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On behalf of Kring & Chung, LLP posted in Newsletter on Friday, November 1, 2013.
A California Appellate Court recently ruled in Baker v. Halliburton Energy Services, Inc. that an employer could not be found vicariously liable for injuries its employee sustained while driving a company car on personal business. While this was a fact specific case, it nonetheless is a helpful case for employers.
Halliburton Energy Services, Inc. provided its employee, Troy Martinez, with a company car for the use of execution of his job duties. After completing his work for the day, Martinez decided to drive to Bakersfield, which was 140 miles away from his normal commute, to buy his wife a car. It should be noted that occasionally in the past Martinez did travel to Bakersfield for work. On his way back from the car dealership, Martinez struck a vehicle, injuring six passengers. The passengers sued Halliburton under a theory of vicarious liability for their injuries.
The Court found that even though Martinez was driving a company owned vehicle and travelled to a place where he had occasionally performed work, the trip itself was purely personal and was not "undertaken for the benefit of Halliburton." The Court reasoned that because the trip to Bakersfield had not been approved by Martinez's supervisor and no tasks were undertaken in Bakersfield for the benefit of Halliburton, that it was not foreseeable that Halliburton would have assumed the risk of a traffic accident, or that such a risk was incidental to Halliburton's enterprise.
The Court did distinguish that "minimal deviations," such as stopping at a yogurt shop on the way home from work, would not extinguish employer liability. The take away from this case for employers is Halliburton keeps intact the "coming and going" rule, which is an exception to the doctrine of vicarious liability.
The "coming and going" rule proscribes that an employer is not liable for providing workers' compensation benefits for injuries sustained by employees going to and coming from work. There are some notable exceptions to this rule that all employers, whether insured or self-insured, should know.
If the injury was sustained while traveling for some incidental benefit to the employer, "not common to commute trips by ordinary members of the work force," then the employer may be responsible. For many types of jobs, such as construction or sales, employment is not fixed at any particular location or time. Typically in those cases, the "coming and going" rule will not apply and the employer would be liable for the employee's injury.
The "commercial traveler" exception. The employer is liable for injuries sustained during business trips, including any mode of transportation such as a driving to a client meeting or flying to business meetings.
The "special mission" exception. The employer is liable for injuries sustained while the employee is engaged in an extraordinary task within the course of employment, and undertaken at the request or invitation of the employer. For example, a secretary gets a call at 5 a.m. from his boss, asking him to drive out of town to drop off a document to a client.
The recent California case of American Safety Indemnity Co. v. Admiral Insurance Co. (2013) 220 Cal. App. 4th 1, confirms that policy language must be unambiguous when an insurer seeks to limit its obligations under an insurance policy. In this matter, the Court of Appeal found that while the language at issue clearly imposed a $250,000 Self-Insured Retention ("SIR") on damages paid to third parties, this SIR was inapplicable to the insurer's duty to defend claims made.
The case began with a landslide or two. It ended with an insurer or two, disputing who should pay for the years of intervening litigation. The facts reach back over a decade, when a grader contracted with developer D. R. Horton, Inc. [Los Angeles Holding Company] ("Holding") for housing construction in Santa Clarita.
Grading began in 2002. However, back cut slope failures resulted in landslides and tension cracks that visibly extended to within 50 feet of existing upslope homes. The slides caused physical damage to the property of several of these adjacent homeowners, who sued Holding, developer related entities D. R. Horton, Inc. and D. R. Horton, Inc. - Los Angeles ("Horton,") the grader and others in 2003.
The underlying subsidence lawsuit settled in 2007 for a total of nearly $5 million. The grader had been insured by American Safety Indemnity Co. ("ASIC.") Holding and Horton had been insured by Admiral Insurance Co. ("Admiral.") Holding was also an additional insured under the grader's ASIC policy.
During the underlying litigation, Holding tendered its defense to ASIC. This was declined. A bad faith lawsuit followed. In settlement of the bad faith action, ASIC agreed to defend Holding. ASIC also paid the defense fees of Horton, unaware of Horton's Admiral coverage.
The instant case arises from ASIC's declaratory relief action for indemnity and subrogation against Admiral. ASIC sought to recover its payment of Horton's defense costs. Admiral's principal defense was that because Horton had not paid the SIR on the Admiral policy, Admiral's duty to defend was not triggered.
The trial court granted ASIC's motion for summary adjudication, and eventually awarded ASIC $1.9 million plus interest. In reviewing the trial court's ruling, the Court of Appeal confirmed, and found that the SIR clause in the Admiral policy failed to expressly and unambiguously make payment of the SIR a condition precedent to Admiral's duty to defend. Instead, the language of the policy gave the Horton a reasonable expectation of defense upon tender. In subrogation, ASIC steps into the shoes of Horton's rights against Admiral. Principles of equitable subrogation required Admiral to reimburse ASIC for Horton's defense fees.
Contract provisions between parties, and insurance policy language, evolve and are often updated year-to-year. Contractual interpretation also evolves, is redefined, and may be reconfirmed or modified. This particular case illustrates that these can be complicated, precise issues. An insurance policy written years ago may simply not mean today what the insured or insurer think that it does.
Congratulations to Lance A. Adair of our Irvine office, who has been selected as a '2013 Top Rated Lawyer' in the practice areas of Land Use and Zoning, as well as Real Estate on behalf of American Lawyer Media, and Martindale-Hubbell. Mr. Adair can be contacted at (949) 261-7700 or ladair@kringandchung.com .
Kring & Chung is pleased to announce that David T. Kim has joined its Irvine, CA office as an Of Counsel attorney. Kim's practice focuses on business transactions and real estate. Kim is proficient in the drafting, review, and negotiations of many different types of contracts, including, among others: commercial leases, distribution agreements, manufacturer agreements, trademark license agreements, and sales representative agreements. Mr. Kim can be contacted at (949) 261-7700 or david.kim@kringandchung.com.
Thank you to all who participated and volunteered at the Kring & Chung Newport Beach Triathlon which took place October 20, 2013. Congratulations to Karl Schultz and Jocelyn Bonney who came in first place in the men and women divisions. Please see the News & Events section of our website to view photos from the event.
In collaborative efforts with Families Forward, Kring & Chung will be preparing 20 food baskets for families to celebrate Thanksgiving. Families Forward greatly relies on the generous support from our local community to fill the needs of the families that they serve during this busy time of year. Last year they provided 700 families with food needed to celebrate Thanksgiving.
If you are interested in participating and donating to the food drive, please contact Valerie Farrell at (949)261-7700.
On behalf of Kring & Chung, LLP posted in Newsletter on Tuesday, October 1, 2013.
California's Right to Repair Act, set forth at California Civil Code Sections 895-945.5, and commonly referred to as "SB 800," allows homeowners to recover the cost to repair certain specified construction defects even though no actual damages have yet occurred because of the defects. SB 800 was enacted in 2002 in response to the California Supreme Court's decision is Aas v. Superior Court, (2000) 24 Cal.4th 627. In Aas, the Court held that construction defects in residential properties which have not cause actual damage are not actionable in tort. SB 800 overturned this decision by providing a statutory mechanism for recovery for construction defects even though they have not yet caused any actual damage.
The 2013 Kring & Chung Newport Beach Triathlon is Approaching!
The Kring & Chung Newport Beach Triathlon will take place on October 20, 2013 in the Back Bay of Newport Beach, California. The course includes a 1/2 mile swim, 15 mile cycle, and a three mile run.
Visit www.newportbeachtriathlon.com for more information and to register.
On behalf of Kring & Chung, LLP posted in Newsletter on Sunday, September 1, 2013.
As technology continues to develop, cars are increasingly more computerized each year. One of the main developments over the past decade has been the installation of "Event Data Recorders" (EDR) in modern motor vehicles. EDRs are commonly known as the car's "black box." They are actually small silver boxes attached to the floor of the car that house a variety of sensors from throughout the vehicle. (Doug Newcomb, "Car Black Box Recorders Capture Crash Data", December 18, 2012.) In fact, the National Highway Traffic Safety Administration is currently proposing that all new consumer vehicles be equipped with them by September, 2014. 49 CFR Part 571. Furthermore, the NHTSA estimates that as of 2011, 91.6% of light motor vehicles are already equipped with these EDR devices.
EDRs are extremely useful because at any moment they record the car speed, engine speed, steering angle, throttle position, braking status, force of impact, seatbelt status, and airbag deployment. When there is an automobile accident, they can be much more reliable for determining the cause of the accident over the recollection of the drivers, witnesses, or police reports. As such, they have increasingly become the subject of investigation by attorneys, insurance companies, and accident reconstruction experts during lawsuits.
Nevada is one of thirteen states that have passed laws governing the disclosures of EDR data. NRS 484.485 states that if a car is equipped with a black box, it must be disclosed in the owner's manual. The owner of the vehicle retains sole control of the EDR and the statute requires that the owner give consent to any party that wants to download the data of the box. Id. However, subsection 2 states that the data can be retrieved by a non-owner pursuant to a court order. Id. As such, if the owner is the subject of a lawsuit relating to an accident involving the vehicle, the attorney may subpoena the box and have an accident reconstruction expert download the data. The data may only be disclosed to the expert solely for the purpose of litigation and the box must then be returned to the owner. Id.
For a lawsuit involving an automobile accident, getting access to the black box data should be an early priority of opposing counsel. The first step is to determine whether the car even has a black box. This can easily be done by checking the owner's manual of the vehicle, but the information should nevertheless be requested by the attorney in the first round of written discovery. Once that is determined, the attorney should issue a subpoena for the black box in order to download its data. Typically, both parties may have accident reconstruction experts and so after the subpoena is issued, a time and place to inspect the box can be scheduled for the convenience of all parties. Once the data is downloaded the box should be returned to the owner. This information could prove to be crucial to the defense of any claims made as a result of a motor vehicle accident.
Earlier this year the United States District Court, Southern District of California, issued a decision that will undoubtedly influence the issue of self-insured retentions ("SIR's") and insurance coverage in our state. In Phillips v. Noetic Specialty Insurance Co. (2013) 919 F.Supp.2d 1089, it was held that under certain circumstances the failure to pay a SIR, which is the amount paid before there is coverage, did not prevent the insurance from being triggered.
In August 2006, a representative of Electric Mobility Corporation ("EMC") visited Mr. Phillips' home and sold him a motor scooter. In 2008, while he was riding the motorized scooter, it toppled over. Among other injuries, Mr. Phillips' hip was crushed in the accident.
Noetic Specialty Insurance Co. ("Noetic") insured EMC. When Mr. Phillips filed a lawsuit, Noetic assumed control of EMC's defense. However, in 2011 EMC became insolvent. Defense counsel's subsequent motion to withdraw as EMC's counsel was granted. Thereafter, EMC's Answer was struck and default was entered. On June 16, 2011, the Court entered judgment against EMC and in favor of Mr. Phillips for $1,052,982.10.
Then Mr. Phillips died. The judgment against EMC became an asset of his estate, with his wife as executor and sole trustee of their joint revocable trust. Mrs. Phillips submitted the judgment to Noetic for payment, less EMC's unpaid $500,000 SIR. Noetic refused to pay the judgment. The widow sued Noetic.
interpreting California insurance and contract law, the federal Court denied Noetic's Motion to Dismiss. The Court found that the insurance contract between EMC and Noetic did not include terms sufficiently specifying payment of the SIR as a condition precedent to coverage. The Court further found language stating that EMC's insolvency would not relieve Noetic of its policy obligations.
We must anticipate that California state courts will be mindful of this federal interpretation of California laws as issues of coverage and SIR's continue to be litigated. One lesson to be learned from this case is that small variations insurance contract language can have million dollar differences in litigation results. Prompt engagement of experienced, knowledgeable legal counsel, and safe use of motor scooters, are two good ways to proceed.
Kring & Chung is pleased to announce that Richard W. Park has joined its Irvine, CA office as an Associate attorney. Park's practice focuses on business litigation. Prior to joining Kring & Chung, Park worked as a judicial law clerk for the Honorable James R. Lambden of the California Court of Appeal, 1st District.
On behalf of Kring & Chung, LLP posted in Newsletter on Monday, July 1, 2013.
Not every divorce has to be a knock-down, drag-out fight. Contrary to popular belief, divorce can be a relatively amicable and straightforward process, depending on how the parties choose to handle it. Parties who find themselves in a long, contentious divorce battle often realize in the end that they expended more time, money and energy than necessary. For parties who desire a faster, less expensive and more amicable way of divorcing, mediation may be the option for you.
Most couples do not realize the cost of litigating a divorce. The cost of a highly contentious divorce can be very expensive and financially burdensome on both parties.
Mediation is more cost effective and affordable because both parties are retaining one neutral mediator to try and resolve all issues for them.
The litigation process in court can be dragged out for several months or even years. Mediation allows the parties to resolve all issues within days or weeks, depending on how quickly the parties can come to a resolution.
Divorces litigated in court are public proceedings, whereas in mediation, all meetings and settlement negotiations take place in a private location.
When a divorce is litigated in court, both parties voluntarily hand over all control to the judge, who they entrust to make important life decisions on their behalf. Although judges are trained and competent in their profession, they are strangers and know little about the family dynamic other than what the parties or attorneys are able to tell them while in court. The parties are essentially leaving their fate in the hands of a stranger.
In mediation, the parties retain control over their own lives and they make decisions based on what they know is best for themselves and their children.
It is never too late to turn to mediation. Whether you are contemplating divorce, or are in the middle of a divorce, mediation can be utilized to work through any issues that are preventing the divorce from being finalized.
As businesses change, there may come a time when it is necessary to change the name of the business. The addition of new partners, the dissolution of partnerships, or the need to update the company image may call for a change in the name of the business. The following is a checklist of things to keep in mind when changing your organization's name. This list is not meant to be exhaustive, but should assist you in getting organized and developing a strategy to have a smooth transition to a new business name.
State Registrations - If you are a registered business entity with the Secretary of State, you will need to file the notification of the name change with the Secretary of State in order to effectuate the change. If you are a corporation or limited liability company, this may mean a resolution by your shareholders, directors, or members approving the name change. It is important to obtain a certified copy of the name change of your organization because some entities (i.e. banks) may request it as a means to verify the name change.
Fictitious Business Name Statement - Consider filing a Fictitious Business Name Statement with your county recorder stating that your new business name is also doing business under your former business name. This may be helpful when you receive payment payable to your former business name.
Tax Entities - Notify the Internal Revenue Service and your state's taxing agency regarding the name change of your business.
Licensing Agencies - Some businesses are required to maintain a license in order to conduct business. As an example, some businesses that require licenses are healthcare providers, contractors, and realtors. Notify the licensing agency of the new business name.
Other Government Agencies - Depending on your business, you may also need to notify the Board of Equalization, the Employment Development Department, or the Department of Industrial Relations.
Insurance - Notify any insurers you have regarding the change in your business name. Depending on the type of business, you may have insurance policies for workers compensation, disability, unemployment, general liability, and other related policies. Contact your carriers directly to inform them of your business's name change.
Finances - Notify your banking institution. You may also need to order new company checks and have new checking cards issued with the new name. If you have one, notify your merchant card provider.
Business Property - If you rent property, notify the landlord of the name change. If you own property, notify the Tax Assessor. Notify your utility and communications providers. As an example, you will want your new business name to appear on any caller identification services.
Business Vendors - Notify your vendors of the new company name. To assist with a smooth transition, it is important to notify any shipping companies that you regularly use and the post office so you will continue to get shipments and mail under both the former and new business name.
Business Materials - Your business may have various printed materials including business cards, letterhead, handouts or brochures, and a return address stamp. You can choose to use your existing materials and update as you need to replenish new materials, or update these materials all at once with a purge of the former materials. In addition, you may have various internal documents such as your employee handbook, inter-office forms, training materials, and payroll.
Business Contacts - Update your email software to display your new email address. To assist your contacts, provide a notification of the new email and company name in your email signature line. Update all of your subscriptions, including professional organizations, with the new business name.
Website - You may need to obtain a new domain name. Be sure to maintain the former domain name and have all website traffic from the old site go directly to the new site. Update the website to reflect your new name.
Signs - Be sure your new business name is reflected in any exterior building signs and building directories.
Changing a business name can be overwhelming. Have patience and know that a name change is not an overnight process. In order to make the transition smooth and to minimize the impact on your business, start with a strategy and a checklist. Set a timeline as to when the changes will roll out. Set a goal as to when the name change should be substantially complete. With a little planning, the change of the name of your business will just be another day at the office.
Congratulations to Sacramento Partner, Jill L. Barr, for being selected again for inclusion in the 2013 Northern California Super Lawyers list. Super Lawyers is a rating service of outstanding lawyers from various practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations.
Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis with no more than 5% of the attorneys in California being selected as Super Lawyers.
Congratulations to Kring & Chung Partners, Laura C. Hess and Shane Singh and Associate, Allyson K. Thompson, for being selected for the 2013 California Rising Stars list. Super Lawyers launched Rising Stars in 1998 to recognize the top up-and-coming attorneys in the state - those who are 40 years old or younger, or who have been practicing for 10 years or less. Today, Rising Stars honors attorneys in California and 35 other states across the country.
There are three components to the Rising Stars selection process: the general survey, the research process and the final selection process. Lawyers are instructed to nominate fellow lawyers they have personally observed in action. The attorney-led research team then reviews the credentials of the potential candidates. The lawyers are ranked by point totals and those with the highest point totals are named to the Rising Stars list. No more than 2.5 % of the lawyers in each state are named to the list.
On behalf of Kring & Chung, LLP posted in Newsletter on Saturday, June 1, 2013.
It is important to note, however, that an interpleader does not terminate the insurance company's duty to defend. In Benchmark v. Sparks, 127 Nev. Adv. Op. 33 (2011), the Court allowed the interpleader but did not release the insurer from its duty to defend. In reaching this conclusion, the Court determined that there was an ambiguity in the policy language, and the ambiguity was interpreted in favor of the insured. Essentially, the Benchmark case stands for the proposition that an insurance company cannot just relinquish its rights to the policy and run; it still has a duty to defend its insured.
It is four o'clock on Friday afternoon and you have been working on your bid to the general contractor all day. The bid is due by five o'clock and you are finally ready to bring the numbers over from your workup sheet to the formal bidding form provided by the general contractor in his instructions to bidders. Then it happens......you fail to transfer three items from your work sheet to the formal bid. The bid is sent in and opened later. That is when you discover you are 40% lower than the next lowest bidder and you start to question your bid. You return to the office and find the three items missing from the bid. After you consider that your life or at least your job is over, what do you do?
First, you should ask someone else to recheck your bid form. After they confirm your error, review the entire bid package including any bid bond your firm posted. Your focus should be on any provisions that relate to withdrawing your bid or errors in the bid. Your next focus should be how your bid was used by the general in preparing his bid. Then you should call your construction attorney immediately. Under some circumstances you may only have five business days to notify the general or public entity of the mistake. This article will analyze what rights a subcontractor has when it has made a simple clerical error in its bid.
Most attorneys would begin their analysis with a review of Chapter 5 of the Public Contracts Code. Before you jump to the section on relief from bid mistake, pay careful attention to the definitions found at Section 5100. As it turns out, both the term "public entity" and "bid" are defined in that section of the Code. Public entity means: "the state, Regents of the University of California, a county city, and county, city, district, public authority, public agency, and any other political subdivision or public corporation in the state." This is indeed a very broad definition that appears to include almost all commonly defined public entities. Section 5100(b) states; "'Bid' means any proposal submitted to a public entity in competitive bidding for the construction, alteration, repair, or improvement of any structure, building, road or other improvement of any kind." The key phrase for a subcontractor is submitted to a public entity. In Diede Construction, Inc. v. Monterey Mechanical Co. (2004) 125 Cal.App.4th 380, the Court held that the Relief of Bidders section of the Public Contracts Code did not apply to a subcontractor who had submitted their bid to the general contractor and not the public entity.
In Diede, the general contractor had been awarded a $12,000,000 contract from the City of Livermore to renovate the city hall. However, after the bids were opened, but before Diede the general contractor signed an agreement with the city, it was notified in writing that Monterey Mechanical, it's HVAC subcontractor, had left out roughly $300,000 out of its $1,775,000 bid to Diede. Monterey refused to perform without relief from the error and Diede had to get a replacement HVAC subcontractor and perform under the awarded contract, or forfeit its 10% bid bond to the City. Diede elected to get a replacement and sue Monterey for the difference of about $467,464.
The Court held that Diede could not seek relief from the City for the subcontractor's error in bidding because the subcontractor submitted the bid to Diede, not the City. The Court noted how unfair it would be to the general contractor to forfeit its bid bond and not be allowed to rebid the job for the error of the subcontractor. It also noted that Diede might have problems proving that the $300,000 error in a $12,000,00 total contract was material as required by section 5103(c). This again would be unfair to the general contractor. Finally, the Court noted that if the statute applied to subcontractors, it would also apply to second or successive level subcontractors and material men. Such a construction would impede the timely and efficient prosecution of public construction.
The Diede case also has lessons to be learned regarding what relief the general contractor can get from a subcontractor in a bidding error case under the doctrine of promissory estoppel. In the next article, we will analyze the doctrine of promissory estoppel and how it could be applied to the Diede matter or other cases of bidding mistakes.
Registration is now open for the Kring & Chung Newport Beach Triathlon, which will take place on October 20, 2013 in the Back Bay of Newport Beach, California. The course includes a 1/2 mile swim, 15 mile cycle, and a three mile run.
Kring & Chung is pleased to announce that Justin R. Taruc has joined its Las Vegas, NV office as an Associate attorney. Mr. Taruc practices in the areas of civil litigation, personal injury, wrongful death, business law, family law, and immigration law. Prior to joining Kring & Chung, Mr. Taruc worked as a high level trust officer for a large national financial institution.
On behalf of Kring & Chung, LLP posted in Newsletter on Wednesday, May 1, 2013.
Divorce is a time of turmoil for the entire family. Typically, parents have had time to prepare for and come to terms with the fact that the family unit will be dissolved. However, this news is always startling to children, no matter how inevitable divorce may have seemed. Children often perceive their parents as "superheroes," so they innocently expect that their parents will work through and solve any issue. When this is not the case, children are often left feeling confused and scared. Divorce ultimately shatters the basic sense of safety and stability that a child finds with Mom and Dad in a united family unit.
Tell them they are not responsible for the divorce!
Tell them both parents love them although one parent will no longer live in the home.
Be prepared with an age appropriate answer when your child asks, "Why are you getting divorced?"
Explain to them in as much detail as possible all the changes that might take place due to the divorce. Give your child as much time as possible to assimilate to the idea of their entire world changing. If possible, do not make huge changes overnight!
Tell your child to come to you with any questions, concerns or fears they may have. Be a source of security for your child during this time.
Never allow your emotions to get in the way of doing and saying what is in your child's best interest.
Never speak unkindly of, or degrade the other parent in front of the child. Allow your child to maintain a high level of respect for the other parent so they never feel as though they are stuck in the middle.
Do not allow your issues with your ex-spouse to interfere with your relationship with your children. Your child deserves you to be the best parent possible, regardless of what issues you are going through with the other parent.
Parents owe it to their children to minimize the long lasting effects that divorce can have on a child. Divorcing parents need to commit to establishing a solid co-parenting relationship with one another, where every decision is centered on what is in the best interest of the child. Although the parents are not together as a couple, a child will ultimately benefit from seeing their parents remain unified in raising and making decisions for their life. This will allow the child to regain stability and security in knowing that their parents remain committed to their parental roles, even if the family unit has dissolved.
On behalf of Kring & Chung, LLP posted in Newsletter on Monday, April 1, 2013.
FAMILY LAW: "Can I Move Away With My Children?"
The old saying "let the buyer beware" is of little relevance to California real estate transactions. If you are contemplating the sale of your home in California and have had construction defects or a prior lawsuit involving defects in your home, you should be aware of the basic disclosure requirements under California law.
Sellers of real property in California have a general duty to disclose all material facts that might adversely affect the value of the property, and which the seller knows are not known by the buyer or within the buyer's diligent attention and observation. A failure to fulfill that duty is a form of fraud.
With regard to sales involving from one to four residential units, California Civil Code Section 1102.6 goes a step further in mandating disclosure of all "significant defects/malfunctions" in a variety of construction components, including, among others, interior and exterior walls, roofs, windows, concrete slabs and foundations, and plumbing. If you are selling your home, you either have been or will be presented with a "Real Estate Transfer Disclosure Statement" requiring the disclosure of problems with these construction components, and others. Another part of the disclosure form requires disclosure of known lawsuits affecting the property, "including any lawsuits alleging a defect or deficiency" in the property or in the common areas, if the property is part of a condominium or townhome development.
In the Calemine case, the seller disclosed a known, prior problem with water intrusion, but did not disclose the fact that two separate lawsuits involving that issue had been filed in court. The buyer promptly sued. The trial court initially found that the seller had adequately disclosed the water intrusion problem. The Court of Appeal, however, disagreed, sending the case back to the trial court to determine whether the seller also should have disclosed the prior lawsuits. Among other things, had the buyers known of the prior lawsuits, they could have obtained the court records and investigated further.
A failure to comply with the disclosure requirements embodied in the Real Estate Transfer Disclosure Statement does not invalidate a sale. However, anyone who willfully or negligently fails to comply is liable for actual damages suffered by the buyer. In addition, compliance with the Civil Code requirements does not relieve a seller of the general, common law duty to disclose anything that might affect the value of the property. The available remedies for a breach of the common law duty include not only damages, but, in an appropriate case, a judgment unwinding the sale.
In the Calemine case, the better course of action for the seller, without question, would have been to disclose the prior lawsuits, even though the underlying problem of water intrusion had been disclosed.
"Can I Move Away With My Children?"
During a divorce, parents are forced to rearrange their lives, and significant changes are often inevitable. Amongst these changes, parents who are divorcing usually make the decision to move because they can no longer afford to live in the same area. They feel the need to live closer to their work or even relocate to an area where they have family that can provide support during this difficult time. Nevertheless, anytime a move is considered and children are involved, the "moving" process becomes much more complicated. When a parent considers moving, the parent must consider whether or not the move is in the best interests of the children, and how the other parent will continue to have frequent and continuing contact with the children.
What does "move away" mean? Any move a parent makes, whether the move is 5 miles or 5000 miles away, that disrupts the current custodial schedule in any way that is detrimental to the relationship of either parent is considered a "move away." This may warrant a new custodial schedule being implemented or even a change of custody. Either the parent wanting to move or the other parent who is opposed to the move must file a Request for Orders with the Court to get permission to move the child, or to get orders preventing the other parent from moving the child.
When dealing with "move away" orders, the Court's priority is always to consider what is in the best interest of the children. The Court also considers the current timeshare and how each parent is exercising their time with the children. The Court's analysis of the situation differs based on whether the parent requesting the move has sole custody, or whether the parties share joint custody of the children.
Sole Custody. If the parent requesting the move has sole custody of the children, that parent has the presumptive right to move. The non-custodial parent has the burden of proving to the Court that the move will be detrimental to the child and/or detrimental to his or her relationship with the child. If the non-custodial parent is able to show that the move will be detrimental to the children, the Court will likely have an evidentiary hearing to reevaluate the current custody schedule to determine if a change in custody is necessary. Otherwise, if no detriment can be shown, the child will likely be allowed to move.
What the child wants, if they are old enough to indicate a preference.
In weighing all of these factors, Courts are often faced with the difficult decision of determining whether or not the move would be in the best interest of the child. Upon a determination of what the Court feels is most beneficial to the children, the Court will either allow the requesting parent to move the child, or the Court will make a change in custody orders as is deemed necessary to protect the well-being of the children. The Court does not make a decision as to whether or not the parent can move, but rather whether or not the parent can move the children with him or her to the new location.
Kring & Chung Managing Partner, Kenneth W. Chung, has been appointed as an advisory board member for the Paralegal Studies program at Irvine Valley College in Irvine, CA. The paralegal program at Irvine Valley College prepares students to assist attorneys as paralegals in administrative agencies, corporations, insurance companies, private law firms, government, and other legal environments. Emphasis is on training students in practical application and development of up-to-date paralegal related job skills. In addition, the program introduces students to legal theory.
On March 7, 2013, the Board of Trustees of the State Bar of California appointed Kring & Chung attorney, Michelle A. Philo, to serve as a State Bar delegate to the American Bar Association's (ABA) House of Delegates. The House of Delegates is the policy-making body of the ABA and meets twice a year, at the ABA Mid-Year and ABA Annual Meeting. The State Bar appoints a total of 11 delegates. The State Bar's delegates are part of the prestigious California delegation, headed by an elected State Delegate. Philo will serve a two-year term, beginning and ending upon the adjournment of the ABA Annual Meeting in August.
Kring & Chung is pleased to announce that Russell D. Collings has joined its Las Vegas, NV office as an Associate attorney. Collings practices in the areas of general civil litigation, insurance defense, personal injury, family law, real estate law, and immigration. Collings is a member of the Clark County Bar Association, the Central Utah Bar Association, and the American Immigration Lawyers Association.
On behalf of Kring & Chung, LLP posted in Newsletter on Friday, March 1, 2013.
EMPLOYMENT: Avoiding Disability Discrimination Claims: Reasonable Accommodation & Interactive Process "How To"
Avoiding Disability Discrimination Claims: Reasonable Accommodation & Interactive Process "How To"
An employee comes to work with a cast on his leg. An employee comes to you and tells you that the light in his office gives him headaches. An employee states that the reason she is not as productive is because her left hand hurts when she types. An employee has exhausted his disability leave, but the employee indicates that further accommodation is needed.
These are examples of the type of observations or statements that can arise in the workplace that will trigger the need for a response from the employer. The "response" is called engaging in the interactive process to see if a reasonable accommodation needs to be made.
So, where does an employer start?
The employer/supervisor becomes aware of the possible need for an accommodation because an employee's disability leave (worker's compensation, CFRA/FMLA, or other leave) is exhausted, but the employee or his medical provider indicates that more leave is necessary.
The supervisor or manager should consult with Human Resources, if applicable. HR should initiate the interactive process with the employee in a timely manner. If the employer does not have an HR department, the highest level supervisor should engage in the interactive process with the employee.
What does it mean to engage in the interactive process? The employer needs to confidentially consult with the employee to identify job-related limitations, if any. It is helpful to pull the job description for the position and run through each task or function to make sure there are no limitations. It is critical that this process is documented. Make sure to engage in this process behind closed doors so that the interview is kept confidential and does not invade the employee's privacy rights.
An employer is allowed to ask the employee for reasonable medical documentation of functional limitations from the employee's medical provider, unless limitations are obvious and already known. An employer should never contact the employee's physician directly. Have the employee get the information. Should the employee give you permission to contact his physician directly, contact HR or legal counsel before doing so.
The information requested from a medical provider should not disclose the nature of the disability or information on the underlying cause. All the employer is allowed to obtain is documentation confirming the existence of the disability and the need for reasonable accommodation. It may include a description of the physical or mental limitations that affect a major life activity. Do not ask for an employee's complete medical records.
If the information provided by the employee is unclear, an employer must identify what information needs clarification and give the employee a reasonable time to provide the additional information.
Next, HR should work with the employee's manager or supervisor to analyze the particular job involved and identify the essential and non-essential functions of the job. From there, the employer and the employee need to identify and discuss possible reasonable accommodations, and discuss options. Remember to listen to the employee and consider the employee's preferences. If the accommodation would pose an undue hardship, consult legal counsel before ruling out that an accommodation cannot be made. What is an "undue" hardship will turn on several factors, including the size of the company, the position, and the costs of accommodation. Ultimately, the accommodation should be effective in allowing the employee to perform the essential functions of his job.
Sometimes, reassignment to an alternate position is considered a reasonable accommodation. It is permissible to ask the employee to provide information about his educational qualifications and work experience to determine if there is a suitable alternative position for the employee. Reducing an employee's pay should the reasonable accommodation involve moving the employee to an alternative position that pays less than the current position should be avoided at all costs.
Make sure that whomever handles the decision to implement the accommodation documents the accommodation provided. Have the employee sign an acknowledgment that the interactive process occurred and whether or not an accommodation was made.
Remember to check back in with the employee approximately 30 days after the accommodation is implemented to see how the accommodation is working for the employee. If necessary and reasonable, make adjustments.
Lastly, all the documentation pertaining to the interactive process, which may include the employee's confidential medical information, must be contained in a confidential file, separate from the employee's personnel file.
Congratulations to Lance A. Adair, who has been selected as a '2013 Top Rated Lawyer' in Land Use and Zoning on behalf of American Lawyer Media, and Martindale-Hubbell.
American Lawyer Media, a leading provider of news and information to the legal industry has teamed with Martindale-Hubbell to highlight "Top Rated Lawyers" in the March Issue of The American Lawyer & Corporate Counsel Magazine.
Lance A. Adair has achieved the AV Preeminent peer review rating, the highest rating in legal ability and ethical standards. The AV Preeminent is a significant rating accomplishment- a testament to the fact that Mr. Adair's peers rank him at the highest level of professional excellence.
On behalf of Kring & Chung, LLP posted in Newsletter on Friday, February 1, 2013.
Does a standard title insurance policy provide assurance that real property can be sold as subdivided parcels, as shown on a recorded parcel map? A recent court decision reaffirms that the answer is no. It may be possible, however, to purchase an endorsement that will provide coverage.
In Dollinger Deanza Associates v. Chicago Title Insurance Company (2011) 199 Cal.App.4th 1132, the plaintiff, Dollinger, purchased certain real property in the City of Cupertino with the intention of selling a portion of the property that was used as an overflow parking lot. A parcel map recorded in 1979 showed that the property was divided into seven separate legal parcels-one of them being the overflow parking lot. In 1984, however, the city had issued a conditional use permit requiring that the property owner merge the seven parcels into one. The city thereafter recorded a notice of merger, but the notice was improperly indexed under the name of a different city.
After attempting unsuccessfully to sell the parking lot parcel to a third party, Dollinger made a claim against its title insurer under the California Land Title Association ("CLTA") policy, which the title insurer rejected. Dollinger then filed suit.
Dollinger argued in its lawsuit that the undiscovered merger of the seven parcels had rendered the parcels unmarketable and directly caused the loss of the $3 million sale. Such a loss, argued Dollinger, was precisely the type of loss the policy was intended to protect against.
The Court of Appeal, however, disagreed. Citing longstanding precedent, the court explained that the notice of merger did not affect Dollinger's title to the land, but merely impaired the property's market value. ( Id. at 1148.) In the words of the court, "a notice of merger does not represent a third person's claim to an interest in the property . . . or otherwise cast doubt on who owns the property." ( Id. at 1152.) Accordingly, the title insurance policy provided no coverage.
The lesson of Dollinger is that a purchaser of subdivided acreage should undertake its own due diligence and not rely exclusively upon matters disclosed in a title report or policy. Another possible solution would be to purchase a Subdivision Map Act Compliance endorsement-CLTA Form 116.7-which any major title insurer will provide for an additional fee.
Happy New Year! As you know, Congress celebrated the new year by stepping out with some new tax legislation in response to the 2012 "fiscal cliff." This tax legislation, known as the "American Taxpayer Relief Act," was signed into law by President Obama on January 2, 2013. The historical uncertainties experienced over the past several years in the field of estate planning as a result of the changing estate and gift tax exemption and the scheduled ends of the previous laws have now been replaced with more permanent federal estate and gift tax legislation.
Estate Tax. The American Taxpayer Relief Act has indexed the federal estate tax exemption for inflation, thereby setting the exemption at $5,250,000 in 2013, and a combined $10,500,000 per couple. The estate tax above these amounts is a flat 40% tax rate, up from 35% last year. This structure has the highest amount protected by the estate tax credit in recent history. As before, the gift tax and the estate tax remain totally unified and will continue to be indexed for inflation in the future, unless the law is changed.
Generation-Skipping Transfer Tax. The generation-skipping transfer tax is an entirely separate transfer tax that applies to transfers to grandchildren and younger generations. The new law indexes the generation-skipping transfer tax for inflation, with an exemption on the first $5,250,000 worth of transfers to grandchildren, and a rate of 40% on transfers to a skipped generation above that excluded amount. Since the generation-skipping tax can be a duplicative tax on top of an estate tax, care must be taken to avoid this double taxation.
Gift Tax. The annual gift tax exclusion is now $14,000 per donor to each donee in 2013. In addition, you can directly pay for tuition and medical expenses without that type of payment being deemed as a gift. All other types of gifts above $14,000 are taxable gifts. The lifetime gift tax exemption was also indexed for inflation and therefore increased to $5,250,000. The maximum gift tax rate has increased from 35% last year to 40% this year. That means that you can make up to $5,250,000 in lifetime taxable gifts ($10,500,000 per couple) before paying a tax. Taxable gifts above $5,250,000 ($10,500,000 for a couple) will be subject to a 40% gift tax rate.
Portability of Unused Exemption. Under the prior law, couples needed to establish a trust at the first death (to benefit the surviving spouse) in order to fully utilize both spouse's credits. Some people viewed this as an unnecessary and complicated estate planning requirement just to allow the couple to claim their combined entire exemption. The "portability" option implemented in the Tax Relief Act of 2010 has now been made permanent in the American Taxpayer Relief Act, and allows the personal representative of a predeceased spouse's estate to transfer assets and any unused estate tax credit to the surviving spouse without such planning. That means that moving forward a married couple can pass on $10,500,000 to their heirs free from federal estate taxes without any planning at all. An important note to keep in mind, though, is that even if the deceased spouse's estate is less than $5,250,000, the surviving spouse will have to file a Form 706 Estate Tax Return in order to take advantage of the deceased spouse's unused estate tax exemption. Otherwise, the deceased spouse's exemption will be lost. Also, portability was not extended to the generation-skipping tax exemption, so for those who need to use both spouse's generation-skipping tax exemptions, additional planning will be necessary.
The "Pick Up Tax." The "pick up tax" was a state estate tax that was equal to a portion of the federal estate tax bill and was collected by state taxing authorities. The "pick up tax" was not included in the new tax law. This means that states such as California, Florida and Texas would have once again collected a state estate tax in the form of the "pick up tax." Keep in mind that there are some states that have a free standing estate tax that will continue to collect estate tax at the state level. California is not one of these states. However, for those who live in one of these states, additional tax planning is necessary.
The changes made by the American Taxpayer Relief Act may have a significant impact on your estate planning. If you already have an estate plan, you should consider having your estate plan reviewed to ensure that it still works the way it is intended to work given the law changes. If you do not have an estate plan, there is no better time than the present to get one in place. The good news is that these law changes offer more certainty than what we had in previous years in that there is no scheduled expiration date for the new law. If your estate plan is currently compliant, you may not need to worry about additional reviews for annually changing and expiring tax laws. Keep in mind that although there is no sunset date on the changes made by the American Taxpayer Relief Act, Congress is free to change it at any time just like any other law. So, although there is no absolute certainty, we are still free to enjoy more than we have had in the estate and gift field in a very long time. Here's to a happy, healthy and well planned 2013!
Congratulations to Managing Partners, Kyle D. Kring and Kenneth W. Chung, for being selected again for inclusion in the 2013 Southern California Super Lawyers list. Super Lawyers is a rating service of outstanding lawyers from various practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations.
On January 17, 2013, Lance A. Adair, Michelle L. Philo, John Schroeder and Allyson K. Thompson attended the Orange County Bar Association's 2013 Judges' Night and Annual Meeting in Irvine, CA. The installation of the new OCBA 2013 President, Wayne R. Gross, took place, and the Honorable Francisco F. Firmat was presented with the Franklin G. West Award.

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