A Legal Checkup

Nevada Jury Instructions

NEV. J.I. 1.0               DUTY OF JUDGE AND JURY
NEV. J.I. 1.01             USE OF INSTRUCTIONS
NEV. J.I. 1.02            MASCULINE FORM OF PRONOUN INCLUDES FEMININE OR CORPORATION
NEV. J.I.1.03             WHAT IS AND WHAT IS NOT EVIDENCE  (more…)

In Nevada, a corporation is formed when one or more persons, called “incorporators”, sign and file articles of incorporation with the Nevada Secretary of State.  Roughly stated, the articles of incorporation state the intention of the incorporators to transact business as a separate legal entity

A corporation may be formed to conduct any lawful business, or to promote or conduct any legitimate object or purpose NRS 78.030(1).  The articles must contain the following information:

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Jay Young’s Peer Reviews

Mark Twain’s reportedly once said, “I like criticism, but it must be my way.”  Below are actual blind peer reviews given of Jay Young, Las Vegas, Nevada business attorney, arbitrator, and mediator to lawyer.com.  Mr. Young’s peers–attorneys and judges–have given him the highest marks available for knowledge and ethics in Arbitration, Litigation, Commercial Law, Real Estate, and Business Law.

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In Nevada, in order to collect attorney fees as special damages, one must plead and prove:

  1. Plead that they are entitled to collect attorney fees as special damages in the complaint pursuant to NRCP 9(g);
  2. Must plead and prove that fees are a “natural and proximate consequence of the injurious conduct”; and
  3. Must prove fees as to each claim.

Liu v. Christopher Homes, LLC, 321 P.3d 875 (2014); Sandy Valley Assoc. v. Sky Ranch Estates Owners Ass’n, 117 Nev. 948, 956, 35 P.3d 964, 969 (2001).

 

See elements for other claims at the Nevada Law Library

In Nevada, the elements for a claim of civil assault are:

  1. Intentionally placing another person in reasonable apprehension of immediate harmful or offensive touching;
  2. Offender intended to cause harmful or offensive touching;
  3. Lack of consent for the contact;
  4. The victim was put in apprehension of such contact; and
  5. Causation and damages.

Graham v. Connor, 490 U.S. 386, 109 S. Ct. 1865 (1989); In re Bradshaw, 315 B.R. 875 (Bankr. D. Nev. 2004); Burns v. Mayer, 175 F. Supp. 2d 1259 (D. Nev. 2001); Lerner Shops v. Marin, 83 Nev. 75, 423 P.2d 398 (1967); Yada v. Simpson, 112 Nev. 254, 913 P.2d 1261; Wright v. Starr, 42 Nev. 441, 179 P. 877 (1919);  Prosser and Keeton on Torts, § 10 at 43 (5th ed. 1984).

 

See elements for other claims at the Nevada Law Library

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A Living Will is different from a Living Trust and is different from a Will. A Living Will is a written statement instructing your family and doctor about what, if any, life-prolonging medical procedures you desire to be performed if your condition is terminal and there is no chance of recovery. In Nevada, it is known as a “Declaration” and allows you to declare your end of life care decisions.

You Have the Right to Refuse Medical Treatment

You have the right to refuse medical treatment. A Living Will gives you the opportunity to express your wishes in advance, since you may not be able to make those desires known when it becomes necessary to do so. Life prolonging procedures include assistance with breathing when you cannot breathe on your own, performing operations or prescribing antibiotics that cannot realistically increase your chance of recovery, starting your heart mechanically when it has stopped beating, or feeding you through a tube, etc.

In Nevada, a physician must follow the terms of your Living Will (Declaration) when:

You have an incurable and irreversible condition that, without the administration of life-sustaining treatment, will result in death within a relatively short time; and

You are not able to communicate your desires, such as if you are in a coma.

A Living Will can be very specific or very general. An example of a statement sometimes found in a Living Will is: “If I suffer an incurable, irreversible illness, disease, or condition and my attending physician determines that my condition is terminal, I direct that life-sustaining measures that would serve only to prolong my dying be withheld or discontinued.”

Power of Attorney

In Nevada, a “Durable Power of Attorney for Health Care” is a signed, dated, and witnessed written instruction naming another person as your “agent” or “health care proxy” to make medical decisions for you if you should become unable to make them for yourself.  The instrument may include instructions regarding any treatment you would desire or those you wish to avoid, such as surgery or artificial feeding. The Durable Power of Attorney for Health Care will be in effect whenever you are unable to make decisions and, unlike the Living Will, is not limited to situations where you are terminal or have an incurable condition. The agent’s authority begins only when a physician determines that you have lost the capacity to decide about treatment.

In Nevada, the defense of laches is available where delay by one party results in a disadvantage to the other such that the party seeking the defense of laches had a change in circumstances which would make granting relief to the delaying party inequitable.  Building & Constr. Trades v. Public Works, 108 Nev. 605,839 P.2d 633, 637 (1992).  The delay must cause actual prejudice.  Memory Gardens v. Pet Ponderosas, 88 Nev. 1, 4, 492 P.2d 123, 124 (1972).  The condition of the party asserting laches must become drastically altered, whereby it cannot be restored to its former state.  State v. Rosenthal, 107 Nev. 772, 819 P.2d 1296 (1991).  In circumstances where the statute of limitations has not run on an action, especially strong circumstances must exist to sustain the defense of laches.  Building & Constr. Trades v. Public Works, 108 Nev. 605,839 P.2d 633, 637 (1992).

 

See elements for other claims at the Nevada Law Library

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What Type of Entity Should You Form?

Some of the most frequent questions that we receive from clients revolve around entity selection for conducting different types of businesses.  One aspect involves governance and authority.  The issue of governance and authority is important because it determines who has the legal authority to bind the company to contracts and to act on behalf of the company.

The three most popular types of entities are corporations, limited liability companies, and limited partnerships. There are others, however, that might be better suited to your needs. (more…)

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Litigators are fairly well known to be the scourge of the civilized world. After all, they are responsible for the number of lawsuits as well as the enormous costs associated with them, right? The truth is that I know litigators like that, but the majority of business attorneys I know do their best to keep their business clients from getting into legal battles. Saving the client from their own mistakes is sometimes difficult. It is made exponentially more difficult when the business owner decides it is cheaper to form the business using one of the various online services or legal software. They might as well be stamped with a warning that in case of a dispute, they almost guarantee full employment for litigators. (more…)

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When buying a business, the buyer should ensure that all assets must be free and clear of liens.  As a reminder, when purchasing a business, you can purchase either the ownership (the stock or the membership interest, for example) or the assets.  Either or both can be subject to liens.  Therefore, it is imperative that a lien search be conducted. (more…)

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What is Disability Insurance?

Disability insurance attempts to insure you against any injury, sickness or illness which would prevent you from earning an income. It is designed to replace up to 66% of your gross income on a tax-free basis should you become disabled. It covers both long term and short term disabilities. Don’t think you need disability insurance?

Consider these sobering statistics:

  • Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. Source: Social Security Administration, Fact Sheet March 18, 2011;
  • Over 36 million Americans are classified as disabled; about 12% of the total population. More than 50% of disabled Americans are in their working years, from 18-64. Source: U.S. Census Bureau;
  • 8.3 million Disabled wage earners, over 5% of U.S. workers, were receiving Social Security Disability (SSDI) benefits at the conclusion of March 2011. Source: Social Security Administration, Disabled Worker Beneficiary Statistics, www.ssa.gov; and
  • In December 2010, there were over 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits. Source: Social Security Administration, Disabled Worker Beneficiary Statistics,www.ssa.gov . Please consider whether you need disability insurance on yourself or a loved one today.

Smart business owners will partially fund their buy/sell agreements through disability insurance and will carry disability insurance on key employees to benefit the business. Even if you have a policy through your employer, you should consider an additional policy so that your family does not have to worry about income if you become disabled for even a short period of time.

 

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

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Long term care insurance covers you for the expense of a in-home nursing care, nursing home, hospice care, assisted living, adult daycare, respite care, and Alzheimer’s facilities. As with any other insurance plan, long term care insurance seeks to protect you against a major loss that you can ill afford. When you think of it, the odds of needing nursing home care are a lot higher than

losing your house to fire. Yet, we don’t think of being without homeowners insurance. It is something to consider for yourself or for an aging loved one.

There are five major reasons why people buy long term care insurance:

  1. It allows you to maintain your independence so you won’t have to rely on family members;
  2. It helps to protect your assets against the high costs of long term care;
  3. It will help preserve wealth and/or your children’s inheritance;
  4. It helps make long term care services affordable, such as home health care and custodial care; and
  5. It will help provide you with more options than just nursing home care, and to pay for nursing home care if it’s needed.

As with any insurance product, you will need to perform a risk/benefit analysis to determine if this coverage is necessary for you. Take into consideration your current health, family history, your age, etc.

So, you are thinking of buying a business?  What types of documentation or information should you be seeking from the seller before you agree on a price, sign documents, or pay any money?  This list will get you started:

  • Seller entity information
  • Documents necessary to discover the seller’s full financial Information
  • Physical Assets of the seller
  • Real Estate (owned and leased)
  • Intellectual Property owned by the seller or to which the seller has rights
  • Employee contracts and employee benefits owed
  • Licenses and permits held by the seller
  • Environmental due diligence
  • Taxes (including verification) owed
  • Material contracts with the seller’s customers and suppliers
  • Customer information
  • Currently pending or threatened litigation
  • Insurance coverage

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With challenges to the economy, companies are looking for every way possible to save money. A potential risk for employers is to mischaracterize an employee as an independent contractor, which may save payroll taxes in the short term but may lead to penalties on such taxes as well as other inadvertent violations of worker’s compensation laws, FMLA, etc, which each hold separate penalties for violation.

There are also state law implications, which vary by state so you may want to consult an attorney in your particular state as to that state’s definitions. Focusing purely on federal issues, the IRS previously had a 20-part test to evaluate whether a worker is an employee or independent contractor.

However, the new and improved IRS test focuses on three areas: (1) behavioral control, (2) financial control, and (3) the type of relationship.

1.  Behavior control addresses the amount of instruction given to a worker, such as work hours, specific job duties, and training.

2.  Financial control addresses the extent to which a worker can realize a profit or loss or seek reimbursement of business expenses.

3.  The third type of control is the type of relationship. Factors include the presence or absence of a written agreement and the permanency of the relationship.

Call today to speak with someone in our employment law department representing businesses and business owners and can answer specific questions in more detail concerning your business. They can also document employment agreements or properly document independent contractor agreements should the workers qualify as independent contractors.

 

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

 

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While you may be tempted to cash any check received these days, with a memo noted “paid in full”, the cashing of that check may modify your earlier agreement and extinguish your contract.

For example, say you had an agreement to provide goods or services for $5,000.  You invoice the client.  The client sends you a check for $3,500 with a note marked “paid in full”.  If you cash the check, you may be held to effectively amend the agreement to accept the contract price of $3,500.

So, you ask, what are you to do when you get a check for less than the full amount?  Under the Uniform Commercial Code (UCC), you are not required to return the check; therefore, you could simply destroy the check.  As a business point, and this is not in the UCC, you can negotiate a payment plan or other settlement. (more…)

 

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Many homeowners or car owners are shocked, after an accident, to find that their insurance does not pay for all of their losses (or those of someone they injured), or in some cases, even most of their losses.

How Much is Enough?

Whether you have the right amount and type of coverage may well depend on the amount of assets you have to protect. If you make $30,000 a year and rent an apartment, $100,000/ $300,000 coverage may suffice. If, on the other hand, you earn a six figure annual salary, have a business, or significant assets, carrying that little amount of coverage would be foolish. (more…)

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So, you did a will, trust, or even a full estate plan. Great! Is it fully funded? Do you understand what that means? Have your financial circumstances changed such that your assets are different today than they were five years ago when you did your will? If you have not also changed your will (or trust) to adjust for these changes, your family could pay the price.

The Three to Five Year Rule

We recommend that you have your estate plan (will, trust, living will, power of attorney, etc.) reviewed every three to five years. Unless you are more diligent than most of us, you are probably leaving things out of your estate plan if you do not have your plan reviewed regularly. (more…)

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When people are attacked, the natural reaction is to attack back. While competent trial attorneys are well equipped to attack the other side for you, a wise attorney will also step back from his role as an adversary and counsel you regarding your settlement options. In doing so, he is not necessarily telling you he doesn’t believe your side of the story. Rather, he is trying to get you, the astute businessperson, to make a smart business decision which considers only your bottom line, and not the emotion of the lawsuit or who is right and wrong. (more…)

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There are state and local licensing requirements to do business in Nevada.

Effective October 1, 2009, the Nevada Legislature transferred the authority for issuance and collection of fees for a Nevada Business License from the Department of Taxation to the Secretary of State.  This step prevented the renewal of company charters by the filing of the “annual list” (whether an LLC, corporation, partnership, etc.) without paying the state business license.

All entities, except nonprofit corporations, movie companies, companies run from home (with certain income limitations), and certain religious organizations, are required to file a State Business License application or renewal at the time their annual list is due (whether they are a Nevada entity or qualifying as a foreign entity).

The business license fee is $200 annually, which may be prorated if your current business license expiration date falls after your annual list due date.  See the Nevada Secretary of State’s website at:  Nevada Secretary of State for more information.

Additionally, there are local business licensing requirements that vary widely depending on your jurisdiction (Clark County, City of Las Vegas, City of Henderson, City of North Las Vegas, etc.).  Before contacting the local jurisdiction, you will need to have organized or qualified your entity with the Secretary of State and have obtained a state business license.

 

By: Guest Blogger Mary Drury, Esq.

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Buy-sell agreements can alleviate disputes that can arise between or among owners and can provide for payments to buy out an owner’s interest in the business at an owner’s death or disability without disrupting the ongoing business.   It can avoid family fights, fights between surviving owners and the deceased owner’s spouse, while maintaining the integrity of the company’s goodwill and liquidity. They are an essential part of proper corporate governance for any closely held business. If an owner is unable to continue in the business, the agreement triggers the sale of that owner’s portion of the company at a price designated in the agreement. (more…)

I tried for 15 years to get my friend to do some basic Estate Planning.  I urged him, at a bare minimum, to create a will.  Better, do a full estate planning package: will, living trust, etc.  He assured me he didn’t need my help, and that he had everything “under control” without spending money on an attorney to do a Will and a Trust.  My friend died and I had to help his widow through the financial mess he left behind.  So far, his mistake has cost his widow over $100,000—and it was completely avoidable.

My friend was an extremely intelligent man and very capable in many ways.  But he did not have things “under control”.  Now, his widow will have to spend thousands of dollars in attorney fees, put his estate through probate, and lose almost 1/3 of the assets they worked so hard to accumulate.  His widow is learning through my friend’s mistakes that if you do not have an estate plan, the State will determine who gets your assets, not you.

This article gives an overview of the ways one may transfer assets upon his or her death, discussing the risks and rewards of each method in Nevada.  We will also discuss the estate planning tools that are available to you to avoid the risks associated with each transfer method. (more…)

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Does your company have a Written Safety Program?

Did you know that a Written Safety Program is required by law?  Every employer in Nevada which has 11 or more employees or which manufactures explosives is required to have a written Safety Program.

Your Written Safety Program (“WSP”) must include:

  • A training program for employees, targeting areas of specific concern or where there have been recurring injuries;
  • If you have more than 25 employees, or manufacture explosives, you must have a safety committee which includes an employee representative.  Your employee representative on the safety committee must be paid “as if that employee were engaged in the employee’s usual work activities” for time spent on the committee;
  • The WSP manual and training must be available in a language and format that is understandable to each of your employees;
  • A statement explaining that the managers, supervisors, and employees are responsible for carrying out the program;
  • An explanation of the methods used to identify, analyze, and control new and existing hazardous conditions; and
  • A method for ensuring that employees comply with the safety rules and work practices.

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Why are you building a business?

In addition to providing yourself employment together with the flexibility, control and responsibility of business ownership, most people build businesses to sell them at a gain in order to retire or to build another business.

 How should you document the sale of your business?

There are primary two ways to sell your business. You can sell the assets or you can sell the equity (typically stock, LLC membership interests, or partnership interests).   These are documented quite differently and can have completely different tax benefits to the parties.  Additionally, a question that needs resolved is whether continuing liabilities of the business remain with the seller or become the obligation of buyer (typically documented by an indemnity from seller). (more…)

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Trademark Defined

A trademark is a word, name, symbol, or device that is used to distinguish one’s goods from others’ goods.  A service mark is a mark that is used in the marketing of services rather than goods. The processes for protecting trademarks and service marks are the same, so for simplicity, we will use the term “mark”.

Marks can be protected in three ways: common law use, federal registration, and state registration.  You do not have to register a mark under the common law; rights in a mark can be established by proof of legitimate use of the mark. However, only limited protection is provided under the common law. (more…)

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Identity Theft is a Crisis of The Modern Era

We are seeing more and more cases of identity theft all the time.  The recent breaches at Home Depot, Target, Anthem, and Sony illustrate the breadth of the problem.. This issue is certainly a topic of national concern. While there are legal means to redress this problem, the best protection is to avoid identity theft altogether.  The following are some suggestions for preventing, or at least limiting the extent of, identity theft. (more…)

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What is a Letter of Intent?

Letters of Intent (“LOI”) can be very useful in setting forth the basic deal points of a transaction, but if they are construed as binding, the parties may get more (or less) than they bargained for.   Surprisingly, it may not be enough to say only once in a LOI that it is not a binding agreement.

In the famous case of Pennzoil v. Texaco, 729 S.W. 2d 768 (1987), the Texas court held that the LOI in that case contained enough terms that the billion plus dollar deal was enforced despite the fact that the LOI specifically said it was non-binding.  The parties were bound to their short form term sheet instead of a deal that contained bargained for and terms with all of the I’s dotted and T’s crossed. (more…)

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If your identity is stolen, the FTC recommends that you immediately take these four steps as soon as possible, and keep a record with the details of your conversations and copies of all correspondence.

Place a fraud alert on your credit reports, and review your credit reports.

Fraud alerts can help prevent an identity thief from opening any more accounts in your name. Contact the toll-free fraud number of any of the three consumer reporting companies below to place a fraud alert on your credit report. You only need to contact one of the three companies to place an alert. The company you call is required to contact the other two, which will place an alert on their versions of your report, too. If you do not receive a confirmation from a company, you should contact that company directly to place a fraud alert. (more…)

If you are a businessperson, sooner or later you will have to deal with a lawyer. In the franchise world, it helps – tremendously – to deal with attorneys who understand franchising and franchise law. It doesn’t matter whether you are a franchisor or a franchisee; no matter which side of the transaction you happen to be on, you will want an experienced franchise attorney to be on the other side.

Surprisingly, the level of franchise law knowledge among attorneys who actually get involved in franchise transactions varies considerably. The majority of the time, lawyers who are knowledgeable in franchise law are on both sides of the transaction. But that is not always the case. Sometimes, the attorney on the other side is inexperienced, and “dabbling,” in franchise law.

This is the first of a two-part piece on why these dabbling attorneys can hinder a transaction, or worse, do harm to their clients.

This part one looks at it from the point of view of the franchisor, which is negotiating with a prospective franchise purchaser. Let’s assume this prospective franchisee is the party represented by a lawyer without franchise law experience. This situation is much more common than the reverse – where it is the franchisor, and not the franchisee, that has inexperienced counsel.

Why Franchise Agreements are Different from other Business Contracts

Some, but not all, franchise agreements are negotiable. The most significant problem involving  inexperienced counsel occurs when the franchisor is otherwise willing to negotiate with the prospective franchisee.

If a prospective franchisee seeks legal counsel, s/he will typically seek out that person’s usual business attorney, if there is one. If the prospective franchisee doesn’t have or know an attorney, that person will ask friends and family for referrals. Frequently, the referral is to a business attorney who has little or no experience in franchise law.

The business attorney may be tempted to do the work, instead of referring it to another lawyer. After all, the terms in franchise agreements look a lot like the ones you might find in other types of business contracts. But the problem is that the franchise relationship isn’t a typical business relationship. It is critical for the attorneys on either side of a negotiation to understand what makes franchising different.

Specifically, franchise agreements are (on the whole) much more one-sided than other business contracts. This is for a good reason: the provisions are there (in one way or another) to protect the health and integrity of the system as a whole, including its intellectual property and goodwill. Protecting the system is paramount, because if the system fails, all of its franchisees lose.

An attorney representing either side of the franchise transaction needs to understand this basic truth at the core of franchising. When s/he has experience in franchise law, counsel will understand which provisions are typical or atypical. They will also understand which terms may be negotiable and whether, taken as a whole, the franchise contract is more or less one-sided than is typical for those agreements. Having this experience will make the negotiation more productive and efficient. A more efficient negotiation will typically result in lower attorney fees.

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What Do I do If I have been sued

 

“NOTICE!” YOU HAVE BEEN SUED.”

These are words none of us ever wants to see.  However, lawsuits are almost an inevitable cost of conducting business in today’s environment.  A recent statistic suggests that over 120,000 Nevada businesses were sued last year alone in Nevada Courts.  An old, but unfortunately true adage to keep in mind: “there are only two types of businesses … those that have been sued already and those that will be sued.”  While I am not sure the future is quite that bleak, all professionals should know what their options and responsibilities are once they have been served with a copy of a complaint.  More importantly, you should know what you can do to help avoid suits. (more…)

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For the first time in years, my wife did not participate in the after Thanksgiving “Black Friday” sales.  Instead, she went on a family paintball outing.  That didn’t stop her from spending several thousand dollars that day, or from opening accounts at Kohls, Target, JC Penny’s, or from applying for a new credit card.  Well, at least it didn’t stop someone using her name from doing those things.

We quickly learned the havoc that can be wreaked from identity theft when someone using evidently well-crafted fake identification containing my wife’s actual name, date of birth, social security number, and home address charged thousands of dollars at various department stores on Black Friday.  It is a problem we are still dealing with, and which we found out probably has its origin in some stolen medical records. (more…)

In Nevada, the appointment of a receiver over a business may be appropriate if:

  1. The appointment of a receiver is governed by statute and is appropriate only under circumstances described in statute.  State ex rel. Nenzel v. Second Jud. Dist. Ct., 49 Nev. 145, 155, 241 P. 317 (1925); Shelton v. Second Jud. Dist. Ct., 49 Nev. 487, 494, 185 P.2d 320 (1947);
  2. Any stockholder may apply if the corporation is insolvent. NRS 78.347;
  3. Any holder of 1/10 of a corporation’s issued and outstanding stock may apply for the appointment of a receiver when a corporation has been mismanaged. NRS 78.650.  A showing of any one of the ten circumstances enumerated in the statue will authorize the appointment of a receiver upon application by a ten-percent shareholder. Transcontinental Oil Co. of Nev. v. Free, 80 Nev. 207, 210-11, 391 P.2d 317, 319 (1964);
  4. A holder of 1/10 of issued stock may apply for appointment of a receiver of a solvent corporation where the business is being conducted at a great loss, the operation is prejudicial to creditors or stockholders such that the business cannot be conducted with safety to the public. NRS 78.630;
  5. The Court must consider the entire circumstances of the case when considering the appointment of a receiver. Bowler v. Leonard, 70 Nev. 370, 383 (1954);
  6. A Receiver may be appointed when a corporate is in imminent danger of insolvency. NRS 32.010;
  7. A Receiver is a neutral party appointed by the court to preserve, protect, and administer the business’ assets for benefit the business. In all cases, directors or trustees who have been guilty of no negligence nor active breach of duty must be preferred over all others in making the appointment of a receiver. NRS 78.650.  Peri-Gil Corp. v. Sutton, 84 Nev. 406, 411 422 P.2d 35, 38 (1968).  Such directors have a right to be heard as to their qualifications. Shelton v. Second Jud. Dist. Ct., 64 Nev. 487, 492-93, 185 P.2d 320, 323 (1947); and
  8. Appointment of a receiver is appropriate when the business’ property at issue is at risk of waste, loss of income, or is insufficient to secure a debt. NRS 32.010; NRS 107.100;

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In Nevada, anticipatory repudiation is a statement by an obligor to an obligee indicating that the obligor will commit a breach that would of itself give the obligee claim for damage for total breach of the contract, or a voluntary affirmative act which renders the obligor unable or apparently unable to perform. Restatement (Second) of Contracts § 250. Concerning anticipatory repudiation, the Uniform Commercial Code first defines the term and then provides the remedies. Repudiation occurs when either party repudiates the contract with respect to a performance not yet due which will substantially impair the value of the contract to the other. NRS 104.2610. For its remedies, the non-breaching party may (1) wait for a commercially reasonable time for a performance, or (2) resort to any remedy for breach, or (3) suspend his own performance. Id.

The Doctrine of Anticipatory Repudiation applies only before the breacher has received all of his performance. Restatement (Second) of Contracts § 253(1); 11 S. Williston, Contracts §§ 1300, 1326 (3d Ed. 1968); 4 A. Corbin, Contracts § 963 (1951). Strangely, the major exception to the Doctrine illustrates the doctrine’s rationale. An anticipatory repudiation can only exist when both parties have not fully performed their duties. Therefore, anticipatory repudiation does not apply when the non-­breaching party has fully performed and the breaching party owes only installment payments. Restatement of Contracts (Second) § 243. The only remedy, therefore, to the injured party in this situation is to wait for the time of performance to sue for damages. Farnsworth, Contracts § 8.20, 630 (1982). In Brown Papermill Co. v. Irvin, the Eighth Circuit declared that the doctrine of anticipatory breach does not apply to a bilateral contract which has become unilateral by complete performance on one side, leaving only an obligation to pay money one day in the future on the other. Brown, 146 F.2d 232 (8th Cir. 1944).

In Nevada, anticipatory repudiation exists where a party demonstrates a definite unequivocal and absolute intent not to perform a substantial portion of a contract.  Kahle v. Kostiner, 85 Nev. 355, 345, 455 P.2d 42, 44 (1969); NRS 104A.2402; NRS 104.2610.

In a famous rationalization of the rule and its exception, the Sixth Circuit explained as follows:

In the ordinary case of . . . executory contracts, the plaintiff may say . . . (now, by your repudiation, you have put it out of my power further to perform, and hence you cannot be permitted to say that you have not received . . . consideration for your future act . , ,) [But if] his part of the contract has been executed by the plaintiff, he has nothing to do but wait, . . . and hence he will have no estoppel to rely upon to precipitate the defendant’s obligation.

Federal Life Ins. Co. v. Rascoe, 12 F.2d 693 (6th Cir. 1926).

In Nevada, the elements for a claim of alter ego or piercing the corporate veil are:

  1. Corporation must be influenced and governed by the person asserted to be its alter ego;
  2. There must be a unity of interest and ownership such that the corporation and person are inseparable from another;
  3. Facts are such that adherence to the corporate fiction of a separate entity under the circumstances would sanction a fraud or promote injustice;
  4. There is no litmus test for determining when the corporate fiction should be disregarded (there are as many as 14 factors that courts may consider, including undercapitalization, comingling of funds, failure to observe corporate formalities, loans to or from the corporation without sufficient consideration, and generally treating the assets of the corporation as the assets of the person); and
  5. A showing that recognizing separate corporate existence, would bring about an inequitable result is sufficient for the claim to lie.

Brown v. Kinross Gold U.S.A., Inc., 531 F. Supp. 2d 1234 (D. Nev. 2008); In re Nat’l Audit Defense Network, 367 B.R. 207 (Bankr. D. Nev. 2007); LFC Mktg. Grp. v. Loomis, 116 Nev. 896, 8 P.3d 841 (2000); Polaris Indus. Corp. v. Kaplan, 103 Nev. 598, 601-02, 747 P.2d 884, 887 (1987); Ecklund v. Nevada Wholesale Lumber Co., 93 Nev. 196, 197, 562 P.2d 479, 479-80 (1977) (quoting McCleary Cattle Co. v. Sewell, 73 Nev. 279, 282, 317 P.2d 957, 959 (1957)); accord Lorenz v. Beltio, Ltd., 114 Nev. 795, 807, 963 P.2d 488, 496 (1998). “Each of these requirements must be present before the alter ego doctrine can be applied.” N. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 520-21, 471 P.2d 240, 243 (1970) (emphasis added). The party asserting the alter ego theory and attempting to pierce the corporate veil bears the burden of proving each of these elements by a preponderance of the evidence. LFC Mktg. Grp. v. Loomis, 8 P.3d 841, 846 (Nev. 2000).

The Nevada Supreme Court has held that, though generally “[t]he corporate cloak is not lightly thrown aside,” nevertheless there are some situations in which blind “adherence to the fiction of a separate entity [of the corporation] [would] sanction a fraud or promote injustice.” Baer v. Amos J. Walker, Inc., 85 Nev. 219, 220, 452 P.2d 916, 916 (1969). The court has therefore carved out an exception to the general rule of faithfully respecting the corporate form and corporate independence, i.e., the so-called “alter ego” exception, by which the corporate veil can be pierced.  Id.  The Supreme Court of Nevada, in the matter of McCleary Cattle Co. v. Sewell, adopted a three prong test for ignoring the separate existence of a corporation in determining “alter ego liability.” McCleary, 73 Nev. 279 at 282, 317 P.2d 957 (1957). This test has since been codified in by Nevada Statute, NRS 78.747:

  1. Except as otherwise provided by specific statute, no stockholder, director or officer of a corporation is individually liable for a debt or liability of the corporation, unless the stockholder, director or officer acts as the alter ego of the corporation.
  2. A stockholder, director or officer acts as the alter ego of a corporation if:

(a)       The corporation is influenced and governed by the stockholder, director or officer;

(b)       There is such unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other; and

(c)       Adherence to the corporate fiction of a separate entity would sanction fraud or promote a manifest injustice.

NRS 78.747(l)-(2). The elements of an alter ego claim must be proven by a preponderance of the evidence.  Truck Ins. Exch. v. Palmer J. Swanson. Inc., 124 629, 635, 189 P.3d 656, 660 (2008).

In determining whether there is such unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other, courts will consider whether there was:

  1. Majority ownership and pervasive control of the affairs of the corporation. McCleary Cattle Co. v. C.A. Sewell, 73 Nev. 279, 281, 317 P.2d 957, 959 (1957) overruled on other grounds by Callie v. Bowling, 123 Nev. 181, 160 P.3d 878 (2007)(holding that an order adding president as a party to domesticated foreign judgment violated president’s due process rights)); Carson Meadows Inc. v. Pease, 91 Nev. 187, 191,533 P.2d 458, 460-61 (1975); Ecklund v. Nevada Wholesale Lumber Co., 93 Nev. 196, 197-99, 562 P.2d 479, 479-81 (1977); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  2. Thin capitalization. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  3. Nonobservance of corporate formalities or absence of corporate records. Ecklund v. Nevada Wholesale Lumber Co., 93 Nev. 196, 197-99, 562 P.2d 479, 479-81 (1977); Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983) (no alter ego because of lack of fraud/injustice); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  4. No payment of dividends. Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983) (no alter ego because of lack of fraud/injustice).
  5. Nonfunctioning of officers and directors. SEC v. Elmas Trading Corp., 620 F. Supp 231, 233-34 (D. Nev. 1985); DeWitt Truck Brokers. Inc. v. W. Ray Flemming Fruit Co., 540 F. 2d 681, 686-87 (4th Cir. 1976); Nat’l. Elevator Indus. Pension Health Benefit and Educ. Funds v. Lutvk, 332 F.3d 188, 194 (3rd Cir. 2003); Hildreth v. Tidewater Equip. Co., Inc., 378 Md. 724, 735-736, 838 A.2d 1204, 1210 (Md. 2003); Yankee Microwave, Inc. v. Petricca Commc’n Sys., Inc., 53 Mass. App. Ct. 497, 521, 760 N.E.2d 739, 758 (Mass. App. Ct. 2002); Pepsi-Cola Metro Bottling Co. v. Checkers. Inc., 754 F.2d 10, 14-16 (1st Cir.1985); 1 W. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 41.30 at 430 (rev. vol. 1983) (cited by Wilcor Constr. and Dev. Corp. v. Hemphill, 872 F.2d 432 (9th Cir. 1989)).
  6. Insolvency of the corporation at the time of the litigated transaction; Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983) (no alter ego because of lack of fraud/injustice).
  7. Siphoning of corporate funds or intermingling of corporate and personal funds by the dominant shareholder(s). Carson Meadows, Inc. v. Pease, 91 Nev. 187, 191,533 P.2d 458, 460-61 (1975) Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  8. Use of the corporation in promoting fraud. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  9. The authorized diversion of an entity’s funds;
  10. Ownership of the entity by one person or one family. Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983)(no alter ego because of lack of fraud/injustice); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  11. The use of the same address for the individual and entity. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  12. Employment of the same attorneys and employees.
  13. Formation or use of the entity to transfer to it the existing liability of another person or entity.
  14. The failure to maintain arm’s length relationship between related entities. McCleary Cattle Co. v. C.A. Sewell, 73 Nev. 279, 317 P.2d 957 (1957) (overruled on other grounds by Callie v. Bowling, 123 Nev. 181, 160 P.3d 878 (2007)(holding that an order adding president as a party to domesticated foreign judgment violated president’s due process rights)); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).

It is not necessary that the plaintiff prove actual fraud in order to recover against a corporate alter ego. It is enough if the recognition of the two entities as separate would result [in an injustice. In determining whether adherence to the corporate fiction of a separate corporate entity would sanction a fraud or promote an injustice, courts consider whether: (1) the facts are such that adherence to the fiction of a separate corporate entity would sanction a fraud or promote an injustice; (2) the family of controlling officers benefits from the controlling officer’s/entity’s actions; (3) the plaintiff will be able to recover damages against the corporate defendant or whether the corporate defendant is insolvent; because the entity cannot pay, will support the finding of injustice; and (4) the corporate entity was undercapitalized. Finally, alter ego recovery has been granted specifically because the corporation obtained a loan, did not use the loan for its specified purpose, and was unable to repay the loan.  See In re Erdman, 236 B.R. 904 (Bankr. N.D. 1999).

In Nevada, the elements for a claim of civil aiding and abetting are:

  1. Defendant intentionally and substantially assists or encourages another’s conduct in breaching a duty to a third person;
  2. The duty to a third person is actually breached; and
  3. Causation and damages.
  4. K. Las Vegas, Ltd. P’ship v. Simon Prop. Grp., Inc., 460 F. Supp. 2d 1246 (D. Nev. 2006); Dow Chem. Co. v. Mahlum, 114 Nev. 1468, 970 P.2d 98, 113 (1998) (citing in re Temporomandibular Joint (TMJ) Implants Prods. Liab. Litig., 113 F.3d 1484, 1495 (8th Cir. 1997)) overruled in part on other grounds by GES, Inc. v. Corbitt, 117 Nev. 265, 21 P.3d 11 (2001); Halberstam v. Welch, 705 F.2d 472, 477 (D.C. Cir. 1983).

 

See elements for other claims at the Nevada Law Library

In Nevada, the elements for an accord and satisfaction are:

  1. A person against whom a claim is asserted and who has a bona fide dispute over an unliquidated amount;
  2. Proves a good faith tender of an instrument to the claimant in full settlement of the entire disputed amount;
  3. An understanding by the creditor of the transaction as such, and acceptance of the payment. (There must be a meeting of the minds with regard to a resolution of the claim); and
  4. The claim is discharged.

NRS 104.3311; Pierce Lathing Co. v. ISEC, Inc., 114 Nev. 291, 956 P.2d 93 (1998); Walden v. Backus, 81 Nev. 634 (1965) (“Accord” is an agreement whereby one of the parties undertakes to give or perform, and the others to accept, in satisfaction of a claim, liquidated or in dispute, and arising either from contract or from tort, something other than or different from what s/he is, or considers himself/herself, entitled to); Mountain Shadows v. Kopsho, 92 Nev. 599 (1976).

 

See elements for other claims at the Nevada Law Library

In Nevada, the elements for a claim of abuse of process are:

  1. Filing of a lawsuit made with ulterior purpose other than to resolving a dispute;
  2. Willful act in use the use of legal process not proper in the regular conduct of the proceeding; and
  3. Damages as a direct result of abuse.

LaMantia v. Redisi, 118 Nev. 27, 30, 38 P.3d 877, 897 (2002); Dutt v. Kremp, 111 Nev. 567, 894 P.2d 354, 360 (Nev. 1995) overruled on other grounds by LaMantia v. Redisi, 118 Nev. 27, 30, 38 P.3d 877, 897 (2002)); Laxalt v. McClatchy, 622 F.Supp. 737, 751 (1985) (citing Bull v. McCuskey, 96 Nev. 706, 709, 615 P.2d 957, 960 (1980); Nevada Credit Rating Bureau, Inc. v. Williams, 88 Nev. 601 (1972); 1 Am. Jur. 2d Abuse of Process.

 

See elements for other claims at the Nevada Law Library

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What is Disability Insurance?

Disability insurance attempts to insure you against any injury, sickness or illness which would prevent you from earning an income. It is designed to replace up to 66% of your gross income on a tax-free basis should you become disabled. It covers both long term and short term disabilities. Don’t think you need disability insurance?

Consider these sobering statistics:

  • Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. Source: Social Security Administration, Fact Sheet March 18, 2011;
  • Over 36 million Americans are classified as disabled; about 12% of the total population. More than 50% of disabled Americans are in their working years, from 18-64. Source: U.S. Census Bureau;
  • 8.3 million Disabled wage earners, over 5% of U.S. workers, were receiving Social Security Disability (SSDI) benefits at the conclusion of March 2011. Source: Social Security Administration, Disabled Worker Beneficiary Statistics, www.ssa.gov; and
  • In December 2010, there were over 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits. Source: Social Security Administration, Disabled Worker Beneficiary Statistics,www.ssa.gov . Please consider whether you need disability insurance on yourself or a loved one today.

Smart business owners will partially fund their buy/sell agreements through disability insurance and will carry disability insurance on key employees to benefit the business. Even if you have a policy through your employer, you should consider an additional policy so that your family does not have to worry about income if you become disabled for even a short period of time.

 

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

 

So, you are thinking of buying a business?  What types of documentation or information should you be seeking from the seller before you agree on a price, sign documents, or pay any money?  This list will get you started:

  1. Seller entity information
    2.         Documents necessary to discover the seller’s full financial Information
    3.         Physical Assets of the seller
    4.         Real Estate (owned and leased)
    5.         Intellectual Property owned by the seller or to which the seller has rights
    6.         Employee contracts and employee benefits owed
    7.         Licenses and permits held by the seller
    8.         Environmental due diligence
    9.         Taxes (including verification) owed
    10.       Material contracts with the seller’s customers and suppliers
    11.       Customer information
    12.       Currently pending or threatened litigation
    13.       Insurance coverage

 

A Review of Nevada’s Corporate Law

This article explores the advantages and disadvantages of various types of business entities in Nevada.  Generally, the main advantage of a corporate entity is to shield its owners from placing their personal assets in jeopardy for the obligations of the business.  If you are unsure which entity is right for you, call today 702.667.4828 for a consultation with one of our business attorneys. (more…)

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By: Guest Blogger Donald R. Parker, CFA, AVA |  Gryphon Valuation Consultants, Inc.

Buy/Sell Agreements provide a blueprint for the transfer of business interests, allowing business owners to control and protect their investment and the integrity of the ownership structure.  

These agreements address certain “triggering events” such as the death, divorce or departure of business owners and should be a part of every business planning process.  A well-constructed Buy/Sell Agreement serves five crucial functions:

  • Creates a ready-made market for a company’s shares or membership interests upon the occurrence of well-defined triggering events or under very specific transfer scenarios;
  • Defines a price (value) at which the shares or membership interests will be transferred and the construct of the transaction;
  • Ensures that any transaction is funded in a predefined manner;
  • Imposes transfer restrictions that protect the integrity of the ownership structure; and
  • Allows for succession and estate planning needs while mitigating possible conflicts.

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video game

 

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.

 

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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…)

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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…)

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