Happy New Year!  Also, its time for Florida employers to pay attention to the new 2017 Florida minimum wage.  As of January 1, 2017, Florida’s minimum wage will rise from the current rate of $8.05 per hour to $8.10 per hour.

Under Florida Statute § 448.110 4(a) and (b), the Florida Department of Economic Opportunity must calculate Florida’s minimum wage based upon the increase, if any, in the Federal Consumer Price Index for Urban Earners and Clerical Workers in the southern region.  Based upon this year’s calculation, Florida’s new minimum wage for 2017 is $8.10 per hour.

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Employers of tipped employees, who meet eligibility requirements for the tip credit under the Fair Labor Standards Act, may count tips actually received as wages under the Florida minimum wage.  However, the employer must pay tipped employees a direct wage.  The direct wage is calculated as equal to the minimum wage, $8.10, minus the tip credit for Florida, $3.02, or a direct hourly wage of $5.08.

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Dori K. Stibolt is a partner 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.

By many accounts, North Carolina has lost in excess of $400 million in business revenue (and a whole lot of basketball games) due to HB2.  HB2, for those who don’t know, is the controversial law that limited who could use which bathrooms and was the subject of fierce protests by many in the LGBTQ communities.  HB2 also limited state level discrimination claims (later rescinded by the legislature) and restricted the ability of local municipalities to raise the minimum wage.

Now, Charlotte City Council has repealed their non-discrimination ordinance in an effort to strike a deal with North Carolina’s state legislature to repeal HB2 and return things to the status quo.  And, the status quo may actually be better for transgender Tar Heels because they will no longer be “formally” banned from public bathrooms.  However, Charlotte’s repeal only goes into effect if the State of North Carolina repeals HB2 and that did not come to pass even after 9 hours of debate yesterday.

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The bathroom battles are not over in North Carolina or nationwide (especially with a new administration waiting in the wings).   But, in general, employers and private companies are better off permitting access to the bathroom that transgender employees and customers choose to use.

I’ve written several posts on bathroom access and employment litigation regarding bathroom access.  See my posts here (OSHA guidance on bathroom access), here (EEOC settlement of litigation which included bathroom access claims), here (11th Circuit Court of Appeals overturned summary judgment in favor of employer in discrimination claim that involved restroom access), here (addressing Houston’s bathroom access ordinance) and here (litigation involving Hobby Lobby that included restroom access claims).

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Dori K. Stibolt is a partner 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.

News today that New York Attorney General Eric Schneiderman has reached agreements with several large retail companies to limit on-call scheduling of employees.  On-call scheduling has been a way for large companies with fluctuating staffing needs to schedule employees depending on weather, holidays, shopper volume, etc.  However, many employee rights’ organizations have lobbied against what they see as an unfair practice since on-call scheduling may make cause employees difficulties in scheduling transportation, child care, school/classes, or other employment.

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While Florida does not have a reporting time pay law, several other states require employers to compensate employees a minimum number of hours in pay if they report to work.

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Dori K. Stibolt is a partner 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.

At the end of my October blog post, Dear Debtor, You Said I was Your First Priority, a VIP!, I suggested that you might want to join a “support group” called the “Official Committee of Unsecured Creditors” (fondly referred to as the OCC or GUCCs), if you felt angry or depressed about your unsecured claim status.  Admittedly, I may have led you astray.

The OCC is not really a “support group,” at least in the conventional sense of the word. So, if it is not a support group, what is it?

Going back to my October post – you have come to the realization that you were not really a VIP to the Debtor and are not entitled to priority payment. Shortly after you admit you are a general unsecured creditor, you receive a letter from the U.S. Trustee’s Office telling you that they are forming an OCC in the Debtor’s Chapter 11 bankruptcy case and asking you if you would like to serve on the committee.

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Your first reaction is to say – Yes, pick me!  Of course I want to “be all I can be”.

Not so fast! Aren’t there some questions you want answered first like…what is the OCC?…what can the OCC do?…what are members of the OCC required to do?…and what are the dangers and benefits of being an OCC member?

Here are the answers to those questions…

The OCC is a committee appointed by the U.S. Trustee’s Office from unsecured creditors that hold the 20 largest claims against the Debtor. It represents the interest of all unsecured creditors of the debtor before the bankruptcy court and in negotiations with the debtor and other parties. Generally, there are 3 to 7 members, depending on the size of the case.

The OCC members are fiduciaries to the other unsecured creditors and are expected to act in the best interest of all unsecured creditors. As a member of the OCC you cannot favor your interest over those of other unsecured creditors.

Among other things, the OCC has the power to do the following:

  • consult with the chapter 11 debtor on administration of the case.
  • investigate the debtor’s conduct and operation of the business.
  • participate in formulating a plan.
  • may, with the court’s approval, hire an attorney, accountant or other professionals to assist in the performance of the committee’s duties. These professionals are compensated by the debtor.
  • monitor management of the debtor’s business.

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The Pros:

  • having a seat at the table and an opportunity to have a voice in the bankruptcy process.
  • legal representation of the committee, paid for by the debtor, that you would ordinarily not receive on your own.
  • access to information regarding the bankruptcy process and the debtor’s financial information, some of which is not readily available to individual creditors.
  • power to participate in and affect the debtor’s plan negotiations and negotiations with other creditors.

Possible Cons:

  • Serving as a committee member can be require a significant (uncompensated) time commitment. Are you sure you have the free time to commit?
  • Is the case out of town? You may need to travel there once in a while.
  • Since your duty is to act in the best interests of all unsecured creditors, you might have to endorse actions that would be detrimental to you and your claim.  Are you prepared to do that?

So – now that you are in the know about the OCC are you ready to “be all you can be” in your debtor’s bankruptcy case?

Before you say “yes,” serving on a creditors’ committee is an important decision. You should carefully weigh pros and cons of serving based on the facts surrounding your claim and your relationship with the debtor. Seek out a trusted bankruptcy attorney in your neck of the woods for advice.


  Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP. Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation. You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

A trial court may not rely on a legal opinion offered by a party’s expert witness.  Florida’s Third District recently reversed dismissal of a mortgage foreclosure action based on this rule in Citibank, N.A., v. Martin and Jitka Olsak, 3rd DCA Case No. 3D15-1032 (Nov. 30, 2016).

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In Olsak, the borrowers called as a witness at trial a mortgage foreclosure fraud investigator and securitization officer, who was not a lawyer.  He testified that, in his opinion the plaintiff, which was a trust, was not allowed to acquire a promissory note that had been endorsed in blank and that the endorsement on the Olsaks’ note violated certain IRS provisions.  Relying on this opinion, the trial court entered judgment for the borrowers, finding that the plaintiff trust had not acquired an interest in the note or mortgage and, thus, did not have standing to foreclose.

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The appellate court reversed because “even witnesses qualified as experts, generally are precluded from providing testimony in the form of legal conclusions.” It follows that opinion testimony about legal conclusions are inadmissible, so it is reversible error for a trial court to rely on expert opinions to decide questions or law.  Finding that the borrowers’ expert witness offered only legal opinions, not facts, and that the trial court based its rulings on that testimony, reversal was required.  It probably didn’t help that the appellate court found the expert’s testimony to be “often of dubious relevance” and of “questionable probative value.”

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Olsak is a good reminder that, regardless of whether or not expert opinions may be relevant, those opinions are not admissible if they are simply legal conclusions.

 

In my May 26th post, I raised several questions that unsecured creditors in any Chapter 11 case should know the answers to and take action where appropriate.  One of those questions is “Am I entitled to priority payment?”  This is also important to answer in a Chapter 7 case.

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Your delinquent customer told you not to worry, you were first in line for payment, and that payment would be coming soon.  Next thing you know, your customer has filed a bankruptcy and you have not been paid.  As discussed in my June 24th post, you obtain a proof of claim form and are prepared to fill it out and file it before the deadline, but then you get to the last question, number 12 – “Is all or part of the claim entitled to priority under 11 U.S.C. § 507(a)?”

Your first impulse is to check “yes” – of course you are entitled to priority – the debtor told you that you were first place, a VIP for payment.

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NOT so fast…most creditors’ claims are “general” unsecured claims, and not entitled to priority treatment.  Take a breath and ask yourself, does my claim fit into any of the following categories:

  • domestic & child support obligation;
  • salary, wages, or benefits owed to an employee;
  • deposit of less than $2,850.00 towards the purchase, lease, or rental of property or services for personal, family, or household use;
  • claim for contribution to an employee benefit plan;
  • claim of grain farmer or fisherman relating to storage and processing facility;
  • certain unsecured taxes or penalties owed to the government;
  • claim for death or personal injury resulting from operation of a motor vehicle or vessel by an intoxicated debtor;
  • customs duty arising out of the importation of merchandise; or
  • claim based on commitment by the debtor to a Federal depository institutions regulatory agency to maintain the capital of an insured deposition institution.

If you fall into one of these categories, GREAT, but chances are that you DO NOT!  Resist the urge to check “other”!  Check the “No” box, sign the bottom of the form and send it in.

Feeling angry and/or depressed?  If your customer is in Chapter 11, you may want to consider joining a support group – perhaps the “Official Committee of Unsecured Creditors” – fondly referred to as the OCC or GUCCs.  I’ll be back to discuss that in a future blog post!


Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

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Are you ready for “Same Day ACH”?  Implementation of the first-phase of a new rule adopted by NACHA (National Automated Clearing House Association) that will provide for the faster movement of ACH payments, including same-day processing of most ACH payments, starts today.

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All ACH receiving financial institutions must begin accepting same-day ACH credits and make the funds from those transactions available to depositors on the same day.  It is anticipated that Same-Day ACH will be used for transactions like same-day payrolls, business-to-business payments, expedited bill payments, and account-to-account transfers.  Same-Day ACH will not be available for international transactions and transactions in excess of $25,000, which represent only about one percent of ACH transaction volume.  In order to take advantage of Same-Day ACH, instead of having settlement completed on the next business day, ACH Originators will have to pay a same-day fee for each Same-Day ACH transaction to allow the receiving financial institution to recoup its costs.35770438 - stamp with text available today inside, vector illustration

The first phase of the new rule, which is what is being implemented today, is limited to credit entries and non-monetary entries, with funds to be available at the end of the receiving financial institution’s processing day.  The second phase, which will go into effect on September 15, 2017, will add debit entries. The third and final phase, which requires receiving financial institutions to make funds available by 5:00 p.m. their local time for all ACH transactions, becomes effective March 16, 2018. These new rules apply to any account that is able to receive ACH entries.


David Greene is a commercial litigation partner in Fox Rothschild’s West Palm Beach office.  His practice focuses primarily on banking litigation, real estate litigation, title insurance litigation, and construction litigation. You can reach David at 561-804-4441 or dgreene@foxrothschild.com.

That look you get when you realize you just bought property at a foreclosure sale that is still subject to liens …

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Foreclosure plaintiffs should take note of the Fourth District Court of Appeal’s recent decision in James Ober v. Town of Lauderdale-By-The-Sea, 4th DCA Case No. 4D14-4597 (Fla. 4th DCA Aug. 24, 2016).  In that case, the Court held that the recording of a lis pendens can “discharge liens that exist or arise prior to the judgment of foreclosure,” but that liens that accrue between entry of the foreclosure judgment and the date of the foreclosure sale are not affected.

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In Ober, after a final judgment of foreclosure had been entered in a prior mortgage foreclosure action, but before the foreclosure sale had been conducted, a municipality recorded a series of liens on the subject real property.  After the property was sold at foreclosure sale, the purchaser sought to quiet title and the municipality sought to foreclose its liens.

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In analyzing the claims, the Fourth District Court of Appeal noted that the relevant statute, Fla. Stat. §48.23, does not provide an end date for a lis pendens.  After considering related statutory provisions and cases that discussed the continuing validity of a lis pendens in other contexts, the Court concluded that a lis pendens terminates “along with the action” or 30 days after the final judgment is entered (assuming an appeal is not timely filed).  Accordingly, the Court rejected the quiet title claim and allowed enforcement of the municipal liens that were recorded and based upon conduct that occurred after the date of the foreclosure judgment.  Foreclosure plaintiffs and those purchasing at foreclosure sales must remember to consider any liens that are recorded after foreclosure judgment has been entered.


David Greene is a commercial litigation partner in Fox Rothschild’s West Palm Beach office.  His practice focuses primarily on banking litigation, real estate litigation, title insurance litigation, and construction litigation. You can reach David at 561-804-4441 or dgreene@foxrothschild.com.

The United States Court of Appeals for the Ninth Circuit, in a recent unpublished opinion in Casault v. One West Bank, FSB, et al., U.S.C.A. 9th Cir. Case No. 14-55494 (Aug. 4, 2016), affirmed the dismissal of the borrowers’class action complaint against various banks, servicers and trustees.  The borrowers in Casault claimed that they relied upon offers to modify loans that were allegedly contained in advertisements, websites and mailings, as well as actions taken after they started the loan modification process, and attempted to assert claims for fraud and improper foreclosure under California law.

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The 9th Circuit found that the borrowers had failed to properly allege their claims.  First, the Court determined that it was not reasonable for the borrowers to rely on the loan modification offers, because those offers did not promise or guarantee a loan modification. Second, the Court found that the foreclosures were based upon the borrowers’ failure to pay, not due to reliance upon misrepresentations or omissions that were allegedly made after they started the loan modification process.  Finally, the appellate court outright rejected the borrowers’ argument that the loan servicer had taken over the loans because it had made advances while the loans were delinquent.

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Many recent appellate opinions throughout the country have made it more difficult for lenders to foreclose mortgages and have even awarded damages to borrowers.  The Casault opinion shows that there is, in fact, a limit to this trend.


David Greene is a commercial litigation partner in Fox Rothschild’s West Palm Beach office.  His practice focuses primarily on banking litigation, real estate litigation, title insurance litigation, and construction litigation. You can reach David at 561-804-4441 or dgreene@foxrothschild.com.

Another United States Circuit Court has ruled that, for purposes of diversity jurisdiction, a national bank is a citizen only of the state in which it has its main office.  In doing so, the Second Circuit joins a growing list of appellate courts that have rejected the argument that a national bank is also a citizen of the state in which it has its principal place of business.

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In OneWest Bank, N.A. v. Melina, U.S.C.A. 2nd Cir. Case No. 15-3063 (Jun. 29, 2016), a borrower sought dismissal of a foreclosure case for lack of subject matter jurisdiction, arguing that there was not diversity of citizenship because the lender’s principal place of business was in New York (another point with which the appellate court disagreed).  The trial court disagreed, finding that, as a national bank, the lender was a citizen only of California, where its main office was located.

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In order for a Federal Court to exercise diversity jurisdiction, there must be complete diversity at the time the case is filed.  Pursuant to 28 U.S.C. §1348, national banks are deemed to be citizens of the States in which they are located, which the U.S. Supreme Court has interpreted to be the state where the bank has its main office, as designated by its articles of association.  The Second Circuit, joining the Ninth, Eighth, Fifth and Seventh Circuits, held that a national bank is a citizen only of the state in which it has its main office and not also in the state in which it has its principal place of business.

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While the Eleventh Circuit has held that a national bank is a citizen of the state in which it is designated to have its main office, it has not yet addressed whether this is to the exclusion of another state in which that bank has its principal place of business.  This is an issue that will likely arise, as more national banks, whether through mergers or otherwise, end up with their main offices and  their principal places of business in different states.  When this issue arises, OneWest Bank v. Melina provides a well-reasoned argument for the proposition that a national bank is a citizen only of the state in which its main office is located.


David Greene is a commercial litigation partner in Fox Rothschild’s West Palm Beach office.  His practice focuses primarily on banking litigation, real estate litigation, title insurance litigation, and construction litigation. You can reach David at 561-804-4441 or dgreene@foxrothschild.com.