HOAs and Mediation: Not always a viable alternative to Litigation

October 30, 2014 on 1:01 pm | In Common Interest Community, HOA, HOA litigation, John Tarley, Real Estate Litigation, State & Federal Litigation, Susan B. Tarley, Unit Owners Association | 3 Comments

We have written extensively on the virtues of alternative dispute resolution, specifically mediation, to resolve disputes. Litigation is a time-consuming and expensive undertaking, and in the end, both sides are generally unhappy with the result because of the costs and time incurred.

But although we encourage mediation generally, mediation in HOA litigation is a much more complex and difficult undertaking. In this blog post, we will discuss difficulties with mediating HOA disputes.

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Can an advisor be held liable for the false statements in a prospectus made by another?

October 30, 2014 on 1:01 pm | In Business Planning, Contributors, General Interest, Merger & Acquisition, Neal J. Robinson, State & Federal Litigation | No Comments

For all you accountants, investment advisors, and even attorneys who provide advice and guidance to companies or other entities raising money or other property for investment purposes, it might be a good idea to pay particular attention to the

United States Supreme Court opinion, when issued, in the case of Janus Capital Group, Inc. v. First Derivative Traders, No. 09-525 (S. Ct.). This case was argued before the Court on December 7, 2010. The Court’s opinion should be issued sometime during the first half of 2011.

Janus Capital Group, Inc. is somewhat factually and legally complex. However, in very simplified terms, First Derivative Traders is attempting to assert primary Securities Exchange Act Section 10(b) fraud liability against an entity,

Janus Capital Management LLC, that “helped” and “participat[ed] in” preparing a prospectus. The prospectus was actually that of, and was issued by, Janus Funds, a separate entity. Janus Funds had its own lawyers review the prospectus. Further, the Funds’ Board of Trustees, which was primarily responsible for it, reviewed it, as did the outside Trustees of Janus Funds, who also had their own counsel review it.

The United States (i.e., the Securities and Exchange Commission) filed an amicus brief in this case advocating such indirect liability in private actions, never mind the right of private action was judicially, not statutorily, created.

Williamsburg Virginia Business Lawyers

United States Supreme Court

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Attorney-Client Privilege: What is it and how do you protect it?

October 30, 2014 on 1:01 pm | In Business Planning, Common Interest Community, State & Federal Litigation, Susan B. Tarley | No Comments

The attorney-client privilege permits confidential communication between an attorney and her client.  The objective is to encourage open communication, which permits an attorney to provide thorough, competent and complete advice.  Generally speaking, only a client can waive the privilege, but as found by the Virginia Supreme Court in Walton v. Mid-Atlantic Spine Specialist, PC, et al., a client’s inadvertent disclosure of a privileged communication may operate as a waiver of the attorney-client privilege.

In this Williamsburg medical malpractice case, a defendant doctor wrote a letter to his attorney calling into question his medical diagnosis he gave to his patient. The doctor kept this letter in a separate notebook. During discovery the defendant medical practice used a third party service to copy document requests. The letter was provided inadvertently to the plaintiff.

Although the defendant claimed that he did not produce the letter or permit anyone else to produce the letter, the Court found that the defendant did not take adequate protection to protect the letter. The Court noted that the notebook in which the letter was found was not marked as confidential or privileged. Furthermore, the Court held that the client did not take prompt action following disclosure.

The Virginia Supreme Court considered five main factors in determining whether the inadvertent disclosure waived the client’s privilege.  The Court looked at:  (1) the reasonableness of the precautions to prevent inadvertent disclosures, (2) the time taken to rectify the error, (3) the scope of discovery, (4) the extent of the disclosure, and (5) whether the party asserting the claim of privilege or protection for the communication has used its unavailability for misleading or otherwise improper or overreaching purposes in the litigation making it unfair to allow the party to invoke confidentiality under the circumstances.

As a start, clients should maintain attorney-client privileged communications in a separate file or notebook and clearly mark the file or notebook and each communication as “CONFIDENTIAL-ATTORNEY-CLIENT PRIVILEGED COMMUNICATION.”  Then, if an inadvertent disclosure is made, the client should contact her attorney as soon as possible to determine a plan of action to restore the attorney-client privilege.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

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Real Estate Listing Agreements for the sale of property: Are they enforceable even if not in writing?

October 30, 2014 on 1:01 pm | In General Interest, Real Estate Litigation, Real Estate Strategies, State & Federal Litigation | No Comments

Generally speaking a party can enforce an oral agreement. However, courts will not enforce certain contracts unless they are in writing. For example, under Virginia Code § 11-2, commonly known as the Statute of Frauds, an agreement or contract for services to be performed in the sale of real estate by a real estate broker or real estate sales person is not enforceable “[u]nless a promise, contract, agreement, representation, assurance, or ratification, or some memorandum or note thereof, is in writing and signed by the party to be charged or his agent . . . .”

Most real estate agents and brokers understand the importance of having written listing agreements with their sellers. However, a recent decision of the Supreme Court of Virginia points out that even in the absence of a written listing agreement, an oral listing contract may be enforceable if there is sufficient documentation to remove it from the bar to enforcement of the Statute of Frauds. The Virginia Supreme Court, in the case of C. Porter Vaughan, Inc., Realtors v. Most Reverend Francis X. DiLorenzo, Bishop of The Catholic Diocese of Richmond, 279 Va. 449, 689 S.E.2d 656 (2010), better defined what is meant by “sufficient documentation.”

House For Sale

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Lawsuits against HOAs are expensive and time-consuming for all

October 30, 2014 on 1:01 pm | In Common Interest Community, General Interest, HOA, John Tarley, State & Federal Litigation, Susan B. Tarley | No Comments

A Virginia Circuit Court case highlights the expense and time commitment required when a homeowner sues a common interest community (referred to as “HOA” in this article). Furthermore, this case illustrates that HOAs can rarely predict or control when they may be dragged into a lawsuit.

In this case, Hornstein v. Federal Hill Homeowners Association, a homeowner had her house for sale with a pending sales contract. Pursuant to Va. Code Ann. § 55-509.5, the HOA provided a disclosure packet that revealed that the homeowner’s fence was not located on her property. In fact, the homeowner’s own survey confirmed that fact. The pending sales contract fell through.

The homeowner sued the HOA in Fairfax Circuit Court for slander of title and tortious interference with contract, including a claim for “bodily injury,” and “mental anguish.” The HOA prevailed in the case, leading to the homeowner’s petition for appeal to the Virginia Supreme Court. [UPDATED: The Virginia Supreme Court refused to hear the case, meaning that the Circuit Court’s decision stands].

Another battle has been waged regarding whether the HOA’s insurance carrier had a duty to defend the HOA in the underlying litigation. When the HOA’s insurance carrier denied coverage and representation, the HOA sued the insurance carrier. The case was removed to the federal court. The 4th Circuit District Court agreed with the insurance carrier. The HOA appealed and the 4th Circuit Court of Appeals reversed the trial court and held that the insurance carrier had a duty to defend. The insurance carrier has appealed for a rehearing. [UPDATED: the insurance carrier lost its appeal and was ordered to pay the HOA $217,308.86 for the attorneys’ fees the HOA incurred].

For a brief review, the HOA provided the disclosure packet in February 2006. After the homeowner’s pending sale fell through, she sued the HOA in August 2007. As we near August 2010, the underlying case may be close to resolution, but litigation with the insurance company may be far from resolving. Based upon the amount of litigation, we can assume that the HOA’s attorneys’ fees have reached six figures. Obviously, payment for these attorneys’ fees is then passed onto the homeowners (unless the case shifts payment of the attorneys’ fees to the losing party, but even then, courts rarely award the full 100% of the incurred fees).

Many lessons can be drawn from this experience. Most importantly, HOAs need to review their insurance policies to make sure they are covered fully for worst case scenarios. Our experience has shown that “anybody can sue anybody for anything at any time.” Although the plaintiff may not win (and did not win in this case), the ensuing litigation will take abundant resources. We can help you review your documents and insurance policies with the necessary professionals to protect your HOA, and homeowner interests.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

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When is a “Contract” not a Contract?

October 30, 2014 on 1:01 pm | In Business Planning, Construction litigation, General Interest, John Tarley, Real Estate Litigation, State & Federal Litigation | No Comments

We know that in Virginia, the parties to a contract are bound to the terms of that contract. We also know that Virginia courts look to the terms of that contract to determine each party’s rights and obligations. But what is a “contract?” This blog post looks at a recent Virginia Supreme Court case that gives a little guidance to answer that question.

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Watch out for email scams!

October 30, 2014 on 1:00 pm | In General Interest, John Tarley, State & Federal Litigation | No Comments

Email and telephone frauds are proliferating through the attorney community, and have been redirected at other professionals. On the message board for the Virginia Trial Lawyers Association, one of my attorney colleagues provided a story from one of his clients: “a consulting engineer who frequently testifies in litigation, was retained by a bonding company in Colorado regarding a dispute with a construction company in Pittsburgh. Luckily he smelled a rat when they announced that a disbursement would be run through his company account.”

 

Email

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A New Twist on Identity Theft and Fraud: How can Realtors, Lenders, Title Companies and Law Firms Protect Your Clients and Yourselves?

October 30, 2014 on 1:00 pm | In General Interest, Real Estate Litigation, Real Estate Strategies, State & Federal Litigation, Susan B. Tarley | No Comments

A case out of Virginia Beach underscores the deviousness of those who engage in identity theft. As reported in Virginia Lawyers Weekly, Guy Gugliotta owned two lots in Virginia Beach. A local realty company maintained contact with Gugliotta via mail in case he was interested in selling the lots. In 2012 someone purporting to be Gugliotta notified the tax assessors office to change the mailing address for tax bills. Then they notified the realty company that they had decided to sell the lots. The lots were listed for sale and in August, a purchaser made an offer.

The seller documents were handled via mail with the fraudulent seller executing documents in Florida and sending them to the closing agent. Deeds to transfer property require that the seller’s signature be notarized so surely this was the end of the road for the fraudster.

But no, not only did the thief take the identity of the owner; he also took the identity of a notary public in Florida. The notary public declared under oath that it was not his signature and that he had never notarized the documents.

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Using your business’ computer to email your attorney may be a bad idea

October 30, 2014 on 1:00 pm | In Business Planning, Common Interest Community, General Interest, HOA litigation, John Tarley, Real Estate Litigation, State & Federal Litigation | No Comments

Email

Well, we have written about protecting the attorney-client privilege and about safe emailing tips when emailing your attorney. Although we thought we had it pretty well covered, a recent decision from a California appellate has given us something more to think about.
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Employee Non-Competes: Why Must Prospective Employers Be Wary?

October 30, 2014 on 1:00 pm | In Business Law, Business Planning, General Interest, State & Federal Litigation | No Comments

We have written previously about employee “non-competes” (a/k/a covenants not to compete or non-competition agreements). You may have come across them in your own business, either by requiring them of your own employees or seeking to hire someone subject to a non-compete.   However, the area of law surrounding non-competition agreements can be tricky, and a new decision has added to the intrigue.

In DePuy Synthes Sales, Inc. v. Jones, the Eastern District of Virginia denied two motions to dismiss filed by the new employers of employees governed by non-compete agreements. DePuy employed two salespersons pursuant to employment agreements that contained non-compete provisions. They eventually left DePuy and began working for a competitor, Sky Surgical. DePuy sued the employees and Sky Surgical. This blog post examines the tortious interference of employment contract claim made by DePuy against the new employer, Sky Surgical.

employee noncompete agreement

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