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Construction Loan Lender Liability Recently Limited by Florida Appeals Court Ruling

Posted in Construction & Real Estate

Sacha Boegem is an experienced litigator in the West Palm Beach Fox Rothschild office.  He focuses his practice on a wide range of commercial litigation matters, including business disputes and torts, banking/financial services industry litigation, trust and estate litigation, and supplier-distributor litigation and advising.  Below is Sacha’s first post on the South Florida Trial Practice blog.  We welcome Sacha to the blog and look forward to future posts. For anyone with questions or comments regarding this post, you can reach you can contact Sacha at 561-804-4437 or sboegem@foxrothschild.com.

In an opinion released April 22, 2015 Florida’s First District Court of Appeals upheld a trial court’s ruling that Section 713.3471(2) of Florida’s Construction Lien Law precluded common law remedies.  See Jax Utilities Mgmt., Inc. v. Hancock Bank, No. 1D14-664, 2015 WL 1809322, at *5 (Fla. 1st DCA Apr. 22, 2015).  This section sets forth certain notice requirements that construction loan lenders must comply with if they make “a final determination, prior to the distribution of all funds available under a construction loan, that the lender will cease further advances pursuant to the loan.”  Fla. Stat. § 713.3471(2)(a).  The statute also provides that a lender has no liability if it complies with the statute, and provides a mechanism for determining damages if a lender fails to comply.  Fla. Stat. § 713.3471(2)(a) and (b).

As the First District Court of Appeal explained on this issue of first impression for a Florida appellate court, “the plain language of section 713.3471(2) evinces a legislative intent to displace the common law remedies and the statute is so repugnant to common law remedies that the two cannot coexist.”  In Jax Utilities, even though the record did not indicate that the lender had served proper notice under the statute, plaintiff Jax elected not to bring a statutory claim and instead sued the lender for equitable lien and unjust enrichment.  The trial court found that the statute precluded Jax’s common law claims and entered summary judgment for the lender, which the Court of Appeals upheld.

This opinion has not yet been released for publication in the permanent law reports and thus is still subject to revision or withdrawal.  Assuming it stands, however, the opinion potentially provides construction loan lenders with a way to avoid or have dismissed common law claims against them for their alleged failure to provide the statutorily-mandated notice, and limits their liability to the measure of damages provided for in the statute in instances where they are found to have violated the statute.

Beware! – Approach Chapter 11 Releases With Caution

Posted in Bankruptcy, Chapter 11, Creditors' Rights, Releases

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Chapter 11 plans routinely contain provisions either releasing, or enjoining litigation against, various stakeholders involved in the case, particularly where the plan contemplates an infusion of cash by those stakeholders.  With few exceptions, the provisions of a confirmed chapter 11 plan are binding upon all creditors, whether or not they vote in favor of the plan.  Accordingly, it is important for creditors to review Chapter 11 plan releases carefully.

In the rent case of Iberiabank v. Geisen (In re FFS Data, Inc.), 776 F.3d 1299 (11th Cir. 2015)(http://media.ca11.uscourts.gov/opinions/pub/files/201411473.pdf) the bank creditor made a pre-petition loan for $10.6 million (“Loan”) which was guaranteed by FFS Data, Inc. (“Corporate Debtor”) and its president (“Debtor’s President”).  Shortly prior to the Corporate Debtor’s bankruptcy, the borrower defaulted on the Loan.  The bank creditor agreed to forbearance against the borrower and the Debtor’s President to provide them with an opportunity to sell the real property securing the Loan and if the property sold, the bank creditor would be permitted to proceed with an action against the guarantors, including the Debtor’s President, for any deficiency.  The bank creditor filed a claim in the Corporate Debtor’s bankruptcy estate for $10.6 million.

The Corporate Debtor proposed a chapter 11 plan and among other concessions, the Debtor’s President contributed $750,000 to the bankruptcy estate and agreed to release more than $1 million of his claims against the bankruptcy estate.  In return, the proposed plan contained a broad release provision for the Corporate Debtor and the Debtor’s President.  The bank creditor did not object to the proposed plan, attend confirmation or appeal the confirmation order.  Thereafter, the creditor bank sued the Debtor’s President on his guaranty and the Debtor’s President responded that the Plan released him from his personal guaranty of the Loan.  The creditor bank sought to reopen the bankruptcy case and moved for a determination that its claims against the Debtor’s President were not released.  The bankruptcy court denied the creditor bank’s motion, the district court affirmed, and the bank creditor appealed.

The U.S. Court of Appeals for the Eleventh Circuit (“Court”) held that the lender’s claims against a bankruptcy debtor’s president, who had personally guaranteed a loan, were released by the general release incorporated in the Corporate Debtor’s confirmed chapter 11 plan of reorganization.  The Court determined that the release was not limited to claims against the Debtor’s President solely in his capacity as an officer and/or director of the Corporate Debtor.  Further, the Court further declined to adopt the Fifth Circuit’s requirement that a release of third-party guarantor be “sufficiently specific” in order to have res judicata effect, but notwithstanding, found that the release was sufficiently specific, as it identified the Debtor’s President and stated that it was a general release of all claims.

The lesson of this case is that Chapter 11 creditors should review releases very carefully, ensure that plan releases are limited to the Debtor’s obligations only, and where releases are broadly worded to include third-party obligors, file objections for non-consensual releases or where they believe clarification is needed on the scope of the release.

Breast Feeding Break Rules – Do They Extend to the Charitable?

Posted in Labor & Employment

I have previously posted on the break time rules for nursing moms.

Now, there is an interesting new case filed out in California by a woman who claims she was discriminated against after serving as a surrogate.  Mary Gonzales worked for a large hotel corporation.  She served as a surrogate for an infertile company.  When she returned to work, the hotel initially accommodated her need for breaks to pump breast milk.  After a time period, she stopped pumping milk for the child she gave birth to and instead started donating the milk to a milk bank.  When Ms. Gonzales started to donate her milk, Ms. Gonzales claimed that her managers forced her to use her lunch break rather than permit her to take breaks as needed to pump.

Ms. Gonzales claimed that she was discriminated against because her employer held impermissible stereotypes about legitimate motherhood. Her Complaint also included claims regarding her physical need for an accommodation (i.e. “clogged ducts, severe breast pain and soreness, blisters, and loss of sleep in order to express milk at night”).

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Ms. Gonzales brought her lawsuit under both the Federal Pregnancy Discrimination Act (“PDA”) and California’s Fair Employment and Housing Act.

Notably, Ms. Gonzales did not bring her lawsuit under the Fair Labor Standards Act (“FLSA”) which was amended by the Patient Protection and Affordable Care Act (“Affordable Care Act” also known as “Obamacare”) to provide additional protection and break requirements for expressing breast milk during the work day.  Ms. Gonzales’ counsel most likely recognized that she would not be covered under the FLSA since she was not expressing breast milk for her own child.

Whether or not Ms. Gonzales would be covered by the PDA is another question.  The PDA which amended Title VII does protect a lactating woman.  For example, an “employee must have the same freedom to address such lactation-related needs that she and her co-workers would have to address other similarly limiting medical conditions.  If an employer allows employees to change their schedules or use sick leave for routine doctor appointments and to address non-incapacitating medical conditions then it must allow female employees to change their schedules or use sick leave for lactation-related needs under similar circumstances.”

It will be interesting to see how the Court rules with regards to the PDA allegations.  One might argue that desiring to donate to a breast milk bank is akin to someone donating sperm or eggs out of an altruistic desire.  Should employers be required to make accommodations for sex based altruistic biological donations or is that something an employer can require an employee to address on his or her own time?

I’ll be following this case, so check back for the outcome.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

File Timely Returns!

Posted in Bankruptcy, Dischargeability, Taxes

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In the recent case of Coyle v. United States (In re Coyle), 524 B.R. 863 (Bankr. S.D. Fla. 2015)(http://www.flsb.uscourts.gov) the U.S. Bankruptcy Court for the Southern District of Florida (“Bankruptcy Court”) held that a debtor’s untimely Form 1040 for 2006 that was filed in 2010, after the Internal Revenue Service’s (“IRS”) assessment of her tax liability for 2006, was not an honest and good faith effort to comply with the tax laws, was not a “return”  as used in 11 U.S.C. §523(a)(1)(B).  Id. at 870.  Therefore, the debtor’s tax liability for 2006 was not dischargeable.  Id.  The Bankruptcy Court found that the test outlined in Beard v. Commissioner of Internal Revenue, 82 T.C. 766 (1984), aff’d, 793 F. 2d 139 (6th Cir. 1986) (“Beard”) for determination of whether a document submitted to the IRS by a taxpayer qualifies as a return should be applied with the issue being “whether, under the Beard test, a Form 1040 filed after an IRS assessment can never represent an ‘honest and reasonable attempt to satisfy the requirements of the tax law.’”  Id. at 868.  Citing Moroney v. U.S. (In re Moroney), 352 F. 3d 902, 906 (4th Cir. 2006), the Bankruptcy Court noted that “[t]he very essence of our system of taxation lies in the self-reporting and self-assessment of one’s tax liabilities”.  Id. at 869.  Accordingly, once “the IRS has completed the deficiency procedures and assessed a tax debt, it is too late for the taxpayer to satisfy his duty to report the amount already assessed and the form cannot function as a determination of the debt by the taxpayer.”  Id.

Florida Whistleblower Statute – Whistling Dixie if Federal Law Preempts

Posted in Banking, Labor & Employment

The United States Court of Appeals for the Eleventh Circuit, which governs Florida, recently found that Florida’s Whistleblower Statute is preempted by the National Bank Act.

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The Plaintiff in this matter was a former vice-president of U.S. Bank (a federally chartered bank).  Plaintiff had alleged that the bank violated a particular federal statute governing banking practices.  And, after the Plaintiff objected to this practice, he claimed that he was fired in retaliation.  The Plaintiff brought his claim pursuant to the Florida Whistleblower Act. U.S. Bank defended by, in part, pointing to a federal statute applicable to federally chartered banks that allowed a bank to dismiss its officers “at pleasure.”

Specifically, the bank argued that the federal statute that allowed the dismissal of the officer preempted the Florida Whistleblower Act which would have limited the bank’s ability to terminate Plaintiff’s employment.  The Federal district court agreed as did a split Eleventh Circuit.

“Preemption” means that under the Supremacy Clause of the United States Constitution, a state law that conflicts with federal law is without effect.  Federal law preempts state law when there is a significant conflict between federal and state law.  The relevant federal statute here allowed a federally-chartered bank to “dismiss such officers or any of them at pleasure.”  See 12 U.S.C. § 24.  The Court concluded that the Florida Whistleblower Act, which would have placed limits on the ability of a federally-chartered bank to terminate one of its officers, conflicted with federal law because it would have limited the freedom of action allowed to federally-chartered banks by federal law.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP. Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Sharing Employees Doesn’t Mean You Can Share Employee I-9 or E-Verify Information

Posted in Labor & Employment

Diane Geller (Fox Rothschild Labor & Employment partner in our West Palm Beach office) recently provided advice on how to work within the government rules that do not allow staffing firms to share I-9 and E-Verify information with third parties, including staffing customers.  You can read the article here.

EEOC Title VII Discrimination Enforcement: Transitioning to Protect the Transgendered

Posted in Labor & Employment

April showers bring May flowers, but recently April has brought a flurry of Equal Employment Opportunity Commission (“EEOC”) discrimination enforcement directed to the protection of transgendered employees under Title VII.

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First, a bit of background:  transgender is generally defined as a person who identifies with a gender other than the one they were born with. While there is no federal law that provides explicit protection for transgendered individuals, the legal landscape has changed over the last couple of years such that transgendered employees are asserting sex based discrimination claims under Title VII.

Back in April 2012, the EEOC solidified and confirmed its intention to protect transgendered employees under Title VII of the Civil Rights Act. The EEOC explained by stating that the “commission hereby clarifies that claims of discrimination based on transgender status, also referred to as claims of discrimination based on gender identity, are cognizable under Title VII sex discrimination prohibition . . . .”  As a result, the EEOC, in 2013, began tracking sex discrimination charges based on gender identity/transgendered status.

Recently, here in Florida, the EEOC settled the first transgender discrimination lawsuit brought by the EEOC.  The EEOC had sued Lakeland Eye Clinic after Brandi Branson’s position had been eliminated. When Ms. Branson’s employment at the clinic began, she identified herself as male and dressed in traditional male clothing. After Ms. Branson began to wear makeup and traditional female clothing to work, she was confronted over her appearance and later most of the doctors at the clinic stopped referring eye patients to her.  The settlement obtained by the EEOC requires payment of $150,000 to Ms. Brnason.

Additionally, there has been other recent news around the country regarding transgender discrimination cases:

  • On March 31st, the United States Department of Justice filed a Title VII lawsuit naming Southeastern Oklahoma State University and the Regional University System of Oklahoma over the failure of the University to award tenure to a transgendered woman.
  • In an April 1st Order, the EEOC ordered the Department of the Army to pay damages to a transgender employee whom it barred from a restroom matching her new identity and referred to her by her previous gender.
  • On April 13th, a transgendered man sued a finance company after he was called into a meeting, shown the dress code policy and asked to sign a form that he would comply with the dress code for female employees.

The takeaway from this recent activity is that employers need to assume that a transgendered employee will be able to sue under Title VII if they are discriminated against or harassed based on their lack of compliance with traditional gender norms.

As Federal Judge Sean Cox ruled this week, in an opinion permitting a transgender discrimination case to move forward, federal law doesn’t specifically protect a transgender person, but there is legal precedent that protects people who are fired for failing to conform to a gender-based expectation.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Florida Construction Liens: Service of Notices under Florida’s Construction Lien Law

Posted in Construction & Real Estate

Service of notices permitted or required under the Construction Lien Law, or copies of notices when so permitted or required, unless otherwise specifically provided, must be made:

  1. by actual delivery to the person to be served; if a partnership, to one of the partners; if a corporation, to an officer, director, managing agent, or business agent; or, if a limited liability company, to a member or manager; or
  2. by common carrier delivery service or by registered, Global Express Guaranteed, or certified mail, with postage or shipping paid by the sender and with evidence of delivery, which may be in an electronic format. Fla. Stat. § 713.18

The terms “managing agent” or “business agent,” in Fla. Stat. § 713.18 require actual delivery to an officer, director, managing agent or business agent. Florida courts have held that these terms connote one who acts as a representative of the corporation and who officially speaks for it in its local business affairs as opposed to a mere employee. See Cont’l Home Parks, Inc. v. Golden Triangle Asphalt Paving Co., 291 So. 2d 49, 50 (Fla. 2nd DCA 1974). If service of notices by actual delivery or by mail cannot be accomplished, then posting on the site of the improvement is permitted. Fla. Stat. § 713.18.

The Plaintiff in an action to enforce a construction lien must allege service of notice in accordance with If a plaintiff fails to allege service of notice in accordance with Fla. Stat. § 713.18. The plaintiff is entitled to amend his or her complaint to allege valid service prior to dismissal of the complaint for failure to follow the statute. S & S Air Conditioning Co. v. Cantor, 313 So. 2d 422 (Fla. 3d DCA 1975).

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

Amendment Two (Medical Marijuana) – What Florida Employers Need to Know

Posted in Labor & Employment

Overview of the Amendment

Amendment Two, medical marijuana, is on the Florida ballot for the election being held on November 4, 2014. In order to pass, this ballot initiative, must receive 60% endorsement from those voting.

Obviously, if the medical marijuana ballot initiative passes, Florida employers will need to be prepared to respond appropriately. Accordingly, my next few posts will be covering the ins and outs of this ballot initiative and the impacts on employers in the Sunshine State.

Ballot Initiative

The official title reads as follows for the ballot initiative is:  “Use of Marijuana for Certain Medical Conditions”

The ballot summary, the text voters will read when they go to cast their ballot on Amendment Two, is as follows:  Allows the medical use of marijuana for individuals with debilitating diseases as determined by a licensed Florida physician.  Allows caregivers to assist patients’ medical use of marijuana.  The Department of Health shall register and regulate centers that produce and distribute marijuana for medical purposes and shall issue identification cards to patients and caregivers.  Applies only to Florida law.  Does not authorize violations of federal law or any non-medical use, possession or production of marijuana.

Ballot Details

Specifically, the measure would guarantee the following:

  • That medical use of marijuana by a qualifying patient or personal caregiver is not subject to criminal or civil liability or sanctions under state law.
  • That a licensed physician is not subject to criminal or civil liability or sanctions for issuing medical marijuana to a person diagnosed with a “debilitating medical condition” under state law.
  • That registered medical marijuana treatment centers are not subject to criminal or civil liability or sanctions under state law.

The measure defines a “debilitating medical condition” as cancer, multiple sclerosis, glaucoma, hepatitis C, HIV, AIDS, ALS, Crohn’s disease, Parkinson’s disease “or other conditions for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for a patient.”

The Florida Department of Health would be responsible for regulating medical marijuana. The department would issue and regulate patient identification cards and personal caregiver identification cards, develop procedures related to medical marijuana treatment centers and institute regulations defining reasonable amounts of marijuana for medical use.

Of interest to employers, the constitutional amendment contains six limitations on how the amendment’s language can be construed:

  • The amendment does not “affect laws relating to non-medical use, possession, production or sale of marijuana.”
  • The amendment does not authorize “the use of medical marijuana by anyone other than a qualifying patient.”
  • The amendment does not allow for the “operation of a motor vehicle, boat, or aircraft while under the influence of marijuana.”
  • The amendment does not require accommodations for medical marijuana use “in any place of education or employment, or of smoking medical marijuana in any public place.”
  • The amendment does not require “any health insurance provider or any government agency or authority to reimburse any person for expenses related to the medical use of marijuana.”
  • The amendment does not require “the violation of federal law or purports to give immunity under federal law.”

Check back, as I’ll be posting more on what Florida employers need to know if Amendment Two passes in November.
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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP. Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

Florida Appeals: Timing is Everything

Posted in Appellate

When commencing an appeal in Florida, timing is everything. For instance, the timely filing of a notice of appeal is a strict matter of subject matter jurisdiction. See Fla. R. App. P. 9.110(b); Miami-Dade Cnty. v. Peart, 843 So. 2d 363, 364 (Fla. 3d DCA 2003). If the notice of appeal is not filed within thirty days of the rendition of an order (either final or non-final), the appellate court is divested of subject matter jurisdiction by “an irremediable jurisdictional defect” and a litigant’s only right to appeal is gone. Peart, 843 So. 2d at 364. Similarly, if a motion for rehearing is not filed within fifteen days of the rendition of an opinion, the right to rehearing may be lost. See Hoenstine v. State Farm Fire & Cas. Co., 742 So. 2d 853, 854 (Fla. 5th DCA 1999) (denying as “unauthorized and untimely” a motion for rehearing that was one day late); see also Fla. R. App. P. 9.330(a). Thus, calculating the time requirements is essential to success on appeal.

As with trial court filings, Florida Rules of judicial Administration 2.514 & 2.516 provide the time computation requirements on appeal. Under rule 2.514, when time for the completion of an event—for example, the filing of a brief—is calculated in days, the calculation begins the day after the event that triggered the time period, and the last day of that period is counted in determining the end date. If the last day, however, is either a weekend or “legal holiday,” the end date is the next business day or non-legal holiday. Be sure to be careful regarding “legal holidays.” This term is defined under rule 2.514, and includes the mandatory holidays delineated by the Florida Legislature. Aside from those holidays, chief judges or the clerk’s office have discretion to add additional dates. As such, be sure to check your filing court’s holiday calendar when you believe a holiday may or may not give you extra time. If you believe a holiday may apply, and it does not, you may miss a crucial filing deadline.

Next, rule 2.514 provides that “”When a party may or must act within a specified time after service and service is made by mail or email, 5 days are added after the period that would otherwise expire under subdivision (a).” This five day additional period applies when service of a document was by mail or e-mail, and the party must respond in a period of time “after service.” If a rule or court order does not explicitly state that the person must act “after service,” the additional five days does not apply. See Miccosukee Tribe of Indians of Fla. v. Lewis, 122 So. 3d 504, 506 (Fla. 3d DCA 2013).For example, a party must file his notice of appeal within thirty days of rendition of the order appealed—not thirty days after service of the order. As such, the five day additional period does not apply when filing a notice of appeal and invoking the subject matter jurisdiction of the appellate court, even if the order is received by mail or email. Id. Furthermore, the additional five days applies when service was effectuated only by mail or email. If a party also effectuates service by another method—such as personal delivery or facsimile—along with mail or email, rule 2.516(2) requires the earlier end date to apply, i.e. the shorter period, which is that without the five days.

Accordingly, understanding how to compute time when calculating filing and service dates will help a litigator (on appeal and even at the trial court level) avoid missing crucial filing deadlines, perhaps give him or her a little more time than originally thought to complete a task, and may even provide a strategic advantage over an adversary who does not understand the time requirements of Florida’s Rules of Judicial Administration.