Corporate Formalities: A Necessary Part of Business
February 18, 2020 —
Hannah Kreuser - Porter Law GroupMany benefits exist in choosing to create a corporation or limited liability company (“LLC”) as your business entity. However, what attracts most people to these entities is the protection they afford the business owner(s) against personal liability for the business’ obligations, debts, and other liabilities. Whatever reason prompts your decision to form a corporation or LLC, if you are like many smaller businesses, once the formation process is over its back to business as usual.
However, in order to keep the protection against personal liability associated with a corporation or LLC, the business must engage in, what are known as corporate formalities. Corporate formalities are formal actions that must be taken by a corporation or LLC in order to maintain the benefits associated with that business entity. These corporate formalities may be required under California law, by the bylaws, and/or by the operating agreement of your business.
When your business is formed as a corporation, many of the corporate formalities exist as part of California’s Corporations Code (“CCC”). These formalities include: (1) holding annual meetings (CCC § 600); (2) regularly electing directors (CCC § 301); (3) keeping meeting minutes (CCC § 1500); and (4) maintaining accurate corporate records (CCC § 1500). While these are only a few of the corporate formalities existing for corporations in the State of California, these formalities are often overlooked or put off by smaller businesses because they are either unknown to the business or are intended to be complied with later, as the actual running of the business takes priority.
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Hannah Kreuser, Porter Law GroupMs. Kreuser may be contacted at
hkreuser@porterlaw.com
Know When Your Claim “Accrues” or Risk Losing It
August 20, 2019 —
Christopher G. Hill - Construction Law MusingsI have discussed statutes of limitation on construction claims in various contexts from issues with a disconnect on state projects to questions of continuous breach here at Construction Law Musings. For those that are first time readers, the statute of limitations is the time during which a plaintiff can bring its claim, whether under the Virginia Consumer Protection Act (VCPA), for breach of contract, or for any other legal wrong that was done to him, her or it by another. The range of limitations runs the gamut of times, for instance it is 5 years for breach of a written contract and 6 months for enforcement of a mechanic’s lien. This time period is calculated from the “accrual” of the right of action. “Accrual” is, in general terms, when the plaintiff was originally harmed or should have known it was harmed (depending on the particular cause of action).
A recent case out of the Circuit Court of Norfolk, Virginia examined when a cause of action for a construction related claim under the VCPA accrued and thus whether the plaintiff’s claim was timely. In Hyde Park Free Will Baptist Church v. Skye-Brynn Enterprises Inc., the Court looked at the following basic facts (pay attention to the dates):
The Plaintiff, Hyde Park Baptist Church, hired the Defendant, Skye-Brynn Enterprises, Inc., to perform certain roof repairs that were “completed” in 2015. Shortly after the work was done, in 2015, the Plaintiff informed Defendant that the roof still leaked and that some leaks were worse than before. The Defendant unsuccessfully attempted repair at the time. 14 months later in 2017, the church had other contractors examine the roof and opine as to its faulty installation. Also in 2017, the church submitted roof samples to GAF, the roof membrane manufacturer and in February 2018 GAF responded stating that the leaks were not due to manufacturing defects. The church filed its complaint on October 1, 2018 breach of contract, breach of warranty of workmanship and fraud in violation of the VCPA. Defendant responded with a plea in bar, arguing that the statute of limitations barred the claim.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
New York Developer gets Reprieve in Leasehold Battle
March 19, 2014 —
Beverley BevenFlorez-CDJ STAFFAccording to The Real Deal, a “Manhattan Supreme Court judge granted an injunction in favor of Tribeca Mews developer Thurcon Properties, which is fighting to keep the leasehold on several adjacent parcels in connection with a certificate of occupancy.”
In 2013, Thurcon Properties was sued by the condo board, who claimed “the certificate of occupancy was pushed back at the building due to a number of construction defects.” The Real Deal further reported that the condo board “claimed the developers sold about 10 units to an outside buyer, and took some of the proceeds for themselves.”
Recently, a judge “ordered Feldman Heritage, owner of the ground lease at 125 Church and several adjacent sites, to appear in court on April 30,” because he wants the lease owner “to show why Thurcon should not be given the chance to cure the alleged lease default.”
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Condos Down in Denver Due to Construction Defect Litigation
November 06, 2013 —
CDJ STAFFA new report suggests that fears of construction defect litigation may be the cause of the slump in condo building in the Denver area. The Denver Business Journal reports that the Denver Regional Council of Governments commissioned the study by Economic & Planning Systems. The conclusion of the report was that the only type of condominium likely to be built is high-cost units with high profit margins. This is not good news for the DRCOG, which is seeking to create more affordable housing.
The report found that builders assess the likeliness of being sued “is nearly 100 percent,” that costs of addressing construction defects are 12% higher than at apartment complexes, and that preparing for litigation adds about $15,000 to the cost of a condo unit.
One possible remedy is to reform Colorado’s construction defect laws. Bob Muphy, the mayor of Lakewook and an advocate of construction defect litigation reform, said that he sees “this as a verification of what I’ve been talking about.”
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Indiana Court of Appeals Rules Against Contractor and Performance Bond Surety on Contractor's Differing Site Conditions Claim
April 03, 2013 —
Brian M. Falcon - Frost Brown Todd LLCEarlier this year, the Indiana Court of Appeals issued an important opinion that impacts contractors and sureties alike. The decision should give contractors in Indiana pause before ceasing work while a dispute with the owner is pending. Sureties also have been placed on notice that strict compliance with the terms of their bonds is amongst their best defenses to claims made by owners and bond claimants.
In Dave's Excavating, Inc. and Liberty Mutual Insurance Co. v. City of New Castle, Indiana, 959 N.E.2d 369 (Ind. Ct. App. 2012), the contractor (“Dave’s”) was the successful bidder on a public sanitary sewer and water main extension project. Dave's procured a performance bond from Liberty Mutual to guarantee its performance obligations to the owner (the "City"). After encountering what it deemed different subsurface conditions—and indeed after having been previously granted a change order to use excavated materials as backfill in light of the subsurface conditions on site—Dave’s placed the project engineer on notice of a differing site conditions claim. The total claim amounted to an 84% increase in the total contract price. With the claim, Dave's advised the project engineer it was ceasing further work until the project engineer provided direction.
While the project engineer reviewed the claim, it reminded Dave's of its contractual obligation to "carry on the work and adhere to the progress schedule during all disputes or disagreements with the OWNER." A dispute immediately occurred regarding whether Dave's was required to continue to work while the project engineer resolved the differing site condition claim. After Dave's maintained its position that it was not required to continue to work, the project engineer placed it on notice of default and copied the letter to Liberty Mutual.
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Brian M. FalconBrian M. Falcon can be contacted at http://www.frostbrowntodd.com/contact.html
Barratt Said to Suspend Staff as Contract Probe Continues
February 02, 2017 —
Jack Sidders - BloombergBarratt Developments Plc suspended at least three more employees within its London business as part of an ongoing probe into potential misconduct in the awarding of contracts, according to two people familiar with the decision.
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Jack Sidders, BloombergMr. Sidders may be followed on Twitter @jacksidders
White and Williams Earns Tier 1 Rankings from U.S. News "Best Law Firms" 2019
November 14, 2018 —
White and Williams LLPWhite and Williams has achieved national recognition from U.S. News and World Report as a "Best Law Firm" in the practice areas of Insurance Law, Media Law and Tax Law. Our Boston, New York and Philadelphia offices have also been recognized in their respective metropolitan regions in several practice areas. Firms included in the “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal experience.
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White and Williams LLP
IRMI Expert Commentary: Managing Insurance Coverage from Multiple Insurers
May 11, 2020 —
Gregory D. Podolak, Philip B. Wilusz & Ashley McWilliams - Saxe Doernberger & VitaWhat do you do when less is more? In many loss scenarios, triggering coverage under multiple policies can be a critical and effective strategy. However, doing so has the potential to complicate the insurance recovery proceedings immensely, and possibly even undermine those overall goals. The relation of "other insurance" clauses, allocation schemes, and the practical impacts of interacting with multiple insurers can all leave the insured with some difficult questions.
We present here several scenarios that illustrate how these concerns can arise and how they should be addressed to avoid running into what The Notorious B.I.G.—had he been a coverage lawyer—would have called "The More Coverage We Come Across, the More Problems We See."
The "Other Insurance" Issue
This first scenario is where a single-year loss implicates multiple lines of coverage. Consider the following: a general contractor (GC) faces a property damage liability claim from an owner. As a prudent insured, the GC notifies its customary first line of defense, its commercial general liability (CGL) insurer, to provide a defense. As knowledge of the claim evolves, it appears an element of pollution may be involved. The GC also places its pollution insurer on notice. Later, it's determined that the GC may have a professional liability exposure, so it tenders a claim to its professional liability insurer. Now assume that each insurer accepts coverage.
Reprinted courtesy of Saxe Doernberger & Vita attorneys
Gregory D. Podolak,
Philip B. Wilusz and
Ashley McWilliams
Mr. Podolak may be contacted at gdp@sdvlaw.com
Mr. Wilusz may be contacted at pbw@sdvlaw.com
Ms. McWilliams may be contacted at amw@sdvlaw.com
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