Category: Litigation
Clear ResultsTax
Tariff Litigation & Section 122 Tariffs
On February 20, 2026 the U.S. Supreme Court issued a landmark decision in Learning Resources, Inc. v. Trump holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The decision invalidates the reciprocal tariffs and trafficking/immigration tariffs imposed in 2025 under IEEPA and confirms that the power to impose tariffs lies with Congress. The Court did not prescribe a refund mechanism; that responsibility now falls to the U.S. Court of International Trade (CIT) and U.S. Customs and Border Protection (CBP). Within hours of the decision, the Administration imposed a new 10% tariff under Section 122 of the Trade Act of 1974 (now 15%), effective February 24, 2026, and limited to 150 days (absent congressional action). This creates two immediate opportunities: Refund claims for prior IEEPA tariffs (available to domestic and foreign companies) Advisory and planning work related to new Section 122 tariffs and potential replacement regimes (Section 232/301) What Changed: 1. IEEPA Tariffs Invalidated The Supreme Court ruled that IEEPA does not authorize tariff imposition. IEEPA tariffs imposed in 2025 are unlawful ab initio. Refunds are not automatic. Importers must act. 2. Section 122 Tariffs Now in Effect 15% tariff on most imports entered on or after February 24, 2026 Limited to 150 days (approx. expires July 24, 2026 unless extended) USMCA-qualified goods excluded “Goods on the water” exception for certain shipments loaded before Feb 24 and entered before Feb 28 This is a temporary bridge. Section 232 (tariff imposed for national security) and 301 (tariffs imposed on foreign products to counter unfair trade practices) actions may follow. Who May Have a Refund Claim: Those who: Imported goods between February 2025 and February 24, 2026 Paid additional IEEPA ad valorem duties Are the importer of record Have entries that are unliquidated or recently liquidated Did not yet file a protective Court of International Trade (CIT) action Refund claims are available to domestic and foreign companies – the controlling factor: who is the Importer of Record on the customs entry Important: Only IEEPA duties are refundable — not Section 232 or 301duties. Downstream buyers may have contract-based reimbursement claims. Areas Where Offit Kurman Can Assist You: 1. Tax Litigation / Customs Litigation Refund analysis and quantification Protest filings Protective CIT litigation Federal Circuit appeals Strategic coordination of administrative and judicial remedies 2. Transactional Tax Tariff deductibility analysis Accounting method considerations Timing of refund recognition Contingent asset treatment Structuring to mitigate future tariff exposure 3. Corporate & Business Structuring Restructuring importer-of-record status Creating new import entities Evaluating transfer pricing implications Risk allocation between affiliates Supply chain realignment 4. Commercial Contracts Review of tariff pass-through clauses Reimbursement rights for downstream buyers Force majeure and change-in-law provisions Supplier renegotiation strategy Indemnification enforcement 5. Commercial Litigation Claims between buyers and suppliers over tariff allocation Breach of contract actions Indemnity disputes Class or coordinated actions among distributors 6. Restructuring & Insolvency Tariff-driven liquidity pressure Claims valuation in bankruptcy Recovery of tariff refunds as estate assets Documents You Should Be Gathering: Entry summaries (CF 7501) Duty payment records Liquidation dates PSC filings Contracts allocating tariff responsibility ACE and ACH refund account status SKU lists affected by Section 122 Bottom Line: IEEPA refunds are potentially significant. Deadlines are running. Section 122 tariffs create immediate planning needs. If you import goods, manufacture overseas, distribute foreign products, or rely on cross-border supply chains, connect with Offit Kurman for consultation.
March 2, 2026
Construction
Pennsylvania Supreme Court Decision Supports Legislative Finality Created by Statute of Repose
In a welcome development for Pennsylvania’s construction industry, the Pennsylvania Supreme Court’s recent decision in Gidor v. Mangus reinforces the integrity of legislatively adopted Statutes of Repose. On October 23, 2025, the Supreme Court held that Section 7512 of the Pennsylvania Home Inspection Law constitutes a one-year statute of repose — eliminating the right to bring a lawsuit against a home inspector. The decision signals continued judicial support for the legislative adoption and intent behind statutes of repose. This decision arrives at a critical point, as two high-profile cases involving the Construction Statute of Repose — Aloia v. Diament and Clearfield County v. Transystems — are pending before the Pennsylvania Supreme Court. Each case threatens to erode the protections afforded by the 12-year Construction Statute of Repose, 42 Pa. C.S. §5536. In Aloia, plaintiffs argue that alleged violations of the building code toll the statute of repose. While the County in the Clearfield County appeal asserts that the ancient doctrine of nullum tempus exempts public entities from the Construction Statute of Repose. The Gidor court’s affirmation of the 1-year Statute of Repose is particularly relevant to the construction industry because the court’s decision heavily relies on its prior decisions interpreting the Construction Statute of Repose. The court emphasized that, because the statutory clock starts at a definite event independent of injury or discovery and is not subject to equitable tolling, the statute extinguishes any claim. Critically, the repose period upheld in Gidor was just one year from the date a home inspection report was delivered. The court’s reasoning underscores the judiciary’s willingness to enforce clearly defined legislative statutory repose periods. Moreover, the court’s acceptance and approval of a one-year statute of repose in Gidor lends judicial credibility to legislative efforts such as Senate Bill 399, which seeks to shorten the Construction Statute of Repose period to six years. By reaffirming the distinction between statutes of limitation and repose, Gidor strengthens the argument advanced in amicus briefs filed by Offit Kurman on behalf of leading A/E/C associations: the repose period must remain a firm and predictable legislative boundary eliminating all claims. If the Supreme Court follows its reasoning in Gidor, we anticipate that the Court will preserve the 12-year Construction Statute of Repose’s essential function of providing finality, reducing indefinite liability, and protecting the architects, engineers, and contractors from stale claims. Law Clerk Robyn St. Hilaire provided valuable insight and contributed to this article.
November 5, 2025
Litigation
How to Avoid Estate Litigation
Trust and estate litigation is an all-too-common outcome for individuals and families in the wake of a loved one’s passing. But why? Is it just about money? Inter-personal and family disagreements? Or something else entirely? The answer inevitably varies. Many, if not most, estate disputes have some underlying familial distrust and disagreement. These family issues can often boil over in the wake of a loved one’s passing. Yet, not all estate disputes arise out of preexisting family issues. It is not uncommon for family dynamics to change and for problems to arise in the face of a loved one’s passing. But how can this be prevented? Communicating with family and planning ahead are just two things to consider when trying to avoid unnecessary estate litigation. Though seemingly insignificant, simply communicating with family, friends, and loved ones that you have an estate plan is vital. Now, this does not mean that you must divulge what your estate plan is, but letting those in your life know that you have one and where and how to access it when the moment comes is important. It aids to remove the element of surprise and ideally with it, the potential for distrust as well. Additionally, letting beneficiaries know who you have chosen to act as your executor is equally important. Informing those affected who will be in charge after your passing again removes the element of surprise, which all too often can breed distrust and discomfort. Planning ahead goes hand in hand with communication. Many Americans put off creating a will or estate plan, seeing it as something to take care of in the future. Something that is not relevant to them today. Yet, this way of thinking is generally an avoidant one. Though it can be difficult to plan for our own passing, doing so can alleviate the myriad of questions and concerns that can occur absent an estate plan. Through developing an estate plan, the execution of your wishes can be better assured and allows for your loved ones to be more informed. This allows for more clarity regarding the wishes and intentions of the deceased and oftentimes makes a meaningful impact in dissuading a loved one’s potential lawsuit. Trust and estate litigation may be common, but through planning ahead and having open communication, it allows for a deeper understanding of our loved one’ wishes and can help prevent minor interpersonal disagreements and familial distrust from devolving into litigation. Seek legal counsel to ensure that your interests are protected. If you have any questions about this or Estate Planning/Estate Litigation topics, please contact me at austin.hinel@offitkurman.com or (703) 745-1899.
January 10, 2024
Litigation
Possession – Is It Really Nine-Tenths of the Law?
What does the expression “possession is nine-tenths of the law” mean? “Possession is nine-tenths of the law” is simply a recognition of presumed ownership. As highlighted recently in an Alexandria federal case over the rightful heirs to four original Norman Rockwell paintings (see Elam v. Early, Case No. 1:23-cv-229), the common law provides that the one possessing property is presumed to own it. On the flip side, one claiming ownership in property possessed by another has one’s work cut out. Why does the common law presume that one in possession is the rightful owner of something? Why does the common law presume that one in possession is the rightful owner of something? Stated alternatively, “Why do we infer ownership from possession?” Because the alternative is too impractical! Imagine a world in which you had to carry or produce receipts or other proof of ownership for anything and everything you own, everywhere, all the time! Absent such proof, you would instead be presumed a thief subject to arrest. One will note that we have developed certain exceptions to the general rule – vehicle registries and cattle branding come immediately to mind. While not expected to produce a car title if stopped by police, drivers are expected to produce proof of registration in part to evidence that the vehicle they are driving isn’t stolen. Similarly, ranchers have a longstanding tradition of uniquely branding their livestock as a means of readily identifying ownership of the animal. The exceptions are generally accepted as appropriate due to the significant value of the items involved. Similar “branding” exists with other items of significant value to which unique identifiers or serial numbers are inscribed or otherwise affixed. While registries and unique identifiers may prove helpful in establishing ownership, however, it must be noted that they, too, merely provide evidence on which one might rely in proving one’s status as the rightful owner. How does one legally challenge the “possession is nine-tenths of the law” presumption? The ability of one not possessing property to establish proof of ownership renders the original presumption rebuttable. One claiming ownership might claim, for instance, that the possessor stole or, in non-criminal terms, “converted” the property. Alternatively, if one had originally come into possession of property legally but subsequently refused to return it, an aggrieved owner of the property might argue that a breach of bailment had occurred. While proof of theft would serve to rebut ownership, it would not necessarily be conclusive in a particular situation where what is ultimately called for is proof of superior title. One might imagine a situation, for instance, where the true owner is shown to have improperly stolen an item back from the original thief. Proof of superior title would prevail as to ownership even if the owner might remain answerable for any legal consequences of the thievery. Establishing proof of a gift of an item is another foreseeable step in a case in which burdens of proof shift back and forth. As a presumption can be rebutted, so too can additional evidence of many kinds serve to support an ownership claim grounded in possession. The challengers in the Norman Rockwell case failed utterly to produce any evidence of superior title such that the party possessing the paintings need not establish, even in the absence of proof that the paintings had been gifted by the decedent prior to death, anything more than unquestioned possession. Proof of a gift is not always impossible, however. Testimony of anyone aware of the gift is generally relevant and admissible, as would be a reference in a gift card (in the event it still existed) to the gift itself. I am reminded of a case of my own early in my career in which my client, for reasons I no longer recall, actually had a Polaroid picture of herself with a gift cuckoo clock and writing from the decedent on the bottom of the frame referencing how pleased he was to have given it to her. Then again, one of my all-time favorite lawyer movies, Legal Eagles (a 1986 romcom starring Robert Redford, Debra Winger, and Darryl Hannah – check out its IMDB), draws a much closer parallel to the Eastern District’s recent summary disposition of the Norman Rockwells. While I’ had not intended this as a movie review or date night recommendation, I can’t help but encourage my fellow law-minded movie lovers to check out this legal classic in which Redford and Winger struggle with proving their non-possessory client’s (Hannah’s) ownership of a valuable painting which ultimately comes down to establishing the existence of a gift inscription on the back of the painting (the fiery pursuit and result of which I wouldn’t dream of spoiling for you!). [You’re welcome in advance for this “oldie but a goodie,” 2-in-1 romcom – “lawyer movie” recommendation, notwithstanding the purposefully only-a-lawyer-could-love, yawnfest of a description! I’ll look forward to reading your critical movie reviews.] Does “nine-tenths of the law” equate to only a 10% chance of successfully challenging one claiming ownership merely by possession? Possession may be nine-tenths of the law, but legally supporting or refuting ownership on behalf of either the one in possession or in favor of the other one-tenth is when you need 100% confidence in the legal advocate you choose to help make your case. Don’t make the mistake of equating “nine-tenths of the law” with a 90/10 probability outcome regardless of who represents you. Good legal representation can increase your odds of success, and indifference in the selection process can lead to unfavorable results. Don’t leave your outcome to chance. Relevant experience matters.
December 13, 2023
Litigation
Legislative Update – What You Need to Be Aware of
During the 2023-2024 North Carolina General Assembly session, which convened in January 2023 and is set to conclude in December 2024, a number of bills were introduced that could greatly affect landlords if passed. In the May newsletter, I discussed House Bill 551 and what its passage could mean for both landlords and renters. In this edition, I will give a brief overview of some of those bills that, if passed, could possibly negatively affect landlords, provide greater clarity regarding existing laws, or reinforce already existing laws. First up is Senate Bill 724. Senate Bill 724. Hotel Safety Issues Related Matters – would help enforce Senate Bill 53 (Hotel Safety Issues), which became law on March 19, 2023. Senate Bill 53 defined transient occupancies as “the rental of an accommodation by an inn, hotel, motel, recreational vehicle park, campground, or similar lodging to the same guest or occupant for fewer than 90 consecutive days.” Senate Bill 724 further addresses transient occupancies by requiring guests to vacate after 90 consecutive days, permitting innkeepers to contact law enforcement to have guests removed, and making it clear that transient occupancies are governed by NCGS Chapter 72 and not 42. Additionally, the bill also permits innkeepers and guests to enter a lease agreement after the 90-day period. Any such agreement will be governed by NCGS Chapter 42. This bill has not yet become law and could possibly not be picked back up during this legislative session. What does that mean for Senate Bill 53 and innkeepers? Will issues arise with enforcing Senate Bill 53? Senate Bill 667. Regulation of Short-Term Rentals – primarily prohibits cities and counties from adopting ordinances, rules or regulations that prohibit the use of residential properties and accessory dwellings as short-term rentals. In the last couple of years, we have seen a drastic increase in the use of short-term rental sites such as Airbnb.com and VRBO.com. Could this be the reason for the introduction of this bill? Senate Bill 633. Mobile Home Park Act – outlines more stringent requirements for mobile home parks. As of right now, mobile home parks are governed by NCGS Chapter 42, just like all other residential rental properties. Passage of this act could possibly make being a mobile home park owner a little more difficult as it includes a number of additional requirements for mobile home parks. House Bill 595. Rental Inspections – prohibits local government from adopting and enforcing ordinances that would require any owner or manager of real property to obtain any permit or permission under Article 11 or Article 12 of NCGS Chapter 160D from the local government to lease or rent residential property or to register rental property with the local government except in limited cases. Senate Bill 553. Landlord-Tenant and HOA Changes – amends NCGS 42-14.1 bar on local rent control regulations and NCGS 42-46 to state that a late fee can only be charged if a rental payment is five or more calendar days late, the first day being the day after the rent was due. Senate Bill 244. Housing Extension – modifies NCGS 42-14 and will require landlords to give 60 days’ notice if they intend to terminate the tenancy regardless of the length of the term (i.e., week to week, month to month, etc.) unless the lease provides otherwise. This bill would also require landlords to give tenants 60 days’ notice of any rent increase. House Bill 208. Low-Income Housing Tax Credit – reenacts Article 3E, Low-Income Housing Tax Credits of NCGS Chapter 105, as it existed immediately before it was repealed in 2015. All these bills are at various stages, some still in the House having passed the 1st reading, others have been referred to the Committee on Rules and Operations in the Senate. All of the bills have seen little to no activity since April and May. The General Assembly (House and Senate) are set to convene on Wednesday, November 29, 2023. What bills do you believe will pass? What bill’s passage do you believe would be most beneficial?
November 14, 2023
Litigation
Same Material Facts . . . Opposite Results?
The Western District of Virginia's Hartford Life v. Herring case outcome doesn’t track with the Virginia Supreme Court’s Wood v. Martin decision . . . or does it? In a recent decision by the Roanoke Division of the United States District Court for the Western District of Virginia, Hartford Life and Accident Insurance Co. v. Herring, the parties disputed the rightful recipient of insurance policy proceeds but were at least able to agree that the separation and property settlement agreement at issue was governed by North Carolina law. In seemingly all material respects, the facts of the Herring case mirrored those of the Virginia Supreme Court’s 2020 decision in Wood v. Martin. Yet, with the Court’s application of North Carolina law, the outcome of the case is in direct conflict with the Wood v. Martin results. Or is it? In Wood v. Martin, the Court held that by operation of Virginia law, Ms. Martin, as the ex-wife, was the rightful 50% beneficiary of her ex-husband’s life insurance policy. The ex-husband’s beneficiary re-designation days before taking his own life, by which he removed her from the policy, was in direct conflict with his contractual and consensually court-ordered obligation to her. The Court agreed with Ms. Martin that under Virginia law, the terms of the divorced couple’s agreement (as incorporated into their consensual divorce decree) requiring that he designate her as the life insurance policy beneficiary effected a written assignment of his contractual right with the life insurance company to change his beneficiary designation, and, consequently, he remained bound to maintain Ms. Martin as the 50% beneficiary of the policy. In Hartford Life v. Herring, the Western District applied North Carolina law to strikingly similar facts to reach the opposite result. The Roanoke federal court faced the situation in Herring where a divorced couple’s post-nuptial agreement had stated that the ex-husband was to retain ownership of his life insurance policy, free and clear from any claim by his ex-wife, presumably bargained for to afford him carte blanche to designate anyone he wanted as his policy beneficiary. When the ex-husband died a few years later, it was discovered that he had never removed his ex-wife as the primary beneficiary of the policy. The Western District acknowledged that under North Carolina law, the failure of a spouse to change the beneficiary ordinarily indicates that he or she did not intend to effect such a change. The Court found that the separation agreement did not sufficiently clearly express the policy owner’s intention to alter beneficiary status (notwithstanding the language about the policy being consensually free and clear from any claim of ownership by his ex) and, therefore, did not constitute an assignment of such interest. Consequently, the Court refused to “blue pencil” the policy’s beneficiary designation to match the stated intentions of the divorced couple’s post-nuptial agreement. With directly opposing outcomes, in such strikingly similar cases, one might simply presume the results were dictated by differing state assignment laws. On closer inspection, one or more other factors might have led to such seemingly contrary findings and conclusions. One possibility is that, perhaps, both courts simply applied an “ends justifies the means” approach to decision-making to fashion a remedy and result favoring an otherwise aggrieved ex-spouse. While attractive at first, with both cases resulting in arguably otherwise aggrieved ex-spouses awarded the life insurance proceeds, this justification seems unlikely. From all outward appearances at least, the Herring policy designee stood to receive an apparent windfall contrary to the outcome for which she’d bargained in the couple’s post-nuptial agreement. Instead, perhaps the facts of the cases differ materially in a non-obvious way? Perhaps the results were driven by specific language in each of the agreements, highlighting more than an innocuous distinction. As it turns out, ownership of a policy is not synonymous with the right to dictate who receives the proceeds thereof. It is true that legally speaking, one with ownership of a policy generally maintains the right to designate beneficiaries of that policy. The Woods v. Martin court recognized an exception to this general rule when one contractually obligates oneself to maintain a particular designee. The Hartford Life v. Herring court was not asked to consider the same contractual obligation, but rather, the apparently unequivocal waiver by the would-be designee to claim an ownership interest in the policy. Considered from these differing perspectives, ownership of the policies in each case went unchallenged, whereas the obligation to designate a particular someone in the former case contrasted materially from the unfettered right of the owner in the latter case to designate anyone he wanted. Then again, perhaps the differing outcomes can be explained factually but less legalistically. After all, simply stated, in the former case, Ms. Martin was awarded with what her deceased former husband had contractually promised to do for her. In the latter situation in Herring, the court’s decision let stand the decedent’s beneficiary designation, which, despite having negotiated for himself the exclusive right to designate anyone he wanted as his beneficiary -- which right he then could have exercised any time he wanted! -- for reasons he apparently took to his grave, he never did. Perhaps it was merely an oversight by the deceased policy owner, or perhaps it was a conscious decision on his part. We’ll clearly never know. We do know, however, that merely because he could change the policy beneficiary did not legally dictate that he must do so. Without language in the post-nuptial agreement expressly directing him to take particular action regarding the beneficiary designation, as in Woods v. Martin, perhaps this is a sufficiently material factual distinction justifying an opposite result without regard to the law of assignments in either North Carolina or Virginia. Seen in this light, the Woods v. Martin and Hartford Life v. Herring decisions make perfect sense! So, when does it make sense that the same material facts lead to opposite results? Certainly, one option is that the law differs from state to state. In this situation, however, another option appears to be that no matter how strikingly similar the facts of the two cases, they differ materially in more ways than one – sufficiently so much as to dictate opposite results and, consequently, leaving unresolved the issue as to the extent to which the law of assignments in this context actually differs between the two states. Thoughts?
November 9, 2023
Litigation
The “Omnibus Order” - “Mutually Beneficial ‘Kitchen-sinking’” | Part One
Originally posted on 04/23/20, content updated on 11/07/23 “MBKS” or Mutually beneficial “kitchen-sinking.” It’s a thing. . . . No, seriously, it is totally a thing! Well, it should be! I credit opposing counsel in a substantial life insurance claim litigation for having suggested that in a single order we might have the court nonsuit (voluntarily dismiss) some claims; nonsuit some arguably interested parties; allow and approve both interpleading of funds and partial payouts of non-interpleaded funds; conditionally dismiss the interpleading party; and generally streamline the pending case to the core factual/legal issue(s)/matters about which the remaining principal parties would be left to dispute. “Not possible,” I was confident. “No way a judge signs off on all that in a single order.” I was willing to try it, of course,–this “omnibus order” approach, as I had dubbed it, where we would toss in everything but the “kitchen sink”–in hopes of achieving all of the above in inconceivably record time. “Doubting Thomas” that I am, however, I had little expectation of this actually working and was confident it would only end up serving to add costs and delay unnecessarily to all of the procedural and substantive agreements we’d negotiated. I waited for the inevitable call to come from the law clerk informing counsel that there were certain rules and procedures to be followed for these sorts of things, and asking (but not really asking) if I would we be so kind as to file the appropriate multitude of motions to be heard at the proper times on succeeding Fridays, etc. . . . etc. But, as you’ve no doubt already discerned, the call never came. The omnibus order was entered, and, as if having just scored an unexpected “Fast Pass” at Disneyworld, we shot to the front of the litigation roller-coaster line short-circuiting much of the anticipated pre-trial delays. Attorneys, litigators in particular, are typically paid really well to know the law (or at least how to figure it out when and as necessary in a given situation!), and compensated even better if able to apply it effectively to their clients’ advantage. Mutually beneficial “kitchen-sinking” is about saving clients’ time and money. Adversaries willing to resolve multiple substantive and procedural matters in a single omnibus order well-serve their clients and, concomitantly, the legal system (by helping keep dockets unclogged and access unfettered) and themselves, “…to the extent one’s reputation among both future adversaries and potential future clients is immeasurably impacted by one’s own choices.” The best litigators know and apply the law to their clients’ substantive advantage with a time and cost efficiency that avoids results where “only the lawyers win,” because these lawyers understand that a pyrrhic victory is no victory at all. One would be wise to remember that, to one’s client, “winning at all costs”–whether or not one’s client appreciates it at the time!–is typically tantamount to a loss. #MBKS!
November 7, 2023
Litigation
Buyer Beware: What Homebuyers Should Know About Latent Defects
With “home buying season” now firmly in the rearview mirror, first-time home buyers and repeat buyers alike are continuing to settle into their new homes. For first-time homebuyers, in particular, the task of purchasing a home can easily and understandably appear to be a daunting one—to say the least. Many first-time homebuyers have genuine fears about the home-buying process, and repeat home buyers may be increasingly untrustworthy after previous bad experiences. All of this, and more, can easily create a stressful endeavor. Yet the commonly known principle of “Buyer Beware” often casts a shadow of doubt over the entire home buying process. The principle of Caveat Emptor or “Buyer Beware,” as it is colloquially known, is often characterized and maligned as a black-and-white doctrine, yet this is not always the case. Buyers often rely heavily on an inspector to provide a “green light” and/or identify faults in the property—but this process will often fail to detect hidden defects. Inspectors can only do so much during an inspection, and all too often, the “smoking gun” may be hidden from view or easily overlooked. If an inspector does fail to identify a defect or fault in the property, “greenlighting” the buyer to purchase the home, latent or hidden defects often do not become apparent until after moving into the home. The concept of Buyer Beware would lead home buyers to believe that most, if not all, undiscovered defects in their new home is their sole responsibility and that a seller need not remediate any issues. However, that is not always the case. In the event of fraud, a buyer may recover from a seller when the seller actively hid defects in the property or performed deceptive acts that induced the buyer to purchase the home. False assurances and misleading statements regarding the condition of plumbing, electrical, or HVAC systems can amount to fraud in the inducement, leaving the seller open to liability from the buyer. Painting over wood rot, covering water damage and mold with new flooring, and other affirmative acts of concealment open a seller up to liability and provide a lifeline to buyers. When a buyer relies on false or misleading statements in the purchase of their home, they may still be able to recover despite a buyer beware principle. In addition to false or misleading statements, a seller who actively conceals material defects in the property in anticipation of sale will open the seller up to liability.
September 14, 2023
Litigation
Missed a Deadline?
Have you ever received a lawsuit or claim with a time-sensitive deadline? While it may be possible to receive an extension from the court or the opposing party, one should not count on such leniency. In some instances, particularly appeals, the filing deadline(s) are mandatory and jurisdictional. By way of example, the Supreme Court of Virginia recently expedited granting an Offit Kurman team’s motion to dismiss an interlocutory petition for review as untimely. The terse and expedited ruling by the Court upholding a Circuit Court decision to deny a preliminary injunction serves as a cautionary tale for those seeking appellate relief in Virginia as the Court refused the petitioner’s attempt to excuse a one-day late filing.[1] If you or your organization are served with a civil lawsuit or are forced to consider appealing an adverse decision, missing a filing deadline might prove to be outcome determinative. Which rules apply and how much time one has to act in a given situation may not be readily apparent. Consulting with a trusted attorney in your area might prove to be the difference between winning and losing. While outcomes cannot be guaranteed and past performance cannot assure future success, Offit Kurman litigators Thomas W. Repczynski | Offit Kurman and Anders Sleight | Offit Kurman are available to evaluate your specific c situation.[2] _______________________________________________________________________ [1] Case results do not guarantee or predict a similar result in any other case. [2] These materials have been prepared for informational purposes only and are not legal advice. Reviewing this post or contacting Offit Kurman in response does not create an attorney-client relationship. Case results depend upon a variety of factors unique to each case, including the specific factual and legal circumstances of each case. This post may constitute ADVERTISING MATERIAL.
August 17, 2023
Litigation
Creative Lawyering – Property Settlement Agreement as Written Assignment (a Supreme update)
A beneficiary’s interest in a life insurance policy is only as protected as the written assignment securing the interest with the policy issuer. In the right circumstances, a Property Settlement Agreement (PSA) – or other similar agreement! – can double as any number of other useful legal documents. I’ve previously written of trial court successes where PSAs have doubled as a real property deed and, in a more recent case, as an “assignment” (serving to transfer an interest in life insurance policy proceeds). Over the pandemic, I left readers hanging by failing to share the appellate outcome on the “assignment” issue. The Virginia Supreme Court took up a case of mine involving a divorcee whose deceased ex-spouse failed to honor a consensually court-ordered life insurance commitment. Essentially, the divorcing husband had promised to maintain life insurance for the benefit of his soon-to-be ex-wife and later reneged by changing the policy beneficiary designation (a not uncommon occurrence, unfortunately) shortly before committing suicide. The trial court had ruled favorably for the surviving ex-spouse (our client) but had done so on questionable legal grounds – relying on a definition of “creditor,” which I had not even argued to the Court (with good reasons, it turns out!). Suffice it to say, the circumstances in the case required a “written assignment” for the proceeds of the life insurance policy to be rightfully owed to the surviving ex-spouse. The assignment requirement stemmed not from the former couple’s divorce documentation but rather from the contractual arrangement with the life insurance company issuing the policy. Additional details of the case aren’t nearly as significant as the rule of law on which the Supreme Court chose to uphold the trial court’s decision and the impact it ought to have on anyone expecting to benefit from the life insurance policy of another. It turns out the Supreme Court agreed that the language of the couple’s PSA satisfied all the requirements of an assignment sufficient to have effected a transfer of the policyholder’s interest in the proceeds of the policy to his ex-spouse. The appellate victory was sweet – not going to lie. Our client’s win, however, proved a cautionary tale for all future would-be policy beneficiaries (not to mention their divorce attorneys, financial planners, and estate planning counsel!) facing similar circumstances. Our client had lucked out inasmuch as her vengeful ex-spouse hadn’t compounded his in-your-face beneficiary re-designation by pledging or otherwise re-assigning the policy to another in exchange for a financial interest of some kind. According to the Supreme Court, had he done so, he would have successfully cut his ex-spouse out of a substantial portion of the financial consideration negotiated for during the parties’ divorce. Because the PSA/assignment document was not provided to and accepted as an assignment by the insurance company (in lieu of the company’s own form assignment document) prior to the policy owner’s death, any subsequent assignment properly documented with the insurance company would have superseded the PSA’s operative language. In essence, the reach of a PSA’s operative assignment impact only extends as far as the parties to the agreement unless and until either the policy issuer becomes a party to the agreement or the policy owner opts to reassign some or all the same interest in the proceeds. The rationale of the Court’s decision might easily be extended beyond the divorce context to anyone with an expectancy in policy proceeds. I’m speaking especially in this context to anyone who might consider extending credit with the promise of repayment to be backed by policy proceeds. Failing to insist on a written assignment on the insurer’s form and confirmation of the insurer’s acceptance of the assignment unnecessarily affords an unscrupulous borrower the ability to leave you completely unprotected. I welcome opportunities to provide guidance prior to leaving oneself or one’s client unnecessarily exposed and/or counsel when looking to extricate from unanticipated consequences after having failed to protect against them beforehand.
July 25, 2023
Litigation
House Bill 551 – What Will This Mean for Landlords?
In my very first newsletter, I provided commentary on the recent uptick in evictions and summary ejectment proceedings in North Carolina. I went on to cover a local story involving corporate housing tenants who were pushing for legislatures to act and introduce a bill concerning rent control, hindering landlords' ability to unilaterally increase rent by imposing a rental cap. One month later, enter House Bill 551, which was filed on April 3, 2023, and sponsored by Representatives Bradford of District 98, Hardister of District 59, K. Hall of District 91, Crutchfield of District 83, F. Jackson of District 45, McNeely of District 84, Ward of District 5, and Warren of District 76. Unfortunately, it appears that legislatures are doubling down regarding their position on rent control. As stated in my March newsletter, NCGS § 42-14.1 provides that "no county or city may enact, maintain, or enforce any ordinance or resolution which regulates the amount of rent to be charged for privately owned, single-family or multiple residential or commercial rental property." House Bill 551 further enforces this and introduces an act that would prohibit counties and cities from adopting ordinances, rules, and regulations that would prohibit landlords from refusing to rent to tenants because a tenant's lawful source of income to pay rent includes funding from a federal housing assistance program. The bill also addresses the regulation of support animals and service animals in residential tenancies and expands litigation costs, in summary, ejectment matters and homeowner's associations. Currently, under NCGS 42-46, landlords are able to recover some fees and costs related to the filing of a complaint in summary ejectment and, although limited, attorney's fees. The statute currently does not provide for recovery of appeals of summary ejectment matters. House Bill 551 modifies NCGS 42-64 to include the following language: "all actual reasonable attorneys' fees paid or owned for any appeals of summary ejectment matters." Lastly, with the addition of NCGS 42-47 regarding support and service animals, the bill also modifies NCGS 42-53, which permits landlords to charge a reasonable, nonrefundable fee for pets kept on the premises by the tenant to exclude service and support animals as defined in newly added NCGS 42-47. House Bill 551 passed its third reading on April 27, 2023, with 87 representatives voting in favor of its passage. The bill will now be sent to the Senate. What do you think about this bill? Is this legislation necessary? Do you think the passage of this bill will have a positive or negative impact? House Bill 551 is one of many that have been filed and introduced during the 2023-2024 legislative session that addresses landlord tenant related issues. Click on the following link to access a copy of House Bill 551: House Bill 551 (2023-2024 Session) - North Carolina General Assembly (ncleg.gov)
May 16, 2023
Litigation
NJ Court Evaluates Enviro Insurance Exclusions Amidst Natural Resource Damages
$3 billion dollars annually. That’s how much US businesses are paying for environmental insurance each year. While environmental insurance is an important risk management tool for a wide variety of industries, insurance is only as good as the terms of the policy, and this applies doubly to environmental insurance, which is written and negotiated on a custom basis to provide tailored coverage. To make things more interesting, there have been precious few decisions regarding the terms of environmental insurance policies. Now, in a recent decision, a New Jersey appellate court has interpreted the terms of an environmental insurance policy to deny coverage to the insured. See Handy & Harman v. Beazley USA Services, Inc., Docket No. A-2068-20 (N.J. App. Div. Mar. 2, 2023). Background A metal etching business operated in New Jersey from March 1984 to November 1985, when it decided to sell the property it operated on. The businesses used hazardous substances and also fell within the industries subject to New Jersey’s Environmental Cleanup Responsibility Act (ECRA), the predecessor of the Industrial Site Recovery Act (ISRA). As a result, the sale of the property triggered the obligation to investigate and remediate historical contamination pursuant to ECRA and subsequently ISRA. The business then entered into an Administrative Consent Order (ACO) to set forth its ECRA obligations and allow the sale to proceed. Thereafter, businesses completed much of the investigation and remediation of the subject property. Many years later, in 2017, and for reasons not disclosed in the decision, the business obtained an environmental insurance policy. The policy contained two relevant exclusions: (1) a Prior or Pending Litigation Exclusion, which eliminated coverage for matters arising from prior claims, proceedings, and litigation; and (2) a Specified Coverage and Contamination Exclusion, which eliminated coverage for certain pollution conditions arising from known pollution conditions, and which the policy defined as all conditions associated with the “ECRA/ISRA investigation/remediation.” The policy also decreed that New York law would govern its terms, which may have proved fatal to the insured’s hopes of coverage. A few years passed again, until 2021 when the New Jersey Department of Environmental Protection sued the business owner for natural resource damages and other environmental damages arising from the historical contamination. Natural resource damages (NRD) are damages damage to any natural resource (such as groundwater or other media) because of the discharge of hazardous substances and pollutants at the property. These damages can be distinct from the actual cost of remediating the natural resource and include loss of use and/or permanent damage to the resource. The business requested coverage for these damages under its environmental insurance policy, but the insurer refused coverage as a result of the above-referenced exclusions. Interpreting the Exclusions Both the trial court and the appellate court decided that the Prior or Pending Litigation Exclusion barred coverage because the NRD could be traced back to the business’s obligations under the ACO, and the ACO qualified as a prior “claim” that was subject to the exclusion. Although it did not convince either court, the business argued that natural resource damages were different in nature from the investigation and remediation required by the ACE. Policyholders should be troubled by this result because there is a distinction between first-party cleanup costs and natural resource damages. Policyholders should evaluate existing coverage to see how this result would apply to them, and prospective policyholders should attempt to instill more clarity regarding coverage for NRD in future policies. The courts did not need to address the Specified Coverage and Contamination Exclusion, which is unfortunate as there are so few cases interpreting this type of exclusion. However, the breadth of the exclusion is likely to have precluded coverage and is a reminder to businesses to more narrowly define known conditions where possible. At times, it is possible to define known conditions by contaminant or area of contamination so that newly discovered contamination and areas are covered. As a final matter, the business should have pressed for New Jersey law to apply to the insurance policy during its negotiations. This is something that can be easily done, and New Jersey law is much more friendly to policyholders. Conclusion Businesses will continue to use environmental insurance to manage risks and should work with experienced counsel to obtain an environmental insurance policy that provides the expected coverage. This decision highlights a few points for businesses to consider as they pursue coverage, but there are many other important areas of focus as well, and these areas vary by industry and insurance carrier.
April 5, 2023
Litigation
Virginia Civil Lawsuit Filings Increase in 2022
Civil lawsuit filings in Virginia's General District Courts increased 9% during 2022. The biggest increase? Unlawful detainer (eviction) filings. Meanwhile, civil lawsuit filings in Virginia's Circuit Courts decreased, with domestic case filings (including divorces) seeing a notable decrease. Full data from the Supreme Court of Virginia can be found here & here. If you or your organization are served with a civil lawsuit, don’t make any decisions about how to proceed before talking with a trusted attorney in your area. Offit Kurman attorneys are available to advise and counsel you. Reach out to Anders Sleight | Offit Kurman today to discuss your specific situation.
March 16, 2023
Litigation
Beware Sellers . . . Caveat Emptor May Not Be All You Believe it to Be!
When it comes to buying residential real estate in Virginia, the doctrine of caveat emptor, or “buyer beware,” may not be as onerous as you think. I’ve had numerous potential clients come to me with horror stories of post-purchase discoveries or mishaps occurring shortly after buying a property. Appliances are breaking down, ceilings are collapsing, and water in the basement! – just to name a few. Generally speaking, there’s not a whole lot one can do about it other than get the problem fixed! If you’re smart, you’ve paid for a good homeowner’s insurance (always get an HO policy! and have it in effect the moment you take the title – if not sooner!). If you’re doubly smart, you insisted upon having a pre-purchase inspection (and bordering on brilliant if you did your homework and checked the credentials of your inspector!). You’re atop the smarts pyramid if, in addition to all that, you also managed to sign an agreement with your inspector in which you refused to limit your damages to whatever comparative pittance you might have paid the inspector (g’luck with that one!). Congratulations are still in order if you at least insisted on accompanying the inspector and insisted further that everything gets inspected as thoroughly as possible for the money (to each their own as to how far to take this one, but I suggest you consider the following before you decide the extent to which you take heed . . . . Believe it or not, not every home seller is completely above board when it comes to disclosing shortcomings. This may shock you, but some share less than the full truth about the foibles and/or outright problems with their soon-to-be-someone-else’s-money-pit of a home. In fact, some people lie! NO?! Yes. It’s one thing to be less than completely forthcoming; it is quite another to hide, mislead, deflect, cover-up, and/or outright deny problems that exist. “Have these pipes ever caused you any problems? Have you ever had any water issues in the basement? Any known cracks in the foundation? How’s the roof? Has the place ever been struck by lightning to your knowledge?” How a seller responds to these inquiries may very well provide a future legal cause of action against them, even if they have seen fit to try to protect themselves as sellers with anything and everything from a “caveat emptor” contract condition to an “as is, where is” clause, and a disavowal of any buyer’s reliance on absolutely anything the seller might have said prior to finalizing the deal. In fact, you can take it up another notch (turn the volume up to eleven, if you will!) and find that you might still have a claim against the sellers even if, after signing a contract with all of these seller protections, you only closed on the deal after having a professional inspector look to find any problems and fail to discover anything. Now, in the event of a major “miss” from your inspector, you might certainly want to get your money back for a negligent inspection, for sure! (And, hopefully, you were savvy enough in advance to have negotiated out of your typical “money back” liability cap on the inspection contract). The key to whether you have any reasonable expectation of recovery from the sellers is if they committed fraud in the process. You see, it’s one thing not to discover problems when you are actively looking for them; it’s another thing entirely when a seller purposefully covers them up and/or affirmatively takes steps to prevent the discovery of the problem altogether. In this regard, I was recently surprised to learn that such cover-up actions can themselves satisfy the “misstatement” element required to establish an actionable fraud claim. In other words, a seller need not affirmatively lie about a problem if acts to “put you off your guard,” i.e., to prevent you from discovering the true nature of the condition. Consider in this regard examples such as damage from an active water leak that gets covered up, painted over, re-plastered, etc.; a “new” roof that was cheaply/improperly installed (with no underlayment by unskilled day laborers); denied access to a problem area (a locked entrance to a boiler room where the allegedly/assuredly “brand new” boiler is located); or, perhaps, a covered-up, foundation wall crack (for instance, with water-absorbent, sawdust packed in the newly-walled over “renovations” – yup, it’s been done!). All of these present possible major problems and potentially unmanageable expenses (not to mention frustration and aggravation!) after the purchase. Should you even bother asking the sellers if any of these potential deal-breakers exist? Undoubtedly, yes. Perhaps they respond truthfully when asked. You won’t know if you don’t try. Alternatively, perhaps they lie and deny it. What then? Trust but verify! But if you do get taken for a ride, you may not be a defenseless victim. Fraudulently inducing someone into a real estate purchase may not only be actionable in particular circumstances, it might also include with it the recovery of legal fees – often the difference between being made whole with a successful case and not being able to afford to bring the case in the first place. So, caveat emptor, for sure . . . but to those would-be fraudsters thinking they can hide safely behind this good-faith seller’s protection, I say, “caveat venditor!” And to those believing themselves victimized, I say document the seemingly fraudulent statements and actions and have a qualified legal professional look before you opt to do nothing.
March 8, 2023
Litigation
Virginia’s 2023 Wage Hike – New Year, New Minimum!
Virginia is one of nine jurisdictions en route to a $15 minimum wage (or higher) by 2026. As it is, Virginia is one of nearly 30 states to affect an increase this year. The first of the year saw the Commonwealth’s previous minimum of $11 per hour -- which had only gone into effect at the beginning of 2022! -- bump up by another $1 to $12 per hour. By comparison here in the “DMV,” Virginia continues to lag its neighboring jurisdictions, Maryland and D.C., with the first of the year, Maryland’s minimum jumped from $12.50 to $13.25 per hour (for companies of certain minimum size – i.e., 15 or more employees), while D.C.’s $16.10 hourly rate comes in higher than all fifty states, many of which still abide by the federal minimum of $7.25, which has remained unchanged since 2009. Virginia’s increase is the latest in a series of step-ups scheduled to take effect in the Commonwealth between now and 2026. The minimum wage rate in Virginia recently climbed $1.50 per hour in 2021 and, after this year’s additional $1 per hour, is slated to increase again to $13.50 per hour in 2025 before reaching the targeted $15 per hour in 2026. That is, of course, so long as the most recent changes to Virginia’s Minimum Wage Act are not repealed or otherwise limited by the now Republican-controlled General Assembly. Keep a watchful eye out for attempted changes this legislative session to Code Section 40.1-28.10 as attempts are anticipated to try to walk back the increases or at least to “slow the roll.” Tipped employees, such as restaurant wait staff, continue to face a meager $2.13 per hour minimum but, with tips factored in, must meet the $12 per hour minimum rate. If you are a small business owner with questions about the new laws and your obligations regarding them, Offit Kurman has the resources to help. Not sure whether your workers are independent contractors or employees subject to the minimum wage requirements? Choosing to do nothing is still making a choice – and the wrong one could prove very costly in this context. If you’re uncertain whether and/or how this or any other new law (recreational cannabis, for instance?) might impact you or your business, let me get you connected with someone who can help.
February 15, 2023
Litigation
The Virginia Consumer Data Protection Act: Is your Business Ready?
Following California’s lead, Virginia became the second state to enact a data privacy statute. VA Senate Bill 1392. The Virginia Consumer Data Protection Act (VCDPA) went into effect on January 1, 2023. Here’s what you need to know. Personal Consumer Data Rights Each individual Virginia resident may exercise the following data privacy rights: Confirmation: The right to confirm whether or not an entity or individual is processing your personal information and to access such personal data; Correction: The right to correct inaccuracies in your consumer personal data, taking into account the nature of the personal data and the purposes of the processing of your consumer personal data; Deletion: The right to delete personal data provided by or obtained about you; Copies: The right to obtain a copy of your consumer personal data that you previously provided to a Data Processor in a portable and readily usable format; and Opt-out: The right to opt out of any processing of personal data for (i) targeted advertising, (ii) the sale of personal data, or (iii) profiling in furtherance of decisions that produce legal or similarly significant effects concerning you. Who is Subject to the VCDPA? Controllers: a person or entity that determines the purpose and means of processing personal data Processors: a person or entity that processes personal data on behalf of a controller Data Controller Obligations: Limitations: Must limit collection of personal data to that which is adequate, relevant and reasonably necessary; Disclosure: Cannot collect personal data for purposes inconsistent with the disclosed purposes for which data is collected; Data Security: Must establish and maintain reasonable data security practices Anti-Discrimination: Prohibited from discriminating against consumers in processing data, including a consumer’s exercise of rights under the VDCPA Consent: Obtain consumer consent before processing sensitive data Privacy Policy: must be reasonably accessibly and inform consumers of their rights, among other requirements Online Submission: must establish a system for consumers to submit data rights requests. Appeals: consumers have the right to appeal decisions regarding consumer data rights requests if action is not taken in response to a request. Controllers need to establish a system to determine appeals. How is the VCDPA Enforced? Exclusive enforcement by the Attorney General of Virginia Enforcement actions authorized; damages of up to $7,500.00 per violation No private right of action. Individuals and entities cannot sue under the VCDPA. Exceptions and Exemptions A controller or processor is not subject to the VDCPA unless itControls or processes personal data of at least 100,000 Virginia residents; or Controls or processes personal data of at least 25,000 Virginia residents and derives over 50 percent of gross revenue from the sale of personal. Financial institutions regulated by the Gramm Leach Bliley Act are exempt. These are just a few of the requirements of the VDCPA, which could change as Virginia begins its 2023 legislative season. If you or your organization may be subject to the VCDPA, reach out to Anders Sleight | Offit Kurman today to discuss your obligations and compliance management.
January 16, 2023
