Fairfax Virginia Law Blog

The Americans with Disabilities Act and Reasonable Accommodations

2011-12-05T10:45:00.000-05:00

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.

Generally, the employee has the legal duty to initiate a request for a disability accommodation, unless the employer is aware of the disability. The employer’s knowledge of the disability can be inferred if the disability is obvious. The employer is not required to provide the best accommodation available; or the specific accommodation that the employee wants. An accommodation is effective if it provides the disabled individual with the ability to participate equally in the employment application process, attain the same level of performance as co-workers, and enjoy all benefits and privileges of employment available to all employees.

An employer does not have to eliminate an “essential function” of the position in order to accommodate an individual with a disability, because a person with a disability who is unable to perform the essential function with reasonable accommodation is not a qualified individual within the meaning of the ADA. Essential functions are the fundamental job duties that an individual must be able to perform, with or without an accommodation. The employee must also satisfy the employer’s job requirements for educational background, employment experience, skills, licenses, and any other qualification standards that are job related.

Accordingly, a careful employer should assume that if an employee suffers from any sort of obvious functional limitation at work, it is covered by the ADAAA, and a reasonable accommodation should be offered. Below are recommended practices for all employers:

1. Enable all individuals to participate equally in the job application process.
An employer must provide a reasonable accommodation to a qualified applicant with a disability that will enable the individual to participate equally in the application process and to be considered for a job, unless the employer can show undue hardship. However, an employer may not ask the applicant if they will need a reasonable accommodation for the job should the applicant be hired until after a conditional offer of employment is made.

2. Be responsive to employee requests for reasonable accommodations.
The request is the first step in an informal, interactive process between the employee and the employer. Once a request is made, the employer should expeditiously determine if the employee has a disability. The employer can ask for reasonable documentation to prove the disability unless it is obvious.

3. Be aware of potential employee disabilities.
If a disability is obvious, and the employee does not ask for a reasonable accommodation, the employer should initiate a discussion with the employee regarding the need for a reasonable accommodation. If the employee declines, the employer has fulfilled its duty.

4. Carefully select reasonable accommodations.
The employer should carefully select the accommodation(s) to be provided to an employee with a disability, keeping in mind that the accommodation(s) must allow the employee to (a) obtain equal access to information communicated to employees in the workplace and (b) to participate in employer-sponsored programs and benefits in the workplace. The accommodations do not have to be the best accommodations or the accommodations that the employee wants, and do not have to be provided if they will cause the employer to suffer an undue hardship.

A Summary Explanation of the Doctrine of Charitable Immunity

2011-11-30T10:52:00.002-05:00

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.

Membership in a class of individuals that could theoretically obtain benefits from the charity is also not enough. Thrasher v. Winand, 239 Va. 338 (1990). Merely because an individual may be eligible to receive the benefits of a particular charity does not mean that charity is immune from tort liability to that individual, unless that person actually receives the benefits of the charity.

Finally, a charitable organization is only immune from liability to its beneficiaries for ordinary negligence committed by the organization’s employees or agents. This means that the organization remains liable to its beneficiaries for acts of gross negligence, acts committed by other individuals that the organization had a duty to monitor (such as other beneficiaries) and for damages that do not result from negligence (such as a breach of contract). For example, a charitable organization may be liable to its beneficiaries for torts committed by other beneficiaries if the charity failed to properly supervise said beneficiaries. A charity can also be liable for the actions of its employees and agents if those individuals were negligently hired or negligently retained.

Going back to the in-home meal charity, the charity would likely be immune from a lawsuit by the recipient of an in-home meal for damages resulting from undercooked chicken if (1) the cook had been hired after appropriate screening; (2) the cook was not grossly negligent in cooking the chicken; and (3) the cook actually worked for or volunteered for the charity.

In conclusion, it is imperative that non-profits operating for charitable purposes take steps to ensure that they will be afforded the protections of charitable immunity. Specifically, the articles of incorporation must reflect a charitable purpose and the organization must operate consistent with that purpose. If the organization wishes to broaden or change its mission, the articles of incorporation must be amended. The organization should utilize proper hiring and training practices as well as appropriately supervise employees and agents. In addition, the organization should clearly understand and identify who actually receive the benefits of the charity.

At Gross & Romanick, we have considerable experience representing charitable organizations in matters ranging from drafting Articles of Organization to litigating tort claims. If you are forming or have formed a non-profit organization, you should retain experienced counsel to assist you in navigating the vast array of legal issues inherent in charitable organizations, including but not limited to the doctrine of charitable immunity.

Non-compete Provision - Revisited and Reversed by Virginia Supreme Court

2011-11-28T13:58:00.002-05:00

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.

The non-compete provision being considered by the Court stated as follows:

The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever, in any city, cities, county or counties in the state(s) in which the Employee works and/or in which the Employee was assigned during the two (2) years next preceding the termination of the Employment Agreement and for a period of two (2) years from and after the date upon which he/she shall cease for any reason whatsoever to be an employee of [Home Paramount].

The Supreme Court determined that the "function" element of the non-compete was too broad since it prevented the employee from working in the pest control industry in any capacity (as opposed to preventing him from performing the same services he provided for the employer). The Supreme Court explained that there are a number of "reasonably conceivable" activities that the employee would be prevented from performing for a competitor (i.e. janitorial services or bookkeeping) which the former employer has no legitimate business interest in prohibiting. The Supreme Court went on to explain that if the "function" element is clearly overbroad, the "geographic scope" and "duration" elements of the non-compete cannot save the provision, and the entire non-compete agreement will not be enforced.

This case makes it abundantly clear that in Virginia, the Courts will not enforce non-compete provisions which prohibit a former employee from performing any activities for a competitor, even unlikely or hypothetical activities. For a non-compete agreement to be enforceable, the employee can only be restricted from performing specific services that are competitive to the services he/she provided for the former employer.

If you need a non-compete agreement to be prepared, reviewed, enforced or litigated, contact the law firm of Gross & Romanick at 703-273-1400. Visit our website at: www.gross.com.

Successful Defenses to Virginia DWI/DUI

2011-11-22T18:22:00.001-05:00

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.

In order to arrest an individual, police must have probable cause to believe that the individual has committed an offense. Typically, in the context of DWI arrests, this decision is based upon driving behavior and field sobriety tests. Some officers will also utilize field (or preliminary) breath testing (“PBT”). If an individual performs well on field sobriety tests and the officer makes a decision to arrest based upon a PBT result, that arrest may be unlawful if the PBT was not properly administered and the individual was not properly advised of their rights regarding the PBT.

Sometimes, even if the field sobriety tests do give rise to probable cause for the arrest, they are not sufficient, by themselves, to prove beyond a reasonable doubt that an individual was driving while intoxicated. If the defendant refuses a station breath test and the field tests are marginal, there may be insufficient evidence to find the defendant guilty of DWI beyond a reasonable doubt.

Other issues that could result in acquittals include unconstitutionally deployed checkpoints, problems with breath analysis machines, improper administration of implied consent laws and a host of constitutional issues regarding the search and seizure of individuals on the highways.

At Gross & Romanick, we pride ourselves on zealous defense of individuals charged with serious traffic offenses, including DWI. We are well versed in all the issues that can result in an acquittal or a reduction to a lesser offense. In 2011 (through November 22), clients of Gross & Romanick, P.C., on average, bested the statewide conviction rate by over 25%. More specifically, 40% of Gross & Romanick's DWI clients were not convicted of a DWI. In 2010, the conviction rate for clients of Gross & Romanick was closer to the statewide average, but over half of those individuals were charged with an enhanced DWI and were convicted of something less than their original charge.

An enhanced DWI charge is a DWI charge that is somehow more serious than a standard DWI charge. If a BAC is over .15, there is mandatory jail time and a requirement for an ignition interlock device. An enhanced DWI charge also includes situations where individuals are charged with a 2nd or subsequent offense within the past 10 years. In situations where individuals have been charged with enhanced DWI, Gross & Romanick has been very successful in obtaining a reduction of the charge to a 1st offense or obtaining a reduction of the BAC.

There are, obviously, a great many factors that influence the results of a particular case: the presence of reasonable suspicion for the traffic stop, the existence of probable cause to arrest, maintenance records for breath machines and the presence of any of the multitude of issues discussed in this article as well as some issues that are beyond the scope of this article. Every case is different and past results cannot predict future results but one cannot help but wonder if the statewide conviction rate would be any lower if some of those 29,063 individuals had retained experienced defense counsel such as the attorneys at Gross & Romanick, P.C.

The Importance of By-Laws to Resolve Governance Battles

2011-11-21T16:23:00.001-05:00

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:

1. The different classes of membership;
2. The rights and limitations which attach to each class of membership;
3. The individuals eligible to be members of each class of membership;
4. The procedure for applying for membership;
5. The procedure for admitting members;
6. The date, time and place of meetings of the membership;
7. The procedure for submitting issues to a vote of the membership;
8. The minimum votes required for the organization to take action;
9. The number of directors and officers;
10. The individuals eligible to be elected as officers and directors;
11. The procedure for nominating individuals for office or directorship;
12. The procedure for electing officers and directors (time, place, manner of voting, proxies, quorum requirements, etc.);
13. The terms of office for officers/directors and eligibility for re-election;
14. The procedure for expelling and replacing officers and directors; and
15. The procedures for amending the by-laws.

The by-laws need to be more comprehensive than our brief outline above. However, if the above-stated items are clearly set out in the by-laws, such that there can be no disagreement about how natural shifts in power must occur, then the organization should be able to control the damage that can result from membership discord. Also, the bylaws should not be a static document, and should be subject to adaptation as the organization evolves.

The attorneys at Gross & Romanick have substantial experience drafting by-laws for non-profit organizations. Whether the organization has recently formed or has been in existence for many years, we can carefully construct by-laws to suit the goals of its members, taking into account the unique aspects of the organization.

Beware When Giving a Reference

2011-11-08T19:42:00.002-05:00

It is more dangerous than ever to speak with a potential employer of your former employee. The Fairfax County Circuit Court in the case of Elsami v. Global One Communications, Inc. (Fairfax County Circuit Court, Law # 174096, January 11, 1999), recently permitted a defamation action to proceed against a corporation that responded to a reference inquiry.

In the Elsami case, a former employee provided his prior employer as a reference. The employee was in a managerial position in charge of the day to day running of the business in Malaysia. When contacted by a potential new employer, the former employer is alleged to have stated that the employee "lost his temper" and "just did not fit in". The employee claims that these statements cost him the potential job, so he sued his former employer for defamation.

The Fairfax County Circuit Court is allowing the case to proceed toward trial, finding that the statements made by the former employer were statements of fact, not opinion, and could have impugned the employee's professional reputation and negatively impacted his profession by preventing him from obtaining new employment.

What is an employer to do?

Although Mr. Elsami must still prove that the statements of fact were false, the Fairfax case illustrates the danger of providing references for former employees. Any time you speak with someone about a former employee, you place yourself and your company at risk of being sued. Moreover, the distinction between permissible negative opinions and impermissible factual misstatements is too difficult to determine when giving a negative reference.

The safest route is to adopt a company policy not to provide any information beyond position held and dates of employment. Any additional information and you may find yourself in expensive litigation defending your statements.

Theoretically you could obtain a written waiver and release from your former employee before speaking with third parties. Another alternative is to only give written references directly to the employee, which they can distribute to potential employees if they so choose. The safest course is to provide no statement at all.

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The above is not meant to replace legal counsel. If you'd like to speak to one of our attorneys, please contact us at 703-273-1400 or fill out our information request form.

Judge Nordlund Opinion in Columbia Realty Venture, LLC v. Dong Dang

2011-10-20T15:09:00.002-04:00

Judge Nordlund Opinion in Columbia Realty Venture, LLC v. Dong Dang --- Continued

2011-10-20T15:01:00.004-04:00

“Non-Profit” Does Not Equal “Tax-Exempt”: Applying for Federal Tax-Exempt Status

2011-09-27T14:09:00.002-04:00

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.

Charitable and religious organizations must apply for tax exemption under Internal Revenue Code Section 501(c)(3) by filing a Form 1023. In order to qualify for tax exemption under Section 501(c)(3), the organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes, the net earnings may not inure to the benefit of any private individual or shareholder, no substantial part of its activity may be attempting to influence legislation, the organization may not intervene in political campaigns, and the organization’s purposes and activities may not be illegal or violate fundamental public policy. A 501(c)(3) organization must benefit the public, and it activities must be limited to a specified cause. A 501(c)(3) organization is eligible to receive grants but cannot engage in political lobbying. Donations to a 501(c)(3) organization are generally tax deductible as charitable contributions.

Business leagues must apply for tax exemption under Internal Revenue Code Section 501(c)(6) by filing a Form 1024. A business league is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit. In order to qualify for a tax exemption, a business league's activities must be devoted to improving business conditions of one or more lines of business, as distinguished from performing particular services for individual persons. No part of a business league’s net earnings may inure to the benefit of any private shareholder or individual, and it may not be organized for profit to engage in an activity ordinarily carried on for profit. Business leagues, unlike 501(c)(3) organizations, are not eligible for grants, but may engage in political lobbying. Membership dues to a 501(c)(6) business league are not tax deductible, but can be classified as a business expense.

Both the Form 1023 and the Form 1024 are lengthy application packets which require the applicant to supply the IRS with a substantial amount of business and financial information. The IRS carefully reviews the applications to ensure that the applicant strictly complies with the statutory requirements. For many organizations, the assistance of an attorney in the preparation of the tax-exemption application may be necessary.

The attorneys at Gross & Romanick, P.C. have substantial experience representing non-profit organizations throughout the process of establishing the non-profit entity and applying for tax-exempt status. Gross & Romanick is general counsel for non-profit organizations, assisting with various issues including leases, property tax assessments, employment law and other legal matters.

Withdrawal Provisions in Organizational Documents

2011-09-27T14:09:00.001-04:00

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:

1. The withdrawing owner automatically forfeits his/her ownership interest without compensation;
2. The entity or other owners are forced to buy-out the withdrawing owner’s interest for an fixed price or a price set by a formula (some formula examples are: appraisal by expert, book value, or a multiple of earnings);
3. The withdrawing owner can sell his/her interest to a third party bona fide purchaser after giving a right of first refusal to the company or other owners;
4. The entity has the option to buy-out the withdrawing owner’s interest for an agreed price, which if not exercised, allows the withdrawing owner to retain economic ownership rights (i.e. right to receive profits), but lose other ownership rights (i.e. the right to vote on business decisions).

In crafting the withdrawal provisions, organizers should take into account the respective duties of the owners to the business. If the income of the business is directly generated by the services provided by the owners (i.e. doctors of a medical practice or attorneys of a law firm), the organizers should probably avoid a situation where one owner can withdraw from providing services, but continue to receive the profits of the business. For those entities, options 1 and 2 above are more suitable. On the other hand, for entities with passive investors, the owners may prefer option 3 or 4 above.

If the entity is going to use a forced or optional buy-out mechanism, it is critical that the agreement clearly states how the buy-out price is determined, and when the withdrawing owner will be paid. Most buy-out formulas are tied to the profit of the business in previous years, plus the value of existing assets. When crafting the buy-out mechanism, the owners should take into account the projected cash-flow of the business and hedge against the risk that the company will be unable to buy-out the withdrawing owner in a lump sum.

The attorneys are Gross & Romanick are well-versed in structuring operating agreements and shareholder agreements to suit the specific business needs of their clients, including carefully crafting withdrawal provisions.

COVENANTS NOT TO COMPETE – DIFFICULT TO ENFORCE IN VIRGINIA

2011-09-27T14:07:00.001-04:00

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:

“Employee hereby agrees that during the Employment Period, and for one year following the termination of the Employment Period, however occurring, Employee will not directly or indirectly, expressly or tacitly, for himself or on behalf of any Competitor, provide Services to any Client to which Employee, or any individual working under the supervision of the Employee, provided substantially similar or related Services during Employee's employment with Daston.”

The employment agreement defined “Competitor” as follows: “any firm, person or entity that provides services or products that are directly competitive with the Services. The “Services” means those Information Technology, Financial Management, Business Consulting and other services that are provided by Daston or Employee during the Employment Period or are being researched or developed by Daston with Employee's assistance as of the expiration of the Employment Period.”

The employment agreement further provided that the covenant not to compete was to be applied nationwide due to the nationwide presence of the Clients, and contained an acknowledgment on each Employee’s part that the enforcement of the restrictions would not prevent Employee from being able to fully earn a livelihood. The employment agreement did not define the word “Client”.

The Court ruled that the covenant not to compete was overbroad, and therefore unenforceable, because the phrase “substantially similar or related” is vague and barred not only direct competition with Daston, but also the provision of services that are merely “related” to the services provided by Daston. Thus, the covenant not to compete was broader than necessary to protect Daston’s legitimate business interest. The Court went on to explain that Courts in Virginia will not “blue pencil” covenants not to compete, meaning that the Courts will not modify the covenant not to compete so as to be enforceable and then enforce the modified covenant.

What this case demonstrates is that in Virginia (and in Fairfax County in particular), covenants not to compete must be very narrowly tailored to protect the employer’s interest in order to be enforceable.

Virginia employers that wish to restrict competition from their employees should have an attorney artfully draft the non-compete language so as to ensure enforceability. The Virginia Courts have made it clear that they will not enforce covenants which are overbroad in the slightest sense. The covenant must narrowly restrict competition to the specific services that are provided by the employer and the specific employee. Thus, an employer cannot rely on the broad boilerplate language found in most standard form employment agreements. The employer must carefully tailor the language on an employee by employee basis.

The attorneys at Gross & Romanick, P.C. have considerable experience drafting non-compete agreements and handling a variety of employment matters. We know the law, we know the cases, and we know how to protect your interests.

Statutory Lien

2011-08-25T14:07:00.003-04:00

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.

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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.

Should You Cash That Check?

2011-08-18T13:11:00.002-04:00

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.

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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.

The Car Accident Patient: Getting Paid.

2011-07-21T11:57:00.004-04:00

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.

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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.

Statute Of Frauds

2011-06-21T14:36:00.001-04:00

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.

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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.

Legal Implications of IP Addresses

2011-05-16T13:08:00.003-04:00

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.

Civil Remedies for Online Harassment and Cyber-Bullying

2011-05-16T13:06:00.001-04:00

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.

Gross & Romanick Attorney Appears On Fox 5 News

2011-05-12T10:28:00.000-04:00

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."

Northern Va Hair Care Business Receives Outpouring of Support After Hateful Facebook Posts: MyFoxDC.com

To read the full story, click here.

To contact Gross & Romanick call 703-273-1400 or fill out our online Information Request form.

Buildout Allowance - Landlord Gets Slammed

2011-05-11T11:25:00.002-04:00

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.

Restricting Competition Following A Business Sale

2011-04-22T11:17:00.000-04:00

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.

Stock Purchase or Asset Purchase?

2011-04-22T11:15:00.002-04:00

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.

Purchasing a Business: Legal Due Diligence

2011-04-22T11:15:00.001-04:00

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).

Gross &Romanick P.C. Handles Large Corporate Acquisition

2011-04-22T11:14:00.000-04:00

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.

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

2011-04-14T11:23:00.002-04:00

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!

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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.

Federal Privacy Policy

2011-03-21T15:14:00.002-04:00

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.

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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.

Collecting A Corporate Debt From A Director

2011-02-17T09:24:00.002-05:00

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.

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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.

Performance Bonds

2011-02-09T11:51:00.002-05:00

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.

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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.

What Creditors Can't Seize

2011-02-03T11:17:00.002-05:00

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

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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.

Business Conspiracy and Employee's Fiduciary Duties

2011-01-17T09:54:00.002-05:00

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

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

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

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

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

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

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

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The above 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.

SUPREME COURT RULINGS IN TWO CRIMINAL MATTERS WILL AID SAVVY DEFENSE LAWYERS

2011-01-14T15:45:00.000-05:00

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.

Collections

2011-01-13T10:37:00.002-05:00

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.

Chapter 11 Bankruptcy & Creditors

2010-12-30T08:38:00.001-05:00

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

Plan of Reorganization

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

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

The Automatic Stay

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

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

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

Benefit to Creditors

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

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

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The above is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact the offices of Gross & Romanick by calling 703-273-1400 or by filling out our online information request form.

Gross & Romanick Has New Blog

2010-12-20T12:06:00.002-05:00

We're proud to announce our new Legal Collection Blog. At http://www.legalcollectionblog.com/ you can expect to find insightful articles and commentary by attorneys who practice at the law firm of Gross & Romanick, P.C.,regarding recent cases, basic concepts and state of the art principles relevant to the collection of debts and judgments through the United States legal system. The blog will also present articles on many creditor issues, as well as asset protection.

At-Will Employment: The Employee Handbook

2010-12-08T12:06:00.002-05:00

WHAT CONSTITUTES AN EMPLOYEE HANDBOOK: An employee handbook can consist of a two page memo informing your employees of specific rules regarding a certain aspect of their employment or it can be a three volume epic covering every aspect of employee behavior, benefits and duties.

DOES A HANDBOOK CREATE A CONTRACT? Not under Virginia law unless there is a written or oral agreement referencing the handbook. However, there are certain conditions in which a handbook or manual can be relied on to establish an employee's rights against an employer. These conditions are: 1) when the wording appears to take the relationship out of an at-will context by fixing the duration of the term of employment, and 2) if its terms constitute a binding promise. An employer may be unhappy to find that a jury or a judge will make the final decision as to whether the wording of the handbook changed the relationship from at-will employment to something more binding.

ACTION ADVICE: Always have your employee handbooks or handbook modifications written by an attorney. Make sure that the handbook states that the terms of employment are "at will". Avoid vague language that may promise benefits that the company does not wish to provide. When discussing disciplinary procedures, give the employer broad discretion to impose probation, demotion and termination. Have employees sign for receipt of the handbook. Finally, follow the handbook when making decisions about employee benefits and discipline.

The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's lawyers, call us today at 703-273-1400 or fill out our Online Information Request form.

Management Issues in LLC Operating Agreements

2010-11-22T11:38:00.002-05:00

Upon forming a limited liability company (LLC), the founding members should have an operating agreement prepared by a lawyer. The operating agreement is the document that will govern the operations of the company and establish the rights and duties of the members. In most jurisdictions the law allows the parties to decide how the LLC will operate (with some limitations), even if a provision in the operating agreement varies from the LLC statute of that state. Therefore, preparing an operating agreement is an opportunity for the founding members to establish their own set of rules and regulations.

The members may want the company to be managed by a single managing partner or by multiple persons. The members need to carefully consider the implications of such shared management and artfully draft the operating agreement to account for potential disagreements amongst the managers and potential manager misconduct. The members also need to decide whether or not the managers will be able to engage in other businesses. If the members do not want the managers to be able to engage in other businesses (especially competitive businesses), the operating agreement must include such restrictions.

Some other issues to consider with regard to management of the LLC are:

1. If there are multiple managers, how will decisions be made (majority vote?)?
2. What will be the duties of the manager(s)?
3. How much power will be invested in the manager(s)?
4. What limitations will be placed on managers and reserved to the members?
5. How can managers be removed?
6. What will managers be paid?

Founding members of a limited liability company should not assume that the law will protect their interests when there are disputes amongst the members and managers. Rather, they need to make sure that the operating agreement clearly reflects their intentions and goals. Few, if any, of the form operating agreements found or purchased on the internet adeq uately address many of the concerns that will be important to the members of the LLC. Every LLC is different, and the operating agreement must be designed to afford the member the best chance for business success and the avoidance of conflict.

The attorneys at Gross & Romanick, P.C. have considerable experience drafting LLC Operating Agreements that effectively resolve management issues endemic to LLC governance. If you have an LLC and are unsure of how to organize the structure of management or want to memorialize the management structure that you have created, contact the attorneys at Gross & Romanick, P.C.

Protecting Confidential Information from Employee Theft

2010-11-22T11:29:00.003-05:00

In today’s electronic age, most employers maintain proprietary, confidential information in electronic form accessible to its employees. This access can be particularly problematic when an employee resigns from employment or is terminated. In a matter of minutes, the employee can discreetly copy the employer’s electronic data onto a disk or flash drive. The former employee can use this information to compete against the employer, to solicit the employer’s clients or for other improper purposes. While the law does provide certain protections to an employer against such behavior after the fact, the employer’s business can still be irreparably damaged.

These issues were raised in Tryco, Inc. v. U.S. Medical Source, LLC, et al., a recent case before the Fairfax County Circuit Court. In that case, a sales representative of a small business resigned from employment and accepted a position with a competing company owned by his sister-in-law. Before leaving, he copied onto his flash drive all of his personal files and two documents containing confidential company information. He also sent an e-mail to each of his clients from his company e-mail address informing them that he was no longer with the company; these e-mails were sent as a blind copy to his personal address (and thus, he retained the e-mail address of each of his clients).

Shortly after commencing work for his new employer, his former employer filed a lawsuit against the employee on various theories including breach of fiduciary duty, civil conspiracy and computer trespass. The former employer alleged that the copied documents contained confidential information which was misappropriated and used by the employee and his new employer for competitive purposes. However, the employer was unable at trial to demonstrate that the documents were used for an improper purpose. Making the case harder for the employer was that the employee did not have a non-compete provision in his employment agreement.

This case is a warning to employers that, even when former employees retain their confidential information without authorization, they may not find a remedy in court. This case can be easily contrasted with other Virginia cases in which employers were able to obtain judgments against former employees that used confidential information to the detriment of the Employer. For example, in Banks v. Mario Industries, 274 Va. 438 (2007) the Virginia Supreme Court affirmed a Circuit Court judgment against a former employee who: (a) had established a competing company, (b) solicited other employees and contractors of the employer to work for the competing company, (c) used the employer’s business plan as a model for the competing company, and (d) used the employer’s business phone book (which contained valuable and confidential contact information for Mario's customers, vendors, and sales representatives) as a resource for the competing company. The evidence in that case also demonstrated that the employee diverted valuable contracts from the employer to his new company. The employer was able to obtain a judgment for lost profits and punitive damages, despite the fact that the employee did not have a non-compete agreement.

These cases demonstrate the ease with which an employee can convert an employer’s confidential information following the termination of his/her employment. If the employee is not bound by an enforceable non-compete agreement, he/she is free to work for a competing business. In most cases, the employer will not know for certain whether or not the employee is actually using confidential information to the detriment of the employer. The employer may be forced to file a lawsuit to ascertain the scope of the misappropriation, to enjoin the use of confidential information and to recover compensatory damages. Without a good non-compete agreement, the employer will have to prove that it has suffered actual damages as a result of the misappropriation, which may not be easy to do. In any event, the employer’s business may have suffered irreparable injury (e.g. loss of customers) by the end of the expensive court process.

Therefore, it is important for employers to take preemptive steps to protect against an employee’s unauthorized taking of confidential information. The employer can utilize various protection measures, including but not limited to the following:

Technological

a. limit employee access to proprietary information and documents
b. monitor employee use of computers and files
c. restrict employees from taking laptop computer off-site
d. limit use of smart phones at the office
e. restrict employee sending business e-mails to personal accounts

Legal

a. warn employees that there is no expectation of privacy for data on company computers
b. have employees sign confidentiality agreements
c. have employees sign non-compete provisions
d. include liquidated damages provisions within confidentiality/non-compete agreements to avoid having to prove losses in Court
e. adopt and distribute an employee handbook with clear restrictions on use of documents and other protections for the company
f. in the event of a breach of confidentiality or non-compete agreement, take immediate legal action such as obtaining a restraining order and an order allowing search of ex-employee’s computers/phones
g. take aggressive legal action against offending ex-employee based upon use of trade secrets, conspiracy to harm business, tortious interference, conversion, etc.

Proper Termination Procedures

a. Create termination procedure guidelines
b. Supervise employee use of computers following termination/resignation
c. Check computer logs for downloads and printing
d. Check e-mails that are sent by terminated employee
e. Immediately retrieve all company computers, phones and files
f. Contact your lawyer

Gross & Romanick, P.C. featured in Virginia Lawyers Weekly

2010-11-19T11:17:00.001-05:00

Click here for the article in PDF format

Contractor's Hit Hard By Taxes/Licenses

2010-11-17T12:10:00.002-05:00

If you do construction contract work in Virginia, you may wonder when the taxes end and the profits begin. Both federal and state laws require income taxes, but you may not realize the extent to which localities can pick your pocket. Here is a brief summary of some of the taxes and fees that Virginia counties, cities and towns can levy on your business:

�58.1-3703 - Counties, cities and towns can require a license, impose a fee and assess a license tax.

�58.1-3706 - Under the new BPOL tax restrictions, localities cannot impose a license tax on gross receipts of $100,000 if the locality has more than 50,000 people or $50,000 to $25,000 if the locality has between 25,000 and 50,000 people. For contractors, the rate can be no higher than 16 cents per $100 gross receipts. However, BPOL rates can be set higher if a locality had such rate set on January 1, 1978.

�58.1-3714 - Contractors subject to a license tax can also be required to post a bond and prove maintenance of workers' compensation coverage before getting a business license.

�58.1-3715 - Contractors are exempt from paying to other localities if they pay the required license tax in their office locality. However, if the work in another locality exceeds $25,000, that locality may assess a license tax.

Virginia also has no shortage of licensing requirements, including:

�54.1-1106 - Class licenses are required by all contractors doing work valued over $70,000 in a single contract or project; or $500,000 over a twelve month period.

�54.1-1108 - Class B licenses are required by all contractors doing work valued over $7,500 in a single contract or project but less than $70,000; or a total of $150,000 but less than $500,000 over a twelve month period.

�54.1-1108.2 - Class C licenses are required by all contractors doing work valued over $1,000 in a single contract or project but less than $7,500; or a total of less than $150,000 over a twelve month period.

�54.1-1111 - Before issuing a building permit, a locality can require proof of licensing or an affidavit demonstrating that a license is not required. In addition, an applicant must prove that required license fees and taxes have been paid.

�54.1-1113 - Nonresident bidders cannot bid on jobs in Virginia without appointing the Director of the Department of Professional and Occupational Regulation as their agent for lawful process.

�54.1-1115 - A fine of $500 per day can be assessed for failure to obtain a valid Virginia contractor's license or certificate, as well as conviction of a Class 1 misdemeanor.

�54.1-1117 - Counties, cities and towns can require local licenses if contractors do not have a Class A license.

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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, call our offices at 703-273-1400 or fill out our online Information Request form here.

Criminal Defense Practice

2010-11-10T10:26:00.002-05:00

Here at Gross & Romanick we're proud of our reputation as an experienced Northern Virginia & Fairfax Virginia criminal defense law firm. Gross & Romanick is led by managing partner Edward Gross, who has practiced criminal defense law in Virginia since 1980. Our Criminal Practice is managed by partner Jeffrey S. Romanick, a skilled trial lawyer who appears in Court on a daily basis. We represent clients in DWI, DUI, reckless driving or other traffic offenses as well as clients charged with assault, drug offenses, computer crimes or other criminal charges. We represent clients in General District Court, Circuit Court and Juvenile Court in Fairfax, Loudoun, Arlington, Alexandria, Prince William and Northern Virginia.

To speak to one of our criminal defense lawyers, call us today at 703-273-1400 or fill out our Online Information Request Form.

The Statute of Frauds

2010-11-05T14:15:00.002-04:00

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.

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For more information about contract law or to consult with one of Gross & Romanick's lawyers, contact us by calling 703-273-1400 or by filling out our online Information Request form.

Acts Of God

2010-10-27T12:48:00.001-04:00

Flood, fire, and famine may be the traditional hallmarks of divine intervention, but the law has a very specific definition of what count as actions by the Almighty. Legally, "Acts of God" are "misfortunes and accidents arising from inevitable necessity which human prudence could not foresee or prevent" - in other words "bad luck." The earliest recorded use of the term "Act of God" was by Sir Edward Coke in 1581; he used the term to refer to death, and later extended it to include a sudden tempest that broke down sea walls. In 1899 the Virginia Supreme Court had the opportunity to address the Act of God question when it excused a reluctant groom from his promise to marry because the unfortunate fellow had contracted a urinary disease that was aggravated by sexual intercourse. As the blushing Court states: "I desire to speak with all reserve: but to possess the lawful means of gratifying a powerful passion, with the alternative of abstaining or periling life, is, indeed, to incur a risk of intense misery, instead of mutual comfort."

Similarly, in 1931 the Virginia Supreme Court came to a widow's aid, when it made her deceased husband's life insurance company pay. The insurance company tried to avoid the insurance contract by a provision that required prompt notice of incapacity even from a person who was too incapacitated to give any notice. The court quotes: "The primary purpose of all insurance is to insure or to provide for indemnity, and it should be remembered that, if the letter killeth, the spirit giveth life."

Most Act of God defenses involve extraordinarily violent storms, sudden tempests, severe frosts, great droughts, lightening, earthquakes, sudden death and illness. Or, a remarkable "freshet"? A railroad company successfully argued that the sweeping away of a privy with one of their employees inside was excused because a freshet with this volume of water pouring through the creek could not have been anticipated.

To successfully employ the Act of God defense, one must have been victim of a natural cause without human intervention that could not have been prevented by exercise of reasonable care and foresight. So, ironically, a devout worshiper who testified that he was trotting through his church under the Spirit of the Lord when he injured a fellow congregant was not permitted to use "Act of God" as a defense.

Should an atheist be allowed to make the Act of God argument? Maybe an agnostic judge should decide the issue.

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To learn more about Acts of God or to speak to one of the lawyers at Gross & Romanick, call 703-273-1400 or fill out our online Information Request form here.

Security Deposits & Bankruptcy

2010-10-20T09:36:00.003-04:00

What happens to a tenant's security deposit after the tenant files bankruptcy? If rent is owned, can the landlord apply the deposit to unpaid rent?

An informal poll of area Bankruptcy Lawyers reveals a belief that a security deposit can be used as a set- off against both pre-petition damages and lease termination damages under Section 553 of the Bankruptcy Code. The set off is subject to mitigation by the landlord, including releting the premises. The safest process is to have a court grant relief from stay before applying the security deposit; but this procedure may cause a debtor to file an objection. Right or wrong, most Landlords simply keep the deposit.

Some attorneys also argued that Landlord can assert a "secured claim" up to the amount of the security deposit.

For more information about landlord/tenancy law and bankruptcy contact the lawyers at Gross & Romanick by calling 703-273-1400 or by filling out our online Information Request form here.

Construction Law At Gross & Romanick

2010-10-13T12:17:00.003-04:00

Gross & Romanick, P.C., located in Northern Virginia represents contractors, owners and suppliers in Virginia, Maryland and Washington, DC. Our goal is to find solutions for our clients through understanding and respect for their business concerns. We strive to keep our clients out of court with proper advice, timely action and effective contracts. When necessary, our lawyers draw upon their very significant experience in construction litigation in state and federal courts, as well as arbitration.

Some of the areas of law in which we can help are:

Business Formation
Avoid exposure of your personal assets by conducting business as a Corporation or Limited Liability Company. We have organized simple and complex business structures. After formation, we can assist with matters from annual Board of Directors meetings to complex corporate reorganizations.

Mechanic Lien's
Our firm has represented claimants in very large mechanic lien cases. In addition, we understand surety law and Miller Act Claims.

Contracts
We can prepare, review and advice on a broad range of contracts from Construction Contracts to Joint Check Agreements. Because we understand the construction industry, our clients use us to negotiate terms and draft their agreements.

Credit Extension/Collections
From credit application through bank garnishment, we can help at every step to lessen your company's risk. We provide credit investigations, seminars and collections. Furthermore, our bankruptcy experience allows us to effectively pursue many debtors even after bankruptcy is filed.

Litigation
Our lawyers have represented companies in the construction industry in hundreds of cases in state and federal courts. These cases range from simple collections to complex breach of contract disputes.

Registered Agent
Edward Gross acts as registered agent for many corporations and limited liability entities. Included in the annual fee is assistance in preparing annual reports, as well as acceptance of legal service of process.

To speak to one of the lawyers at Gross & Romanick, call us today at 703-273-1400 or by filling out our online information request form.

Lease Survives Bankruptcy

2010-10-07T09:54:00.001-04:00

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

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

For more information about commercial landlord law or to speak to one of our attorneys, contact Gross & Romanick today by calling 703-273-1400 or by filling out our online information request form.

Corporation vs. LLC

2010-10-04T16:51:00.005-04:00

Perhaps the most common question we receive from individuals looking to start a new business is: “What is the difference between a corporation and an LLC?” This is a very important question because understanding the differences between these two entities is essential to making the right choice for your new business. Or, in some cases, making a decision regarding whether to convert your existing company to a corporation or an LLC.

The first chart below addresses some of the important differences between Corporations and LLCs. The second chart below, which naturally flows from the first, lists some of the pros and cons of forming either entity.

These charts are not intended as a substitute for the advice of an attorney and a CPA. Many of the issues, especially the tax issues, are presented in a simplified form; therefore, in some situations the issue may be more complex with a different result than described below. You should speak with an attorney and a CPA about which entity is best for you based upon your needs and circumstances. Furthermore, these charts are based on the laws of the Commonwealth of Virginia. State law varies in the treatment of Corporations and LLCs
[SEE CHARTS BELOW]

	Corporation	LLC
Formation	Corporations are formed by filing Articles of Incorporation with the State Corporation Commission (the “SCC”).	LLCs are formed by filing Articles of Organization with the State Corporation Commission (the “SCC”).
Ownership	Corporations are owned by “Shareholders”. Shareholders can be either individuals or business entities. Upon formation, each Corporation is authorized by the Commonwealth to issue a particular number of shares of stock. The Corporation then issues physical stock certificates to its Shareholders. The Corporation may elect to issue different classes of stock (i.e. common stock and preferred stock) which afford different rights to the Shareholders, such as voting rights and profit distribution rights. If the corporation elects to be taxed under Subchapter “S” of the Internal Revenue Code (see below), it can issue only one class of stock. In addition, it can have a maximum of 100 shareholders, all of which must be individuals (with some exceptions) residing in the United States.	LLCs are owned by “Members”. A Member can be an individual or a business entity. A Member’s ownership interest in an LLC is usually referred to as a “Membership Interest”. Most LLCs do not require membership certificates; instead the percentage of an individual’s Membership Interest is documented as an attachment to the LLC’s Operating Agreement. The Operating Agreement can afford different rights to different Members, such as voting rights and profit distribution rights.
Management	Corporations are typically managed by the Officers and the Board of Directors (“BOD”), who are elected by the Shareholders. The Officers (i.e. President, Secretary and Treasurer) run the day-to-day affairs of the Corporation and report to the BOD. Typically, the BOD votes on the major decisions of the Corporation.	LLCs can be “Member Managed” or “Manager-Managed”. That is to say, the LLC can elect to have its day to day affairs controlled by a Manager or a Board of Managers, or can elect to have its day to day affairs controlled by all or some of the Members. Typically, Members vote on the major decisions of the LLC. LLCs can give the Managers common titles, such as President, CEO, etc., but is not required to do so.
Governance	Corporations are governed by state law and the agreements of the Shareholders. State law governing corporations is well-developed, and typically addresses all aspects of corporate governance. Bylaws and Shareholder Agreements can also govern the Corporation if adopted by the Shareholders. With some exceptions, Bylaws and Shareholder Agreements will trump state law when inconsistent. If the Bylaws and Shareholder Agreement fail to address a particular issue, state law will control.	LLCs are governed by state law and the LLC’s Operating Agreement. State law governing LLCs mirrors state law governing Corporations in many respects, but is not as well-developed or tested in Court. In almost all circumstances, an LLC’s Operating Agreement is what controls and governs the LLC. However, if the Operating Agreement fails to address a particular issue, state law will control.
Protection from Personal Liability	A Corporation is an entity separate from its Shareholders. Shareholders cannot be personally liable for corporate debts unless a creditor is able to “pierce the corporate veil”. This is rare, but may occur when the Corporation was established to perpetrate a fraud, fails to follow the corporate formalities required by the Commonwealth or is merely an “alter ego” for the Shareholders (i.e. the Corporation does not actually operate as a separate entity). Shareholders must be careful to keep corporate affairs separate from personal affairs, and must be sure to sign “on behalf of” the Corporation whenever engaging in corporate transactions.	An LLC is an entity separate from its Members. Members cannot be personally liable for corporate debts unless a creditor is able to “pierce the corporate veil”. This is rare, but may occur when the LLC fails to follow the legal formalities required by the Commonwealth or is merely an “alter ego” for the Members (i.e. the Corporation does not actually operate as a separate entity). Members must be careful to keep LLC affairs separate from personal affairs, and must be sure to sign “on behalf of” the LLC whenever engaging in LLC transactions.
Taxation	Corporations are taxed under Subchapter “C” of the Internal Revenue Code, unless the Corporation elects to be taxed under Subchapter “S” of the Internal Revenue Code. If taxed under Subchapter “C”, the Corporation itself must pay a corporate tax on its net income. Shareholders must then pay personal income taxes on the distributions they receive from the Corporation. If taxed under Subchapter “S”, the income and losses of the Corporation “pass through” to the shareholders, based upon each shareholder’s percentage ownership in the corporation. No corporate tax is required for a Corporation taxed under Subchapter “S”.	LLCs are taxed under Subchapter “K” of the Internal Revenue Code. The income and losses of the LLC “pass through” to the owners of the LLC based upon each Member’s percentage ownership in the LLC. No income tax is paid by the LLCs. Unless otherwise elected by the LLC, the LLC is taxed like a partnership and each member receives a “K-1” form each year from the LLC.
Ongoing Formalities	Corporations must: (a) file annual reports with the SCC and pay an annual fee, (b) hold annual meetings, (c) must keep the SCC advised of the officers and directors of the Corporation, (d) comply with formalities found in the Virginia Code, and (e) comply with its By-laws.	An LLC need only pay an annual fee to the SCC. The LLC’s Operating Agreement determines what formalities, if any, will be required by the LLC.
Case Law	Corporations have been recognized as separate business entities for many years. Accordingly, there is well developed case-law which Courts will follow in the event of a corporate dispute or attempt to pierce the corporation.	The LLC is a relatively new business form, and as a result, the Courts have not addressed all issues regarding LLCs. Nevertheless, it appears that the Courts will be following corporate case law precedent, where applicable.

	Corporation	LLC
Pros	• Shareholders protected from personal liability. • Well suited for large businesses due to the fact that it is easy to raise capital and take on investors by simply issuing additional stock certificates. • Easy transfer of shares in case of sales. • Well developed (and litigated) statutory and case law provides guidance to Shareholders and reduces risk of doing business. • Uniformity between states with respect to laws governing Corporations.	• Members protected from personal liability. • No corporate tax required. Income of LLC passes through to its owners. • LLC is principally governed by an Operating Agreement. The Members can draft this document however they choose. This results in LLCs being very flexible with respect to management and distributions of profits/losses. • LLCs typically require fewer formalities. • CPA’s find tax advantages.
Cons	• Shareholders must follow many corporate formalities. • Not very flexible with respect to distributing profits/losses to Shareholders. • Not flexible with respect to management. • Must pay corporate tax unless a Subchapter “S” election is made. Requires significant planning to avoid double taxation.	• Less developed statutory and case law to guide Members. • Lack of uniformity between states with respect to laws governing LLCs. • Not well suited for large businesses with many investors or businesses with regular changes of ownership.

Reckless Driving

2010-09-28T09:47:00.001-04:00

Recently attorney Jeffrey S. Romanick defended a client with a DC license in a Reckless Driving case. The client was alleged to be driving 79 MPH in a 55 MPH zone. On the scheduled Court date, the client was on assignment overseas. We were able to obtain a waiver of her appearance and then negotiated a plea with the Commonwealth of Virginia reducing the charge from Reckless Driving to Failure to Obey a Highway Sign with only a $25 fine assessed as the penalty.

Afterward, the client wrote: “I cannot thank you enough for your help. This is wonderful news. I will recommend your services should anyone I know find themselves in a similar predicament. Your guidance was invaluable.”

To learn how the lawyers at Gross & Romanick can help you with your Reckless Driving, DWI/DUI or Traffic Defense case, contact us today by calling 703-273-1400 or by filling out our Online Information Request Form.

Thanks.

Federal Privacy Policy

2010-09-08T12:46:00.001-04:00

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.

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The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's attorneys please contact us by calling 703-273-1400 or by filling out our online Information Request form.

Contracts: Prebankruptcy Provisions

2010-08-31T12:16:00.001-04:00

Creditors and lending institutions have recently been including various provisions in their contracts and credit agreements, which contemplate what will happen in the event of a bankruptcy. The provisions can be divided into three basic categories: (1) Waivers; (2) Covenants; and, (3) Representations/Admissions.

Waivers limit a borrower's right to either file a bankruptcy petition or to oppose the creditor's lifting of the automatic stay. Covenants provide for immediate relief from the automatic stay or consent not to contest a lift stay motion. Representations/Admissions include provisions in the agreement which admit the elements necessary for the creditor to lift the automatic stay, admit that any future bankruptcy filing will be made in bad faith to hinder or delay the creditor and admissions that security interests are properly perfected.

The prebankruptcy waivers provide a comfort level to lenders and creditors in the hope that they will not be delayed or damaged in the event of bankruptcy and they also are put in agreements to provide assurances that they are avoiding deals with debtors heading toward bankruptcy.

The courts are split on the enforcement of the prebankruptcy provisions. Some courts have expressed concern as to whether or not the provisions violate public policy. In almost all cases however, the courts have found the agreements are not necessarily self-executing. Therefore, a creditor should be weary of taking any action, which may result in a violation of the automatic stay without first obtaining bankruptcy court approval.

On the positive side, prebankruptcy provisions have proven to speed up the process and assist creditors in obtaining quick relief from the automatic stay of bankruptcy. In addition, some courts have upheld the various admissions and representations as conclusive evidence of the elements needed to lift the stay. This has led to a decrease in litigation cost for some creditors.

It would be dangerous and unadvisable to take any action which may be determined to be a violation of the automatic stay in reliance on the prebankruptcy provisions, but including the provisions may save you litigation fees in the long run. Therefore, while prebankruptcy provisions are not guaranteed to work, you may want to include them in your agreements.

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The above is not meant to replace legal counsel. If you'd like to speak to one of Gross & Romanick's business lawyers, contact us by calling 703-273-1400 or by filing out one of our online Information Request form.

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

2010-08-25T11:44:00.002-04:00

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!

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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, call 703-273-1400 or fill out our online Information Request form.

Buildout Allowance - Landlord Gets Slammed

2010-08-23T13:14:00.003-04:00

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 meet with one of Gross & Romanick's lawyers, please call 703-273-1400 or fill out one of our online Information Request forms.

Slip & Fall: Landlord's Should Take Notice

2010-08-21T13:41:00.001-04:00

Virginia is one of the most difficult states in the country in which to win a slip and fall case by an injured party. Nevertheless, a jury recently awarded a Plaintiff $2.5 million against a landlord for a slip and fall. Yet, a previous jury hearing the same case presented by the same attorneys awarded $0. The vagaries of the jury system account for this stark discrepancy, but the ultimate verdict indicates that landlords need to understand their obligations to safeguard the public from injury while on their premises.

Three 1992 Virginia Supreme Court cases prevent most victims of slip & falls from succeeding. A&P Tea Co. v. Rosenberger, establishes that owners of property are not insurers or guarantors of the safety of business invitees. Colonial Stores v. Pulley states that plaintiffs must prove that the owner created the defect which caused the fall or at the very least should have known of the problem. A&P Tea Co. v. Berry instructs judges to dismiss the case if the jury must speculate in order to determine that the owner had notice of the defect.

Thus, in order to recover Plaintiffs must prove that the defendant knew or should have known of the defect which caused the fall. This standard of proof is extremely difficult since many victims do not know why they fell or cannot conclusively prove that the owner or lessor of the property actually knew a problem existed. However, violations of building codes and standards can overcome proof difficulties since many such violations are considered negligence per se with no requirement of notice.

The $2.5 million case was successful because Plaintiff introduced evidence that there was grease or greasy water on the floor of the fast food restaurant. Another case was successful because a leaky roof was not repaired after notification by a tenant. A more complex case succeeded when a succulent plant was shown to be shedding leaves because of improper care by the plant section of the department store, which also failed to sweep the area for 4 1/2 hours. In addition, a slight erosion of the owner's position is taking place regarding slip on ice cases, since the Supreme Court held that merely walking on ice or snow was not an assumption of the risk or contributory negligence.

Despite these and other cases, the landlord in Virginia has the upper hand if proper attention is paid to dangers for which there is actual notice and if proper maintenance schedules are followed.

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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.

The Automobile Injury Patient: How to get paid

2010-07-22T10:13:00.003-04:00

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.

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The above is not meant to replace legal counsel. To speak to a lawyer at Gross & Romanick, contact us today by calling 703-273-1400 or by filling out our online Information Request Form.

Collecting the Professional Debt: Discretion with Aggression

2010-07-12T11:49:00.005-04:00

Harry has been a client of your firm for several years. Eventually, you have come to regard him as a trusted client who promptly pays for services rendered. This morning he called you with an urgent message. It seems that he is involved in a large matter and your fees will go well beyond any amount previously billed to him by your firm. If you are successful, you know there will be funds available to cover your fees and costs, but you are not certain it will succeed.

While all businesses have credit extension concerns, professionals have factors to consider that require special considerations. The services of a lawyer, doctor, CPA, architect and other professional are unique and, once engaged, cannot generally be suddenly terminated. The savvy professional improves the chances of avoiding collection problems by conducting prudent credit checks like other businesses, even for existing clients who request more extensive credit.

Prevention

Additionally, the professional should candidly discuss the prospects of success in the enterprise, e.g. the risks of the medical procedure or the likelihood of reversal of the IRS ruling. Explain in detail the estimated fees and what factors can effect these charges. Do not forget to reveal expenses such as photocopies, travel, filing fees, investigations, subcontractors, etc. Tell the client how to keep the total bill down. Very importantly, tell the client when bills are expected to be paid. Not only will these types of explanations allow the client to budget, but it will avoid surprising the client with an unexpectedly large bill.

Do not assume that your client can afford your services. Ask for an upfront retainer even with a good credit history. Bills can be monthly, at project stages or other predetermined dates. For example, architects normally obtain a 5% retainer, 15% upon production of the schematic design, 20% upon detailed sketches drawn to scale, and so on with varying percentages due at specific phases of construction. Put the payment agreement in writing to avoid differing recollections.

Unless the matter is handled on a total contingency fee, the final bill should not be the majority of the account due. The final bill is the most difficult to collect, especially if the work is unsuccessful or the bill is unexpected.

Dunning the Client

When, despite your efforts, your receivables become delinquent, the part of the business that most professionals find disagreeable has to be undertaken. Most lawyers would rather argue before a jury than with a slow paying client. Furthermore, if you too vigorously emphasize prompt payment of bills, your client may feel you are more concerned about your fees than his case. Still a balance must be struck between a too-strident policy, at the cost of a lost client, and one that is too permissive, at the cost of profitability.

When it becomes necessary to go after a delinquent client, the question arises as to how the contact should be made and who in the firm should make it. A carefully edited letter, which is sent soon after payment is due, can be a good reminder. Relationships will not be damaged if regular, reasonable reminders are provided. In some cases a letter will not be sufficient and a telephone call must be made. A call from the professional handling the matter is not advisable because it can tarnish the working relationship and can be very awkward for the professional and the client. The bookkeeper or a secretary, whose duties are removed from the client, should place the call. As a final effort, an associate or partner should speak to the client about the implications of a failure to pay.

Firing the Client and the Fear of Counterclaim

Firing the nonpaying client creates a set of particular concerns to the professional.

1. Do you have the right to discontinue services? For example, can an orthodontist leave complex and potentially dangerous devices in a patient's mouth?
2. Must the client's records, books and your work product be given over?
3. Are you going to be sued for malpractice despite competent efforts to that stage of the work? Should you worry about the next psychologist ruining all the progress and you getting the blame?

Answers to many of these questions can be obtained from professional associations and by reference to ethical codes; get a written opinion for your files.

If you perform your work to the best of your abilities and meet the standards of your profession, sue your former client if they owe you a significant fee. Threats of a counterclaim based upon negligence are usually just a ploy to avoid payment. Of course, you will need some nerve and confidence in your performance, as well as good documentation. Finally, hire a good collection lawyer who can be your professional.

A Final Thought

Remember a line from the classic 1967 movie Cool Hand Luke: "What we've got here is a failure to communicate." If you keep the lines of communication open with your clients, you will establish mutual trust and will probably be rewarded by prompt- paying clients.

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The above is not meant to replace legal counsel. To speak to an attorney at Gross & Romanick, call 703-273-1400 or fill out our Online Information Request form here.

Parking Spaces... Assigning Equals Licensing

2010-07-06T12:24:00.001-04:00

Before you start assigning your tenants parking spaces, be sure you are not excluding anyone. In a recent Fairfax Circuit Court case a judge struck down an assignment of parking spaces to non-garage owning association members. The garage owning members took the association to court, which found that the association was not propounding a rule, but in fact it was giving a license to its non-garaged owners. Because the lots were assigned only to some owners and not others, those owners with the assigned spots were able to exclude the other owners from the use of those spots in the common area. This exclusion is the essence of a license. The Court concluded that the community association did not have the authority to issue a license to its owners and ruled in favor of the excluded owners.

One would expect this ruling to apply in many other parking assignment situations.

The above is not meant to replace legal counsel: if you'd like to speak to one of the attorneys at Gross & Romanick, call us today at 703-273-1400 or fill out our online Information Request form.

Fictitious Name Filing: Where to File?

2010-06-23T13:47:00.001-04:00

Many corporations mistakenly only file their tradename (also called fictitious name) certificates with the Virginia State Corporation Commission. In fact Va. Code §59.1-69 states that a proper certificate must be filed in "the same office of the clerk of the court in which deeds are recorded in the county or city wherein the business is to be conducted." File them with the SCC and the County.

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The above is not meant to replace legal counsel. If you'd like to speak to one of our attorneys, contact Gross & Romanick by calling 703-273-1400 or by filling out our online information request form.

Liquidated Damages

2010-06-16T11:15:00.002-04:00

Liquidated Damages is the dollar amount stipulated in a contract which the parties agree is a reasonable estimation of the damages that would be owed to one party in the event of a breach by the other party. Companies often rely on liquidated damages clauses to assure performance of the contract. Since the amount of damages is often difficult to ascertain when there is a breach, a liquidated damages provision attempts to fix the amount. Even if the parties agree to a liquidated damages clause, the Court will only award the actual damages suffered if they can be ascertained. In theory, the clause also saves litigation time and legal fees.

WHEN VALID: The Commonwealth of Virginia recognizes liquidated damages clauses in contracts as valid under the following conditions:

(1) The figure must be a reasonable amount contemplated at the time of contract to be the probable loss to the non-breaching party in the event of a breach;

(2) The amount cannot be punishing or punitive damages, grossly in excess of the actual damages; and

(3) The damages must not be susceptible of a definite measurement. The Court examines the conditions at different times of the contracting parties' relationship. When looking at the first and third conditions, the court examines them from the time of the contract. The second is examined at the time of breach.

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

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

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

Apparent Authority: Is It What It Seems?

2010-06-14T09:34:00.002-04:00

Before your business ships materials to a construction site, you insist that the subcontractor execute an agreement that all payments from the general contractor to the subcontractor be in the form of a joint check with your company as joint payee. After the general contractor and the subcontractor execute this joint check agreement, you begin shipping materials. When the subcontractor disappears with an outstanding balance on the account, you notice for the first time that the few payments you received were from the subcontractor and not joint checks issued by the general contractor. A call to the general contractor reveals that they claim to have no knowledge of the joint check agreement; in addition, they insist that the person who signed the agreement had no authority to do so. Can you get past due money from the general contractor for its failure to comply with the joint check agreement?

Actual v. Apparent Authority

Our analysis of the validity of the joint check agreement begins with whether the employee of the general contractor had actual or apparent authority to sign the agreement.

Actual authority means that the general contractor has officially empowered the employee with the right to sign the agreement and bind the company.

Even if an employee does not have actual authority, an employer may be bound by the acts of its employee under the theory of apparent authority. According to the Virginia Supreme Court in the case Wright v. Shortridge, "An act is within the apparent scope of the employee's authority if, in the view of the character of his actual and known duties, an ordinarily prudent person, having a reasonable knowledge of the usage's of the business in which the agent is engaged, would be justified in believing that he is authorized to perform the act in question," In our case example, a common laborer does not have apparent authority while the job supervisor probably does.

Even when an employer has specifically limited the actual authority of an employee, the employer may still be bound under apparent authority if it has held out the employee as possessing authority or has permitted the employee to represent that the employee possesses such authority.

Estoppel Works Both Ways

The general contractor in our case may be estopped from denying that its employee lacked authority to sign the joint check agreement if it acted or allowed the employee to act as though the employee had ostensible authority. Thus, employers cannot claim that an employee lacks authority if it represented that the employee had such authority or if the employee is clothed with apparent authority to enter into the agreement.

On the other hand, if your company knew or should have known that the employee lacked authority, you will be estopped from arguing reliance upon the employee's apparent authority. Furthermore, if you accept checks without informing the employer of the breach of the joint check agreement, the employer may have a good argument that they were unfairly prejudiced by your failure to provide an opportunity for them to avoid breaching the agreement.

Avoid Problems

Employers who wish to limit and define the authority of their employees or other agents should place these limitations in writing and they should send potential contracting parties a copy of this document. To limit the appearance of authority, control and monitor activities of employees and avoid giving important titles to people with lesser duties. If you learn that an employee's act exceeds granted authority, immediately repudiate the act and disclose the lack of authority to third parties relying on the act. Otherwise, you may inadvertently ratify the act, or worse, unknowingly extend the authority to the employee to bind the company.

Parties who enter into agreements with companies should beware. You may think you are dealing with an employee with authority to bind the company; however, this may not be the case. Even the President of a corporation may not have actual authority to bind the company; the president's power as an agent comes only as delegation of authority from the bylaws or the board of directors. (See Annotation Note to Virginia Code §13.1-673)

Protect Yourselves!

Insist on documentation of the authority of the person who is signing the agreement, such as a corporate seal or a corporate resolution. When in doubt, send a copy of the agreement to the company's headquarters, this will assist your estoppel, reliance and ratification arguments if the company does not protest the agreement. Had the supplier, in our example, sent a copy of the agreement to the general contractor and immediately contacted them when the checks were not issued jointly, then they might have prevailed in court even without actual authority. As the facts stand in the example, they will lose and fail to recover any money from the general contractor.

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The above is not meant to replace legal counsel. To speak to one of Gross & Romanick's atttorneys, contact us at 703-273-1300 or fill out our online Information Request form.

Gross & Romanick Collects $525,000 Judgment

2010-06-02T14:26:00.000-04:00

The Law Firm Gross & Romanick, P.C. located in Fairfax, Virginia, is pleased to announce that, on April 20, 2010, it was able to successfully collect in excess of $500,000 on a judgment rendered by the Fairfax County Circuit Court in 2008. Despite facing stiff opposition from both the judgment debtor and numerous garnishees represented by some of the nation's largest and best known law firms, the attorneys of Gross & Romanick prevailed in recovering a judgment from a debtor with seemingly unlimited resources that considered the judgment to be a great miscarriage of justice.

In 2008, Xyrous Communications, LLC obtained a judgment in excess of $800,000 against the Bulgarian Telecommunications Company. Through various collection proceedings, Xyrous was able to recover a little over $300,000 before reaching a dead-end and turning to Gross & Romanick. The attorneys of Gross & Romanick began investigating and, almost immediately, found bank accounts of the judgment debtor with Citibank that contained over three million euro. Garnishment of these accounts, however, proved to be extremely difficult as Citibank removed the garnishment proceedings to federal court and interposed a defense to the garnishment proceedings based upon the New York separate entity doctrine. The judgment debtor also appeared in the garnishment action seeking to have the entire proceeding dismissed for lack of jurisdiction and service of process. Gross & Romanick successfully rebuked the judgment debtor's attacks in the opinion reported by Virginia Lawyers' Weekly. While continuing to pursue the garnishment against Citibank, Gross & Romanick began additional collection procedures by garnishing T-Mobile USA, Inc. and AT&T Corp. While AT&T confessed that it maintained a relationship with the judgment debtor that was financially significant enough to pay off the judgment, the judgment debtor again intervened and suggested various technical defenses.

During a specially set hearing in the Fairfax County Circuit Court, the attorneys of Gross & Romanick successfully persuaded the Court to order payment to the judgment creditor. In a span of less than two years, Gross & Romanick will have managed to collect the entire balance of a judgment against a large foreign corporation with nearly unlimited assets that the judgment creditor had once thought to be uncollectible. In addition, the attorneys of Gross & Romanick obtained a favorable reported decision from the Eastern District of Virginia that will be of immense aid to judgment creditors in maintaining jurisdiction in Virginia.

Fresh off victory against the Bulgarian Telecommunications Company, Gross & Romanick has now turned its attention to other international collection matters, including pursuing an energy conglomerate.

It is through collection proceedings that creditors and individuals that have been wronged are able to obtain actual recovery. Many companies and individuals overlook the collections process when hiring a law firm, but the attorneys of Gross & Romanick, P.C. have the rare combination of experience, intelligence, legal acumen and tenacity to succeed in recovering money when other attorneys and law firms have reached a dead end. If you have a judgment or a legal claim for the collection of money against a difficult debtor, consider using a law firm experienced in succeeding against the most difficult of foreign debtors: Gross & Romanick.

Financing a Company in Chapter 11

2010-06-02T09:54:00.001-04:00

Who would lend money, lease property or extend credit for supplies to a company in bankruptcy? Why would anyone want to do that?! Who would want to provide financing to a company that has already mismanaged itself into bankruptcy? Answer: you may want to.

Inevitably a Chapter 11 debtor will require additional cash flow or extensions of credit. Because companies in bankruptcy need money, leases and supplies, if a creditor is willing to provide funds, offer a lease or extend credit, that creditor stands to obtain very favorable terms. Because few creditors are willing to enter into high risk investments, Congress enacted incentives under Section 364 of the U.S. Bankruptcy Code, which permits priority to such creditors over already existing creditors and administrative costs (the so called "super priority"), as well as providing security in the assets of the debtor.

Extending Credit

The potential creditor should obtain a copy of the company's bankruptcy schedules. The schedules will reveal the company's assets and liabilities. The creditor should also request all financial information that will assist in assessing the company's ability to repay the credit. Ask for balance sheets, income statements and monthly operating reports.

The potential creditor should try to place itself in the most secure position possible. The levels of security available range from unsecured credit that is paid back as an administrative expense prior to pre-existing unsecured creditors, to debt secured by a senior lien on property of the estate.

A creditor is most secure if it holds a senior lien on property of the bankrupt company. Be creative! You can hold a lien not only on real property, but also accounts receivable, equipment, inventory, etc. If the bankrupt company has real property with sufficient equity, a lender can get a lien senior to a pre-existing security interest. This is a unique opportunity for a lender to bypass perfected liens and Deeds of Trust, and to move directly into a first position. Of course, existing creditors may object to their loss of position at a hearing but the judge ultimately decides based upon the best interest of all the creditors.

At a minimum the creditor should demand a "super priority". A "super priority" will allow the creditor to be paid back prior to administrative claims such as fees charged by lawyers, accountants and other expenses incurred by the company to preserve the estate.

Conclusion

Opportunities for profit are available for those creditors who take advantage of the protection available. Furthermore, an infusion of credit or cash may preserve the bankrupt company to your long-term benefit.

For more information speak to one of Gross & Romanick's lawyers by calling 703-273-1400 or by filling out one of their online Information Request forms.

Abandoned Property

2010-05-27T10:16:00.001-04:00

ISSUE: A Landlord must often deal with property seemingly abandoned by a former tenant. While the Landlord would like to dispose of or sell this abandoned property, the Landlord may not know who owns the property or if there is a recorded security interest. In some instances, the Landlord may want to sell the property to satisfy unpaid rent or transfer it to the next tenant. Before any decision can be made, the Landlord must determine whether the property is truly abandoned and whether other parties may have a legal claim to the property.

THE LAW OF FINDS: "Abandonment" according to the Law of Finds, means that the owner of the goods has voluntarily relinquished "possession with the intention of terminating his ownership and with no intention of vesting title in another."

ACTION ADVISE: If the Landlord wishes to transfer or sell the property, it should: (1) Do a complete inventory of the property by 2 witnesses; (2) Examine the property for evidence of ownership; and (3) Conduct a UCC search for recorded liens or leases.

NOTICE: The Virginia Residential Landlord and Tenant Act requires a letter to be sent to the former tenant giving a 10 day notice that unless the property is retrieved it will be considered abandoned. Normally Residential Landlords are held to a higher standard than Commercial Landlords when dealing with their tenants. Therefore, it would be appropriate to provide a 10 day notice to any person who you believe has an interest in the property, including parties with UCC claims, tenants, or names which are found on the property.

DISPOSITION: If none of these parties make a claim, the property is probably abandoned. This determination will have to be made in each situation on a case-by-case basis in conjunction with a lawyer. Non-legal factors may impact on your determination of how to dispose of the property, i.e. the value of the equipment or if it can be transferred to a new tenant in the same space. A carefully worded sale agreement of the equipment may provide some protection for the Landlord from a subsequent claimant.

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

Selling & Buying Business Assets

2010-05-19T15:40:00.003-04:00

Ed Gross, Gross & Romanick's managing partner, discusses the purchase and sale of the assets of a business in this recent video.

Some of Gross & Romanick's business practice areas include business formation, business acquisition, merger, spin-off and reorganization, buy-sell agreements, computer law, collections, contracts/agreements, corporate formalities, employment law, franchise law, and limited liability companies.

To speak to one of our lawyers, contact us by calling 703-273-1400 or by filling out our online information request form.

Wolftrap and Marijuana Possession

2010-05-13T10:51:00.000-04:00

Summer in Northern Virginia means the start of the concert season at the Wolftrap National Park for the Performing Arts. For individuals that attend concerts and events at Wolftrap, it is important to realize that Wolftrap is not your ordinary concert venue. Unlike Jiffy Lube Live or the Patriot Center, Wolftrap is considered a “federal enclave”. This means that any conduct at Wolftrap that leads to criminal charges can result in those charges being filed in the United States District Court for the Eastern District of Virginia, Alexandria Division and not necessarily in the state courts of Fairfax County. Depending upon where you are located on the Wolftrap property and what officer issues you a citation impacts whether you must appear in the Fairfax County Courts or in the federal court.

Put more simply, simple possession of marijuana and underage possession of alcohol quite literally can become a federal case if committed at Wolftrap. Moreover, the United States Park Police are routinely patrolling the parking areas and concert grounds along with Fairfax County Police Officers and are usually in plainclothes and not easily identifiable. These officers can sometimes be rather aggressive in attempting to ferret out marijuana and alcohol possession. In one recent case, our attorneys successfully persuaded that United States Attorney’s Office that the arresting officer had been overly aggressive and had violated an individual’s constitutional rights. It is therefore extremely important that individuals charged in federal court retain an experienced attorney to ensure that their rights are fully protected.

Under federal law, marijuana is a Schedule I substance under the federal Controlled Substances Act, and possession of marijuana is a misdemeanor offense. If convicted of possession of any amount, first time offenders face the possibility of being sentenced to up to one year in prison and being assessed a minimum fine of $1,000. For a second conviction, the penalties increase to a 15-day mandatory minimum jail sentence with a maximum of two years in prison and a minimum fine of $2,500. Persons charged may also be subject to an onerous pre-trial probationary period involving mandatory drug screens. Certain individuals may be eligible for a first-offender program that, in some limited circumstances, may result in dismissal and expungment upon completion of the program.

The attorneys at Gross & Romanick, P.C. has represented a number of individuals charged with possession of marijuana and underage possession of alcohol at the Wolftrap National Park for the Performing Arts. If you are charged with possession of marijuana or underage possession of alcohol, whether wrongfully or rightfully, it is imperative that you retain an attorney to represent you in Court. The attorneys at Gross & Romanick, P.C. are experienced in this area and can use their expertise to zealously defend your rights.

Charges For Drugs Not On List Of Banned Drugs

2010-05-12T09:18:00.004-04:00

Why are you being charged if the drug that you had in your possession is not on the list of banned drugs?

The various schedules prohibiting certain drugs don’t always list the common or popular name of different substances. Sometimes the schedules list the scientific name of the prohibited substance. For example, a specific drug may not be listed on any of the schedules. Instead, the substances which are contained within the substance may be listed on the schedules. As you can see, in order to determine the potential for your defense, your attorney has to understand some of the chemistry involved in various drug offenses.

That is why hiring an experienced attorney like the lawyers at Gross & Romanick is so essential.

All drug charges, whether pending in state or federal court, are criminal in nature. These matters have serious financial and economic implications beyond the fines and costs assessed by the Court. For many, a drug charge is their first experience with the American legal system. This system has complex rules and procedures. An attorney knows how to navigate through the law, the rules and the court procedures. An experienced lawyer knows the law, as well as the procedures of the court.

Many drug defenses involve complex and technical issues, sometimes involving constitutional rights. A capable lawyer can assess and recognize whether the prosecution can prove its case. A lawyer can advise you regarding viable defenses; help you present defenses that work; and, when appropriate, can negotiate a satisfactory plea bargain. A lawyer can protect your rights and prevent you from being taken advantage of by an overloaded and impersonal legal system. In short, a lawyer is your ally in a complex and often hostile system.

If you’re facing a drug charge in Virginia, Maryland or the District of Columbia, contact the lawyers at Gross & Romanick today by calling 703-273-1400 or by filling out our online information request form.

COLLECTING THE INTERNATIONAL DEBT

2010-05-11T10:11:00.002-04:00

As international business becomes more commonplace, the insidious side effect is international collections. It is a fact that whenever business is conducted, there are unscrupulous and financially unstable businesses that cannot or will not pay their obligations. When this occurs with a domestic entity, it is easy to invoke the US legal process, obtain a judgment and attempt to collect the debt utilizing statutory collection procedures. However, when a foreign company refuses to honor its debt obligations, collection is far more complex and difficult.

Most domestic businesses lack the resources to litigate a case or obtain a judgment in a foreign country. Fortunately, in many circumstances resorting to the judicial process of a foreign country is unnecessary. Most states, Virginia included, can obtain jurisdiction and render judgments against any individual or business that has “purposefully availed” itself of the privilege of doing business within the state. Virginia, for example, is known as a single-transaction state. So long as the dispute involves a relationship where a single business transaction took place in Virginia, Virginia courts can and will exercise jurisdiction over the dispute. However, jurisdiction is only one step in the process of getting the foreign business to appear before a domestic court. The next step is providing notice of the claim, i.e. “Service of Process”. The foreign entity must be provided with legal notice that an action has been commenced against it in a Court in the United States. In most cases the Service of Process must be provided in compliance with the Hague Convention, which has requirements that vary from country to country. The good news is that once you obtain jurisdiction and service of process on the foreign business, you can obtain a judgment just like in a case involving domestic parties.

After judgment is rendered by a court, the collection process can begin. Typically, a judgment creditor has three tools at its disposal: garnishment, debtor interrogatories and actual levy. In most cases involving a foreign debtor, actual levy is not available because none of the debtor’s property is not located in the United States; actual levy requires taking physical possession of a tangible item. Debtor Interrogatories is the process of bringing a debtor or representative of the debtor before a court to answer questions about the debtor’s assets. Debtor Interrogatories may also not be a viable collection tool, because such proceedings require a judgment creditor to obtain personal service on an individual representative of the debtor and, although the Hague Convention allows for Service of Process, it is not considered personal service. Therefore, unless a judgment creditor is aware of an individual representative being physically located in the United States, serving debtor interrogatories may not be possible. Thus, in order to successfully collect, the judgment creditor must rely upon the garnishment process.

For the garnishment process to be effective, a judgment creditor needs to identify potential garnishees (companies who owe debts to the debtor or who hold money of the debtor). Business relationships within the industry and large international banks are the most likely target to be garnishees. In Virginia, a valid garnishment requires not only obtaining jurisdiction and Service of Process on the garnishee, but also on the judgment debtor. Gross & Romanick, P.C. is at the forefront of these issues, having recently convinced a federal judge that jurisdiction in a garnishment action is an extension of the jurisdiction to render a judgment. Xyrous Communications, LLC v. Bulgarian Telecommunications Company AD, 74 Fed. R. Serv. 3d 629 (E.D.Va. 2009).

Garnishment of an international bank may generate its own set of challenges as many U.S. banks that operate internationally have corporate structures in place designed to insulate the foreign operation from U.S. legal process. In these cases, the bank, not the judgment debtor, may push litigation in order to protect its corporate structure and customers.

In short, while collection of domestic debt is difficult, collection of debt owed by a foreign business presents additional challenges. Foreign entities often will fight with all their resources to avoid having to pay debts owed in the United States in order to shield the company from the United States judicial system. The attorneys at Gross & Romanick, P.C. are uniquely poised to successfully collect these international debts. Collection of international debt requires an exceptional understanding of the law, as well as tenacity and experience.

Traffic Ticket: A Satisified Client Writes In

2010-05-06T10:17:00.004-04:00

After hiring Gross & Romanick to handle his recent traffic ticket, a client wrote the following to Jeff Romanick:

Jeff,
I received your letter noting the disposition of my traffic ticket.

I deeply appreciate the efforts you have went to on my behalf. The professionalism of your firm has impressed me. While I hope not to ever need your services again, I would utilize Gross & Romanick in the future and recommend you to anyone.

For more information about Gross & Romanick's criminal traffic practice, click here or call us at 703-273-1400.

2010-04-20T11:11:00.002-04:00

Gross & Romanick's Fairfax injury lawyers provide serious results for individuals in the Washington DC metro area. If you have a personal injury, wrongful death or accident case in Maryland, Northern Virginia, or Washington DC we have experienced attorneys that can help you.

If you've been injured in a car accident or have lost a loved one as the result of the negligent or intentional conduct of another individual, we can help you. We understand the pain and stress you are going through in dealing with your injury, lost income, and unexpected medical expenses. Our firm represents injured individuals and their families in serious personal injury and wrongful death cases involving:

* Truck, SUV & Car Accidents
* Traumatic Brain Injuries
* Truck Collisions
* Motorcycle Accidents and Bicycle Accidents
* Pedestrians Hit by Motor Vehicles
* Slips and Falls
* Attacks in Buildings/Premises Liability
* Escalator and Elevator Accidents

To find out more about how the attorneys at Gross & Romanick can help you with your personal injury case, contact us today by calling 703-273-1400 or by filling out our online Information Request form.

Avoid Personal Liability: Always Use Legal Name of Business

2010-04-14T09:08:00.001-04:00

In Virginia, a business entity properly registered with the State Corporation Commission (“SCC”) is a legal entity, separate and independent of its owners. Accordingly, unless it is necessary to promote justice, a business owner cannot be held responsible for the obligations of his/her business.

Nevertheless, business owners can quickly lose this shield of protection if they fail to disclose to third parties with whom they do business that they are acting in the capacity of an agent for the business, and not in their individual capacity. If this agency relationship is not disclosed (i.e third parties do not know they are doing business with an entity as opposed to an individual), the business owner may be held personally responsible for the obligations of the entity.

The same situation applies for business entities that use tradenames. If the tradename is not properly registered with the SCC, and the actual legal name of the entity is not disclosed to third parties, the business owner can be held personally responsible for the obligations of the entity.

Accordingly, it is very important for a business owner to make sure that all business correspondence (including letters, e-mails, contracts, agreements, business cards, etc.) clearly states the full legal name of the business. The full legal name includes the acronym identifying the form of the business entity (i.e. “Inc.”, “LLC”, “PC”, “LP”, etc.). When signing for the business, owners should always designate their title next to their name (i.e. President, CEO, etc. ) or use the term “authorized agent”. If a tradename is being used by the business, then it must be properly registered with the SCC. If not, all business correspondence must clearly state the actual legal name of the business, and not just the tradename.

Gross & Romanck, P.C. is currently representing an individual business owner being sued by a vendor for a debt of his business. The business had placed a purchase order with the vendor for expensive industrial machinery. When the business failed to pay for the machinery in full, the vendor sued the owner in his personal capacity for the debt. The vendor is relying upon the fact that the purchase order does not disclose the legal name of the business to argue that the order was placed by the owner, and not his business.

The lawsuit could have been avoided if the purchase order clearly identified the full legal name of the business or if the tradename had been properly filed with the SCC.

Do not let this happen to you! Always make sure that the full legal name of your business entity is disclosed to the third parties with whom your entity does business; and make sure that you always sign as an agent of the business.

Can you have your criminal record expunged?

2010-04-08T08:55:00.002-04:00

Yes. In Virginia, under certain circumstances a person charged with a criminal offense may remove the police and court records relating to the charge. An expungement of an arrest record requires filing of a petition with the Court.

An expungement can only be granted if either: (a) the individual was acquitted of the offense (i.e. found not guilty), (b) the prosecutor requested the court to dismiss the charge, or (c) the charge must have been "otherwise dismissed". Even if the case was dismissed by the court, an expungement will not be granted if the individual pled guilty to the offense or the Court found there to be sufficient evidence for a finding of guilt.

An expungement will not be granted in cases of a "deferred disposition" in which the court dismissed a charge after an individual completes certain actions within a timeframe set by the Court (i.e. complete community service, attend ASAP class, etc.) if the deferred disposition requires a plea of guilty or the Court finds sufficient evidence for a finding of guilt. A plea of "no contest" may also prevent an expungement.

While the Commonwealth Attorney can agree or object to an expungement, it is granted at the discretion of the Court based upon "good cause" shown. In addition to meeting the criteria for expungement, the Court must also find that the continued existence and possible dissemination of information relating to the charge causes or may cause circumstances which constitute a manifest injustice to the individual. Generally the Court requires that an individual have no prior criminal record similar to the charge that is being expunged.

If an expungement is granted, the record of the arrest will be removed entirely from the records of the Court, the local/county police, and the federal Department of Criminal Justice Services.

Expungement is one of Gross & Romanick's primary criminal practice areas. Other practice areas include: Reckless Driving; DWI/DUI; Traffic Defense; Felonies; Juvenile Court; Expungement; Misdemeanors; Drug Charges; and Appeals. To speak to one of our attorneys, please contact Gross & Romanick by calling 703-273-1400 or by filling out our online Information Request form.

Registered Agents In VA

2010-03-25T09:55:00.003-04:00

In this video by Gross & Romanick's Managing Partner Ed Gross you'll find answers to commonly asked questions about registered agents in VA. Gross is currently the registered agent for over 100 entitles in the Commonwealth of Virginia.

To find out more about registered agents or to consult with any of the Gross & Romanick lawyers, contact the firm directly by calling 703-273-1400 or by filling out their online information request form.

Speeding in Virginia

2010-03-16T11:56:00.002-04:00

If you've recently received a speeding ticket, or a reckless driving by speed ticket, in Virginia, you may well ask how police in Northern Virginia even measure speed?

The police in NoVa actually commonly use one of three methods to measure the speed of moving vehicles:

- Radar
- LIDAR, or Laser speed detection
- and pace

The method most of us are familiar with is radar. Radar works through an application of the Doppler Effect.

The Doppler Effect explains why the pitch of a siren coming from far way sounds different from the pitch of one close by. As sound travels through air, sound is distorted. The further the distance between your ear and the sound, the more the sound is distorted.

A police officer aims the radar gun at a target--in this case your vehicle--and the signal distortion is directly proportional to the speed of the target: the faster the vehicle, the greater the distortion. The distorted radar beam is reflected back to the radar gun and the radar gun "reads" the distortion and calculates the speed of the target.

Radar guns are generally accurate within approximately one mile per hour under normal conditions. However, numerous variables affect the accuracy of radar including calibration errors, distance and interference. The further the radar gun is from the target, the wider the radar beam and the greater the possibility of measuring the wrong vehicle or some other object that will cause interference. At a distance of 1000 feet, the beam could be as wide as 250 feet. In Northern Virginia, radar guns are checked for accuracy using a tuning fork or a calibrated speedometer. A tuning fork, vibrating at a specific frequency produces the same effect on a radar beam as a moving car. In Virginia, tuning forks must be calibrated and checked for accuracy every six months.

Most of us are less familiar with LIDAR, another method of detecting speed. (LIDAR stands for LIght Detection And Ranging.) LIDAR devices are frequently referred to as Laser speed detection devices. Essentially, LIDAR and radar are identical except that, while radar uses a sound or frequency beam, LIDAR uses a focused beam of light. When light is transmitted from the LIDAR device and hits a target, the light is reflected back to the LIDAR device. If the target is moving away from the LIDAR device, the reflected light will have a longer wavelength than it did when it left the LIDAR device. If the target is moving closer to the LIDAR device, the reflected light will have a shorter wavelength. The LIDAR device measures the distance between the target vehicle and the device hundreds of times within about 1/3 of a second and can translate the distances into a determination of speed.

LIDAR is very accurate because it uses a very narrow, focused beam of light. At a distance of 1000 feet, the beam of light is only 3 feet wide. LIDAR is more precise than radar and less likely to encounter interference from objects and other vehicles, which are the reasons why police prefer LIDAR. However, like radar, distance can affect the ability of a police officer to target the correct vehicle. LIDAR devices sight targets much like a gun or rifle and accuracy depends on the ability of the operator to properly sight the target. LIDAR devices must also be checked for accuracy every 6 months. Currently Virginia uses LIDAR devices manufactured by Kustom Signals, Inc. in the State of Kansas. The accuracy certificates used in Court are completed in Kansas by the employees of Kustom Signals, Inc. and sent to Virginia. This practice has opened the door to challenges as to the admissibility of the LIDAR certificates of accuracy.

Most of us are also unfamiliar with the third method of detecting speed in Northern VIrginia: pace. Pace is, as the name suggests, the practice of measuring speed according to the pace (speed) of the police car. A police officer will position the police cruiser at a specific point in relation to a vehicle suspected of speeding (for example, two car lengths behind) and will attempt to maintain the same speed as the target vehicle for a measurable period of time or distance.

But various factors affect a police officer's ability to establish a meaningful pace. These factors include an accurate speedometer, speed changes due to road conditions, distance and time the speed of the target vehicle is measured as well as the location of and the actions taken by other motorists at the time of the pace. In Virginia, the traffic courts require a police officer to present a sworn speedometer accuracy certificate in order to conclude that the officer testimony is credible and that the measurement of the target vehicle's speed is accurate.

If you've received a speeding ticket in VA don't hesitate to contact the lawyers at Gross & Romanick by calling 703-273-1400 or by filling out our Information Request form.

Whether you are charged with an offense that is criminal in nature or a basic traffic offense like speeding, Traffic Court matters have serious financial and economic implications beyond the fine and costs assessed by the Court. For many people, traffic court is their first experience with the American legal system. It is a system with complex rules and procedures. A lawyer knows how to navigate through the law, the rules and the court procedures. Experienced counsel knows the inclinations of the various judges and the prosecutors.

Many traffic defenses involve complex and technical issues. A capable lawyer can assess and recognize whether the prosecution can prove its case. A lawyer can advise you regarding viable defenses; help you present defenses that work; and, when appropriate, can negotiate a satisfactory plea bargain. A lawyer can protect your rights and prevent you from being taken advantage of by an overloaded or impersonal legal system. A lawyer can help you obtain a restricted driver's license if you are qualified for one. In short, a lawyer is your ally in a complex and often hostile system.

Reckless Driving in Fairfax County VA

2010-03-04T09:47:00.003-05:00

Have you received a reckless driving ticket for any of the following reasons in the state of Virginia?

- Speed
- General rule
- Pass school bus/emergency vehicle
- Racing
- Accidents
- Fail to maintain control

Then you need a criminal traffic lawyer to represent you. The lawyers at Gross & Romanick are admitted to practice in Fairfax County,Loudoun County, Prince William County, Arlington County, Alexandria City, and in Federal Court. Don't delay: contact us todya by calling 703-273-1400 or by filling out our Fast Response Online Contact form.

Fees For DWU/DWI or Traffic Cases High?

2010-02-25T10:27:00.002-05:00

If you're hesitant to hire a criminal traffic lawyer for your DWU/DWI or traffic case
because you're afraid the fees will be too costly, think again. In most circumstances, the lawyers at Gross & Romanick will agree to a flat fee. The fee depends upon our lawyers' estimate of the time involved in handling your case.

Contact Gross & Romanick today either by calling 703-273-1400 or by filling out Fast Response Online form.

Reckless Driving by Speed in Virginia

2010-02-24T10:24:00.002-05:00

If you've been charged with reckless driving or speeding in Virginia you need a lawyer who can defend your case and protect your interests. Jeff Romanick, manager of Gross & Romanick's criminal practice, talks about reckless driving charges in Virginia.

To contact Gross & Romanick, call 703-273-1400 or fill out their online Information Request form.

Traffic Tickets in Fairfax, VA

2010-02-18T09:47:00.002-05:00

If you've received a traffic ticket or a DWI ticket in Fairfax, VA you need a lawyer.

Gross & Romanick is an experienced Northern Virginia & Fairfax Virginia criminal defense law firm. We represent:

- Reckless Driving
- DWI/DUI
- Traffic Defense
- Felonies
- Juvenile Court
- Expungement
- Misdemeanors
- Drug Charges
- Appeals

You don't have to face your DWI charge alone. To speak to one of our experienced lawyers, contact us today by calling 703-273-1400 or by filling out one of our online Information Request forms.

DWI In Virginia

2010-02-10T10:54:00.001-05:00

Dealing with a DWI or DUI charge in Virginia can be traumatic. That's why you need the support of a reputable law firm like Gross and Romanick. In this short video, Gross & Romanick attorney Jeff Romanick talks about the DWI process in Virginia. Take a look:

What's The Process for Commercial Landlord/Tenant Evictions In VA?

2010-02-04T09:58:00.002-05:00

One of the busiest parts of Gross & Romanick's practice is our Commercial Landlord division. In this part of our practice, we represent our commercial landlord clients in: the lease and other agreements; evictions; bankruptcy; litigation; and self-help.

The eviction process proves to be one of the most problematic for our clients, so our Managing Partner Ed Gross, put together a video explaining the process. Take a look:

Commercial Landlord Law: Evictions

2010-01-27T10:03:00.002-05:00

Jeffrey Romanick, partner at Gross & Romanick, P.C., prevailed on January 26, 2010 at a rehearing of an eviction of a restaurant in Baltimore (Maryland) City District Court.

The Tenant, who was evicted January 15, 2010 for non-payment of rent, requested and received three separate hearings after the originally scheduled eviction date and time in the attempt to prevent or undue the eviction. Mr. Romanick successfully won all of the hearings. During the most recent three hour hearing, the tenant's lawyer argued that the rent had been cured at the time that the writ of restitution was filed and that the tenant should be given the opportunity to cure the rental default. Mr. Romanick effectively presented factual evidence and legal argument sufficient to prevail at the hearing.

Because of a threatened protest by the Tenant's customers and friends, Edward Gross (managing partner at Gross & Romanick) arranged for a bodyguard to accompany the Landlord's chief witness.

The grateful Landlord's property manager circulated the following message: "I'm pleased to report that the judge awarded in favor of the Landlord and that the eviction was not reversed. Jeff did a wonderful job in court today to secure a successful outcome for Landlord. The hearing was long but without incident. (The bodyguard) who [accompanied] me to hearing was very helpful. Thanks to the entire group!!"

Gross & Romanick, P.C. is a very experienced law firm, handling commercial landlord matters. Phone: 703-273-1400; Website:www.gross.com

ASAP Pre-court Evaluation

2010-01-13T08:39:00.002-05:00

The Alcohol Safety Action Program (ASAP) was established by the Virginia legislature to provide alcohol courses and programs for persons convicted of a DWI (Driving motor vehicle, engine, etc., while intoxicated). As a condition of probation and to obtain a restricted license, a person convicted of a DWI must enter into and successfully complete ASAP. Although a court may decline to order participation in ASAP if the assessment by ASAP indicates that intervention is not appropriate for such person, it almost never happens in the Northern Virginia courts. Nevertheless, a pre-court evaluation by ASAP can be a valuable tool in certain cases.

While an ASAP evaluation normally takes place after a conviction of a DWI, Fairfax ASAP offers a pre-court evaluation service. Someone who is charged with a DWI and who took a blood or breath test indicating a high level of alcohol may wish to obtain a pre-court evaluation. In cases of high blood alcohol levels a judge may require an ASAP evaluation before issuing a restricted license. A pre-court evaluation which indicates that the accused does not have a serious alcohol problem and will not be a danger on the road may enable this person to obtain a restricted license at the first court hearing. Since an ASAP evaluation in Fairfax County can take 6 weeks or more to obtain, a pre-court evaluation may save a person from a substantial period of time without a driver's license.

An appointment for a pre-court evaluation must be made at least several weeks prior to the court date. The evaluation interview is conducted in a group setting and takes approximately three hours. The pre-court evaluation report contains a demographic statement, offense history, alcohol and drug history, recommendations for program requirements and a risk assessment. A copy of the pre-court evaluation report is sent to the court, the defendant's attorney and the client.

Although a good evaluation can be very helpful, a bad report can be devastating to the attempt to obtain a positive result in court. Because the report generally contains information about the drinking behavior of the accused on the day of the charge, a decision to obtain the pre-court evaluation should be made in consultation with an experienced DWI lawyer. This lawyer can also advise the client on how to properly conduct oneself during the interview.

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The above is not meant to replace legal counsel. If you'd like to speak to one of the attorneys at Gross & Romanick, call the firm directly at 703-273-1400 or fill out their online information request form.

Residential and Commercial Tenants: Do Not Treat Them the Same

2010-01-12T16:27:00.001-05:00

All leases are not created equal. Commercial leases are generally governed by the specific terms of the lease agreement between landlord and tenant, but Virginia law automatically merges certain statutory terms into every residential lease. The Virginia Residential Landlord Tenant Act gives residential tenants considerably more rights than are afforded to commercial tenants.

Evictions

The differences between residential and commercial leases are most starkly apparent when a landlord attempts to evict a defaulting tenant. Commercial landlords have rights of self-help; they can, under proper circumstances, simply lockout non-paying tenants (as long as this is done with great care - see Edward Gross Report, Spring 1992). Residential landlords, however, have no such remedy. The Virginia Code Section §55.248.36 provides that "Landlord may not refuse to permit tenant access to a unit unless refusal is pursuant to a court order." Furthermore, a residential landlord is also forbidden from denying essential services to his tenant, such water, heat, or electricity, in an effort to force out that tenant. Residential tenant must be served with a 5 day "pay or quit" notice before eviction, but no such notice is required for commercial tenants (we recommend serving notice on both types of tenants).

Duty to Maintain

A commercial landlord has no duty to maintain the premises during the lease term; repairs are the responsibility of the tenant. Of course, both commercial landlords and tenants can, and often do, specifically contract to impose a duty to repair upon the landlord, but no such duty is implied in law. Conversely, the Virginia Residential Landlord Tenant Act imposes a specific affirmative duty on every residential landlord to maintain and repair the premises throughout the term of the lease. A residential landlord must keep all common areas in a clean and safe condition, must maintain all plumbing and heating, sanitary facilities, and any appliances on the premises. A residential landlord also has a general obligation to keep the premises in a "fit and habitable" condition. These duties can be transferred to the tenant, but the transfer must be in writing and done for a "good faith" purpose (something other than just an attempt by the landlord to evade his obligations).

Security Deposits

In commercial settings, the amount and disposition of security deposits are generally governed by provisions of the lease. The lease will spell out for what purposes it can be used by the landlord, and when and how the security deposit is to be returned to the tenant. Residential landlords, on the other hand, must comply with Section §55-248.11 of the Act, which provides detailed procedures and rules governing the use of residential security deposits. Among its provisions, the Act mandates that a residential security deposit cannot exceed more than two month's rent; and the landlord must provide interest at five percent per anum payable to the tenant upon termination of the lease (if the deposit is kept for over thirteen months).

The residential landlord may apply the security deposit only to the payment of accrued rent (with attendant late charges), and to offset damage to the premises caused by the tenant. The landlord must inspect the premises for damage within 72 hours from the time the tenant vacates, and the tenant has a right to be present during the inspection. After making deductions for damage, the landlord must return the remaining portion of the security deposit within thirty days after the termination of the tenancy, along with a written itemization of the damages to which the deposit was applied. If the landlord fails to comply with any of these provisions, the tenant may recover from the landlord the security deposit plus any actual damages and reasonable attorney's fees.

In the Fall, 1991 edition of the Edward Gross Report, an article discussed the possibility of losing a security deposit after foreclosure. In fact, this only applies to commercial tenants because Virginia Code Section §55-248.11 states: "The holder of the Landlord's interest at the time of termination of tenancy regardless of how that interest is acquired or transferred...shall be required to return any security deposit received by the original Landlord."

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The above is not meant to replace legal counsel. If you'd like to speak to an attorney at Gross & Romanick, please contact the firm directly by calling 703-273-1400 or by filling out their online information request form.

The Automobile Injury Patient: How to get paid

2010-01-07T09:25:00.002-05:00

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.

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The above article is not meant to replace legal counsel. If you'd like to speak to an attorney at Gross & Romanick, call 703-273-1400 or fill out their online Information Request form here.

Build-Outs and Tenant Allowances

2009-12-31T09:24:00.001-05:00

A common aspect of commercial leasing is the building out of the premises for the tenant. The costs of the build-out (and the hiring of the contractor(s) to perform the build-out) may be the responsibility of the landlord alone, of the tenant alone, or may be a joint enterprise between landlord and tenant. Whatever the arrangement, build-outs are a very common area of dispute between landlords and tenants. It is extremely important that the landlord clearly state the terms of the build-out in the written commercial lease. The following are the some items relating to the build-out that must always be addressed in detail in the lease when applicable:

What improvements will be made to the premises?

When must the landlord work and tenant work be completed?

Does the completion trigger the lease and/or rent commencement date?

Who is responsible for the costs of the build-out?

Who is responsible for hiring architects and contractors to perform the build-out?

What is the landlord’s mechanism for approving the contractors and the work specifications?

Is the landlord going to pay some or all of the build-out costs?

If so, will the landlord pay the general contractor directly or pay the tenant?

Is the tenant required to pay back the costs to the landlord or will the costs be amortized within the rent?

If the tenant is responsible for the costs of the build-out, will the landlord pay the tenant an improvement allowance?

If so, when/how will the allowance be disbursed? Will it be disbursed to the tenant or to the contractor(s)? What must the contractor/tenant provide to the landlord in order to receive disbursements of the allowance?

Is the tenant required to pay back the allowance? If so, when and how?

In addition to clearly setting forth the terms of the build-out in the lease, landlords need to take additional steps to protect their property and their investment in the build-out. The following are some tips that can help landlords avoid unfavorable results:

The lease default provisions should require the tenant to repay the improvement allowance and the landlord’s expenditures toward the build-out if there is a default of the lease.

If the landlord is paying for the costs of the build-out, without upfront payment from the tenant, the landlord should make sure that the improved premises will be suitable for other tenants. In the event the current tenant fails to pay rent and the landlord is forced to evict the tenant, the landlord needs to be able to market the space to other prospective tenants without tear-down expenses and another build-out.

The landlord should require the tenant and its owners to personally guarantee the repayment of the build-out expenses.
The landlord should only disburse funds for work that is actually completed. The landlord needs to monitor the project, only pay the contractor(s) directly, and require lien waivers from all contractors before disbursing funds.

Collecting the Professional Debt: Discretion with Aggression

2009-12-29T13:26:00.002-05:00

Harry has been a client of your firm for several years. Eventually, you have come to regard him as a trusted client who promptly pays for services rendered. This morning he called you with an urgent message. It seems that he is involved in a large matter and your fees will go well beyond any amount previously billed to him by your firm. If you are successful, you know there will be funds available to cover your fees and costs, but you are not certain it will succeed.

While all businesses have credit extension concerns, professionals have factors to consider that require special considerations. The services of a lawyer, doctor, CPA, architect and other professional are unique and, once engaged, cannot generally be suddenly terminated. The savvy professional improves the chances of avoiding collection problems by conducting prudent credit checks like other businesses, even for existing clients who request more extensive credit.

Prevention

Additionally, the professional should candidly discuss the prospects of success in the enterprise, e.g. the risks of the medical procedure or the likelihood of reversal of the IRS ruling. Explain in detail the estimated fees and what factors can effect these charges. Do not forget to reveal expenses such as photocopies, travel, filing fees, investigations, subcontractors, etc. Tell the client how to keep the total bill down. Very importantly, tell the client when bills are expected to be paid. Not only will these types of explanations allow the client to budget, but it will avoid surprising the client with an unexpectedly large bill.

Do not assume that your client can afford your services. Ask for an upfront retainer even with a good credit history. Bills can be monthly, at project stages or other predetermined dates. For example, architects normally obtain a 5% retainer, 15% upon production of the schematic design, 20% upon detailed sketches drawn to scale, and so on with varying percentages due at specific phases of construction. Put the payment agreement in writing to avoid differing recollections.

Unless the matter is handled on a total contingency fee, the final bill should not be the majority of the account due. The final bill is the most difficult to collect, especially if the work is unsuccessful or the bill is unexpected.

Dunning the Client

When, despite your efforts, your receivables become delinquent, the part of the business that most professionals find disagreeable has to be undertaken. Most lawyers would rather argue before a jury than with a slow paying client. Furthermore, if you too vigorously emphasize prompt payment of bills, your client may feel you are more concerned about your fees than his case. Still a balance must be struck between a too-strident policy, at the cost of a lost client, and one that is too permissive, at the cost of profitability.

When it becomes necessary to go after a delinquent client, the question arises as to how the contact should be made and who in the firm should make it. A carefully edited letter, which is sent soon after payment is due, can be a good reminder. Relationships will not be damaged if regular, reasonable reminders are provided. In some cases a letter will not be sufficient and a telephone call must be made. A call from the professional handling the matter is not advisable because it can tarnish the working relationship and can be very awkward for the professional and the client. The bookkeeper or a secretary, whose duties are removed from the client, should place the call. As a final effort, an associate or partner should speak to the client about the implications of a failure to pay.

Firing the Client and the Fear of Counterclaim

Firing the nonpaying client creates a set of particular concerns to the professional.

1. Do you have the right to discontinue services? For example, can an orthodontist leave complex and potentially dangerous devices in a patient's mouth?
2. Must the client's records, books and your work product be given over?
3. Are you going to be sued for malpractice despite competent efforts to that stage of the work? Should you worry about the next psychologist ruining all the progress and you getting the blame?

Answers to many of these questions can be obtained from professional associations and by reference to ethical codes; get a written opinion for your files.

If you perform your work to the best of your abilities and meet the standards of your profession, sue your former client if they owe you a significant fee. Threats of a counterclaim based upon negligence are usually just a ploy to avoid payment. Of course, you will need some nerve and confidence in your performance, as well as good documentation. Finally, hire a good collection lawyer who can be your professional.

A Final Thought

Remember a line from the classic 1967 movie Cool Hand Luke: "What we've got here is a failure to communicate." If you keep the lines of communication open with your clients, you will establish mutual trust and will probably be rewarded by prompt- paying clients.

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The above is not meant to replace legal counsel. If you'd like to speak to an attorney please contact Gross and Romanick directly by calling 703-273-1400 or by filling out their online Information Request form.

Employees: Duty of Loyalty

2009-12-28T10:34:00.002-05:00

Your top salesperson has just given you a two-week notice of resignation. When you discuss this problem with another employee, you learn for the first time that your top salesperson has already set up a competing company based upon copies of your files and solicitation of business from your clients. To compound the problem, several of your key personnel quit within days of your top salesperson; you learn that they are joining this new competitor. What can you do? Well, a recent case in the United States District Court for the Western District of Virginia may provide some help.

In National Legal Research Group v. Latham, the court, in an unusual ruling, enjoined a former employee from soliciting or communicating with clients of the firm for two years after resignation. Furthermore, the former employee was charged with actual damages caused to the former employer, as well as punitive damages, even though the offending employee had no written contract. This case could be a significant aid to employers seeking to enforce the so-called "Duty of Loyalty" that binds all employees.

Non-Competition Clauses

Of course, sales people should sign employment agreements containing restrictive covenants, which prevent them from copying confidential materials or competing upon termination of employment. However, such covenants are rarely executed because of the fear that excellent employee candidates may refuse employment on this basis.

To be enforceable, Virginia law generally requires that non-competition clauses be reasonably necessary for the protection of the employer, and not impose undue hardship on the employee. If the clause prevents the employee from competing in a limited geographical area or for a limited period of time, a court will generally uphold the agreement. If the clause has no such limits, courts will often find the restriction to be impermissibly overbroad and unenforceable. Since non-competition clauses are, in general, a restraint on free trade, a court will carefully examine the agreement and construe the clause, where possible, in favor of the employee.

Duty of Loyalty

Despite the failure to include a restrictive covenant in an employment agreement, the law implies an agreement on the part of the employee to faithfully serve an employer. In addition, an employee is a fiduciary with respect to information learned during the course of employment.

Virginia Trade Secrets Act

The Virginia Trade Secrets Act, Virginia Code §59.1-336 may prevent former employees from using information for which the company took reasonable steps to keep secret. This Virginia Code Section was the basis for the court's ruling in the National Legal Research Group v. Latham case.

Protect Yourself

Restrictive covenants in employment agreements are the best method for protecting your trade secrets and preventing competition from former employees. Nevertheless, you may have a case under the Virginia Trade Secrets Act if you take reasonable steps to protect your important trade secret information. Establish written procedures: inform your employees of what materials are considered protected and under what limited circumstances these materials may be utilized.

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The above article is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact Gross & Romanick directly by calling 703-273-1400 or by filling out our online Information Request form.

Traffic Offenses in Fairfax, VA

2009-12-23T10:06:00.001-05:00

Recently, Gross & Romanick helped a client’s elderly father with a criminal traffic matter. Afterward, our client wrote to say: “You came through when my family badly needed help, and I very much appreciate your efforts. There is a good reason the folks at the Fairfax Courthouse recommend you so highly!”

If you’d like to speak to one of the attorneys at Gross & Romanick about a criminal traffic matter in the Virginia, DC or Mayland areas, contact us by calling 703-273-1400 or filling out our online Information Request form. We’d be more than happy to discuss your case with you.

Can I have a personal injury claim if I don't have automobile insurance?

2009-12-16T09:39:00.002-05:00

Yes. A personal injury claim is filed against the person who caused the accident and that person's insurance company must pay. The fact that you were not covered by your own insurance policy at the time of the accident does not prevent you from making a claim.

If you'd like to speak to an attorney about your personal injury claim, contact the lawyers at Gross & Romanick at 703-273-1400 or by filling out their online Information Request form.

What Creditors Cannot Seize

2009-12-10T10:41:00.003-05:00

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 the lawyers at Gross & Romanick, please contact the firm directly by calling 703-273-1400 or filling out their online Information Request form.

Our Website Has A New Look

2009-12-03T09:25:00.001-05:00

Check out our new website. We hope the new interface will make finding what you need that much easier. And remember, if you want to speak to an attorney directly, simply call us at 703-273-1400.

Lease Survives Bankruptcy Rejection

2009-11-30T10:20:00.001-05:00

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

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

Commercial Landlord & Collections

2009-11-17T14:54:00.001-05:00

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

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

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

Business Conspiracy and Employee's Fiduciary Duties

2009-11-11T09:26:00.002-05:00

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

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

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

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

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

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

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

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

Terminating A Residential Lease

2009-11-02T09:30:00.002-05:00

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

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

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

Pre-Judgment Attachment: Get It Before It Vanishes

2009-10-29T08:32:00.002-04:00

Unfortunately, filing a lawsuit to collect a debt is often an encouragement to the debtor to move and conceal assets. This sometimes makes creditors hesitant to take early legal action. But, Virginia law has a solution: the pre-judgment attachment. Virginia law allows a creditor to bring the debtor's property into court custody at the outset of a lawsuit, thereby assuring that the property will be available to satisfy any judgment the court eventually grants.

Virtually any significant asset of a debtor can be subjected to attachment. Although real estate and business equipment are the most popular targets, a creditor can also attach bank accounts or even other monies owed to the debtor by a third party. One useful application of pre-judgment attachment occurs in construction cases, when a sub-contractor attaches payments to an out-of-state general contractor. An interesting case is the attachment of an elephant from a traveling circus; unfortunately, the creditor neglected to compute the cost of feeding the animal before taking this ill-advised action.

To secure a pre-judgment attachment the plaintiff files a sworn petition setting forth the cause of action and the grounds for the attachment. The justifications for attachment must fall within one or more of the categories allowed by Virginia Code Section 8.01-534. If the petition is approved by a judge, the creditor must post a bond of twice the amount of the claim. Upon posting of the bond a warrant will be issued ordering the sheriff to seize the property and bring it into the custody of the court. Generally, the debtor will request a hearing within twenty-one (21) days of the seizure at which time the court will determine whether the property will be released or remain in custody until the lawsuit is completed. Many attachments are dismissed at that hearing because of failure to comply with the technical requirements of Virginia attachment procedure.

Pre-judgment attachments do involve certain risks to the creditor. The bond is posted in order to compensate debtors for the improper seizure of their assets. Therefore, creditors should not use attachments for questionable claims. Nevertheless, the judicious utilization of this legal tool can be the difference between an empty judgment and a collected judgment.

Grounds for Attachment:

In summary form, it is sufficient grounds for attachment that the defendant:

* Is a nonresident corporation or individual, which has assets or debts owed to it in Virginia

* Is removing or about to remove out of the Commonwealth with intent to change domicile

* Intends to remove, or is removing, or has removed the specific property sued for or his assets or the proceeds of the sale of his property out of the Commonwealth so that the debtor will not have therein assets sufficient to satisfy the judgment

* Is converting, is about to convert or has converted his property into money, securities or debt with the intent to hinder, delay or defraud creditors

* Has assigned or disposed of or is about to assign or dispose of his assets with intent to hinder, delay or defraud creditors

* Has absconded or is about to abscond from the Commonwealth or has concealed himself to the injury of his creditors, or is a fugitive from justice.

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The above is not meant to replace legal counsel. To speak to one of the attorneys at Gross & Romanick, call 703-273-1400 or fill out one of our information request forms.

Reasonable Attorney's Fee?

2009-10-28T08:42:00.002-04:00

Unless there is an agreement providing for attorney's fees, a Virginia court will not award attorney's fees for breach of contract or failure to pay on an open account. While most companies are aware of this problem and put attorney fee provisions in their supply contracts or promissory notes, there is still a problem. If these agreements provide for "reasonable attorney's fees", then the court may want proof of the amount the litigation actually cost (sometimes by expert witnesses) and often awards less than the contingency fee, the actual cost, and the cost it will take to collect the judgment. If the agreement states a fixed percentage such as "25%" or "1/3", the court may decide that it did not take that much effort to obtain the judgment and award less than the amount that the client will be forced to pay the attorney out of collection. Furthermore, if the debtor defaults on a confession of judgment note, the clerk of court who enters the confessed judgment will not determine the amount to be awarded under a "reasonable attorney" fee clause.

The above is not meant to replace legal counsel. If you'd like to speak to one of the attorneys at Gross & Romanick, please contact them by calling 703-273-1400 or by filling out their online information request form.

Important Eviction Deadlines

2009-10-26T12:28:00.002-04:00

During a commercial eviction procedure there are important deadlines that landlord must meet in order to successfully evict a tenant. Some of them are as follows:

Notice of Default
There are no 5 day statutory notice requirements as in residential evictions. However, all notices required by the lease must be satisfied before filing the Unlawful Detainer.

Service of Unlawful Detainer
Must be made 5 days prior to first return date.

Removal
Tenant may seek to remove the case to the Circuit Court but must do so within 10 days after the first return date. If this occurs, be sure to demand that the tenant post a bond for future rent.

Appeal
If either tenant or landlord wants to appeal the General District Court trial verdict, a notice of appeal must be filed within 10 days; or, 30 days from a Circuit Court judgment.

Writ of Possession
If the court awards possession to the landlord, the Writ of Possession can be filed after 10 days. But, many clerks of court will not issue a Writ of Possession after 60 days.

Sheriff's Return
The sheriff must evict the tenant or return the writ of possession to the court without eviction within 30 days. Don't delay or Landlord may have to start the eviction all over again.

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

The Mechanic's Lien

2009-10-21T08:14:00.002-04:00

Northern Virginia's construction industry was hit hard by the recent recession. One indicator of that is the spiraling number of mechanic's liens filed by unpaid general contractors, subcontractors and suppliers. The figures rose at a staggering rate during 1989 and 1990. By the end of 1990, more than $105 million worth of liens had been filed in Northern Virginia counties, including Loudoun, Fairfax, Arlington, Manassas and Alexandria. During the first half of 1991, 2,798 liens were filed, worth $53,144,530.10. In times like these, contractors have good reason to take advantage of this extraordinary remedy.

The mechanic's lien was specially created by lawmakers to protect the workers and suppliers whose sweat and effort should not go unrewarded, even if the General Contractor or Owner of the property goes bankrupt. A mechanic's lien gives contractors and sub-contractors a star preference over virtually all other creditors and liens, sometimes even challenging the Internal Revenue Service. The catch is: you must follow the rules. Even small errors could frustrate your chance to collect on a debt. Since mechanic's liens arise only under specific statutes, the courts strictly follow those laws.

What Is It & How Do I Get It?

Anyone whose work or materials are used to increase the value of real property has the right to secure a lien on that property. The lien is only a potential right until it is properly "perfected" in the manner specified by law. You perfect a lien by recording a Memorandum of Mechanic's Lien with the records division of the county or city where the property is located. This notice lets the world know of your lien interest. The Virginia Code sets out in detail what must be included in the Memorandum. Virginia Code, sections 43-5 (general contractors), 43-8 (sub-contractors) and 43-10 (laborers and materialmen).

The Memorandum and a lawsuit to enforce the lien (Bill to Enforce Mechanic's Lien) must be filed within specified time periods (see the filing deadlines). The Bill to Enforce asks the court to sell the property in order to pay the lien.

Enforcing Liens Against Subsequent Purchasers

The sale of the building or property does not destroy either a filed mechanic's lien or the legal right to file a lien. Thus, many new homebuyers are shocked to find that they may be responsible for a mechanic's lien filed after settlement. Title insurance is the method of protection recommended for residential purchasers. Fortunately, banks always require the owners of commercial property to have title insurance.

Virginia is only one of seven states giving mechanic's lien claimants the power to sell the property to satisfy the debt even against good faith purchasers. In fact, a 1988 Fairfax County Circuit Court case, (Talbot v. Swango, 18 Va. Cir. 5), held that purchasers after a foreclosure are at risk for liability on outstanding liens, even if the lien is not perfected until after the foreclosure sale! Since Virginia law provides a relatively generous amount of time to file a lien after work is completed (compared to Maryland and the District), subsequent purchasers may have no notice of the lien and no idea they can be liable for the debt.

Statutory protection for contractors and subs is under continual challenge in the Virginia General Assembly. The legislature is considering measures that would shorten the time for filing liens and would provide less protection for contractors.

Get It Right the First Time

The Memorandum of Lien and the Bill to Enforce must be complete and accurate. Although there are a few trivial mistakes involving form that the courts will overlook, the courts strictly enforce the statutory requirements. One recurring problem is the failure to name the correct Owner or naming only a few of many owners. Avoid this mistake! Have a title search performed. Once the time for filing the mechanic's lien has expired, a judge will not allow an amendment to correct mistakes contained in the Memorandum.

Many deserving lien claimants have lost their only possibility of being paid because they failed to include all necessary parties or to correctly state all requirements in the Memorandum and the Bill to Enforce. The Virginia Supreme Court in Mendenhall v. Douglas L. Cooper, Inc., 239 Va. 71 (1990), dismissed an action to enforce a mechanic's lien, because the named trustee under a recorded Deed of Trust was not included as a party to the suit when it was filed. Because of the technical nature of these procedures, it is advisable to rely on an experienced attorney to enforce your rights.

The Case of the Absconding General

Suppliers of labor and materials should take steps to protect themselves from the risk of a nonpaying General Contractor before they begin work or deliver supplies. It is essential to make careful decisions regarding extension of credit (see article on Credit Applications). But, despite all reasonable measures, there will be those few General Contractors who pocket the money intended for subs and blow it on fun and frolic. Or more commonly, the General files for bankruptcy protection. In many states, including Virginia, once the Owner pays the bill to the General Contractor, he is released, regardless of whether the subs and suppliers get paid.

Virginia, however, has a seldom utilized statute (Virginia Code §43-11) which lets you impose personal liability on the Owner or General Contractor, despite the absence of a written contract. By following specific notice requirements, the sub-contractor or materialman can obtain this additional security without having to resort to the mechanic's lien process.

It is worth noting that Virginia law also imposes criminal sanctions on General Contractors or sub-contractors who intentionally and fraudulently keep money intended for those who performed labor or furnished materials. Virginia Code §43-13.

Conclusion

While the title companies may ultimately have to pay for a perfected mechanic's lien, they will test every technical aspect of the lien, from the filing date to inclusion of all necessary parties. Nevertheless, the mechanic lien process remains one of the best methods for assuring payment. During these tough times, it is often the only way to be paid.

Mechanic's Liens Filing Deadlines

Are Owners Liable When a Mechanic's Lien is Filed Against a Tenant?

What happens if your tenant hires a contractor to do work on the leased property, and then fails to pay for it. Many property owners would assume they have to pay once they receive notice that a mechanic's lien has been filed. Not necessarily so. With some exceptions, the mechanic's lien may only be good against the tenant's leasehold interest, and may not attach to the underlying property. Owners should check on this rule before agreeing to pay.

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The above article is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact Gross & Romanick by calling 703-273-1400, emailing law@gross.com, or filling out the firm's online Information Request Form.

Fictitious Name Filing: Where to File?

2009-10-19T10:20:00.002-04:00

Many corporations mistakenly only file their tradename (also called fictitious name) certificates with the Virginia State Corporation Commission. In fact Va. Code §59.1-69 states that a proper certificate must be filed in "the same office of the clerk of the court in which deeds are recorded in the county or city wherein the business is to be conducted." File them with the SCC and the County.

The above is not meant to replace legal counsel. To speak to an attorney, please contact Gross & Romanick directly by calling 703-273-1400 or fill out their online Information Request form.

Limited Liability Companies

2009-10-15T08:18:00.004-04:00

After a hard-fought legal battle over a limited liability company, the attorneys at Gross & Romanick were able to conclude a very favorable settlement which included the sale of a 25% ownership interest to its client for a very reasonable price. In addition, the intellectual property was conveyed to the LLC without an additional fee. The pleased client said, “Ed and Chris: Thank you for your help in getting this finalized."

To speak to the attorneys at Gross & Romanick, contact the firm by calling 703-273-1400 or by filling out their online Information Request Form.

Pre-Judgment Attachment: Get It Before It Vanishes

2009-10-14T16:54:00.002-04:00

Unfortunately for the creditor, filing a lawsuit to collect a debt is often an encouragement to the debtor to move and conceal assets. Creditors often delay filing legal action for fear of triggering such diversion of assets. However, Virginia law may have a solution: the pre-judgment attachment. Virginia law allows a creditor to bring the debtor's property into court custody at the outset of a lawsuit, thereby assuring that the property will be available to satisfy any judgment the court eventually grants.

Virtually any significant asset of a debtor can be subjected to attachment. Although real estate and business equipment are the most popular targets, a creditor can also attach bank accounts or even other monies owed to the debtor by a third party. One useful application of pre-judgment attachment occurs in construction cases, when a sub-contractor attaches payments to an out-of-state general contractor. An interesting case was the attachment of an elephant from a traveling circus; unfortunately, the creditor neglected to compute the cost of feeding the animal before taking this ill-advised action.

To secure a pre-judgment attachment the plaintiff files a sworn petition setting forth the cause of action and the grounds for the attachment. The justifications for attachment must fall within one or more of the categories allowed by Virginia Code Section 8.01-534. In summary form, it is sufficient grounds for pre-judgment attachment that the defendant/debtor is:

· a nonresident corporation or individual, which has assets or debts owed to it in Virginia
· removing or about to remove out of the Commonwealth with intent to change domicile or business location
· intending to remove, or is removing, or has removed the specific property sued for or his assets or the proceeds of the sale of his property out of the Commonwealth so that the debtor will not have therein assets sufficient to satisfy the judgment
· converting, is about to convert or has converted his property into money, securities or debt with the intent to hinder, delay or defraud creditors; (5) assigned or disposed of or is about to assign or dispose of his assets with intent to hinder, delay or defraud creditors
· absconded or is about to abscond from the Commonwealth or has concealed himself to the injury of his creditors, or is a fugitive from justice.

If the petition is approved by a judge, the creditor must post a bond of twice the amount of the claim. Upon posting of the bond a warrant will be issued ordering the sheriff to seize the property and bring it into the custody of the court. Generally, the debtor will request a hearing within twenty-one (21) days of the seizure at which time the court will determine whether the property will be released or remain in custody until the lawsuit is completed. Many attachments are dismissed at that hearing because of failure to comply with the technical requirements of Virginia attachment procedure, but equally as many cases are resolved because of the seizure.Pre-judgment attachments do involve certain economic risks to the creditor. The bond is posted in order to compensate debtors for the improper seizure of their assets. Therefore, creditors should not use attachments for questionable claims. Nevertheless, the judicious utilization of this legal tool can be the difference between an empty judgment and a satisfied judgment.

The Effect of a Default Judgement on Future Litigation (TransDulles Center v. Dr. Yash Sharma (1996))

2009-10-14T08:38:00.002-04:00

Facts
Landlord obtained a default judgment in the General District Court in an unlawful detainer action. Tenant was personally served but did not appear at court. Default judgment was entered and landlord's witness presented evidence establishing a 3-month arrearage in rent, attorney's fees and costs. Even though the tenant was evicted pursuant to the unlawful detainer action, Tenant did pay the judgment amount.

Over a year later the Landlord again sued the Tenant for continuing rents accrued after the default judgment. The Tenant in this new case sought to assert defenses in order to deny liability.

Court Ruling
The issue of whether rent was owed had already been litigated, even though it was done by a default judgment. The Tenant cannot now deny liability.

Lease Drafting Tips
Permit the Landlord to seek continuing rents even after judgment or termination of the lease.

Action Advice
(1) File unlawful detainers in the General District Court, not the Circuit Court (2) Obtain personal service on the Tenant (3) Always present proof at court by a witness, not just by affidavit (4) Object to any contest of liability when seeking additional rental amounts at a later lawsuit.

The above is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact Gross & Romanick directly by calling 703-273-1400 or by filling out the online Information Request Form.

The Lease Indemnity Clause

2009-10-07T08:37:00.002-04:00

THE PURPOSE: Typically a Lease will state that Tenant will indemnify and hold the Landlord harmless from any claims of damages, suits, fines, liabilities, losses, costs and expenses or injury by the Tenant, Tenant's employees and third parties. Often the indemnity clause states that it even applies to Landlord's own negligence.

CASE LAW: In Appalachian Power Co. v. Sanders an indemnity provision was upheld which required the Tenant to indemnify the Landlord, even though the injured party fell on the premises into a hole from an old water meter. However, in the case of Hiett v. Lake Barcroft Community Ass'n an indemnity agreement signed by a triathalon participant, absolving negligence of the event's sponsor, was set aside on the basis of public policy.

INSURANCE: The Lease should require the Tenant to include in its insurance policies, provisions that: (1) protect the Landlord from subrogation or other claims that are covered by fire, casualty or other types of coverage; and, (2) prevent the invalidation of insurance coverage if the Tenant has waived its right to recover from the Landlord.

ADVICE: The Lease should include hold harmless, indemnification, and defense provisions relating to mechanic's liens, property damage, business losses, personal injuries, theft, safety, and environmental laws. Landlord's agents, employees, invitees and independent contractors should be covered by these provisions. The Lease should protect the Landlord from its own negligence, from construction injuries, and from damages caused by mechanical systems.

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The above is not meant to replace legal counsel. If you'd like to speak to an attorney, please contact Gross & Romanick directly by calling 703-273-1400 or by filling out the online Information Request Form.