Archive for: February, 2015

 

A new law in California, effective January 1, 2015, requires online websites and mobile app companies to permit a minor to remove content posted by a minor.  The new law, Bus & P C §§22580–22582, allows minors who are registered users of the website or app to either remove the content themselves or to request the removal by the app or website operator. (more…)

While you are here learning best practices to protect your business, consider taking the FREE Legal Checkup by clicking here.  A Legal Checkup diagnoses the relative strengths and weaknesses of your business, letting you know how you can best protect your investment and your livelihood.  Did we mention it is free?

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Certain employers cannot lay off employees without giving advance notice or paying them for a period of time.

In 1989, the government enacted WARN – the Worker Adjustment and Retraining Notification Act.  WARN protects workers by requiring employers to provide sixty days advance notice of certain mass layoffs. In general, employers are subject to WARN if they have a 100 or more employees, not counting employees who have worked less than six months in the last twelve months, and not counting employees who work an average of less than twenty hours a week.

An employer subject to WARN must give sixty days’ advance notice if an employee site will be shut down and the shutdown will result in employment loss for fifty or more employees during any thirty-day period.  This is commonly known as a “plant closing”, although it does not merely apply to manufacturing sites.

Alternatively, an employer subject to WARN must give notice if there is to be a “mass layoff” which will result in an employment loss at the employment site during any thirty-day period for 500 or more employees or a lay off 50 to 499 employees if the number to be laid off makes up at least 33% of the employer’s active workforce.

In either case, employees who have worked less than six months in the last twelve months or employees who work less than twenty hours a week do not count in determining whether an employer is subject to WARN.

WARN also applies in the case of a sale of a business.  However, there is an additional twist.  Not only is the seller responsible for providing notice of the “plant closing” or “mass layoff”, but if the buyer of the business would anticipate a “plant closing” or “mass layoff”, such buyer must also give the sixty-day notice.  As an alternative to giving sixty days notice, if a company is subject to WARN, the employer can pay the laid-off employees for those sixty days.

 

By Guest Blogger Mary Drury, Esq.

 

 

What is an Umbrella Insurance Policy?

“Umbrella” or “excess coverage” insurance is an extension of your home and auto insurance policies. Most often, an insurer will only provide umbrella coverage if both your home and autos are insured with that company. The policy kicks in after all of your homeowner or auto policy coverage has been exhausted. In other words, it protects you against those truly extraordinary losses for which you are at fault and for which your home or auto coverage are simply not enough. (more…)

 

An asset purchase agreement crossed my desk recently with a provision that allowed the buyer to post a notice on the door that there was a pending transfer of the business.   Also included in buyer’s proposed purchase agreement was a provision obligating seller to maintain all customers, vendors, and employees against that threat that the buyer could terminate the contract.

Upon review, it appeared that the buyer was setting the seller up to force the seller out of business so that buyer did not actually have to pay any money to eliminate its competitor. It is critically important that confidentiality be maintained during the pendency of the transaction.  There are many ways to do this: (more…)

A defense attorney was cross-examining a police officer during a felony trial. It went like this . . .

Q:   Officer, did you see my client fleeing the scene?

A:   No sir, but I subsequently observed a person matching the description of the offender running several blocks away.

Q:   Officer, who provided this description?

A:   The officer who responded to the scene.

Q:   A fellow officer provided the description of this so-called offender . . . Do you trust your fellow officers?

A:   Yes sir, with my life.

Q:   With your life? Let me ask you this then officer, do you have a room where you change your clothes in preparation for your daily duties?

A:   Yes sir, we do.

Q:   And do you have a locker in that room?

A:   Yes sir, I do.

Q:   And do you have a lock on your locker?

A:   Yes sir.

Q:   Now why is it officer, if you trust your fellow officers with your life, that you find it necessary to lock your locker in a room you share with those same officers?

A:   You see sir, we share the building with the entire court complex, and sometimes lawyers have been known to walk through that room.

With that, the courtroom erupted in laughter, and a prompt recess was called. The officer on the stand has been nominated for this year’s best comeback line and we think he’ll win.

 

Many of you have read our popular Seven Deadly Business Sins outline. One of those sins is the incomplete contract (which admittedly happens unintentionally through vague or forgotten terms).   Perhaps even worse than the incomplete contract is the agreement-to-agree contract.

What is an Agreement to Agree Contract?

An agree-to-agree contract is one where the parties agree to determine a business or legal term later.  From a legal standpoint, certain contracts must be in writing (and are not binding if they are not documented in writing).  Examples include agreements concerning real estate, agreements to answer for the debts of another, etc.   This concept under English common law was known as the Statute of Frauds.  In Nevada, it can be found in NRS Chapter 111.

Also from a legal standpoint, certain key terms must be pre-agreed, most notably, price, to be enforced.  Most often a court will enforce a contract that has a mechanism for determining price, such as an appraisal, but absent such a process, the contract will most likely not be deemed enforceable.

From a practical perspective, a key point in drafting all of the terms of an agreement is to be clear about each party’s obligations so that the deal goes smoothly.  If points are left to be discussed and determined later, even well-meaning parties can honorably disagree.

The fate of disagreements under the agree-to-agree contract is typically litigation, unless the contract addresses what happens when negotiations go awry.   An example might be authority granted to a specific person to determine a specific term.    My opinion is that the challenge of determining that person and process is greater than just agreeing now on the particular agree-to-agree term.

By Guest Blogger Mary J. Drury, Esq.

 

Diagnosis: Predatory Lending

Much has been said and written about abuses in the Mortgage and Escrow industries here in Nevada and elsewhere.  In an effort to police these professionals, Nevada’s legislature passed laws governing their actions.  This article summarizes these changes in Nevada law.

Punishments

Any person who engages in the escrow, mortgage broker agent, or mortgage banker businesses without a license does so at his own peril.  Nevada law requires that any contract with an unlicensed person in those businesses may be voided.  In other words, the person dealing with the unlicensed mortgage agent may unwind the contract such that the law will place the parties in the position they would have been in had they never had the contract.

The Commissioner of Mortgage Lending may also require “escrow agents, escrow agencies, mortgage brokers, mortgage agents, and mortgage bankers” to pay restitution to any person who has suffered an economic loss as a result of a violation of law by an escrow agent or agency.  The law authorizes a $50,000 administrative fine for persons engaging in the escrow business or the business of mortgage broker agent or banker without a license.  Further, a person who engages in any of these businesses is subject to a civil action for actual and consequential damages for harm caused, as well as for punitive damages and attorney fees.

Bonding Requirement

Mortgage brokers must now deposit a $50,000 bond naming as principals the mortgage broker and all mortgage agents employed by or associated with the mortgage broker for the principal office and an additional $25,000 for each additional office (not to exceed a total of $75,000).  Any person claiming against the bond may file civil action on the bond for damages within three years of the harmful act.  The bonding company may bring an action for interpleader against all claimants.  All claims against the bond will have equal priority and will be paid on a pro rata basis if the bond is insufficient to pay all claims.

New Fiduciary Duties

By statute, all those who are licensed as escrow agencies, escrow agents, mortgage brokers, mortgage agents, and mortgage bankers now have a fiduciary obligation to their clients.  This law does not impose a requirement to offer or obtain access to loan product or services for a client other than those that are offered at the time of the transaction.  The law defines the “fiduciary obligation” as “a duty of good faith and fair dealing,” including, without limitation, the duty to”: 1) act in the client’s best interest; 2) conduct only mortgage transactions which are suitable for the client’s needs; 3) disclose any financial business or professional interest the licensee has in conducting the transaction; 4) disclose any material fact that the person knows or should know may affect the client’s rights; 5) provide any accounting to the client which lists all money and property received from the client; 6) not accept or collect any fee rendered unless the fee was disclosed; and 7) exercise reasonable care in performing all other duties related to a mortgage transaction.

Nevada law prohibits the disbursement of money held in escrow accounts until deposits that are at least equal to the disbursements have been received.  It also prohibits disbursements on the same business day as the funds are deposited unless deposits are made in forms which allow for immediate withdrawal of money.

How healthy is your business? Are you SURE? Take a free Legal Checkup today at www.alegalcheckup.com

 

 

Renters Become Victims of Foreclosures

Many innocent renters have been victimized by foreclosures in Nevada.  The scam goes like this:  A Borrower who intends to default on his mortgage payments moves out of the home and rents it to a Tenant, who pays the usual deposits and rent.  While Tenant is dutifully paying rent, Borrower/landlord pockets that money instead of passing it on to the lender.  Borrower did not, of course, inform the Tenant of the impending default or of the eventual foreclosure.  Once the house is foreclosed on, Tenant is suddenly faced with a new landlord who wants the Tenant out of the house and Tenant does not get credit for his deposits, etc. (more…)

 

What is a Deficiency Judgment?

Most homes in Nevada have loans against them for an amount greater than the actual market value of the home.  If a homeowner owes $200,000 and the property is sold at foreclosure for $100,000, there is a $100,000 deficiency owed by the borrower.  Nevada laws generally provide that the lender can sue the borrower or guarantor for this deficiency after the foreclosure and obtain a judgment against the borrower or guarantor for the same.  This is known as a deficiency judgment.  As of October 1, 2009, however, lenders who are a financial institution may not seek a deficiency judgment in some circumstances.

What is a “Financial Institution”?

A “financial institution” is defined in the new law in broad terms as applying to any entity required to be licensed or registered under state or federal law to loan money.  The definition specifically excludes credit unions from this definition, meaning that they are still free to seek deficiency judgments.   This law applies prospectively, meaning that it only applies to loans written and secured by real property after October 1, 2009.  Further, it only applies where: 1) the real property is a single-family dwelling and the debtor owns the real property; 2) the debtor used the loan to purchase the property; 3) the debtor occupied the property continuously after obtaining the loan; and 4) the debtor did not refinance the property after obtaining the loan from the judgment creditor.

Lenders are no longer able to sue the homeowner if the foreclosure sale does not yield enough money to cover the debt.  This is a significant development in Nevada law.  While its full effects are not known, this law will surely result in changes in how and whether financial institutions lend money for homes in Nevada.  Further, one may anticipate that credit unions may eventually have a market advantage over other financial institutions, as their risk will be less because of their ability to seek and obtain deficiency judgments.  Since the law does not have a sunset clause, this is not a temporary advantage, although in the current market, it is doubtfully much of an advantage at all.  To combat this advantage, other financial institutions are sure to find other ways to level the playing field, such as requiring personal guarantees from all borrowers.

 

How healthy is your business? Are you SURE? Take a free Legal Checkup today at www.alegalcheckup.com   

 

 

 

This article is a story about an out-of-state friend and the poor advice and poor service she received from multiple CPAs.  The story is told with my friend’s permission with the hope others will heed the warning.  Be sure to tell your professional advisors (lawyer, accountant, insurance representative, financial advisor) all of your goals.

My friend (jet’s call her “Nancy”) CPA failed to timely file her “S” Election.  For those who do not know, an S Election is a tax election whereby an eligible entity with one class of stock and not more than 100 shareholders, among other requirements, can elect under Subchapter S of Chapter 1 of the Internal Revenue Code (Sections 1361 through 1379) tax treatment similar to that of partnerships, namely, that income passes through to the shareholders of the corporation and is not taxed at the corporate level. (more…)

 

With the economic downturn, clients are increasingly asking specific questions about the rights and remedies of creditors.

As a caveat, this article is not intended to include everything that one might need to know about collecting against judgments.  These remedies can be affected by many other laws not discussed here, including but not limited to claims by creditors of preferential or fraudulent transfer, or bankruptcy.  The intent of this article is to explain some basic information about types of creditors and types of remedies available to judgment creditors. (more…)

 

It is probably not what you are thinking.  Having recently experienced the stress of having to locate and make sense of the assets of two family members who died, I can tell you that having all of your vital information in one spot would be a great gift of love to your family.

A friend, Will Scarlett, introduced me to the Family Love Letter recently and I think it is a great resource.  The Family Love Letter guides you through the important information you need to leave for your loved ones.  Will says:

 “It provides a single place to record all of the legal, financial and personal information needed when a loved one’s life ends. By putting all these essentials in one place, you’ll be getting your house in order for those you love.”

Well said, Will.  Order your Family Love Letter today from Will

Legal Checkup

I have spent most of my legal career as a business litigator; I litigate all kinds of business disputes, including contract disputes between businesses, business breakups between former friends or family members, trademark infringements, unfair competition, collections against businesses, piercing the corporate veil, and employment matters.  No matter the context, whenever there is a business on the other side of a lawsuit, as a litigator, it is my job to find that business’ weakness and attack it for my client’s advantage.  Many times those weaknesses are self made and have nothing to do with the dispute between the parties.  Most of the time when those weaknesses are exposed, it is both a surprise to the business owner and too late to remedy the problem.

So, when I advise my business clients, I try to find those same weaknesses in my client’s business and teach them why they are vulnerable.  Then, I help them to make those weaknesses into strengths.  We have taken our knowledge of how to attack businesses in litigation and developed a systematic approach to give an early warning to our clients if they are in jeopardy.  We evaluate risks to our business clients so that they can see their business from a bird’s eye view.  We show them their weaknesses and their strengths by evaluating seven areas of concern: 1) Personal Issues; 2) Business Formation and Corporate Governance Issues; 3) Contract Issues; 4) Employment Issues; 5) Intellectual Property Issues; 6) Finance Issues; and 7) Management Issues.

A Legal Checkup is an online survey.  It takes about 8-10 minutes on average to complete.  Once completed, I will schedule a no-obligation meeting with you to review the results.  Based on your answers, a powerful computer program will diagnose your legal health in each of the seven areas.  I will provide you with a written report detailing possible areas of weakness for your business, together with possible strategies for repairing your business.  Some of those strategies might be as simple as changing the way you keep your business records, while others will be more complicated.  Together, we will build a strategy with your other professional advisors (CPA, Insurance Agent, Financial Planner, Banker, and Business Coach) to help your business become as strong as it can be.

You Say Trusts AREN'T Just for Rich People Anymore?

You Say Trusts AREN’T Just for Rich People Anymore?

What are the Advantages of Having a Trust?

The type of Trusts we are discussing here is not designed to secret your millions away in an account in the Grand Caymans to protect it from your creditors. We are talking about a Living Trust, which is an agreement under which you (acting as trustee) hold legal title to real or personal property for the benefit of another (beneficiary). In my opinion, every person who is over 18 years old and either has dependents or has real property should consider having an estate plan, including a Trust. (more…)

Six Ways Every Business Can Save Money on Attorney Fees

Six Ways Every Business Can Save Money on Attorney Fees

Abraham Lincoln, a man well known for his analytical skills, once said that “a lawyer’s time is his stock in trade.” As usual, Lincoln was correct; every time you contact an attorney, you can expect to be charged for the time the attorney takes to field your call, respond to your letter, or provide advice.

Therefore, a critical question for any person or entity relying upon an attorney is: how do you keep from giving your attorney a blank check? There are several key tips to follow when looking to save attorney fees. (more…)