring a business. They understand the issues that the purchaser must investigate and consider, and know how to structure the deal to protect the purchaser’s best interests. Gross & Romanick, P.C. also represents sellers, who have other issues to consider in the course of a business sale (which issues will be the subject of another article).
Gross &Romanick P.C. Handles Large Corporate Acquisition
Gross & Romanick, P.C. is proud to announce that its client has successfully closed on the purchase of the D.C. area’s premier moving company, “Two Guys and a Truck”. Our firm represented the purchaser from the initial stages of contract negotiation through the closing of the multi-million dollar transaction. This was a very complex acquisition involving the purchase of the assets of various entities, as well as the purchase of ownership interests in other entities. Gross & Romanick prepared the various agreements necessary to document the complex sale, and performed the closing in our Fairfax office. Part of the transaction involved the acquisition of a franchise operation and the issuance of a new “Two Guys and a Truck” franchise in Washington, D.C. Edward Gross and Christopher DeSimone, the Gross & Romanick attorneys handling the transaction, conducted substantial legal due diligence and were able to structure the deal to limit the purchaser’s liability exposure. In addition, Gross & Romanick negotiated a favorable lease extension with the landlord. Following the closing and the exchange of the keys to the business, both the Buyer and Seller were pleased with the handling of the transaction and were enthusiastic about their future endeavors.
Thursday, April 14, 2011
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 theatre 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 theatre 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!
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, please call 703-273-1400 or fill out our online information request form.
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!
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, please call 703-273-1400 or fill out our online information request form.
Monday, March 21, 2011
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.
***
The above is not meant to replace legal counsel. To speak to one of Gross & Romanick's attorneys, call 703-273-1400 or fill out our online information request form.
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.
***
The above is not meant to replace legal counsel. To speak to one of Gross & Romanick's attorneys, call 703-273-1400 or fill out our online information request form.
Thursday, February 17, 2011
Collecting A Corporate Debt From A Director
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.
***
The above is not meant to replace legal counsel. If you would like to speak to one of Gross & Romanick's lawyers, please contact us by calling 703-273-1400 or by filling out our online Information Request Form.
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.
***
The above is not meant to replace legal counsel. If you would like to speak to one of Gross & Romanick's lawyers, please contact us by calling 703-273-1400 or by filling out our online Information Request Form.
Wednesday, February 9, 2011
Performance Bonds
Companies in the construction industry should understand performance bonds. Performance bonds differ in many ways from payment bonds. While payment bonds are designed to assure compensation to subcontractors and suppliers, performance bonds seek to secure completion of the project or award of damages to the owner for default by the general contractor.
Performance Bonds Defined
The parties to a performance bond consist of the following: (1) the principal (usually the general contractor), (2) the obligee (the owner), and (3) the surety. In some cases, a performance bond is required of a subcontractor, in which case the principal is the subcontractor and the obligee is the general contractor. Performance bonds are primarily designed to afford significant protection to the owner, while subcontractors and suppliers typically have no rights under such bonds.
Claims are brought by the obligee, when the principal has defaulted on its contract with the obligee - the obligee declares the principal to be in default and notifies the surety. Only then is surety required to act, since premature actions by the surety can result in litigation with the principal.
Actions upon Default
In the event of default by the principal, the surety has several options. It can permit the owner to finish the project and compensate the owner for damages. Or, the surety can finish the project through a new contractor. Or, it can finance the general contractor so the defaulting obligee can complete the contract. The choice depends upon the situation and the players.
Statute of Limitations
While the federal Miller Act states no specific time period within which suit must be brought against a surety, there are federal, state and local time limitations applicable to performance bonds. Virginia Code Section 11-59 requires actions against sureties on performance bonds be filed within one year after completion of the contract, including the expiration of all warranties and guarantees. If the action is for a breach of warranty or defect, then all cases must be filed within one year of discovery of the defect or breach of warranty.
Conclusion
In conclusion, individuals in the construction industry should keep in mind that the rules and principles, which govern the operation of these bonds, are sometimes peculiar to the bonds themselves and the statutes under which they are provided. Therefore, it is important to have a good understanding of the terms of your bond, any applicable statutes, your contract and the facts.
***
The above is not meant to replace legal counsel. If you'd like to speak with one of our lawyers, please contact Gross & Romanick by calling 703-273-1400 or by filling out our online information request form.
Performance Bonds Defined
The parties to a performance bond consist of the following: (1) the principal (usually the general contractor), (2) the obligee (the owner), and (3) the surety. In some cases, a performance bond is required of a subcontractor, in which case the principal is the subcontractor and the obligee is the general contractor. Performance bonds are primarily designed to afford significant protection to the owner, while subcontractors and suppliers typically have no rights under such bonds.
Claims are brought by the obligee, when the principal has defaulted on its contract with the obligee - the obligee declares the principal to be in default and notifies the surety. Only then is surety required to act, since premature actions by the surety can result in litigation with the principal.
Actions upon Default
In the event of default by the principal, the surety has several options. It can permit the owner to finish the project and compensate the owner for damages. Or, the surety can finish the project through a new contractor. Or, it can finance the general contractor so the defaulting obligee can complete the contract. The choice depends upon the situation and the players.
Statute of Limitations
While the federal Miller Act states no specific time period within which suit must be brought against a surety, there are federal, state and local time limitations applicable to performance bonds. Virginia Code Section 11-59 requires actions against sureties on performance bonds be filed within one year after completion of the contract, including the expiration of all warranties and guarantees. If the action is for a breach of warranty or defect, then all cases must be filed within one year of discovery of the defect or breach of warranty.
Conclusion
In conclusion, individuals in the construction industry should keep in mind that the rules and principles, which govern the operation of these bonds, are sometimes peculiar to the bonds themselves and the statutes under which they are provided. Therefore, it is important to have a good understanding of the terms of your bond, any applicable statutes, your contract and the facts.
***
The above is not meant to replace legal counsel. If you'd like to speak with one of our lawyers, please contact Gross & Romanick by calling 703-273-1400 or by filling out our online information request form.
Thursday, February 3, 2011
What Creditors Can't Seize
A fellow being chased by creditors would be smart to give his fiancee' an expensive engagement ring. She'll be thrilled, and he'll be making a safe investment, since Virginia law specifically exempts wedding and engagement rings from attachment by creditors. Lawmakers have decided that, for public policy reasons, people should keep such property in the family. Better not divorce!
A religious couple might consider investing in a Guttenberg Bible, since the law also exempts the family Bible.
Animal lovers can rest easy, too. Creditors can't take the family pet, whether it's a dog, cat, squirrel or snake. As long as the debtor does not raise the animal for sale purposes, the creditor cannot take it.
Someone facing bankruptcy might not be in the frame of mind to dwell on mortality, but it's an opportune time to purchase a burial plot. The law also exempts this property as a matter of policy. Who said you can't take it with you!!
Investigate Credit Worthiness
* Call other creditors of applicant
* Call industry contacts
* Check with landlords and credit references
* Obtain a Credit Bureau Report
* Review Dun & Bradstreet Reports
* Study court records for information about: Judgments, pending litigation, title to real estate, liens on realty, and UCC financing statements
* Hire an investigator or attorney Have your CPA review financial records
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, contact us by calling 703-273-1400 or by filling out our online information request form here.
A religious couple might consider investing in a Guttenberg Bible, since the law also exempts the family Bible.
Animal lovers can rest easy, too. Creditors can't take the family pet, whether it's a dog, cat, squirrel or snake. As long as the debtor does not raise the animal for sale purposes, the creditor cannot take it.
Someone facing bankruptcy might not be in the frame of mind to dwell on mortality, but it's an opportune time to purchase a burial plot. The law also exempts this property as a matter of policy. Who said you can't take it with you!!
Investigate Credit Worthiness
* Call other creditors of applicant
* Call industry contacts
* Check with landlords and credit references
* Obtain a Credit Bureau Report
* Review Dun & Bradstreet Reports
* Study court records for information about: Judgments, pending litigation, title to real estate, liens on realty, and UCC financing statements
* Hire an investigator or attorney Have your CPA review financial records
***
The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, contact us by calling 703-273-1400 or by filling out our online information request form here.
Monday, January 17, 2011
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.
***
The above article is not meant to replace legal counsel. If you'd like to meet with one of our lawyers, please call 703-273-1400 or fill out our online Information Request form.
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.
***
The above article is not meant to replace legal counsel. If you'd like to meet with one of our lawyers, please call 703-273-1400 or fill out our online Information Request form.
Friday, January 14, 2011
SUPREME COURT RULINGS IN TWO CRIMINAL MATTERS WILL AID SAVVY DEFENSE LAWYERS
On January 13, 2011, the Virginia Supreme Court handed down two opinions that should prove to be of immense benefit to criminal defense lawyers.
In the first opinion, Roseborough v. Commonwealth, Record No. 100507, the Virginia Supreme Court held that the Virginia Implied Consent law is implicated in all circumstances where a defendant accused of drunk driving is asked to submit to a breath test. In this case, the Supreme Court found that the trial court erred in admitting into evidence a Certificate of Analysis because the officer had made an invalid warrantless arrest. Consequently, the logic of the holding will allow criminal defense lawyers to argue that the statutory requirements of the implied consent law must be strictly followed, or the results of the breath test will be inadmissible in Court.
In the second opinion, Hernandez v. Commonwealth, Record No. 092524, the Virginia Supreme Court held that a Circuit Court judge has the inherent authority to enter a deferred disposition for any type of case. In its holding, the Supreme Court determined that the act of entering judgment is more than a ministerial act and therefore the Court determined that judges are not obligated to enter a judgment of guilt even if the evidence supports a finding of guilt. This case will open the door for defense attorneys in appropriate cases to seek probation, community services and alternative ways of addressing the problem without the need for entry of a criminal conviction on their client’s record.
Collectively, these opinions provide new legal authority for savvy criminal defense lawyers to help defend and assist their clients.
In the first opinion, Roseborough v. Commonwealth, Record No. 100507, the Virginia Supreme Court held that the Virginia Implied Consent law is implicated in all circumstances where a defendant accused of drunk driving is asked to submit to a breath test. In this case, the Supreme Court found that the trial court erred in admitting into evidence a Certificate of Analysis because the officer had made an invalid warrantless arrest. Consequently, the logic of the holding will allow criminal defense lawyers to argue that the statutory requirements of the implied consent law must be strictly followed, or the results of the breath test will be inadmissible in Court.
In the second opinion, Hernandez v. Commonwealth, Record No. 092524, the Virginia Supreme Court held that a Circuit Court judge has the inherent authority to enter a deferred disposition for any type of case. In its holding, the Supreme Court determined that the act of entering judgment is more than a ministerial act and therefore the Court determined that judges are not obligated to enter a judgment of guilt even if the evidence supports a finding of guilt. This case will open the door for defense attorneys in appropriate cases to seek probation, community services and alternative ways of addressing the problem without the need for entry of a criminal conviction on their client’s record.
Collectively, these opinions provide new legal authority for savvy criminal defense lawyers to help defend and assist their clients.
Thursday, January 13, 2011
Collections
Gross & Romanick has an extensive and substantial history in the practice area of debt collections. (We've even started a new blog that you may want to read--Legal Collection Blog. For many years the Law Firm handled a large volume of collection matters. During that period the firm represented creditors in thousands of cases, working with numerous collection agencies, other collection law firms, forwarding lists and large companies. The Law Firm was a member of the Commercial Law League of America, the leading organization of collections, creditors' rights and bankruptcy professionals. In addition, Edward Gross, the managing partner, developed a collection software program (GoldSoft) that was sold to and is still used by many collection law firms across the United States.
In 2000, the law firm purposely chose to change focus from a volume collection practice to concentrate on larger dollar value collection matters. The lawyers at Gross & Romanick routinely apply the knowledge gained from collecting so many debts in their past to assist its current clients who are generally owed a substantial amount of money. Gross & Romanick continues to utilize the latest technological advances in its collection practice. The Law Firm has access to huge databases and extensive online research tools.
Collection of judgments requires creativity and persistence. Businesses that owe money to our client must either pay or go out of business. Here are just a few of the collection techniques used by us in our practice:
Investigations
Our firm has the internal ability to investigate the debtor and the likelihood of collection. In some cases we use private investigative services, locator services and other outside professionals to locate the debtor and the debtor's assets.
Demands & Settlements
In many cases a lawsuit can be avoided by an aggressive demand letter. If the debtor is willing to make and the client is willing to accept a payment schedule, we structure settlement agreements to assure, as much as possible, payment of the debt. Often, we utilize confession of judgment notes, consent orders, UCC-1 Financing Statements, Deeds of Trust and other security to back up the promise to pay.
Judgments
It is important to sue all of the parties who may be liable for the debt, including tradenames and guarantors, in a manner that improves the likelihood of collection after the judgment. While many law firms simply sue the obvious parties responsible for the debt and do not consider the ultimate collection of the judgment, our firm performs a thorough review of the documents, facts and parties before filing the lawsuit. When it can be done in "good faith", we include fraud, conversion and other causes of action that may prevent a judgment from being discharged in bankruptcy.
Prejudgment Attachments
In some circumstances the court may authorize the seizure of property and bank accounts of the debtor even before suit is filed. Obtaining a prejudgment attachment is very technical and requires a firm with a great deal of experience to succeed.
Garnishments & Seizures
The seizure of bank accounts, debts owed to the judgment debtor, personal property and other intangible property is a favored collection procedure. Finding the property, serving the proper parties and filing the proper paperwork takes a tremendous amount of experience and aggressive effort. The judgment debtor must be made to understand that non-payment will result in disturbance to its business and personal finances.
Debtor's Interrogatories
The judgment creditor is entitled to question the debtor about the location of its assets. We generally conduct debtor's interrogatories before a commissioner or a judge, and have a court reporter transcribe the debtor's testimony. This procedure discourages perjured testimony and aids in understanding the potential location of all assets. If a debtor is personally served with the Summons ordering attendance at Debtor Interrogatories hearing and fails to show, our Law Firm routinely requests that the debtor be arrested for disobeying the Court Order and only released upon the posting of a bond.
Fraudulent Conveyances
In some cases a debtor may transfer assets to a third party or other entity in order avoid payment of the debt. We have filed many legal actions to pierce corporations and to pursue the third parties to whom the assets were transferred.
Bankruptcy
Bankruptcy does not necessarily end our pursuit of the debt or the judgment. We have successfully collected money from many debtors who filed bankruptcy. It some cases we have objected to discharge based upon fraud, conversion or other allowable objections to discharge under bankruptcy law.
For more information or to speak to one of our lawyers today, please contact Gross & Romanick by calling 703-273-1400 or filling out our online Information Request form.
In 2000, the law firm purposely chose to change focus from a volume collection practice to concentrate on larger dollar value collection matters. The lawyers at Gross & Romanick routinely apply the knowledge gained from collecting so many debts in their past to assist its current clients who are generally owed a substantial amount of money. Gross & Romanick continues to utilize the latest technological advances in its collection practice. The Law Firm has access to huge databases and extensive online research tools.
Collection of judgments requires creativity and persistence. Businesses that owe money to our client must either pay or go out of business. Here are just a few of the collection techniques used by us in our practice:
Investigations
Our firm has the internal ability to investigate the debtor and the likelihood of collection. In some cases we use private investigative services, locator services and other outside professionals to locate the debtor and the debtor's assets.
Demands & Settlements
In many cases a lawsuit can be avoided by an aggressive demand letter. If the debtor is willing to make and the client is willing to accept a payment schedule, we structure settlement agreements to assure, as much as possible, payment of the debt. Often, we utilize confession of judgment notes, consent orders, UCC-1 Financing Statements, Deeds of Trust and other security to back up the promise to pay.
Judgments
It is important to sue all of the parties who may be liable for the debt, including tradenames and guarantors, in a manner that improves the likelihood of collection after the judgment. While many law firms simply sue the obvious parties responsible for the debt and do not consider the ultimate collection of the judgment, our firm performs a thorough review of the documents, facts and parties before filing the lawsuit. When it can be done in "good faith", we include fraud, conversion and other causes of action that may prevent a judgment from being discharged in bankruptcy.
Prejudgment Attachments
In some circumstances the court may authorize the seizure of property and bank accounts of the debtor even before suit is filed. Obtaining a prejudgment attachment is very technical and requires a firm with a great deal of experience to succeed.
Garnishments & Seizures
The seizure of bank accounts, debts owed to the judgment debtor, personal property and other intangible property is a favored collection procedure. Finding the property, serving the proper parties and filing the proper paperwork takes a tremendous amount of experience and aggressive effort. The judgment debtor must be made to understand that non-payment will result in disturbance to its business and personal finances.
Debtor's Interrogatories
The judgment creditor is entitled to question the debtor about the location of its assets. We generally conduct debtor's interrogatories before a commissioner or a judge, and have a court reporter transcribe the debtor's testimony. This procedure discourages perjured testimony and aids in understanding the potential location of all assets. If a debtor is personally served with the Summons ordering attendance at Debtor Interrogatories hearing and fails to show, our Law Firm routinely requests that the debtor be arrested for disobeying the Court Order and only released upon the posting of a bond.
Fraudulent Conveyances
In some cases a debtor may transfer assets to a third party or other entity in order avoid payment of the debt. We have filed many legal actions to pierce corporations and to pursue the third parties to whom the assets were transferred.
Bankruptcy
Bankruptcy does not necessarily end our pursuit of the debt or the judgment. We have successfully collected money from many debtors who filed bankruptcy. It some cases we have objected to discharge based upon fraud, conversion or other allowable objections to discharge under bankruptcy law.
For more information or to speak to one of our lawyers today, please contact Gross & Romanick by calling 703-273-1400 or filling out our online Information Request form.
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