California Injury Attorney Blog

The Federal Deposit Insurance Corp. today proposed that banks prepay tens of billions of dollars in fees to bolster its insurance fund that has been depleted by a rash of bank failures during the recession. The FDIC today proposed making banks pay three years worth of fees in advance, a move that could rake in $45 billion and would replenish the dwindling FDIC deposit insurance fund. As of the end of June, the FDIC's insurance fund for depositors had dwindled to $10.4 billion, its lowest level in 15 years. The agency now expects bank failures to cost the fund $100 billion over the next four years, with the bulk of the costs coming this year and next, and the fund balance to turn negative this month.

Continue reading "Fed Requests Banks Prepay Fees" »

What is it with these banks that are so quick to hit you with a fee for spending more than you have in your checking account but take their own sweet time in crediting deposits?

My colleague Andrew Martin and I heard that complaint repeatedly from readers after we wrote about overdraft fees earlier this month. The angry questions happened to arrive as we approach the five-year anniversary of when the federal law known as Check 21 took effect. The law allows banks to turn paper checks into digital images and settle them electronically instead of shipping bags of paper around the country on airplanes

Once banks embraced the new procedures, money disappeared from your account much faster when you wrote a check. But the old laws on how quickly banks must credit your account when you make a deposit did not change at all. They still haven't. In fact, they haven't changed in more than 20 years.

In part because of that, consumers are suspicious that banks earn more money by not making the funds available until they absolutely have to. Banks, meanwhile, say that they often make deposited funds available before they know that the checks haven't bounced.

The banks and the Federal Reserve have made some progress in speeding up many deposits. But the rules -- and especially their exceptions -- still trip up plenty of people.

So first, a refresher course on the rules, the ones the bank explained to you when you signed up for an account in a fine print document that you probably ignored. (I've posted links to more detailed explanations from the online version of this article.)

Banks are supposed to allow you to withdraw the following types of deposits no later than the next business day after the bank receives them: cash, electronic payments like paychecks and other direct deposits, government checks, postal money orders and cashier's checks. That said, if you don't make the deposits in person (say, if it's through an A.T.M.), there may be further delay.

For other checks, the Federal Reserve rule that governs deposits makes a distinction between local checks and nonlocal checks. Once you deposit your check in your own bank, it may go to a Federal Reserve check processing center before it heads to the bank of the person or company who wrote it. If the same center services both banks, then the check is local. If not, it's nonlocal.

Banks must make your deposits of local checks available no later than two business days after you hand them over. But they get a full five days on nonlocal accounts. In either case, they must make $100 available to you the next business day after the deposit as a sort of good-faith advance. That number, too, has not changed in two decades.

One piece of good news here is that because of the rapid adoption of electronic check imaging, the Federal Reserve is a year or so away from completing the consolidation of all its processing centers. As a result, many more checks are already local. So when you deposit them, they hit your account more quickly.

The bad news, however, is that there are still a number of exceptions that allow banks to put a hold on part or all of the deposit, often for at least five business days. Any deposit over $5,000 is automatically suspect. If your account has been overdrawn at least six days in the last six months, then the bank can delay all deposits to your account. If your account is less than 30 days old, then your bank gets the extra time there, too (plenty of fraud happens in new accounts).

The large deposit exception ensnares plenty of people, according to Gail Hillebrand, senior attorney for Consumers Union. They include those who are paid on commission or quarterly and those earning royalties, and a large number of others moving money around from, say, a brokerage account to their checking account to pay big medical or tuition bills or buy a car or house.

She suggested taking an active approach with the bank when big money is involved, deposit by deposit. "Ask the bank if there will be a hold and how soon you can have the money. Don't assume it's going to be there because the teller smiled at you and accepted it," she said. "If you're moving money for a big payment, do it well in advance."

Banks can and do move faster than the regulations require. And some have pushed their daily deadlines for depositors later by a few hours. Credit unions, in particular, tend to clear deposits more quickly, according to a 2007 Federal Reserve study of the effect of Check 21.

But you can't count on that happening. So if you can't keep a cushion in your checking account to protect yourself from running out of money while waiting for deposits, there are a few other available tactics.

Use direct deposit for everything you possibly can, from government benefit checks to tax refunds to reimbursement from your health insurer or flexible spending account administrator. Freelancers who do regular work for large companies can often receive payment via direct deposit, too.

If you're sending money to a child in school or supporting a relative in some other way, you'll spare yourself a lot of desperate phone calls if you can find a way to transfer money electronically into their account from your own linked account, say by listing yourself on the account with them.

There's one big win for consumers arising from Check 21 that should have happened by now but mostly hasn't. It's something bankers like to call remote deposit capture. In plain English, that means you scan the check using your home computer and send it to the bank without having to bother with envelopes and mailboxes or remembering to stop at the branch in person.

Banks were fairly quick to make this available for their biggest customers -- businesses. But only a couple of hundred banks or credit unions have given it to consumers so far, according to Bob Meara, a senior analyst with Celent, a financial services consulting firm.

The early adopters tend to be institutions like USAA Federal Savings Bank, which has only one branch but has lots of customers serving in the United States military who don't want to send money in from an Army base. In fact, the bank has gone a step further and created an iPhone application that allows many of its customers to take pictures of their checks and deposit them that way. One in four of the bank's check deposits now arrive remotely.

Customers of bigger banks could get their deposits into their bank accounts a lot faster if only the institutions were willing to let them move money this way. So why don't they?

According to Mr. Meara, 90 percent of all transactions with bank tellers involve checks. If everyone had an iPhone deposit app, people wouldn't come into the branch as often. That would be fine had banks not invested so much time and energy in training branch workers to persuade checking account customers to move into more profitable products.

It can't hurt to ask your bank for this sort of deposit-at-home service. But Mr. Meara thinks it will be many years before everyone gets to use it. That's too bad. Until the Federal Reserve acts to tighten the deposit crediting rules further, having more ways to make deposits is one of the best benefits that can still come out of Check 21. If only your bank were in a bigger hurry to give you the tools.

Continue reading "The Business of Banking" »

Investors swamped California with orders in its first debt sale since resolving its budget crisis, allowing the state to sell $8.8 billion in short-term notes, the state treasurer said on Wednesday, in a good sign for his plan to sell long-term bonds next month.

Retail investors bought 75 percent of the revenue anticipation notes and set a record for municipal debt.

California resorted to issuing IOUs in the summer due to a fiscal crisis. But in its return to the market, the state looked like a safe investment compared with stocks which have run up quickly, California Treasurer Bill Lockyer said after speaking with investment managers.

"There were many who thought that some investors were worried the stock market was getting frothy and were looking for a safer place to put money," Lockyer said in a telephone interview with Reuters.

California plans to tap long-term debt markets in early October by selling general obligation debt, and its sale of short-term notes suggests retail investors will return.

"I would expect that there are enough buyers participating in the short-term sale who would want to participate in the long-term sale," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

"Strong protections make the likelihood of default extremely small and of course we have a market in search of yield," LeBas said.

Continue reading "California Debt Sale Yields $ 8.8 Billion" »

Businesses can operate in a variety of structures, such as a sole proprietorship, partnership, limited partnership, corporation, or limited liability company. Each of these forms of incorporation provides certain benefits and also certain limitations. The legal structure of a business determines how it is managed, how it is taxed, and what regulations it must follow.

So how do you know what form of entity is the right one for your business? Things to take into consideration include:

Company Size- Do you plan on keeping your business small or do you plan on expanding by adding employees and locations? How many existing employees do you currently have and how many owners will there be, does every owner own an equal share? Some corporate structures require additional formalities. For instance the corporate form requires a board of directors, annual meetings, shareholder approval, etc. Smaller companies may consider more flexible forms of business, such as an LLC or even a sole proprietorship.

Business Purpose- Will your business make and sell a product or will you provide a service? Some states only allow personal services providers to register as LLCs or LLPs.

Liability -Some forms of doing business offer the protection of limited liability, which means the owners are not personally responsible for the debts of the business. Business structures offering limited liability protection include corporations, limited liability companies (LLCs) and limited liability partnerships (LLPs). Sole proprietorships and partnerships do not have limited liability.

Taxes - Profits and losses for businesses are treated differently for each type of business entity. Profits from sole proprietorships and partnerships pass through to the owners and are treated as personal income. This means the profits are taxed one time. Profits from corporations and limited liability companies do not necessarily go directly to the owners, but are taxed when the company distributes dividends to the owners. There are some exceptions and alternatives depending on the entity structure.

The main types of business entities are:

1) A Sole Proprietorship is a business which is completely owned by one person and which the business does not have a separate legal identity. The owner personally owns all of the assets and profits and may not be required to register with the state.

2) A Partnership is a business that has two or more owners who agree to share the profits and has not formally registered as a corporation, LLC or other entity type. The general rule in a partnership is that each partner owns an equal share of the business unless there is a written partnership agreement giving one of the partners a majority interest. In most states formal steps may not be required to create a partnership, but complying with certain formalities is usually recommended.

3) A Limited Liability Partnership (LLP) is a business that is organized and run just like a partnership but limits the liability of each partner. Some states only allow licensed professionals to form an LLP, like architects, accountants or lawyers while other states allow anyone to form an LLP. Most states require LLPs to register and pay a registration fee, and include "limited liability partnership" or "LLP" in the business name.

4) A Corporation is a business that has a separate identity from its shareholders, and may be organized for any business purpose. The general requirements are that there must be at least one shareholder and the corporation must have a director(s), president, secretary and treasurer, though in some states the same person may hold all of those positions. Unlike a partnership or sole proprietorship, a corporation continues to exist even when its ownership changes hands.

5) A Limited Liability Company (LLC) is a hybrid of a corporation and a partnership. Unlike a corporation the owners of an LLC are called members, and LLCs. LLCs offer limited liability, while requiring fewer formalities than a corporation. Other features which may be provided for include continuity of life if a member dies or sells their interest, centralization of management, and free transferability of an owner's shares.

Continue reading "Items to Take Into Consideration When Choosing The Proper Form of Business Entity" »

A contract is a legally enforceable agreement between two or more parties. So, how do you enforce it if it is broken by one of the parties?

That depends on how exactly the party breaches the contract. A minor, or nonmaterial, breach of contract entitles the non-breaching party to actual damages suffered. Therefore, if your mechanic used a different brand of oil that was of at least the same quality as that named in your contract, then you likely would not have a material breach of contract. You did not suffer any damages and may have, in fact, received a better product.

If, however, a party significantly or materially breaches a contract then the other party is entitled to either force the breaching party to perform his or her responsibilities pursuant to the contract or to pay damages for the breach. In the example of an auto mechanic adding oil to your car, if the mechanic failed to put any oil into the engine after cleaning it and your car broke down as a result of that mistake then you have suffered damages from the mechanic's material breach of your contract and you are likely entitled to damages.

Here are some things to think about when deciding whether a party's breach was material:

The extent to which the breach has caused the nonbreaching party a denial of benefits under the contract which he or she reasonably relied upon;
Whether the injured party can be compensated for the breach;
The likelihood that the breaching party will correct his or her failure. (When considering this likelihood it is important to consider all past performances by the party as well as any reasonable assurances the party has provided);
How the breaching party's behavior comports with fair business and good faith;
Whether the breach was under the breaching party's control or whether the breach was due to outside influences.
If a party materially breaches a contract then non-breaching party can consider the contract to be terminated.

Ultimately, a material breach of contract is one that goes to the very core of the contract. If you hire a videographer, for example, to take a video of your wedding and that videographer forgets his video camera and instead shows up with a point and shoot camera then the videographer has materially breached the contract. You hired him to make a video of your wedding, an event that cannot be recreated, and he did not do that. Since the videographer materially breached the contract you can consider the contract void and refuse to pay him.

However, it is important to remember that a material breach is a legal term and if you have any doubts about whether a breach was in fact material then you should contact your attorney. Otherwise, if the breach is not in fact a material breach then any failure to perform your own obligations pursuant to the contract could make you liable for damages!

Continue reading "Enforcement of a Broken Contractual Agreement" »

The centerpiece of the plan will be a tax that few people in California have ever heard of, is virtually untested in the world, is disliked by business and labor interests alike and one that even commissioners acknowledge has not yet been fully vetted.

It is called a business net receipts tax. It would be paid by businesses in every industry. Businesses would subtract from their gross receipts the costs they pay to other businesses for the purchase of materials and services, then pay a tax of about 4 percent on the difference. They could not subtract the key expenses of payroll or interest payments.

Very small businesses would be exempt, because the requirement to pay the tax would not be triggered until a business reached $500,000 in annual gross receipts.

The commission envisions that over time the revenue produced by the BNRT would allow California to eliminate its corporate income tax, do away with the state sales tax and dramatically reduce personal income taxes.

Critics on the left and right have a far different view. They believe the BNRT proposal ought to be dead on arrival.

"If this is the starting point, we've taken several steps behind the starting line," says Michael Shaw, an analyst with the National Federation of Independent Businesses. "It creates a labor tax, which is a huge problem for the retail and service industries."

The chief selling point of the BNRT is that it would provide a way to levy a consumption tax -- everyone agrees that businesses would largely pass along the tax to consumers -- on products other than just the tangible goods that are now subject to sales taxes.

Schwarzenegger and legislative leaders clearly hoped the panel, called the Commission on the 21st Century Economy, would devise a way to broaden the base of consumption taxes as a way to reduce the volatility of a California tax system that is extraordinarily dependent on income taxes.

The original hope was the commission would produce a report that could be put to an up-or-down vote in the Legislature, but commissioners acknowledge their recommendations are not yet refined enough for that.

Schwarzenegger has said he will call a special session of the Legislature to deal with the ideas submitted by the commission. He has been strongly advocating for changes that would reduce the volatility of the state's existing tax system in the hope of ending the roller-coaster cycle of booms and busts experienced by state government.

The BNRT would achieve the goal of producing new revenues in order to allow a shift away from the more volatile income tax.

Law firms would pay it, golf courses would pay it as would landscaping services, amusement parks, accounting firms, hospitals -- all businesses that produce services that are not now subject to the sales tax.

Shaw said he believes the tax's chief appeal to the commission is that it provided a way to deal with the politically sensitive issue of levying a sales tax on services without having to confront it head-on.

"Sales taxes on services are not popular," he said. "The truth is that this just takes the sales tax and shifts it to the business side of the equation rather the transaction side. This would be hidden from the consumer because the tax would be hidden in the price of goods."

Support on the commission is far from unanimous, and it remains unclear how many of the 14 commissioners will sign the final report. Seven of the commissioners were appointed by Republican Schwarzenegger, and seven by Democratic legislative leaders.

Because it would tax a business's payroll costs, it would disproportionately tax knowledge-based industries, which everyone agrees is the best thing California has going for it.

Accordingly. the net receipts for a company such as Wal-Mart would be a much smaller percentage of gross receipts than a company such as Oracle. While much of Wal-Mart's expenses are buying inventory, most of the value of what Oracle sells is the brainpower of its highly compensated, highly skilled work force.

Question: What type of businesses do we want to encourage in the California economy?

The commission analysis acknowledges its proposed tax changes would shift much of California's tax burden away from the very wealthy, who would be the chief beneficiary of a reduction in the personal income tax. The changes, according to the commission's analysis, would reduce revenue from the state income tax by $14 billion a year, with $7 billion of the savings going to the top 3 percent of taxpayers, or those who make more than $200,000 a year in adjusted gross income.

The California Tax Reform Association, notes the BNRT would compound the shifting of the tax burden to the poor and middle-class by effectively taxing rents. Especially since landlords could not subtract interest payments on their property from their gross receipts, they would be forced to raise rents to cover the new taxes.

The Federation of Independent Businesses said another drawback of the BNRT is it would tax struggling, startup businesses exactly the same as established, profitable ones. The existing corporate income tax is levied only on profits

The California proposal is modeled largely on a similar tax enacted in Michigan in 2007, although the rate of the Michigan tax, 0.8 percent, is just a sliver of the 4.2 percent rate mentioned by the commission.

Continue reading "Business Net Receipts Tax (BNRT) Contemplated for the State of California" »

Buy-sell agreements usually take the form of either a redemption,in which the corporation purchases its own shares from the selling shareholder, or a cross-purchase, in which the other shareholders purchase the seller's interest. In the past, corporate purchases havegenerally been preferred to cross-purchases because of their simplicity
and because corporate rather than personal funds or credit are used to complete the purchase. See 1 Ballantine & Sterling, CaliforniaCorporation Laws §63.03 (4th ed); Weary, Preserving CorporateStructure (Buy-Sell Agreements, Preferred Stock Recapitalizations,Spin-Of{, Life Insurance, Extension of Time to Pay Federal Estate
Tax), NYU 39th Inst Fed Tax §1O.03[2] (1981). However, cross-purchases are becoming more popular because of the potential adverse tax consequences of redemptions, particularly when insurance funding is used agreement can also benefit the remaining shareholders because they receive a basis in the purchased shares equal to their purchase price, which can be especially useful to an S corporation if there are losses
that can be passed through to the shareholders. IRC §1012.
With an entity purchase, the basis of the shares of the remaining shareholders is not affected, even though the value of those shares may be increased by the redemption. See IRC §1060(a).

A cross-purchase permits the relative power between groups of shareholders to remain the same by allowing them to structure the buyout so that the departing shareholder's interest is purchased by members of the same group. See 1 Ballantine & Sterling, Corporation Laws §63.03[3][a]. Finally, when insurance funding is used, a cross purchase is more equitable than a redemption when there are differences in the ages or shareholdings of the owners.

For most shareholders, the primary drawback of a cross-purchase is that they must use their own funds to finance the buyout. If the shareholders have to withdraw dividend income from the corporation to fund the buyout, the funds will be subject to double taxation:once as income to the corporation and again when they are received
by the shareholders.

Another disadvantage of cross-purchase agreements is their increased complexity when insurance funding is used. In addition to the additional policies required, the shareholdersmust be able to monitor the policies to make sure that none are allowed to lapse. Insurance proceeds may also be subject to taxation under the transfer-for-value rule. IRC §101(a);
Selecting the appropriate form for the buyout requires consideration of complex legal and tax factors in addition to the individual circumstances and goals of the parties to the agreement.

Depending on the form of agreement may permit the parties to delay the decision until the triggering event occurs, when the financial and tax situations of the parties can be better evaluated.

Continue reading "California Business Attorney: Buy-Sell Agreements - Redemption or Cross-Purchase?" »

What Is A Writ Of Attachment And Why Do You Need It?

If you have filed a lawsuit, and want to make sure that the defendant's assets will be
available to satisfy a judgment, a writ of attachment allows you to levy on and obtain a lien against the defendant's California property. The writ of attachment establishes your lien priority-without it an unsecured creditor risks being subordinated to other liens imposed on the defendant's property prior to the creditor obtaining a judgment and perfecting its judgment lien.

A writ of attachment is available in a contractual action involving a claim or claims for
money. CCP §483.010(a). A writ of attachment is also available in an unlawful detainer actionto the extent of the unpaid rent at the time the action is filed plus estimated rent, computed at the lease rate, through the estimated date that the plaintiff will gain possession. CCP §483.020.

The claim must be fixed or ascertainable in an amount not under $500, exclusive of costs
interest, and attorney fees, but claims can be aggregated. CCP §483.010(a). The claim cannot be secured by real property unless, through no act of the plaintiff or the person to whom thesecurity was given, the security has become valueless or has decreased in value to less than theamount owed on the claim, in which case the writ of attachment is for the difference between the value of the security and the amount of the claim. CCP §483.010(b). Attachment is allowed on claims secured by real property or by fixtures under the Commercial Code. CCP §483.0 1D(b).

A writ of attachment encourages and promotes settlement, because it forces the defendant to seriously consider the merits of your claim. If you can obtain a writ of attachment, it is possible to deprive the defendant of the use of their assets you have attached-throughout the course of the lawsuit!

In collection cases, where the defendant is incurring business losses, concealing assets, or about to leave the state; or where several creditors are all trying to establish priority~a writ of attachment can quickly protect you from losing out on collecting what you are owed.

Continue reading "Awesome Prejudgment Collection Remedy: The Writ of Attachment" »

A. Preliminary Considerations Identifying the Client:

An attorney who is asked to plan and draft, or to review, a buy-sell agreement often faces a preliminary problem in ascertaining which party is being represented: Is it the entity itself, management asindividuals, some or all of the shareholders or partners, or a combinationof these parties? Unless counsel has decided to avoid the multiple representation issue by representing only one party to the transaction,the initial conflict letter should set forth the party or parties who are considered to be the client.

If the entity is the client, the attorney must "conform his or her representation to the concept that the client is the organization itself,acting through its highest authorized officer, employee, body, or constituent overseeing the particular engagement." Cal Rules of Prof Cond 3-600(A). See also Meehan v Hopps (1956) 144 CA2d 284,
290, 301 P2d 10, 14 ("The attorney for a corporation represents, its stockholders and its officers in their representative capacity.He in no way represents the officers personally"). Whenever it becomes apparent that the organization's interests are or may be adverse to the organization's directors, officers, employees, members, shareholders,
or other constituents with whom the attorney is dealing,the attorney must identify the client for whom he or she is acting.Cal Rules of Prof Cond 3-600(D).Because the attorney must rely on the entity's management or-owners to determine its interests, maintaining the distinction between the entity and its constituents can be particularly difficult in buy-sell situations, whether the attorney represents multiple parties to the agreement or only the entity. Frequently, the same individuals who
are the parties to the agreement will have made the decision to retain the attorney.

Unless counsel takes particular care to distinguish between the entity and its constituents, he or she risks representing the entity inadequately or representing conflicting interests.

Once the buy-sell agreement has been drafted, questions may arise about who, if anyone, will be represented by the attorney in the future. Moreover, designating the person or persons who will be instructing the attorney, and on whose directions the
attorney may rely, will force the parties to consider this issue at the outset. With large business entities, limiting this authority to selected individuals often results in better communication between the attorney and the client and avoids unnecessary legal fees attributable to poor communication and direction from multiple representatives.

Continue reading "Identifying the Client: California Business Attorney Buy-Sell Agreements" »

The Federal Emergency Management Agency (FEMA), recently hosted a forum titled, "Will Your Business Survive an Earthquake," for the Encino Chamber of Commerce in California.

QuakeSmart was developed by FEMA around the premise that no community can fully recover from a damaging earthquake until its businesses are back and running. Because local businesses may not be as prepared to resume commercial activity, getting them to mitigate for earthquake loss has become an economic priority. "We want at-risk businesses to become 'QuakeSmart,'" said Nancy Ward, regional administrator of FEMA Region IX. "Being a QuakeSmart business means knowing your risk, making a plan, and taking action."

QuakeSmart forums feature leading national experts who address topics such as Earthquake Vulnerability-Protecting Your Investment, What a Small Business Can Do NOW, Mitigation Resources for Business and Business Interruption Planning. Participants at the Encino, CA forum heard from a local business that provided a first-hand account of how mitigation helped them recovery more quickly following the Northridge earthquake.

The benefits to businesses that participate in the program and actively work to mitigate are substantial. Not only can business owners protect their and others' investments and recover more quickly from a disaster, they could also save on insurance premiums, substantially reduce the risk of injury or death for themselves, their employees and customers, and help create a more resilient community in which future investment is more attractive.

The QuakeSmart forum is one of many activities occurring during National Preparedness Month to promote public and government awareness of the critical importance of preparedness at every level.

Continue reading "California Earthquake Business Survival: How to Quickly Recover" »

NATURE OF A LIS PENDENS
In real estate law, one of the most potent weapons a plaintiff has when filing an action affecting title or possession to real property is to record a lis pendens. With the anemic economy, expect to see many more of them.
A lis pendens is a document which is recorded with a County Recorder following (but never preceding) the filing of a lawsuit in which the plaintiff (i.e. the person who is suing) asks the court to issue an order or other judgment which affects title or possession to a specific piece of real property.
The purpose of the lis pendens is to impart notice (more technically, "constructive notice") to everybody in the world who might be interested in the property which is the subject of the litigation. The technical name of a lis pendens is a "Notice of Pendency of Action."
Once the lis pendens is recorded with the County Recorder in the county in which the real estate is located, all persons who thereafter deal with the property are bound by all past and future rulings of the court in the subject litigation.
By comparison, a lis pendens is a little bit like a first trust deed. Anybody who thereafter loans money and secures the loan with a second trust deed against the property, is bound by the terms of the previously recorded trust deed. Similarly, a lis pendens constitutes an encumbrance against the owner's title to the property. If he/she sells it or refinances it after the recordation of the lis pendens, the new buyer or lender will be subject to and bound by any decision of the court

The most frequent occurrence of the recordation of a lis pendens is by a buyer who contends that he and the property owner are parties to an enforceable contract, whereas the seller maintains that the contract was cancelled or is otherwise unenforceable. Thus, the proponent of the lis pendens maintains that he has the right to purchase the property, whereas the property owner asserts that the contract is no longer effective.
One such scenario might occur where the selling property owner cancels the escrow based on a contention that the buyer did not timely perform. The seller then seeks to resell the property to a new purchaser. The original buyer, who disputes the seller's position, then files a lawsuit and records a lis pendens before the seller is able to consummate an escrow with a new purchaser.
If the new purchaser then proceeds to accept title to the property and close the escrow, he acts at his own peril. That is because if the court finds that the contract with the first buyer was enforceable, the court will remove the title from the new purchaser and reconvey it to the original buyer upon the buyer's payment of the purchase price to the seller.
Thus, the recordation of a lis pendens has a chilling effect on any resale or refinancing of the property pending the conclusion of the litigation.

Continue reading "California Lis Pendens: A Chilling Effect On the Sale of the Real Estate" »

Among all Americans, only prisoners enjoy the protection of the U.S. Constitution when it comes to health care. And even for prisoners, the Eighth Amendment requires basic health care services only for serious medical needs. As the North Carolina Supreme Court observed in 1926, "[I]t is but just that the public be required to care for the prisoner, who cannot by reason of the deprivation of his liberty, care for himself."

The prison system in California spends an average of more than $40,000 a year on a population of about 170,000. Yet, the federal court has found the prison health care system unconstitutional, causing one unnecessary death per week, on average. Thus, we can see that the expenditure of vast sums of money will not, alone, result in a sound system for the delivery of health services.

But what of those who have no access to such services? Some 40 million Americans have no health insurance at all. Clearly, something is drastically wrong.

Why is it always the poor and middle-class people who embrace propaganda that can inure only to the benefit of the corporations and the wealthy? The state of our health care is a disgrace, comparing 7th or 8th among systems in around the world. Here, even those lucky enough to have health insurance at work can be bankrupted by catastrophic injury or illness.

HMO's, PCP's, and other "plans" offered by the insurance companies already limit our choices of doctors and treatments. Frequently, reimbursement or coverage is unreasonably and unjustifiably delayed. And increasingly, these highly profitable insurance corporations simply refuse to pay legitimate claims because of noncompliance with mindless formalities. (By now, everyone has heard of cases where coverage was denied when a person was rushed to an emergency room but failed to notify the insurer first.) And increasingly, these corporate behemoths rescind coverage altogether when it is needed most, pointing to some hyper-technical and immaterial omission, an unintentional misstatement on a health care application, or any other plausible excuse at hand. Rather than suing the company, many people are intimidated, throw their hands into the air, and allow the insurance company to bully them to the detriment of their health and financial welfare. When people do seek legal protection, it often comes too late.

Insurance policies are incredibly difficult to understand, they employ terms unique to the industry, and few who have policies know what will or will not be covered. The insurance companies keep lawyers on retainer and it's easy for their representatives to confuse, confound, and intimidate consumers. For the companies, it's all about a dollars and cents analysis - how much do we gain by denying or delaying coverage, how much might litigation cost, and what are the chances that a lawsuit will be filed?

As a result, the provision of actual health services declines while profits rise. So who has an interest in perpetuating such a deeply flawed system? And who is financing frightening misinformation about universal coverage in a single-payer system?

We already provide universal coverage for people who seek care in emergency rooms. That haphazard expenditure of public funds is terribly wasteful because many emergent medical needs could have been addressed through preventive care, the most effective use of health care dollars. And 70% of all health care expenditures are connected to treatment in the last three months of life with little regard for the quality of life during that period. Meanwhile, the health care needs of children and young people are neglected. Is that really the best way to allocate limited resources? Even we aging "Baby-Boomers" would have to concede that such practices defy reason.

This nonsense about "socialized medicine" and government imposed euthanasia are expressions of fear of the unknown (and untried) not very different from the reaction of a frightened ostrich. But sticking our heads in the sand won't make this problem go away, and neither will these tired scare tactics.

The facts are that government does a pretty good job of administering health care for veterans, the elderly, and the poor. Those who have the benefit of that care express a higher degree of satisfaction than those who have to rely on for-profit insurance companies. And, contrary to conventional wisdom, government does a better job of administering a health care system than corporate insurance companies that spend nearly 20% of our health care dollars on administration.

Where in the world did we get the idea that health care should be a profit-driven industry? How in the world are there so many less affluent countries providing health care for all citizens while spending far less than we spend? And why in the world should we allow financial exploitation of the ill and infirm to continue? It's long past time to plan health care expenditures as we do our home budgets - rationally and in accordance with principled priorities. We're long overdue in developing a health care system that is founded on our shared sensibility that no one in need of medical care should be denied because of social status. We should (if necessary, swallow hard and) recognize that basic decency requires a health care delivery system that covers everyone, not just those who can pay.

Continue reading "The "Business" of Health Insurance" »

It looks like the state of California will pass a tough bill banning health plans from retroactively canceling consumer policies for alleged misstatements in their applications. The practice, known as rescission, has pitted the state's health plans against regulators in a years-long battle over what the law allows.

The new bill, which has been passed by the state Senate and is expected to pass the Assembly shortly, would set up an independent board that would have to approve any cancellation of beneficiaries' contracts. To get a cancellation, insurers would have to prove that the applicant intentionally misrepresented facts on their application. Right now, the insurer gets to decide whether the application is factual, and whether any errors were intentional.

The bill would also create a standard set of health history questions that all health plans doing business in the state would have to use in screening applicants. Health plans would have to complete their medical underwriting analysis of the contract before issuing a policy. In the past, some have not-so-coincidentally canceled policies once the member began to face large treatment costs.

The bill would take effect far more quickly than proposed health reform efforts demanding the end of medical underwriting entirely. Most health reform proposals call for a 2013 deadline, but this bill would take effect in January 2011. If it is approved by both houses, Gov. Arnold Schwarzenegger is expected to sign the measure.

Continue reading "California Health Plans Cannot Unilaterally Cancel Policies" »

Times are tough. The economy has fallen off a cliff and has only very slowly begun to claw its way back up. In the State of California real estate and the construction trades are slow. Bills are piling up. The phones are starting to ring. And who's on the other end of the line is not your long lost sweetheart from whom you haven't heard in a billion years, but a debt collector with what seems to be serious in collection an overdue bill.

That's where the Fair Debt Collection Practices Act comes in.

This law was first passed by Congress in 1977. It has been amended seven times since, most recently in 2006. The law was adopted in response to abusive collection practices which, in turn, led to an increase in personal bankruptcy filings. The stated purpose of the act is to provide guidelines and accepted practices for debt collection agencies and debt collection attorneys when seeking to collect on legitimate debts.

The Act is also meant to grant certain protections to consumers, to shield them from unscrupulous debt collection practices, and to provide consumers with certain remedies against rogue debt collectors. It is important to note that the federal act is generally supported by complimentary state laws which vary from one state to the next.

The act extends to personal, family and household debts. Included under its protections are debts associated with the purchase of a vehicle, mortgage debt, debts associated with medical services, and money owed on credit card accounts.

What debt collectors are subject to the act? Lots of them. The act is specifically targeted to apply to any person or entity who regularly collects debts owed to third parties, including lawyers who regularly perform debt collection services. In-house collection departments are not generally included under the act. If, for example, you owe a local merchant a debt, the law will not regulate the merchant or prevent him from contacting you about the debt. If, however, the merchant employs an outside debt collection service, the law will likely will apply.

Here are some of the restrictions:

• Debt collectors may not contact neighbors, friends, relatives or employers of the debtor except when that party is a co-signer for the debt.

• They may not falsely threaten to refer your account to an attorney, harm your credit rating, repossess property or garnish wages;

• They may not repeatedly call at unreasonable times (before 8 a.m. or after 9 p.m.), unless you have given the debt collector permission to contact you during those hours.

• They may not call you at an inconvenient place (most commonly, contacting you at work in violation of a known policy of your employer or after being requested not call at work).

• Debt collectors may not inform your employer of the purpose of the call, unless first asked by the employer.

• They also may not use foul, abusive, or obscene language or employ racial slurs or insults, send letters which appear to have come from a court, seek collection fees or interest charges not permitted by your contract or by law, request post-dated checks with the intention of prosecuting if they bounce, sue in courts distant from where you live, or threaten you with arrest if you do not pay the debt.

Continue reading "Fair Debt Collection Practices Act: Let the Creditor Beware" »

Claim and Delivery is a provisional California Collection Law remedy that enables the plaintiff in an action for recover of specific, tangible personal proeprty in the defendant's possession to obtain possession of the property prior to judgment.

The Claim and Delivery procedure is most often used when the personal property sought is security for the repayment of a debt now in default. It is also used by California Collection lawyers to reclaim personal property which has been loaned, leased or bailed to another; or to obtain personal property which is the subject of a dispute over ownership.

Upon the filing of a complaint for Claim and Delivery the plaintiff shall seek a writ of possession as long as the plaintiff can show that it is more probable than not that he or she will ultimately obtain a judgment for the possesion of the personal property.

Continue reading "Claim and Delivery: An Action to Recover Specific Personal Property " »

The common count known as "book account" or "open book account" is based upon the indebtedness shown by a detailed statement kept by the creditor, which constitutes the principal record of one or more transactions between the creditor and the debtor.

Book account is defined in California Code of CivilProcedureSection 337a, must (1) arise form a contract or fiduciary relation, (2) show the debits and credits in connection with the relationship, (3) be entered in the regular course of business conducted by the creditor, and (4) be kept in a reasonably permanent form and manner (a) in a bound book, or (b) on a sheet or sheets fastened in a book or to backing, or (c) on a card or cards, or (5) be kept in other reasonably permanent form and manner.

Continue reading "California Collection Law: Common Counts Pleading - Book Account" »

The object of a Bill of Particulars, per California Collection Law, is to give the party demanding it reasonable notice of the items constituting the claim sued on so that he or she may prepare for trial.

Because the creditor need not set forth in a complaint on common counts the particular items of an alleged claim, the complaint does not usually provide the debtor with adequate notice.

Within ten (10) days after service of a written demand, the plaintiff must deliver to the defendant a copy of the accouint "or be precluded from giving evidence there ". See California Code of Civil ProcedureSection 454. Delivery has then effect of limiting the plaintiff's evidence to the items specified but does not constitute competent admissible evidence of them.

When a Bill of Particulars shows that the amount of the claim is less than that prayed for in the complaint, the bill limits recovery to the lesser amount.
.

Continue reading "The Effect of the Demand for Bill of Particulars" »