In an excellent decision for preference targets, the Eleventh Circuit recently held in the case of Kaye v. Blue Bell Creameries, Inc. (In re BFW Liquidation, LLC) that the new value defense, under Section 547(c)(4), does not require new value to remain unpaid.

In reaching this conclusion, the 11th Circuit has found common ground with the Fourth, Fifth, Eighth, and Ninth Circuits which also reject the idea that § 547(c)(4) requires new value to remain unpaid.

This opinion should result in a meaningful reduction of preference exposure for vendors and others that continue to extend credit and transact business with financially troubled debtors.  In fact, vendors may be incentivized to continue extending short-term credit without fear of having all the payments they receive for newly delivered goods clawed back.

Yet another benefit (for practitioners) – complicated “remains unpaid” preference analysis spreadsheets will soon be distant memory (at least in the 11th Circuit).  Thank you 11th Circuit!


  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.

 

 

 

According to the AIA, the 2017 document set simplifies the payment provisions found in the older documents.  In order to simplify the payment provisions, the AIA merely reorganized the items to be listed in a payment application such that those that are to be included in the payment applications are listed first, followed by a list of those items that are to be deducted. The AIA also added an express retainage provision that provides an area to exclude certain common items from retainage, such as general conditions or insurance.

The revised AIA A101 language requires the Owner to pay the contract amount “allocable to the work.” The references to completed percentages of the work and a schedule of values are de-emphasized in contrast to the 2007 documents.

The A102 continues to use percentage of the work and schedule of values for billing purposes. Contractors are instructed to deduct from payment applications any amount that the Contractor does not intend to pay to a subcontractor.


W Mason is an partner with the law firm Fox Rothschild LLP. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and business litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

I’ve written a post for Fox’s In the Weeds blog.  See my post which addresses a recent Court ruling that upends Florida’s medical marijuana license system.

 


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.

While Florida’s medical marijuana business appears to be booming by many metrics, there have been repeated delays and hiccups in the roll out of Florida’s program.  See my earlier post for details.

Now, almost two years after Florida’s program got underway, the director of Florida’s Office of Medical Marijuana Use, Christian Bax, has abruptly resigned.  As I’ve previously noted, Florida’s program has been plagued by an extremely limited number of medical marijuana licenses and litigation issues related to smoking, patient growing, and citrus industry and other “carve-out” licenses.

Mr. Bax came to his job with little experience in general and minimal medical marijuana experience as reported by the Tallahassee Democrat back in 2017.  The important job heading up Florida’s medical marijuana program was also not publicly advertised.

Courtney Coppola will serve as interim director of the Office of Medical Marijuana Use upon Bax’s resignation which is effective August 10, 2018.


Dori K. Stibolt is a West Palm Beach, Florida based partner with the law firm of Fox Rothschild LLP.  She focuses her practice on litigation and labor and employment issues.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Debtors generally file a bankruptcy petition seeking a fresh start, free from their personal debts.  Debtors have the option to agree to pay certain debts to retain a car or other property through reaffirmation agreements and lease assumption.  Reaffirmation or lease assumption may seem like a good option at the time – when for instance a debtor wants to keep his current car.   However, whether he should enter into such an agreement should be given careful consideration as to the debtor’s ability to make payments going forward.  Once a pre-petition debt is reaffirmed or a lease is assumed, a debtor is bound to make the payments and if the debtor defaults, the debt is not included in the debtor’s fresh start – the coveted discharge.

By example, the debtor in a recent South Florida bankruptcy case,  entered into a assumption agreement for his leased vehicle.  At some point thereafter, the debtor determined that he could not continue to make the lease payments and turned the car over to the lessor.  Not wishing to be personally liable for the remainder of the payments under the lease, the debtor argued that he should not have any personal liability under the lease because he did not reaffirm his obligations under the lease in accordance with subsection 524(c) and thus the personal liability will be discharged when he receives his discharge.  Alternatively, he argued that because he “rescinded assumption” prior to discharge, his personal liability under the lease should be discharged.

The bankruptcy court considered in its decision on the matter, whether the safeguards contained within 11 U.S.C. 524 must be satisfied when a debtor assumes a lease pursuant to subsection 365(p) in order for a debtor’s personal liability under the assumed lease to survive the debtor’s discharge.

The court held that in personam liability under an assumed lease is not dependent on adherence to the reaffirmation provisions of subsection 524(c) and that Toyota may proceed against the car and has the right, subject to the provisions of the lease and applicable non-bankruptcy law, to seek from the debtor any remaining amounts due under the lease.  However, the lessor could not proceed against the debtor until after the debtor received his discharge, or the lessor sought stay relief against the debtor.

Whether to assume a lease or reaffirm a debt in bankruptcy requires careful consideration!  Debtors should ask themselves – can I foresee having any trouble making the payments going forward?  If the answer is maybe – just say no to assumption and reaffirmation!


  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.

The new E204 Sustainable Projects Exhibit addresses the risks and responsibilities unique to projects involving sustainable design and construction. The AIA has taken many of the provisions
found in various AIA contract documents related to sustainable projects and has created a single exhibit. The procedures and terminology related to sustainable projects is identical the former provisions, but now those provisions are organized in a single exhibit. The E204 has been developed for use on projects in which the Sustainable Objective includes obtaining a Sustainability Certification, such as LEED® (Leadership in Energy and Environmental Design), or those in which the Sustainable Objective is based on incorporation of performance-based sustainable design or construction elements.

Contractors should make sure to review and understand the E204 as the Contractor is responsible for performing those Sustainable Measures assigned to the Contractor by the Sustainability Plan. While E204 does not require the Contractor to guarantee achievement of the Sustainable Objective, the Contractor will be responsible for failure to perform in accordance with the Contract Documents, including the Sustainability Plan.


W Mason is an partner with the law firm Fox Rothschild LLP. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and business litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

I’ve written another new post for Fox’s In the Weeds blog.  See my post which provided an update regarding Florida medical marijuana smoking litigation.


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.

IRA and 401(k) retirement accounts are generally exempt from claims of creditors pursuant to Section 222.21, Florida Statutes and Section 522 of the Bankruptcy Code.  For this reason, these types of retirement accounts can be a useful asset protection tool.  However, as I have mentioned in previous blog posts, there are exceptions to every rule!

Beware – prohibited transactions can cause the assets in your IRA or 401(k) account to LOSE their exempt status!  Terms like “set it and forget it,” and “we are programmed to receive,” come to mind when I think of these types of accounts.  Playing around with IRA or 401(k) funds, especially self-directed accounts, is risky business!

By example, in a S.D. Fla. Bankruptcy Case, the Court concluded that the funds in the Debtor’s Merrill Lynch IRA were not exempt because the Debtor engaged in prohibited transactions pursuant to the Internal Revenue Code and the funds in his two other IRA accounts were not exempt because they constituted funds from the Merrill Lynch IRA which had lost its exempt status.


  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.

In the US, it is almost universally established that BBB grades are opinion statements entitled to absolute privilege under the First Amendment of the Constitution. Some inroads on BBB liability have been made by attacking statements other than the rating. Specifically, in Caribbean Cruise Line, Inc. v. Better Business Bureau of Palm Beach County, Inc. d/b/a Better Business Bureau of Southeast Florida and the Caribbean, Case No. 4D13-3916, a trial court found that the BBB’s representations regarding systems and practices could be defamatory if the Plaintiff could prove the falsity of the statements.

On the other hand, in Canada, ratings seem to be the fair subject of a defamation suit. In Walsh Energy Inc. v. Better Business Bureau of Ottawa-Hull Incorporated, 2018 ONCA 383 (Hoy A.C.J.O., Huscroft and Paciocco JJ.A.), April 19, 2018, a Canadian appeals court found that the plain and ordinary meaning of a D- grade issued by the BBB to a business could be legqally defamatory. While the BBB ultimately prevailed on one of the defenses it asserted in the litigation, the Canadian court, unlike US courts, found that the plain and ordinary meaning of a D- rating was actionable.

While the Canadian model has no impact on the status of US consumer bureau defamation law, the distinction between Canadian law and US law is interesting especially for US plaintiffs that have been frustrated by the BBB’s opinion statement defense.


W Mason is an Partner with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W has previously written on several issues pertaining to litigation involving consumer bureau defamation. W focuses his practice on commercial litigation throughout Florida, with an emphasis on litigation involving consumer bureaus and various Better Business Bureau affiliates. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

The 2017 revisions to the A201 improves the Contractor’s ability to request and obtain financial information from the owner throughout the project. On most projects, Owner’s typically create a single purpose legal entity, usually an LLC, that owns the real property where construction takes place. The legal entity typically enters into the construction contract with the Contractor. The A201 recognizes that the entity entering in to the construction Contract on behalf of the Owner most likely has little or no assets. As such, it provides the Contractor with the ability to request reasonable evidence of the Owner’s ability to pay.

The 2017 revisions of Section 2.2 continues to allow the Contractor to request reasonable evidence (1) prior to commencement, (2) after failure to make a timely payment, (3) after a material change in the work that materially affected the contract sum, or (4) after identification of a reasonable concern over the Owner’s ability to pay. While the 2007 A201 did not impose an express timeline on the Owner or a consequence for the Owner’s failure to provide the reasonable evidence, the 2017 revision requires the Owner to provide the reasonable evidence within 14 days after the Contractor’s request. If the Owner fails to provide reasonable evidence within 14 days, the Contractor may stop work. If the request is made due to a change materially affecting the Contract sum, the Contractor may only stop the work related to the change. Significantly, the 2017 A201 expressly provides that the contract time and sum shall be increased by the amount of the Contractor’s reasonable costs and delay, plus interest. Given that Section 2.2 of the 2017 A201 has more “teeth” in favor of the Contractor, practitioners representing owners may want to consider revisions to Section 2.2 accordingly.


W Mason is an partner with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and commercial litigation throughout Florida. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.