The Conference Room--Answers to Questions on N.C. Law

The Magic Multiplier

In North Carolina, damages for personal injury involve several different kinds of damages. First are the hard damages or “specials” as some call them. These are the damages where the amounts are usually easy to determine. As long as medical bills and lost hours at work can be shown to be caused by the negligence of a defendant, the jury has an easy time determining exactly how much the injury is. Other damages are soft. Past, present, and future mental pain and physical suffering, permanent injury, scarring, and loss of function are all legitimate damages but don’t have an invoice attached to them. Ultimately a jury decides how much the plaintiff’s pain is worth, based on the facts of the case and their own life experiences.

Settling a case, or deciding not to settle a case and have it tried before a jury, requires a plaintiff to evaluate the value of his case and somehow forecast a range of verdicts a jury may give for both the hard and soft damages.   

Many clients believe in the old rule of thumb that a personal injury case is valued at three times the medical bills, plus the hard damages. Some clients even believe this is the law. It is not the law and I have never seen or heard of it even being used in an argument to a jury. At one time it may have been standard practice for personal injury attorneys and insurance adjusters. However, even if it was at one point a good ballpark number for an initial case evaluation, it is no longer the case, and has been for the most part largely rejected for many reasons. 

For example, a jury is pulled from your county or jurisdiction. Some counties are more conservative than others in awarding damages because of age, employment, military service, and several other factors. In addition, the type of injury effects the amount of pain and suffering a jury will award. While the actual pain of a broken bone you can see on an X-ray, and a sprain or strain of the ligaments of the back that you cannot see, may be exactly the same, a jury will typically award more pain and suffering damages to the broken bone. Juries can give more weight to medical doctors over chiropractors even if both testify the same. Also, the idea of tort reform and the fear of a jury of giving out the next “McDonald’s coffee case” can skew the amounts a jury may award. Finally, although the law says and the judge will instruct that the jury not consider damages until they determine liability, the reality is that jurors make deals. A juror skeptical over the fault of a defendant, may nevertheless find against him if the damages are kept low. Finally, ever increasing cost of medical treatment, and the type of treatment, can skew the total of the medical bills out of proportion to the actual injury.  

Experienced attorneys can take all those factors into account and give you a good, realistic value of your case and give you the best knowledge of the risks and benefits of settling for what the insurance company offers, and taking a risk of trial.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Amending the Amendment

West face of the United States Supreme Court building in Washington, D.C. Español: Edificio de la Corte Suprema de Estados Unidos en Washington, D.C. (Photo credit: Wikipedia)

A few days ago, Amendment One was passed in North Carolina by a margin of 61 percent to 39 percent according to unofficial results, with only seven of North Carolina’s 100 counties voting against the Amendment. Opponents of the Amendment, which included not only those in favor of marriage for homosexuals, but those in favor of civil unions, and those worried about the unintended consequences of the Amendment (as discussed earlier), are now searching for ways to “repeal” or at least amend Amendment One.

The North Carolina Supreme court has the power to void a law passed by the North Carolina general assembly if the justices determine that the law is in conflict with the North Carolina Constitution. However, Amendment One is not a law, but rather is now part of the North Carolina Constitution and therefore, by definition, it is not unconstitutional. This power of the North Carolina courts is one reason given by the supporters of Amendment One as to why the amendment was needed when there was already a law in North Carolina restricting marriage to being between a man and a woman. The supporters were fearful that the North Carolina Supreme Court may one day find the old defense of marriage law to be in conflict with the equal protection provisions of the North Carolina Constitution.

The process that opponents of the Amendment must take is the exact same process that the supporters of the Amendment used to get it passed. North Carolina does not have a statewide initiative process like some other states, most notably California, so either two-thirds of the members of each house of the General Assembly call for a constitutional convention, or, three-fifths of all members of each house vote to send a proposed amendment to the voters. Then a simple majority would govern.  

The only other method for the removal of Amendment One, and indeed for all federal and state laws and state constitutions, is for the United States Supreme Court to determine that the US Constitution forbids restricting marriages to opposite-sex couples only. Currently, the case of Perry v. Brown, a case decided by the U.S. Court of Appeals for the Ninth Circuit, found that a California law outlawing same sex marriages violated the U.S. Constitution. The case will likely reach the U.S. Supreme Court, who would then have the opportunity to overturn not only that California law, but all laws in the United States, including Amendment One. There is some precedent for this despite marriage being historically a state, rather than a federal, institution, in the case of Loving v. Virginia, which found that banning interracial marriages was a violation of the U.S. Constitution.

For the supporters of same-sex marriage bans, the trump to the U.S. Supreme Court is a version of Amendment One in the U.S. Constitution. That amendment would require two-thirds of each house of Congress and ratification of three-fourths of the states (38 of the current 50). This was attempted last in 2006, where such an amendment failed to recieve the two-thirds majority in the House of Representatives.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Amendment One

    On May 8, 2012, North Carolina citizens will be going to the polls to cast their vote in the Republican Primary. Also at stake in this election is an issue which should be of great importance to all voters, regardless of their political party, whether to vote FOR or AGAINST a proposed amendment to our North Carolina State Constitution. North Carolina Senate Bill 511, more commonly referred to as “Amendment One,” asks voters to decide whether to amend the State Constitution to limit the types of domestic relationships which shall be deemed “valid” or capable of being “recognized” in this State. Sponsored by Senator Peter Brunstetter, the actual title of the Bill is: “An Act to Amend the Constitution to Provide That Marriage Between One Man and One Woman is the Only Domestic Legal Union That Shall Be Valid or Recognized in This State.” The language of the Bill, proposing to add a new section to Article XIV, is as follows:

Marriage between one man and one woman is the only domestic legal union that shall be valid or recognized in this State. This section does not prohibit a private party from entering into contracts with another private party; nor does this section prohibit courts from adjudicating the rights of private parties pursuant to such contracts.

    The purpose of the proposed amendment, according to its sponsors and proponents, is to prevent a rogue judiciary with a liberal agenda from overturning existing statutory prohibitions against gay marriage in this State.

But I thought it was already illegal for homosexual couples to marry in North Carolina?

    North Carolina General Statute Section 51-1 limits legal marriage as between “a male and female person” only, and further prohibits courts in this state from recognizing same sex marriages created in other states under the Full Faith and Credit clause of the United States Constitution.   A constitutional amendment, argue proponents of the bill, would prevent liberal judges from eroding the applicability of this statute and would ensure that same sex couples may not receive the same or similar rights/benefits as married couples. However, many judges, attorneys, law professors and other professionals from across the political spectrum have come out in opposition to Amendment One, concerned that the language of the proposed amendment is so broad that it goes far beyond the current ban on same-sex marriage and places the rights of both homo- and heterosexual couples and families at risk. Of particular concern is the fact that there is currently no definition of exactly what constitutes a “domestic legal union” in the laws of North Carolina or of any other state. In fact, the language of North Carolina’s proposed marriage amendment is significantly broader than marriage amendments that have been passed in other states. The language of Amendment One would introduce terms and concepts into our State Constitution that are not clear on their face, have never been interpreted by our Courts, and the impacts of which are untested and uncertain as to meaning and scope.

If gay marriage is already banned in North Carolina, what impact would this Constitutional Amendment have on family law in this State?

      My short answer is that we aren’t is exactly sure. In declaring that no “domestic legal union” other than heterosexual marriage “shall be valid or recognized by this state,” Amendment One goes beyond the parameters of the existing statutory ban on gay marriage and into uncharted legal territory. N.C. General Stat. Section 51-1 forbids homosexual marriage, however it does not limit the State’s ability to grant a more limited set of rights and protections to same sex or opposite sex unmarried couples living here. In fact, despite the statutory prohibition against marrying, both homo and heterosexual couples may create marriage-like relationships with one another through legal documents such as wills, grants of powers of attorney, health care and financial directives and designations within some employer benefit programs. These relationships in turn confer benefits to unmarried partners and their children, for example in the receipt of health insurance benefits.1 Amendment One would most certainly put an end to these benefits. Since the Amendment states that the only “domestic legal union” which is valid or recognized would be heterosexual marriage, alternative arrangements would not be capable of legal existence and therefore members could not receive benefits. For employees of two of the State’s largest counties and two of its five largest cities, all current domestic partner benefits would come to an immediate end. Employees of private companies, including Bank of America, may also see their rights affected.

What about the Amendment’s language regarding contracts which would continue to be recognized?

    The problem with the logic that unmarried couples could avoid the harsh application of Amendment One by executing binding legal contracts with one another is that a number of important issues cannot be covered by such documents. For example, a will is not a contract. If Amendment One passes, one member of an unmarried couple who devises his or her property to the other would be open to challenge by the deceased partner’s relatives, who might claim that the will was procured by undue influence in that it was the result of a domestic relationship deemed unlawful by our State Constitution.  

    So too, financial and health care powers of attorney executed on behalf of unmarried partners would be subject to challenge, potentially meaning that the surviving partner could not make important end of life decisions including advanced directives such as whether or not to continue life on a breathing machine or feeding tube, or whether to donate organs.

I’ve heard that Amendment One could remove the protections of domestic violence laws from unmarried couples?

    This is a hotly debated issue. Just days ago a number of state district attorneys and member of law enforcement came out with the claim that domestic violence laws would be unaffected by Amendment One. However, Chapter 50B of our state statutes limits domestic violence protections to persons in a “personal relationship” with one another. The law defines this to include the following six categories: (1) current or former spouses; (2) persons of the opposite sex who live together or have lived together; (3) parents and children and grandparents and grandchildren, including persons acting in loco parentis to a minor child; (4) people who have a child in common; (5) current or former household members; and (6) people of the opposite sex who are in a dating relationship or have been in a dating relationship. North Carolina courts have consistently applied the domestic violence protections in cases involving unmarried straight and gay couples. However, the proposed Amendment which limits our State’s recognition of “personal relationships” to only married couples would consequently restrict the availability of civil and criminal protections for unmarried victims of domestic violence.

      In a recent article discussing the Amendment, respected legal scholar and professor of family law at Wake Forest University Suzanne Reynolds wrote the following:

    Unlike other law protecting us from criminal conduct, domestic violence law requires that the victim and batterer have a “personal relationship.” We learned by tragic experience in this country and state that the more general law of assault and battery simply is inadequate to address the very different threat of violence in the home. Before someone is entitled to the extraordinary relief that the law of domestic violence provides, however, the victim must have a “personal relationship” with the batterer. Currently in North Carolina, a victim may invoke the law of domestic violence for her protection even if that “personal relationship” is an unmarried relationship – between persons of the same or different sexes.

    But if Amendment One passes, the state constitution ties the state’s hands: the state will be constitutionally forbidden from recognizing an unmarried relationship as a valid “domestic legal union.” If a batterer lives with his victim – of the same or different sex – he will surely argue that the victim lives in a domestic union that the state constitution declares is no longer legal. Consequently, she must rely on the law of assault and battery – law that we already know is inadequate to the special vulnerability of someone who is battered in the home.

    Why am I so certain that batterers will raise these arguments? Because in states with marriage-related amendments, they already have. The domestic violence laws of these other states, like the current domestic violence law of North Carolina, protected persons who were unmarried. But after the state passed a marriage-related amendment, batterers argued that the amendment restricted domestic violence protection to married victims and batterers.
Eventually the appellate courts of both states concluded that the wording of the constitutional amendments did not prevent the state from continuing to use domestic violence law to protect victims in unmarried relationships. But, both of those amendments were much narrower than the breathtakingly broad Amendment One. In both states, the marriage-related amendments restricted the state only from creating a status that approximated marriage.That is not what Amendment One does. Amendment One tells the state of North Carolina that no domestic union except marriage is legal or valid.

Are there any other consequences if Amendment One passes?

    Absolutely. This post is simply meant to identify some of the key issues in this debate, which I hope motivates further investigation by voters. The current child custody laws in North Carolina allow unmarried couples to create families and to exercise legal rights with regard to their children. The passage of Amendment One threatens to undermine decades of progress in this area of the law. If unmarried couples, particularly same sex couples, are incapable of legal recognition by North Carolina courts, this calls into question the ability of an unmarried parent’s ability to enforce existing custody orders or to pursue custody or visitation rights in the future.
The simple fact is, the language of the proposed Amendment is unduly vague, and the (perhaps unintended) consequences far too great. Courts will struggle, as they have for years in other states, with how to interpret the language of this poorly drafted amendment. North Carolina families, including tens of thousands of children, could be negatively affected by the application of this amendment in seeing their benefits eliminated, their parents’ relationships not recognized, their access to domestic violence protections threatened, and their custodial relationships with unmarried parents at risk. For more information, read the paper written by Professor Maxine Eichner of the University of North Carolina, Chapel Hill entitled, "Potential Legal Impact of the Proposed Domestic Legal Union Amendment to the North Carolina Constitution"

--Jennifer Bennett joined Hodges & Coxe PC as an associate attorney in 2010 and currently practices in the areas of general civil litigation and matrimonial law, focusing on divorce, child custody disputes, establishment and defense of child and spousal support obligations, equitable distribution and marital tort claims. You can reach her at (910) 772-1678 or at jbennett@hc-lawfirm.com

Chris Brown, Rihanna, and What Comes Next

Rihanna and Chris Brown concert. Brisbane Entertainment Centre. November 1st 2008 (Photo credit: Wikipedia)

Below is a post that my friend, Roger Canaff first posted on his excellent site where he discusses criminal law and violence against women and children. I thought it an excellent discussion of this area and he graceously gave me permission to share it here. 

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If an adult, even a young one, can be labeled by his actions, Chris Brown is a violent, narcissistic thug. The savage, lengthy beating he inflicted on his then-girlfriend Rihanna in 2009 earned him a felony conviction, something not particularly common in the world of intimate partner violence. I saw quite a few of those cases as a prosecutor, many of them violent and damaging, but few other than homicides that merited the possibility of a prison sentence. It’s a possibility Brown avoided, but happily so for many adoring fans who still refer to that drawn-out, bludgeoning attack as a “mistake.”

Since that mistake, Brown has shown again and again an explosive, boundary-bereft side and a frightening inability to even fully control himself.

Now, for whatever reasons, Rihanna has chosen to request a relaxation of the protective order she was granted against him, and to collaborate with him musically. Collaboration may be all it is. Or, she may be entertaining a friendship or something more with her attacker, a circumstance often encountered if rarely justified.  She was a blameless victim in the pummeling she endured, and since I know nothing of her personally I won’t seek to judge whatever reunification she’s navigating with Chris Brown now.

But I will judge the “Birthday Cake” remix she is releasing and on which Brown joins her, because it’s classless and crass, even by the standards of Rihanna who often objectifies herself sexually in her music. But what makes this first collaboration since Brown’s arrest and conviction far worse is the past that underscores it.  What Chris Brown adds to the magic of “Birthday Cake” includes the lines “Girl, I wanna f— you right now. Been a long time, I’ve been missin’ your body.”

Bravo, Chris! This is far more than an expression of what I suspect are your creative limits or your grasp of subtlety and real sexuality (which I rather enjoy, although I find it resonates more when it isn’t reduced to the sputtering of a worked-up child). It’s also a window into how you likely viewed this woman before you viewed her as a punching bag. She’s a toy as far as you’re concerned, and that’s how you want to treat her. First sexually.  Then violently. Then sexually again.

Take a wild guess, dear reader, as to whether a pattern is forming here.

Lewdness in pop music is a fact of modern life. Many would criticize Rihanna for the overt sexuality she injects into her music and speculate darkly from it on how she views herself. I won’t. Frankly, she has the right to engage her sexuality in any way she sees fit and I won’t impose my model or that of anyone else in an effort to judge her. What she does artistically and how it might affect the millions of girls who look up to her is best discussed elsewhere.

For now, what’s clear is that Rihanna, a beautiful and talented young woman, was beaten- breathtakingly- by a man who now joins her in a song in which he celebrates the idea using her like a plastic doll.  That’s wrong on more than one level. Unfortunately, I doubt either of them have a clue.

© 2012, Roger Canaff. All rights reserved.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Buckle It.

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The night of Valentine’s Day, I heard a loud boom outside my house. I thought a tree had fallen or a transformer blew. About five minutes later, at least five police cars came streaming now the street. Looking a few houses down, I saw a horrific wreck where an SUV had wrapped itself around a tree. Looking at the,news reports the next day, a SUV was traveling at least 80 mph down our residential street with no lights on and swerved off the road  into a tree during the accident. Two female passengers, died on impact. The driver of the SUV, was taken to the hospital and was pronounced dead early Tuesday morning. A backseat passenger was expected to survive.

There were numerous circumstances that could have contributed to causing this crash, but the one thing that stood out to me was the one factor identified that could have saved these people despite the crash. According to the police reports, the driver and passengers were not wearing seatbelts. I don’t know if wearing seatbelts would have saved them, but it has been estimated that 50% of car crash deaths would have been prevented had the passengers been wearing a seatbelt. According to the  National Highway Traffic Safety Administration the five things you should know about seatbelts are the following:

1. Wearing a seatbelt is the single best thing you can do to protect yourself.

2. Air bags are not a replacement. Air bags are meant to work with a seatbelt to provide additional protection. They are not meant to replace them. Without a seatbelt on, an airbag can actually do more harm than good as hitting the airbag without a restraint may cause additional injuries.

3. When wearing a seatbelt, the lap belt and shoulder belt should be secured across the pelvis and rib cage.

4. Don’t just check out the stereo and cup holders in the new car you are getting. Make sure the seatbelt is a good fit, and if it’s not, ask the dealer about seat belt adjusters or extenders that will give you a better and more comfortable fit.

5. Everybody should wear seatbelts or some kind of restraints, including small children (with a booster or car seat) and pregnant women.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Good TV

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I’ve watched a lot of lawyer shows over the years. The first I remember was “The Paper Chase” which was actually about law school. After watching that I decided I didn’t want to be a lawyer just from the shear amount of stress it appeared that law students have. (Of course I did eventually go to law school and handled it better than my grade school self thought I could). After that I went through various shows, most notably “L.A. Law” and “The Practice.” During and after law school, I stayed away from lawyer shows, since by the end of the work day I wanted to get away from the office but lately I’ve been watching “The Good Wife,” with my good wife about a woman who goes back to work as a 2nd year associate in Chicago after her husband, the District Attorney, is removed from office and goes to jail in a scandal. I enjoy the show, but there are some things about it, and most other lawyer shows I’ve seen, that have me scratching my head. Usually those things are not about the law. I don’t know the law of Illinois, where the show is set, but the general legal principles seem to be followed. I assume they have legal consultants for the show (where do I get that gig) who help guide the writers on the law. Most of the things that are procedural issues or the business of the law firm more than the law itself. If I wanted to make a more “realistic” version of this or other legal TV shows I’d have to do some of the following.

1. One “big case” a season. Week to week on “The Good Wife” they get a $80M settlement, a $55M class action, a $30M verdict etc. Those lawyers make a lot of money every week to keep working in private practice. Unless rent in a Chicago office is over $1M a month, I don’t know why the partners keep stressing about their client list and billable hours. My show would be maybe one “big case” a season, with a lot of little cases week to week. That is closer to how real lawyers operate. Any more than that, they are running for Senate, retiring to Malibu, or start commentating on Court TV.

2. Show the build up. The “one big case” rule would also allow people to show that a case is not signed up, worked up and tried in a few days. Most shows have our hero lawyers and their investigators finding out the twist in the middle of the trial, changing their whole strategy, and coming out the victor. Yes, sometimes this happens (and it does make a great story when it does) but the workup of a case by the attorneys and investigators can take months, if not years. Little cases take a few months as well, but we have to give a nod to some entertainment values. Nobody wants to watch a guy shuffle through papers for an hour and wonder where the hell stuff is.

3. Adversaries not Enemies. My experience is that lawyers are much more professional than what is depicted. It is understandably difficult for Hollywood, America, and even our own clients to understand that we can be an aggressive advocate for their rights, and our opponent can be for her client, without her being mean, nasty or just evil. Those people do exist, and some of them are attorneys, but we know who they are, they are a minority, and we know how to deal with them.

4. Relax the Firm Politics. “The Good Wife” has had a few on-going storylines about partners backstabbing each other, getting voted out, and associates competing against each other like it was the only job in Chicago. Law partnerships breakup just like any other business, but, especially where the lawyers are good, it is usually done with good will. The competition over clients is overblown as well. In North Carolina, the client gets to choose where to go when a lawyer leaves a firm. The case belongs to the client, not the lawyer or the lawyer’s firm. Sometimes the former lawyer or lawfirm will have a claim for legal fees for work if a client leaves the firm to follow a former partner (or for any other reason), but that claim would be on the work the former lawyer actually performed, so the client should not have to pay for double for legal work.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

HOA lien procedure

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The following is a list of the steps our office does when assisting homeowner's associations in collecting on past due assessments. Usually, the matter is resolved after the lien is placed and seldom do we have to resort to a sale of the delinquent owner's property.

Our office obtains a list of delinquent payers from the Homeowners/Property owners Associations.  This list includes the name, property address, last known mailing address for each property owner, and amount owed to the HOA/POA.  Attorney confirms that Declarations provide for assessments.

The delinquent payer list is checked against the county’s Tax Administration website to confirm that the property has not been transferred to a new property owner.

Notification letters are written and mailed to each delinquent payer specifying the amount owed, that the delinquent payer will owe attorney’s fees and costs if assessments are not paid and, have thirty (30) days from the date of the letter to come current with the HOA/POA or a lien will be placed on the subject property.  Notification letters are mailed United States Postal Service via certified mail and regular mail to the property address and last known mailing address of the property owner if not the same.
 
Once thirty (30) days have elapsed and payment has not been received by the HOA/POA or by Hodges & Coxe, P.C. on behalf of the HOA/POA, a claim of lien is drafted for each property.  Deeds for each subject property are reviewed to confirm legal descriptions for the properties.
 
Claims of Lien are reviewed and filed with the clerk of court. Claims of  Lien are mailed United States Postal Service via certified mail and regular mail to the property address and last known mailing address of the property owner if not the same.
 
Attorney and paralegal time is reviewed; legal fees are calculated and divided among all the delinquent payers and is included in their total fees to eradicate the lien.
 
Within three (3) years from the date of the lien, after consultation with the HOA/POA, a suit is filed to enforce the lien.
 
After judgment, a judicial sale of the property is conducted to satisfy the lien, fees, costs and interest.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678. 

Asset Protection

Asset protection employs legal techniques that deter others from taking, or in some cases, attempting to take your assets. The complexity of any asset protection plan depends largely on what types of assets you have, and what type of work you do.

A typical asset protection case involves the formation of one or more entities, typically limited liability companies (LLCs), and/or irrevocable trusts.  In a typical situation, an LLC is formed, in which you are the manager, and the assets that you want protected are contributed to the LLC. As the manager, you retain control over the assets in the LLC. With an irrevocable trust, you give up the ownership and control of the property transferred to the irrevocable trust.  

An LLC provides liability protection for its members from liabilities generated by property owned by the LLC, and assets owned by the LLC are protected from any liability of any member.   If the liability is generated by the LLC, only the assets owned by the LLC are available to the plaintiff if the lawsuit is successful.  The other assets owned by the members of the LLC are not available to the plaintiff.  If the liability is generated by a member of the LLC, the property owned by the LLC is protected. 

 A creditor of a member of an LLC cannot take the member’s interest in the LLC or assets from the LLC.   A creditor is only entitled to get what is known as a charging order.  This means that if any distributions are made by the LLC to the member, the creditor is entitled to those distributions until the judgment is paid in full. The charging order does not entitle the creditor to become a member of the LLC.

Corporations do provide limited liability to the officers, directors and stockholders of the company. This means that in a properly organized, maintained and capitalized corporation, the officers, directors and stockholders have no personal liability for any debts of the corporation.  If the corporation loses a lawsuit, and the corporation does not have sufficient assets to satisfy a liability, a creditor cannot seek the personal assets of the officers, directors or stockholders.  However, if your corporation loses a lawsuit, all of the corporate assets are available to satisfy the judgment.  The stock of a corporation is not protected from a shareholder's personal liabilities.  A shareholder’s stock in any corporation (closely held or publicly traded) can be used to satisfy any of the shareholder’s personal debts, obligations, judgments and liabilities. 

It is important to realize that not every person will use the same asset protection structure. Designing a plan to fit your needs should take place under the guidance of an attorney who concentrates in these matters.  Finally, and most importantly, your asset protection plan must be created before any claim.  If you wait until there is a liability, it is probably too late. 

--Matthew Adams joined Hodges & Coxe in 2010 as an associate attorney and currently practices in the areas of estate planning, estate administration, business formation and organization, business transactions, corporate law and taxation. Please contact him for advice on these issues at (910) 772-1678.

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Rules for Kids

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Having just celebrated my first Christmas holiday with my nine-month-old son, I started to think about children whose parents are divorcing and all of the complicated issues that arise when custody is a contested issue, during the holidays and throughout the year. The reality is that when two parents make the difficult decision to live separately, their children’s lives must also change. Children of divorce have two homes. They spend holidays and special occasions shuffling back and forth between houses or dividing their time and attention to accommodate the realities of their new life. There is no avoiding this change, and while I have seen many, many successful instances where parents and children navigate such uncharted waters amicably and develop a new “normal,” I have seen other cases where the children of divorcing parents suffer from anxiety, depression or have difficulties with school and personal relationships as a result of being torn between two houses. Children, and the all important considerations surrounding their custody, are certainly at the top of my clients’ priority lists and as such, custody litigation is one of the most hotly contested areas of domestic law. Sometimes battles over the custody of children are inevitable. Sometimes real problems exist that necessitate asking a Court to step in and determine what is in a child’s best interest, because a parent cannot or will not do so. However, such vicious custody litigation is actually rare. In most instances, we are fighting over shades of grey much more than black and white. In those cases, especially, I believe that there are behaviors which parents engage in—many times without even realizing it—which have serious and sobering impact on their children in ways they never intended.

I recently read an article by Kara Bishop titled, “If Your Kids Could Make the Rules of Divorce,” which I have included below in its entirety to accompany this month’s blog. Ms. Bishop runs a program aimed at helping children deal with divorce in which she asks her 10-12 year olds to identify a list of “rules” they wish their parents would follow in regards to them during the divorce process, and afterward. I was deeply moved by this list, and I felt it important to share it. I have litigated many custody matters over the years and have witnessed well-meaning, loving parents behave in ways they would never approve of under “normal” circumstances. I believe it is important to give a voice to the children of divorce—perhaps in hopes that a review of these “rules” may provide a parent contemplating separation with some guidance in how to behave during the process. If you have questions about how to protect your children, or how to proceed if you are contemplating separating from your spouse and you have minor children, please do not hesitate to contact me for a free consultation. 

As promised, here are the "Top Ten Rules" most commonly wished for by children of divorcing parents, taken from Ms. Bishop’s article:

1. Don't Say Bad Things About My Other Parent

This rule comes up every time we've done the exercise and almost always in the top five. It also seeps into many other exercises, from one where kids express their feelings artistically on postcards (see example below) to one where kids role play an advice-giving radio talk show. They really want to know how to stop the "bad-mouthing," especially those kids who have actually asked their parents to stop only to be told "you need to know what kind of person your ____is" or, "it's not bad-mouthing if it's true."

The kids want you to know that they "don't care if it's true;" they just "want it to stop" because "hearing bad things about someone I love hurts my heart".

The above rule is so pervasive that even after isolating it, it haunts our next rule:

2. Keep Us Out Of Adult Stuff

Bad mouthing the parent doesn't have to be an outright proclamation, it can be the subtle or not so subtle release of information beyond the child's years of comprehension and/or need to know. There is no educational or emotional value in telling a child, "there will be no ____ because your other parent is behind on child support," or "your ____ left us because they're boinking a co-worker."

3. Don't Make Me Feel Bad For Loving The Other Parent

At 11, Aaron (the inspiration for my work in this area), was the only child of three still willing to endure his mother's wrath in order to continue seeing his dad. He braved being called "stupid just like your dad," constant questioning -- "why do you want to be with the person who broke up our family?" -- and having his bags packed by the front door after being told, "if you like him so much, just go live with him."

By 14 he had given in, but only after the entire other side of the family sat him down and told him he was being a "traitor to his real family" for continuing to see his dad against his moms wishes and that he had to choose "us or him."

What I really want parents to understand is that while they may think their actions are only punishing their ex, they are also (and often even more so) punishing their child.

I'm pretty sure every parent reading this can imagine how sad and deprived their child would be without their special love. Can being deprived of the other parent's love be any less sad? With that knowledge, would you still do something that makes your child any degree of sad, just to punish your ex?

4. Learn To Get Along For Big Events

Kids want and deserve to have both parents at their game/play/graduation. You don't have to stand next to each other, but don't "hide the date" from the other parent.

5. Don't Make Me Choose Sides

They want you to know this is "the worst thing you could ever make a kid to do."

6. No Fighting In Front Of Us

As a prelude to one of our coping exercises, the kids have to pick a common situation that makes them so uncomfortable that they have to "get out of there." Seeing or hearing their parents fight is the one that comes up the most.

7. Don't Make Me A Messenger Or Put Me In The Middle

Even sending simple messages through your child is a burden. It's not their job to remember to pass the message along, get the message right, get an answer and then deliver the response back to you. They want you to "find a way to communicate."

8. Don't Share Or Take Your Anger Out On Me.

This one probably has the most variety in how it's written: "Don't share your anger with me," "shelter me from your anger," "don't take your anger at them out on me." But my favorite is "let me still be a happy kid."

9. Don't Ask Me To Spy

Our November group had a girl who was actually given a notebook to write her observations in. It's heartbreaking to understand that her sharing of this deed was really more of a confession. She knew it was wrong, but wanted to be an obedient daughter.

10. Give Me One-On-One Time With Both Parents

This rule and "give me equal time with both parents" would actually be higher on the list if we didn't separate them from their kin. But because there are powers (courts) that may keep this rule from becoming a reality, we often suggest that the kids try to steer away from the "equal" wording. That works about half the time. But not at all when we have one of those rare kids who gets to stay in their home while their parents rotate in and out. Then the request becomes downright insistent: "we stay home, you switch houses every week!"

Happy New Year everyone!

--Jennifer Bennett joined Hodges & Coxe PC as an associate attorney in 2010 and currently practices in the areas of general civil litigation and matrimonial law, focusing on divorce, child custody disputes, establishment and defense of child and spousal support obligations, equitable distribution and marital tort claims. You can reach her at (910) 772-1678 or at jbennett@hc-lawfirm.com

Who is in a Homeowner's Association (and who is not)

Image by alancleaver_2000 via Flickr

I recently had a complaint from any owner who was being assessed by a homeowner’s association for annual dues. He explained that he never agreed to be in a homeowner’s association and didn’t consider his property to be within the area governed by the homeowner’s association. Therefore, the HOA had no power to assess him or his property.

In investigating his case, I had to look at several issues. First, does he own the property and what does the deed say? The first part seems to be common sense, but I have had people who were assessed who were renters. (In that case, all they needed to do is send the bill to the landlord). Assuming he is the owner, the typical deed is a general warranty deed. This type of deed gives the property to the person buying (the “grantee”) all the rights in the property and “warrants” that the property is the seller’s (the “grantor”) to sell or give. Usually, there is a small clause in the deed that says that the deed gives all rights except for other rights and reservations of record. “Of record” means if there is a filing with the county register of deeds office that gives some other right to another person or entity. This will include easements to allow utility companies to put wires over your property or possibly the driveway your neighbor behind you uses to get to the street. It also includes the declarations or covenants of a planned community. So looking at a general warranty deed wouldn’t tell you if your property is in a planned community with a homeowner’s association governing it, but that exception means that even if you didn’t know it, you are still bound.

Therefore, the next step is to find the recorded declarations or covenants for the planned community and check when they were filed. If they were filed after the owner got his deed, then he would not be subject to the declarations but if they were filed before, he may still be on the hook. The declarations usually refer to the plat or map of the community and the deed or deeds that gave the property to the developer. The map as well as those prior deeds are also filed with the register of deeds. Unless you are a surveyor, or have an intimate knowledge of the history of the property, it is difficult to follow the written descriptions in a deed, but the map or plat is usually easier to read. If the property is listed on that map and in the deeds it is subject to the declarations. In this particular case, my owner was correct. While all the property around him was within a planned community, his house and lot was left off the plat and off the developer deeds. It appeared the historical use of the property was a large tobacco farm. The farmland was bought, subdivided and sold as lots in the subdivision, but he had the original farmhouse that was never sold to the developer.

Had my client’s lot appeared on the recorded plat, then he would be within the planned community and governed by the declarations. Usually those declarations provide for a homeowner’s association who has the authority and power to manage the planned community after the developer has moved on. So once it is established that you are in a planned community, you look at the declarations and the North Carolina statutes to determine what assessments and other powers are allowed.

--Bradley A. Coxe is a practicing attorney in Wilmington, NC with Hodges & Coxe PC who specializes in Personal Injury, Medical Malpractice, Homeowner's Associations, Contract and Real Estate disputes and all forms of Civil Litigation.  Please contact him at (910) 772-1678.