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 San Jose Business & Commercial Law Blog

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SAN JOSE BUSINESS & COMMERCIAL LAW BLOG

Subscribe to our legal blog for latest news and insights

Third party records such as bank statements are fair game in post judgment discovery

Third party records such as bank statements are fair game in post judgment discoveryA new ruling from California’s 6th Appellate District clarifies what appeared to be a gap in what is permitted for post-judgment document discovery on third parties.

California’s Enforcement of Judgment laws (enumerated in the California Code of Civil Procedure)+ §680.010 et seq.) has very clear code sections on what is allowed for discovery of the judgment debtor:

  1. the judgment creditor may propound interrogatories (§708.020), and may seek production of judgment debtor’s financial records (§708.030); and
  2. the judgment creditor may take the debtor’s examination (§708.110) “The judgment creditor may apply to the proper court for an order requiring the judgment debtor to appear before the court, or before a referee appointed by the court, at a time and place specified in the order, to furnish information to aid in enforcement of the money judgment.”
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FLSA UPDATE: United States Department of Labor Issued New Regulations

FLSA update diemer wei san jose caThe United States Department of Labor issued new regulations today affecting the white collar exemptions to the overtime wage and hour laws under FLSA. (The Fair Labor Standards Act.) DOL apparently set a new threshold amount for claiming the exemption. Workers must now make $35,308 per year in order to claim any of the white collar exemptions. The effect of the new overtime rules, issued today, March 7, 2019, is unclear as a number of groups have indicated that they intend to take legal actions related to these new regulations.

[DOL’s Fact Sheet here: https://www.dol.gov/whd/overtime/fs17a_overview.htm]

Diemer & Wei, LLP routinely represents employers related to wage and hour claims. Please call if you need legal advice about this type of matter, or are concerned about how the new rules might affect your business operations.

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How Small Partnerships End in California

How Small Partnerships End in CaliforniaThe California Corporations Code requires founders to follow specific procedures and file specific forms before the entity comes into existence. For example, articles of incorporation must be filed with the Secretary of State in order to create a corporation. In contrast, a general partnership can be formed without any document at all.

A partnership is formed when two or more individuals co-own a business for profit. Cal. Corp. § 16101 (9). No writing at all is required to form a partnership. However, written partnership agreements are often created by the partners and this article discusses one reason why a partnership agreement is important.

For example, Sallie and Juan open a bakery shop together in downtown San Jose. Sallie buys all the groceries, pays for them and hires the staff. Juan gets up early, bakes everything and stocks the display windows. Together Sallie and Juan help customers and man the cash register. At the end of each day, they split the proceeds after costs are paid. They are clearly doing business together in their San Jose bakery. Even without a written partnership agreement or the intent to form a partnership, they have.

However, one day Sallie tells Juan that she has to move out of state to care for an elderly relative. Sallie leaves San Jose for Reno the next day. Juan no longer has a partner.

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Seven Years After the Homeowner’s Bill of Rights (HBOR) – A legal update:

Homeowners Bill of Rights san jose ca residentsAfter the subprime meltdown, sweeping legislation was enacted in an effort to protect Californian homeowners. HBOR cases have since trickled in over the last seven years with a new one regarding fees for borrowers who successfully halt a foreclosure sale with a temporary restraining order.

1.  A Prevailing Borrower Is Entitled to Attorney’s Fees After Obtaining a Temporary Restraining Order.

After the Monterossa case in 2015 which held that HBOR provided for award of attorney fees and costs when a preliminary injunction issues, it was logical to then wonder if the same would apply after the borrower obtains a TRO. A TRO is an early court order, one that is obtained on a one day ex-parte notice. It is often difficult for a loan servicer or lender to mobilize in time to oppose a temporary restraining order.

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California Supreme Court Rules Foreclosure Purchasers Need To Record Their Trustee’s Deed Before Starting Eviction

California Supreme Court Rules Foreclosure Purchasers Need To Record Their Trustees Deed Before StarOwners who take title via a foreclosure sale must perfect their title before beginning eviction proceedings. This may seem obvious, but the issue was unresolved in California until just a couple of weeks ago. 

What is perfection of title? In this case, it is the recording of the Trustee’s Deed. Just being the successful bidder at sale is not enough to run down the courthouse to file an unlawful detainer.

Why is this an issue? Because of the 15 day retroactive language in Civil Code Section 2924h(c) which states the trustee’s sale “shall be deemed perfected as of 8 a.m. on the actual date of the sale if the trustee’s deed is recorded within 15 calendar days after the sale…” 

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Co-Ownership of Real Property – What Happens if Not All Owners Sign the Listing Agreement?

co ownership of real property san jose real estate lawCalifornia real estate brokers are required to have a written contract with their clients to list a property for sale. A real estate commission is usually a percentage of the transaction, and with multi-million dollar San Francisco Bay area real estate values, the commission is often five or six figures.

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Co-ownership of Real Estate - Who Can Lease Or Raise Rents To Co-owned Property?

Who Can Lease Or Raise Rents To Co owned Property San Jose CAIn California, real estate often has multiple owners due to investment structure or inheritance of family property.

Co-owners of California real estate can hold title to the property as joint tenants or as tenant-in-common.  These two types of ownership have different legal ramifications and tax treatment.  However, under the law, each co-owner has equal rights to the property regardless of co-ownership percentage.

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Legislative Update: California Extends Homeowner’s Bill of Rights

California Extends Homeowners Bill of RightsAfter the subprime meltdown, California enacted the Homeowner’s Bill of rights (HBOR) to amend the non-judicial foreclosure processes. Among the changes were to bar “dual-tracking” and require a 30 day pre-foreclosure communication period. Those changes sunset in 2019. SB818 reinstates certain provisions of the HBOR and Governor Jerry Brown signed the bill a few weeks ago. Most of the bills signed will go into effect Jan. 1, 2019. [https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB818]
 

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Case Update: SDNY Finds No Franchisor Liability in re Domino’s Pizza

SDNY Finds No Franchisor Liability in re Dominos PizzaThe Southern District of New York Court ruled against the employees claim that both the Franchisor and the independent Franchisees were liable in a class action wage and hour claim In Re Domino’s Pizza.

Although the In Re Domino’s Pizza case does not control California courts decisions in wage and hour cases, the case is important because it is the first court to squarely address the issue of whether both franchisors and franchisees can be liable. Additionally, the New York District Court is generally quite influential, and the decision itself is thorough, clearly setting out it’s thought process and the law underpinning that thought process.

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Supreme Court Finds Arbitration Provisions Containing Class Action Waivers Valid

Supreme Court Finds Arbitration Provisions Containing Class Action Waivers ValidCalifornia employers should consider the routine use of arbitration agreements for employees, to avoid the risk of class action litigation. The United State Supreme Court in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) upheld class action waivers contained in arbitration agreements. Just a week ago the Ninth Circuit Court of Appeals overruled the Northern District Court of California, specifically finding that arbitration agreements containing class action waivers are valid. See, O’Connor v. Uber Technologies, Inc., Case No. 14-16078.

TAKEAWAY⇒California employers should update their procedures, and consider implementing arbitration agreements for all employees, containing a specific class action waiver, in the form and style used in the Epic Systems, and Uber Technologies, Inc. cases, in order to assist in limiting risk of class action lawsuits by employees such as wage and hour claims, and meal and rest break litigation.

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Creditors Fail to Void Payments Made to University for Judgment Debtor’s Child

creditors fail to void payments made to university for judgement debtorsParents' creditors failed to reach tuition payments made directly to their child's university in the recently published case of Lo v. Lee (Jun 27, 2018). This case is one the first decisions analyzing the The Uniform Voidable Transactions Act (Civ. Code, § 3439 et seq.) (formerly the Uniform Fraudulent Transfer Act).

In 2006, the Lo family made a loan to David Lee. Lee defaulted on the judgment and in 2013, Lo obtained a judgment in excess of $1.1M against Lee. Immediately after the amended judgment issued, Lee paid over $104k in tuition to Northeastern University on behalf of his son.

The Lo family sued under the Uniform Voidable Transfer Act alleging that the tuition payments for Lee’s son were made with the intent to “hinder, delay, or defraud” his creditors.

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Hasty decisions could make your debt situation worse

Money is often on the minds of most people. They may think about their next paycheck, how much they should spend on food or clothing, whether they have enough money for vacation, or how they will deal with their outstanding debts. Unfortunately, that last thought plagues many people, and you may be one of the numerous individuals who loses sleep each night wondering whether you will ever get out from under the outstanding balances you face.

It can prove immensely difficult to deal with debt, and you may think that chipping away little by little will help you keep your financial struggles under control. However, small steps may not always prove effective, especially when balances continue to increase due to interest rates and fees. The time may come for you to take more substantial action in hopes of achieving debt relief, but you may want to avoid making hasty decisions.

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Real estate fraud comes in many forms

You may think that, because you are not a mortgage banker involved in predatory lending, you cannot face accusations of mortgage fraud. However, mortgage fraud can occur at any level of a real estate transaction, from lenders, borrowers, appraisers and other professionals. Whatever area of the real estate industry is your livelihood, you should know that authorities take fraud seriously, and if you are facing these allegations, you may have a lot on the line.

Fraud is any kind of deception or misrepresentation, including omitting critical facts. A buyer may commit fraud by including false employment information on a loan application in order to improve the chances of getting a house. However, you may face accusations of more intricate schemes.

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3 misconceptions that may have you reconsidering Chapter 11

When your business started facing financial struggles, you may not have felt an immediate sense of panic. Most companies face losses and are able to get back on track by utilizing the right business strategies. However, now that your company's financial situation has gotten increasingly worse, you may worry that recovery is no longer an option and that you may have to close down.

Before you start the process of dissolving your business, you may wish to consider certain efforts that may help your company financially while also giving you the opportunity to keep the doors open. Filing for Chapter 11 bankruptcy helps many businesses deal with creditors, lenders and other factors relating to financial issues. However, you may think that this route will cause more harm than good.

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Advertising blunders that cost well-known companies millions

Regardless of the type of business you run here in California, you need to get your name out there in order to draw in customers. This makes marketing and advertising a vital part of nearly every business since word of mouth alone may not be enough to expand your customer base and make your business a success.

The problem is that if you fail to exercise caution, you could end up facing allegations of false advertising. In the alternative, you may suspect that a competitor's product claims are false. Understanding this issue could be as simple as learning from other major companies who ended up in trouble for false advertising.

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Chapter 11 Bankruptcy Reorganization Provides Debt Relief to Corporations

The United States Bankruptcy Code, which organizes types of bankruptcy into different chapters, offers debt relief to both individuals and corporate entities. If you are individual in need of debt relief, the "liquidation" of non-exempt property facilitate by chapter 7 bankruptcy may be the most sensible option. If it is your corporate entity, whether a corporation, partnership, or other entity, rather than yourself as an individual separate from your business, chapter 11 bankruptcy may be the more prudent choice - especially if it is your intention to remain in business following the bankruptcy process. In determining which chapter of bankruptcy is most appropriate and beneficial, whether as in individual or corporate entity, consult with an experienced San Jose bankruptcy attorney.

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Chapter 7 Bankruptcy Is an Option for Individuals Seeking Debt Relief

Debt Relief. Thinking about bankruptcy in such terms is the first step in no longer allowing any information gap-related anxiety from getting in the way of educating yourself about bankruptcy. Chapter 7, like other types of bankruptcy, is about relief. In bankruptcy's chapter 7 form, this relief is in the form of liquidation. Chapter 7 liquidation, as spelled out in the U.S. Bankruptcy Code, is "the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors." When focusing on the positive, on relief, the words "nonexempt property" should jump out.

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Chapter 13 Bankruptcy Allows Debtors to Retain Property

The number 13 in Chapter 13 bankruptcy may seem like a bad harbinger, but don't be scared off; Chapter 13 bankruptcy is there to help you keep your property while paying off debts over time. Importantly, Chapter 13 is distinct from other types of bankruptcy (all organized into "chapters"). For individuals seeking to liquidate all but non-exempt property and use the proceeds to pay creditors, Chapter 7 is a sensible option. For a business seeking to reorganize and remain in business by crafting a new payment plan and timeline, Chapter 11 may be prudent. The purpose of this article is to explain the basics of Chapter 13 bankruptcy. In choosing the chapter that is right for you, whether as an individual or business, consult with an experiencedSan Jose bankruptcy law attorney.

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Asserting Your Rights as a Creditor When a Debtor Files for Bankruptcy

Just as debtors have legal rights in the bankruptcy process, so do creditors. The specific rights depend on whether a given debt is secured or unsecured, and the priority of the debt relative to debts owed to other creditors. Working with an experienced creditors' rights bankruptcy attorney, you - the creditor - can ascertain your exact legal rights even as a debtor liquidates assets in Chapter 7 bankruptcy or a business reorganizes debt via Chapter 11 bankruptcy.

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Bankruptcy Offers Protection and the Opportunity to Restructure a Business

The term "bankruptcy" is loaded with meaning. When reading it, one might conjure images of a dream gone bust, a life gone wrong, and a hopeless future. Such a grim picture simply does not square with reality, however. The truth is that many individuals and businesses that choose to go through the bankruptcy process go on to experience great success in life and in business.

Take, for example, Donald Trump, the current President of the United States. Prior to being elected, Trump had filed for bankruptcy. Not only that, but Trump's companies filed for bankruptcy six times. This fact alone illustrates that bankruptcy is by no means inconsistent with prosperity. Importantly, however, one must be strategic and well-prepared in the bankruptcy process, working with an experienced San Jose bankruptcy and business law attorney every step of the way.

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