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

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)

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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. 

The Kardashian Effect—Legal Separation, Divorce “Papers” and Whether to Seek Annulment or Absolute Divorce?

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By now even the non-entertainment savvy amongst us has heard about reality television “star” Kim Kardashian’s made-for-television, multi-million dollar marriage to NBA player Kris Humphries, and their equally publicized break-up a mere 72 days later. Reports have circulated that Kim K. initially asked Humphries for an annulment, however his refusal to “agree” to one left her forced to go the more traditional route of filing for a divorce, citing “irreconcilable differences.”

One of the more frequent questions I receive in my domestic practice surrounds the question of exactly what “papers” a potential client must obtain in order to “legally separate” from his or her spouse. In fact, in North Carolina there are no such “papers” that are needed in order to effectuate a valid, legal separation. North Carolina is what is called a “no-fault” divorce state, meaning that the only requirement for legal separation is a decision by one of the spouses to end marital co-habitation, followed by the action of actually physically separating and no longer living together as husband and wife. It is not even required that the decision to separate be a mutual decision. So long as one spouse has communicated his or her desire to separate from the other spouse, and acted on it—meaning physically ceased cohabitation—a legal separation has occurred. Terms like “irreconcilable differences” are irrelevant in this state, as North Carolina does not require a petitioner to cite a reason for the separation in order to later file for an absolute divorce.

Back to the Kardashians, reports that KK’s beloved Mr. Humphries thwarted her attempts at an annulment might make for good checkout magazine fodder, but legally speaking this is not possible. This is because in California, as in this state, parties cannot merely “agree” to an annulment but rather they must qualify for one under some very strict criteria. Interestingly, the length of Kim Kardashian’s marriage would be irrelevant to a determination of whether or not she could have the union annulled. To “annul” a marriage is to ask that it be declared invalid, that it never legally existed. An action for divorce ends an otherwise valid marriage, whereas an action for an annulment seeks a declaration that the marriage never existed. Annulments are rare, largely because a person must prove grounds to qualify for an annulment before one may be granted by the Court.

Faced with not wanting to wait the mandatory twelve months it takes to obtain an absolute divorce, many newly separated clients ask whether they are able to seek an annulment of the marriage as a faster alternative. Unfortunately, the length of the marriage is not a consideration in whether or not annulment is available and seeking an annulment is not always a faster option for ending the legal bond of husband and wife. In some circumstances, a marriage may be declared “void” and in others, it may be “voidable” based upon a particular set of circumstances. Chapter 51 of the North Carolina General Statutes provides that a marriage may be declared void only if:

1) the marriage was between any two persons nearer of kin than first cousins, or between double first cousins;

2) either of the parties is under the age of 16 (with a limited exception) at the time of marriage;

3) one of both of the parties to the marriage was already married to another living person at the time of marriage;

4) one or both of the parties to the marriage was physically impotent at the time of the marriage; or

5) at the time of the marriage, one or both of the parties was “incapable of contracting from want of will or understanding;” OR

6) the marriage was contracted under the representation that the female is pregnant, the parties separate within 45 days of marriage, and no child is born to the female within ten months of the date of separation.

It is important to note that none of the above-stated grounds for annulment have to do with fraud other than fraud regarding impotency or regarding a pregnancy. Fraud regarding other issues, for example the desire to have children, is not a ground for annulment.  Furthermore, only a bigamous marriage cannot be ratified by the parties. Meaning that even if one of the other “voidable” criteria is met, if the parties were aware of the defect at the time of marriage and married anyway, this is not a basis for annulment later.

As a practical matter, annulment is a rare and specialized cause of action. In most instances, parties will not qualify and will instead need to wait the requisite 12 months before they may petition the Court for a divorce. If you are contemplating separation or would like to speak with an experienced attorney, Hodges & Coxe can help. I offer free consultations and am always happy to sit down with you to discuss your specific case and to determine what path is best for you.

--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

Power of Attorney

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Protecting our financial interests is especially important in this day and age of social security and economic uncertainty. I say “our” to point out that this type of knowledge is certainly helpful to us all, myself included! And it’s never too soon or too late to get started.  That said, I’d like to take this opportunity to share a few of the estate planning lessons that I took away from a recent seminar.

IT IS ALWAYS A GOOD IDEA TO HAVE A POWER OF ATTORNEY. If you become incapacitated, such as through an accident, sudden illness, unplanned or scheduled absence, a general power of attorney allows you to name someone to act on your behalf with regard to any and all financial, business and contractual matters. This includes the opening and closing of bank accounts, paying of bills, transferring property and contracting attorneys and accountants. This allows YOU, not the court, to decide who is best able to handle your financial matters. If you become unable to handle your financial, business and contractual affairs and haven't appointed an attorney-in-fact, then court intervention will most likely be required before anyone may pay bills, sign a deed to transfer property, sign contracts, or decide other important matters. Moreover, a power of attorney may be required to get access to joint accounts and conduct other business. As a result, failure to appoint a financial power of attorney could ultimately cause excess stress to your family, unnecessary and additional legal fees and delays. Bottom line, it is always a good idea to appoint a power of attorney in the event that you may become unable to handle your financial affairs. Although it is certainly preferable to hire an attorney to draft your power of attorney, Chapter 32A of the North Carolina General Statutes explains the laws in NC with regard to powers of attorney. More specifically, NC Gen. Stat. §32A-1 provides a statutory short form power of attorney.

A HEALTH CARE POWER OF ATTORNEY IS A SEPARATE AND DISTINCT TYPE OF POWER OF ATTORNEY DIFFERENT FROM A GENERAL POWER OF ATTORNEY. The North Carolina General Assembly has acknowledged the fundamental right of an individual to control the decisions relating to his or her medical care, and that this right may be exercised on behalf of the individual by an agent chosen by the individual. As a result, North Carolina has established an additional, nonexclusive method for an individual to exercise his or her right to give, withhold, or withdraw consent to medical treatment, including mental health treatment, when the individual lacks sufficient understanding or capacity to make or communicate health care decisions by and through the designation of a health care power of attorney. Basically, a health care power of attorney allows you to name someone else to make medical decisions for you if you should become unable or unwilling to make these decisions for yourself. You can have both a living will and a health care power of attorney and both can be in the same document. Please note that someone providing health care to you for compensation cannot be named as your health care agent. If you do not name someone as your “health care agent” in a health care power of attorney, then your spouse or next of kin will make all medical decisions for you if you become incapacitated. Chapter 32A of the North Carolina General Statutes explains the laws in NC with regard to health care powers of attorney and NC Gen. Stat. §32-25.1 provides a statutory form health care power of attorney.

--Sarah Reamer currently practices with Hodges & Coxe PC and specializes in general civil litigation, focusing on real estate litigation and foreclosure protection. Please contact her at sreamer@hc-lawfirm.com or (910) 772-1678.

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Corporation Games

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Businesses can be organized in several different ways. One of the newer forms of business is a Limited Liability Company or LLC. The best way to understand an LLC is to compare it to a traditional corporation.

Limited Liability Company

A LLC is a legal entity that exists separate and apart from its owners. The owners of the LLC are called "members" (as compared to a corporation, where the owners are referred to as "shareholders"). An LLC is formed by filing articles of organization Secretary of State (filing fees are paid with the articles of organization).

There are three primary areas of an LLC that are attractive business owners:

The LLC, like a partnership, is given a pass through tax treatment, which means that profits and losses are reported on each member's individual tax return;

The LLC, like a corporation, provides liability protection for the members (assuming that potential debts and obligations are incurred in the name of the LLC and not the members individually), which means that creditors can assert their claims only against LLC and not directly against the members (again, assuming that the LLC is properly operated and the members do not personally guarantee any obligation of the LLC); and

The LLC provides flexibility in management and other issues while preserving the 2 advantages listed above.

Corporations

A for-profit corporation is a business structure formed by filing articles or incorporation with the secretary of state. A corporation is recognized as being separate and apart from its owners. (The owners are called "shareholders".) As a separate entity, it has its own rights, privileges, and liabilities apart from the individuals who form it.

The shareholders of a corporation are generally not personally liable or responsible for the debts or obligations of the corporation. A stockholder's personal liability is usually limited to the amount of his, her or its investment in the corporation and no more. A corporation continues to exist after the death of or transfer of shares by one or more of the shareholders. A corporation pays taxes on its profits, and its shareholders pay taxes on dividends, unless "S" tax status is elected - then the profits and losses of the corporation "pass through" to the shareholders.

The shareholders of a corporation have only the money that they have invested into the company at risk - shareholders are generally not required to pay their own money to satisfy any debt of or judgment against the company.

A corporation's existence may continue on regardless of what may happen to its individual officers, directors or shareholders. Also, ownership of the business may be transferred, without disrupting operations, through the sale of stock.

Capital can be more easily raised with a corporation. This may be accomplished through the sale of stock or other equity interests.

Corporations can offer anonymity to its owners. The corporate name is used in the operation of the business, generally not that of the shareholders.

--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.

A not-so-social deposition

The movie “The Social Network,” is about the formation of Facebook. A lot of the narrative of the movie is told in flashbacks framed by the various depositions in the lawsuits between the parties who allegedly had role in the creation of the social media site. In this scene, Mark Zuckerberg, the creator of Facebook,(played by actor Jesse Eisenberg) answers some questions in a deposition by the attorney for the Winklevoss twins who filed a lawsuit alleging that Mr. Zuckerberg stole their idea and created Facebook. Despite this being an entertaining clip and it seems that Mr. Zuckerberg won this exchange, if this is how the transcript played out in reality, he did nothing but hurt his case.

One of the mistakes that people make in depositions is trying to argue with the other attorney. This happens especially with experts and professionals because they think they are smarter than the attorney asking the questions. In a lot of cases they are even correct (and it would not be a stretch to say Mr. Zuckerberg was smarter than the opposing lawyers). But by verbally sparring with the other attorney, you are doing more than just answering the question. You are providing the other attorney free information about your case. You are giving your opponent cross-examination material to use on the stand against you. Mr. Zuckerberg’s comments in this deposition can be read to a jury and introduced into evidence. In fact, this appeared to be a video depositionA good attorney could build an entire closing argument around these comments. “Thank you ladies and gentlemen of the jury for your attention to the facts in this case. That is all my clients, the Winklevoss twins asked of you and you have delivered. If only the Defendant had given them his attention, as he agreed to do. But he did not, and even in a lawsuit did not. The only person that the Defendant thought deserved attention was himself.  Does he even think you deserve his attention…”

Save the clever arguments for your lawyer and cocktail parties. Just listen to the question; answer the question; and let your lawyer object if it is irrelevant.

--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. 

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Servicemembers Civil Relief Act

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The “Servicemembers Civil Relief Act” (SCRA) was enacted in 2003. This law is the latest in a series of statutory protections dating back to the Civil War for active service members, including the predecessor statute the Soldiers’ and Sailors’ Civil Relief Act. The SCRA provides protection to servicemembers regarding residential leases, automobile leases, installment contracts, interest rates, court proceedings, and some tax protections.

Residential Leases

If a servicemember is a named party on a residential lease, the SCRA allows him to terminate it for entering active duty, or he receives orders for a permanent change of station or to deploy for a period of not less than 90 days. In order to take advantage of these protections, the servicemember has to make a written request with a copy of their orders. The lease will then be terminated 30 days after the date on which the next regularly scheduled payment is due. Like most contracts the statutory mandate is the minimum required. Particularly in areas with a large military presence, there may be additional protections that are provided in your lease.  

In addition, the servicemember can be protected from evictions from a residence occupied by the servicemember or dependants for which the monthly rent does not exceed a certain amount. If the court determines that the servicemember or dependents are unable to pay their rent on time as a direct result of the servicemember’s military duties, they may order that the eviction be postponed for up to three months.

Automobile Leases

A new provision similar to the protection for residential leases allows the termination of automobile leases for use by servicemembers and their dependents. Automobile leases may be cancelled if the servicemember receives orders to active duty for a period of 180 days or more or permanent change of station orders outside the continental US. The servicemember is responsible for title, tags, excess wear and mileage, but cannot be charges with an early termination fee.

Interest Rates

If a servicemember has debts that were incurred prior to entering military service, and if the her  military service has directly affected her  ability to pay those debts, the servicemember can have the interest rate capped at six percent (6%) for the duration of her military service. The service member must request this reduction in writing and include a copy of her orders. Note that the language of the statute specifies that the excess interest is forgiven and not just deferred to be collected at a later time.

Court Proceedings

Where I generally have run into this act, is the provision regarding court proceedings. If a servicemember is a defendant in a civil proceeding, the servicemember may ask for a postponement if he submits a statement along with a statement from his commanding officer explaining how their current duty requirements prevent them from appearing. The SCRA also would allow a court to reopen a default judgment entered against the servicemember if it is clear that the servicemember was unable to defend themselves due to their military service and they have a legal defense to the action. The new statute also extends this protection to administrative hearings.

Taxes

The SCRA also has a provision that would prevent states from increasing the tax bracket of a nonmilitary spouse who earned income in the state by adding in the service member’s military income for the limited purpose of determining the nonmilitary spouse’s tax bracket. This practice has had the effect of increasing the military family’s tax burden.

Happy Veteran's Day.

--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.