October 2014 Archives

CAR Attempts to Provide Brokers Additional Liability Protection

By: Anna Greenstin Kudla

This November, the California Association of Realtors ("CAR") is coming out with a new standard Residential Purchase Agreement ("RPA"). The new RPA contains revisions to its Financing, Loan Contingency, and Termite sections. Most notably, the RPA has a new larger Scope of Duty section designed to protect brokers. Paragraph 18, entitled "BROKERS," identifies compensation rights, sets parameters for scope of duty, and addresses the real estate professional's representative capacity.

Admissibility of Expert Testimony in Nevada publications

Nevada's rule on the admissibility of expert witness testimony is codified in Nevada Revised Statute 50.275, which states that a qualified expert witness may testify as to matters within that expert's scope of knowledge, so long as such testimony will assist the trier of fact to understand the evidence or determine a fact in issue. While the Nevada Legislature laid the foundation to allow expert testimony to be presented and granted judges the discretion as to whether to allow such testimony, it was not until Hallmark v. Eldridge (2008) 124 Nev. 492, that the Nevada Supreme Court gave further clarification on the factors judges were to consider when admitting expert testimony evidence. 

Melissa Bright Joins Kring & Chung's Las Vegas Office

Kring & Chung, LLP would like to welcome Melissa Bright to its Las Vegas, Nevada office. Bright graduated from the University of Nevada, Las Vegas where she majored in criminal justice and minored in sociology. She received her Juris Doctorate degree in 2011 from University of Nevada, Las Vegas, William S. Boyd School of Law. Bright's practice consists of employment law, personal injury and business litigation. 

Sexual Harassment Training

Kring & Chung is reminding California employers with 50 or more employees to provide sexual harassment prevention training to supervisors and managers every two years. Employers must provide training to all employees who have "supervisory authority," which includes anyone who has independent authority to hire, transfer, demote, suspend, lay off, recall, discharge, assign, reward or discipline, or direct other employees. This could include employees that do not have a management title. New supervisors and managers must be trained within six months of being promoted to a supervisory position and, thereafter, every two years.

Kring & Chung provides this interactive AB 1825 (Cal. Gov. Code § 12950.1) compliance training at a very competitive rate and attorneys are available to conduct this training on-site.

If you have any questions or wish to schedule a training session contact Allyson Thompson, Esq.

Time for Another Residential Real Estate Boom as FNMA Relaxes Impact of Prior Foreclosure, Short Sale and Bankruptcy

Posted on October 7, 2014

By: Anna Greenstin Kudla

Since 2007, maneuvering through the murky waters of government-backed mortgage-finance policies seemed to be nearly impossible for borrowers and real estate professionals alike. Whether you were seeking a short sale from your lender, or you were a borrower forced to endure the painful experience of foreclosure, the end result to your credit was the same. Eventually, real estate professionals were turning away most borrowers with a foreclosure, bankruptcy, short sale, or deed-in-lieu on their credit record. Homeowners with disparaging credit were advised that foreclosures and short sales can stay on a credit report for up to seven years, making it difficult (if not impossible) to qualify for a reasonable loan. Conversely, struggling homeowners were watching their homes decrease in value while trying to avoid foreclosure or short-sale alternatives.

Cochran v. Schwan's Home Services, Inc.: Employer Must Reimburse Reasonable Percentage of Employee's Cell Phone Bill

Posted on September 25, 2014

By: Laura C. Hess and Sachiyo Miller

On August 12, 2014, the California Court of Appeal issued a sweeping opinion in Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal.App.4th 1137. The Court discussed the issue of whether an employer must reimburse an employee for the reasonable expense of mandatory use of a personal cell phone for work purposes, or whether the reimbursement obligation is limited to situations in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job. The answer is that partial reimbursement is always required.

Understanding Successor Liability

Posted on October 7, 2014

By: Richard C. Hatem

In acquiring some or all of the assets of another entity, companies must be careful to avoid being exposed to liability as a successor to the predecessor entity. Structuring the transaction as an asset purchase had been an effective method of protecting a buyer from a seller's liabilities. However, buying a business in this fashion is no longer a sure way of acquiring the assets free of all liabilities. The courts have now identified several exceptions which could lead to unintended liability.

The Letter of the Law: October 2014

IN THIS ISSUE:

EMPLOYMENT LAW: Cochran v. Schwan's Home Services, Inc.: Employer Must Reimburse Reasonable Percentage of Employee's Cell Phone Bill

REAL ESTATE LAW: Time for Another Residential Real Estate Boom as FNMA Relaxes Impact of Prior Foreclosure, Short Sale and Bankruptcy

BUSINESS LAW: Understanding Successor Liability

Cochran v. Schwan's Home Services, Inc.: Employer Must Reimburse Reasonable Percentage of Employee's Cell Phone Bill

By: Laura C. Hess and Sachiyo Miller

On August 12, 2014, the California Court of Appeal issued a sweeping opinion in Cochran v. Schwan's Home Services, Inc. (2014) 228 Cal.App.4th 1137. The Court discussed the issue of whether an employer must reimburse an employee for the reasonable expense of mandatory use of a personal cell phone for work purposes, or whether the reimbursement obligation is limited to situations in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job. The answer is that partial reimbursement is always required.

In this case, an employee filed an action on behalf of customer service managers who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones. The trial court denied class certification due to the lack of commonality, and because a class action was not a superior method of litigating the claims. Thereafter, the California Court of Appeal held that employees must be reimbursed a reasonable portion of these bills for work-related use, and reversed the denial of class certification.

Labor Code § 2802 states that "an employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties...." The ruling noted that the purpose of this statute was to prevent employers from passing their operating expenses on to their employees.

The employer argued that many employees had unlimited plans and did not incur extra expenses due to work-related calls. In addition, the employer pointed out that many employees had phones paid for by third parties, such as family members. The Court rejected both of these arguments, reasoning that the issue was whether the business should be required to reimburse the expense. The Court held that, to show liability under Labor Code § 2802, "an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed."

The answer was straightforward. To comply with Labor Code § 2802, employers must reimburse a reasonable percentage of the employee's cell phone bill if the employee has to use his or her phone for work purposes. The Court acknowledged that the issue of damages was more complicated. It therefore ordered the trial court to review how damages might be proven.

This ruling will affect the vast majority of employers. Most employers allow employees to use their own personal cell phones for work purposes. Some employers have Bring Your Own Device (BYOD) policies due to perceived productivity gains and cost savings.

In terms of other devices such as tablets, laptops, and home computers, etc., subsequent similar cases might be affected by this court's ruling. Although this ruling remains subject to further appeal, employers should review their cell phone policies to determine best practices related to expense reimbursements to avoid liability on this emerging issue.

Time for Another Residential Real Estate Boom as FNMA Relaxes Impact of Prior Foreclosure, Short Sale and Bankruptcy

By: Anna Greenstin Kudla

Since 2007, maneuvering through the murky waters of government-backed mortgage-finance policies seemed to be nearly impossible for borrowers and real estate professionals alike. Whether you were seeking a short sale from your lender, or you were a borrower forced to endure the painful experience of foreclosure, the end result to your credit was the same. Eventually, real estate professionals were turning away most borrowers with a foreclosure, bankruptcy, short sale, or deed-in-lieu on their credit record. Homeowners with disparaging credit were advised that foreclosures and short sales can stay on a credit report for up to seven years, making it difficult (if not impossible) to qualify for a reasonable loan. Conversely, struggling homeowners were watching their homes decrease in value while trying to avoid foreclosure or short-sale alternatives.

However, this all may be changing. As of July 29, 2014, the Federal National Mortgage Association (FNMA) decreased the waiting period for residential owners who had a previous bankruptcy, foreclosure, short sale or deed-in-lieu of foreclosure to purchase a new residence. Below is a comparison of previous vs. new waiting times for a borrower qualifying to purchase a new residence through FNMA:

  • Foreclosure: Previous: 7 years, Now: 3 years with "Extenuating Circumstances" (including loss/decrease of income). The floodgates will open for this exception.
  • Short Sale/Deed-in-Lieu/Charge-off: Previous: 4 years, Now 2 Years.
  • Bankruptcy (Ch. 7): Previous 4 years, Now 2 years.
  • Multiple Bankruptcies: Previous 5 years, Now 3 years from most recent Bankruptcy.

As indicated above, FNMA lender underwriting requirements are relaxing. Since FNMA is the largest purchaser of conforming residential loans, lenders across the board will follow FNMA's underwriting guidelines. It may take up to 6 months from FNMA's guideline announcement for originating lenders to change their underwriting standards. This would then result in an increase in the number of purchases of residential properties, and an increase in demand and sales. If that happens, the end result would be greater demand than supply, which means increased property values.

Within the next two years, the likely next step for FNMA will be to allow "stated income" or decreased documentation for income under certain circumstances. Another option for a FNMA underwriting change would be to offer new loan options that reduce the required monthly income threshold, such as (1) reduced LTV% (Loan-to-Value percentage) and (2) creative loan options, such as negative amortization loans (which were previously offered before the meltdown). Based on the strength of lending and real estate agent/broker lobbyists and the elapse of time since the last real estate crash (2007-10), additional relaxation may follow. Although the change in FNMA guidelines will be in small increments, when pieced together the result could be the same lending atmosphere that caused the 2007 real estate collapse. It is very possible that we are now embarking on a brand new real estate bubble. Not only will this affect homeowners, borrowers, brokers and real estate agents, but we will also see an increase in construction and development.

The real estate attorneys at Kring & Chung, LLP, some of whom also maintain real estate broker's licenses, are knowledgeable and ready to assist homeowners, agents and brokers with any and all real estate related legal matters in this rapidly evolving market. Whether you have easement issues or construction defects, are a borrower, lender, real estate professional or contractor, if you have any legal questions, please feel free to call Anna Greenstin Kudla.

Understanding Successor Liability

By: Richard C. Hatem

In acquiring some or all of the assets of another entity, companies must be careful to avoid being exposed to liability as a successor to the predecessor entity. Structuring the transaction as an asset purchase had been an effective method of protecting a buyer from a seller's liabilities. However, buying a business in this fashion is no longer a sure way of acquiring the assets free of all liabilities. The courts have now identified several exceptions which could lead to unintended liability.

When courts are tasked with determining the extent of successor liability, they will generally examine a multitude of factors. Each situation is different and the analysis is primarily fact-based. Some of the factors which will be examined include: (1) Is the new company a mere continuation of the previous entity. Courts will look to see if key officers or directors of the predecessor are involved in the new entity, and if the same name, location, or facilities are being used; 2) Did the seller dissolve or cease doing business as a result of or immediately after the sale; 3) were substantially all of the assets of the predecessor acquired, leaving only a corporate shell; and (4) is the successor company benefiting from the goodwill or reputation of the predecessor.

Finally, if the buyer entity continues the production of the predecessor's line of products it may be subject to the product line exception. In this instance, the buyer may assume strict liability for the same product line previously manufactured, if the right of action against the predecessor company is no longer available as a result of the purchase.

There are many strategies available to prospective buyers as they attempt to avoid successor liability. For example, buyers may request that sellers maintain their corporate existence post-closing and retainsurance policies covering pre-closing liabilities.

Additionally, the asset purchase agreement should expressly state that the buyer is not assuming any of seller's debts or liabilities. The Agreement should specifically identify known liabilities or ongoing litigation for which the seller is retaining sole liability. Finally, the agreement should contain an indemnification provision calling for the seller to defend and hold the buyer harmless in the event any post-closing liability arises.

The circumstances of each asset purchase are unique. Consulting experienced counsel during the structuring of any purchase can have a significant impact on lowering a buyer's potential exposure to the debts and liabilities of the seller.

NEWS AND EVENTS:

Melissa Bright Joins Kring & Chung's Las Vegas Office

Kring & Chung, LLP would like to welcome Melissa Bright to its Las Vegas, Nevada office. Bright graduated from the University of Nevada, Las Vegas where she majored in criminal justice and minored in sociology. She received her Juris Doctorate degree in 2011 from University of Nevada, Las Vegas, William S. Boyd School of Law. Bright's practice consists of employment law, personal injury and business litigation.

Sexual Harassment Training

Kring & Chung is reminding California employers with 50 or more employees to provide sexual harassment prevention training to supervisors and managers every two years. Employers must provide training to all employees who have "supervisory authority," which includes anyone who has independent authority to hire, transfer, demote, suspend, lay off, recall, discharge, assign, reward or discipline, or direct other employees. This could include employees that do not have a management title. New supervisors and managers must be trained within six months of being promoted to a supervisory position and, thereafter, every two years. Kring & Chung provides this interactive AB 1825 (Cal. Gov. Code § 12950.1) compliance training at a very competitive rate and attorneys are available to conduct this training on-site. If you have any questions or wish to schedule a training session contact Allyson Thompson, Esq.

Ms. Thompson can be reached at athompson@kringandchung.com or (949) 261-7700.

Kring & Chung 6th Annual Thanksgiving Food Drive - November 1, 2014 - November 14, 2014

In collaborative efforts with Families Forward, Kring & Chung will be preparing 20 food baskets for families to celebrate Thanksgiving. Each year, Families Forward holds a Thanksgiving-themed grocery distribution for local families in need. The weekend before Thanksgiving, local families come to Families Forward to receive all of the traditional Thanksgiving fixings to cook a warm, holiday meal. While parents pick up their baskets, their children participate in fun-filled activities such as arts and crafts, and face painting.

Families Forward relies on the generous support from the local community to fill the needs of the families they serve during this busy time of year. Last year they provided 700 families with food needed to celebrate Thanksgiving. Click here (http://www.families-forward.org) for more information about Families Forward.

Items needed include: 20-$20 gift cards for turkey or produce; 40 boxes of stuffing; 40 jars of gravy; 40 cans of cranberry sauce; 40 boxes of muffin or corn bread mix; 40 cans of sweet potatoes or yams; 40 cans of soup (1 broth & 1 cream); 80 cans of vegetables; 60 cans of fruit; 40 cans of evaporated milk; 40 cans of pumpkin or other pie filling; and 20 boxed pie crust. Items can be dropped off at our Irvine office located at 38 Corporate Park, Irvine, CA 92606.

Please contact Michelle Bennett at mbennett@kringandchung.comif you have any questions. Thank you for your support.

Premium Av Preeminent 5.0 out 5 Rating Peer Review Rated LexisNexis Martindale Hubbell Avvo Super Lawyers OC Metro Register
Contact

How Can We Help You?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Locations

Irvine Office
38 Corporate Park
Irvine, CA 92606

Phone: 949-345-1621
Fax: 949-261-8800
Irvine Law Office Map

Los Angeles Office
3435 Wilshire Blvd., Suite 2700
Los Angeles, CA 90010

Phone: 949-345-1621
Phone: 213-232-1633
Map & Directions

Temecula Office
41955 Fourth St., Suite 315
Temecula, CA 92590

Phone: 949-345-1621
Phone: 951-331-4520
Fax: 951-257-0450
Map & Directions

Sacramento Office
2620 J Street #1
Sacramento, CA 95816

Phone: 949-345-1621
Phone: 916-266-9000
Fax: 916-266-9001
Map & Directions

San Diego Office
11682 El Camino Real, Suite 100
San Diego, CA 92130

Phone: 949-345-1621
Phone: 858-436-0268
Fax: 858-436-0279
Map & Directions

Las Vegas Office
1050 Indigo Dr., Suite 200
Las Vegas, NV 89145

Phone: 949-345-1621
Phone: 702-260-9500
Fax: 702-260-9434
Map & Directions