Collecting Real Estate Deficiency Judgments in Rancho Cucamonga, California

Suppose a debtor defaults on a mortgage while owing $110,000 on the loan. The sale of the property nets only $90,000, excluding costs and fees, leaving you with a deficiency of $20,000. A deficiency judgment is your way of collecting this $20,000. You must sue the debtor. And if you win, the money can be taken from the debtor’s personal assets – through wage garnishment or seizure of bank account assets, for example.

Unfortunately for lenders, California law strongly favors borrowers in this situation. Unlike many other states, it strictly limits the ability of a lender to collect a deficiency judgment. The following are some examples of the limits on a mortgage lender’s freedom of action in this situation.

Judicial vs. Non-judicial Foreclosures

Two options exist for foreclosure under California law: non-judicial foreclosures and judicial foreclosures:

• Most residential foreclosures are non-judicial in nature (the same cannot be said of foreclosures on commercial properties). Non-judicial foreclosures are carried out by the lender, not the court, and are subject to California’s anti-deficiency statute. This means that, as a lender, you are stuck with any deficiency – you have no recourse to the borrower’s personal assets.

• Some residential foreclosures and most commercial property foreclosures are carried out by the court. Although deficiency judgments are allowed in principle, several exceptions exist, including:

1. Deficiency judgments are not allowed for purchase money loans.

2. Deficiency judgments are not allowed for seller-financed (“seller carry-back”) loans

3. Deficiency judgments are not allowed for refinanced purchase money loans executed on or after January 1, 2013, except under certain circumstances.

If a deficiency judgment is allowed, the amount of the deficiency will be the lesser of:

• The amount owed on the mortgage minus the fair value of the property as determined by the court; or

• The amount owed on the mortgage minus the proceeds of the judicial sale.

For this reason, the lender is not guaranteed to receive the full amount of the outstanding balance – the fair value of the property may exceed the proceeds of the judicial sale (which is a very common occurrence).

The One Action Rule

Under California’s “one action rule,” a lender can only pursue one action to recover a mortgage or a debt. He can:

• Conduct a judicial foreclosure;

• Conduct a non-judicial foreclosure; or

• Sue directly on the promissory note.

The lender, however, is subject to a significant disadvantage: he cannot sue on the promissory note as an alternative to foreclosure. If the debt is secured, he must pursue the security first.

At CKB Vienna LLP, we advise you on the best way to collect on any deficiency that may be owed to you and we can help you collect this deficiency. We can also help you structure transactions in a manner that will help you avoid this situation in the first place.

Call us at 909-980-1040 or fill out our online contact form to schedule a consultation with us. We serve clients from Rancho Cucamonga as well as elsewhere in California.

Trade Secrets under California Law

A trade secret is confidential information that is used in business that confers a competitive advantage over other companies or individuals that do not know of or use it. It can be technology, compilations such as lists of customers, business methods, devices, techniques or processes, among other items.

Although many trade secrets cannot be protected under patent law, some trade secrets can be protected in this manner. But the business that holds them does not wish to be subject to the time limitations on their validity. The formula for Kentucky Fried Chicken is a good example: Yum! Brands, the company that owns KFC, doesn’t want its formula patented because patent protection only lasts for 20 years.

Legitimate and Illegitimate Access

One of the disadvantages of holding a trade secret is that, if someone manages to obtain the information through legitimate means, they can use it as they please and there is very little you can do about it. On the other hand, if your employee or a competitor hacks into your computer database, discovers a trade secret, and uses it to start his own company, you definitely do have legal recourse – including criminal sanctions, in some cases.

The Defend Trade Secrets Act of 2016

The World Trade Organization (of which the United States is a member) obligates its signatories to take legal steps to protect trade secrets held by both domestic and foreign entities and individuals. The Defend Trade Secrets Act of 2016 (DTSA) is the U.S. federal government’s response to bring it into compliance with WTO standards (state law remedies for trade secret violations have been available for quite some time, however).

The DTSA allows you to sue in federal court for trade secret violations, thereby eliminating (theoretically) the possibility of local bias when an out-of-state plaintiff sues in another state’s court. Although minor discrepancies exist among state trade secret laws, they are mostly harmonized because almost every state has adopted the Uniform Trade Secrets Act.

The Pros and Cons of Trade Secret Protection

The primary advantages of trade secret protection are:

• Trade secret protection can potentially endure forever. Think about how long the formula for Coca-Cola has been protected, for example.

• There is no need to publicize the details of a trade secret. Patent protection, by contrast, requires complete disclosure before a patent is even granted.

The primary disadvantages of trade secret protection are:

• Trade secret law does not protect against independent discovery. If someone else comes up with the same idea on their own, you have no recourse against them.

• Trade secret law does not protect against reverse engineering. Of course, reverse engineering can be difficult or impossible, depending on the nature of the secret.

• To qualify for trade secret protection, you must make an effort to keep the information secret. There is no need for such an effort for patent protection since the information has already been disclosed to the public.

An Ounce of Prevention Is Worth a Pound of Cure

At CKB Vienna LLP, we can help you create a trade secret protection policy that can protect your business interests for years or even decades to come. And if you are already involved in a  trade secret dispute, we are adept at applying the pleasure/pain principle to stop the leakage of your confidential information in a forthright manner – and win you financial compensation in the process.

Call us at 909-980-1040 or fill out our online contact form to learn how we can best assist you. We serve clients from all over the Rancho Cucamonga area, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.

Adopting a Child in California

Adoption is a serious matter. Considering the fact that adoption involves transferring parental rights from birth parents to adoptive parents and the fact that the birth parents may never see their child again, how could it not be a serious matter? Obviously, adoption laws exist for very good reasons. If you are considering adopting a child in California, it is important that you understand how the process works.

Obtaining Consent for an Adoption

In nearly every case, consent is required for the adoption process to get started. This consent must be given by:

• Both of the child’s parents if they are married

• Both of the child’s parents, even if they are not married, as long as the father’s name appears on the birth certificate

• The child’s custodial parent only if the other parent has failed to communicate with or support the child for to least one year

• The child’s custodial parent only if the other parent fails to respond to a court-issued notice of adoption proceedings that has been delivered to him or her

• The adoptive parent’s spouse

• The child being adopted as long as he/she is at least 12 years old

The foregoing is an abbreviated summary of consent requirements under California law. As with just about every legal issue, the details are far more complicated.

The Home Study

The home study is the process by which California adoption officials evaluate whether the child’s living environment would suit his best interests under your care. It involves:

• Submitting your fingerprints;

• Submitting to a medical examination;

• Attending adoption classes;

• Being interviewed by a social worker on several occasions; and

• Submitting to a visit from a social worker in your home as well as an investigation of the child’s living conditions.

Your adoption application might be refused if you have ever been convicted of a crime involving child endangerment or child pornogrpahy. Other criminal offenses, such as violent crimes or alcohol- and drug-related crimes, might disqualify you if they occurred within five years previously. The same rules apply to any adult living in your home.

Finalizing the Adoption

If you successfully complete the home study, your adoption can be finalized in as little as six more months. You will need to undergo several more interviews with a social worker, including at least one interview with your child present.  

International Adoptions

International adoptions are growing increasingly popular, especially from China. If your adoption was finalized under, say, Chinese law, it would still be to your child’s advantage for you to re-adopt your child under California law. This would allow him or her to have an English language U.S. birth certificate. As long as your adoption was finalized overseas, however, re-adoption is not a legal requirement.

At CKB Vienna LLP, we can help you navigate the maze of California adoption law, whether you seek a domestic adoption or you seek to finalize an adoption commenced overseas. If you seek assistance with an adoption, feel free to telephone us at 909-980-1040 or simply fill out our online form so that we can schedule a consultation.

We serve prospective adoptive parents from all over Rancho Cucamonga, including Alta Loma, Etiwanda, and Claremont, among other neighborhoods.

Child Custody Law in California: The Basics

Although child custody law in California is more complex than you might imagine, it is guided by a few foundational principles. Foremost among these is “the best interests of the child” that supersedes either parent’s right to authority over or contact with the child, should these values ever conflict with each other.

“The Best Interests of the Child”

The best interests of the child does not necessarily coincide with the child’s own preferences, although these can be taken into account if the child is considered old enough and mature enough to render his preferences worthy of consideration. On the other hand, “I wanna live with Daddy because he serves me ice cream for breakfast” could have the opposite of the intended effect.

The best interests of the child breaks down into two sub-principles:

• The health, safety, and welfare of the child takes precedence over either parent’s preferences; and

• California law presumes that the child’s best interests are best served when the child benefits from frequent and continued contact with both parents (contrary to the popular notion that the mother is always favored).

Physical Custody vs. Legal Custody

“Custody” comes in two forms, and enjoying one form of custody does not necessarily mean enjoying the other.

• “Physical custody” means the child’s living arrangements. All other things being equal, parents share physical custody – one parent may keep the child during the week, for example, while weekends may be reserved for the other parent.

• “Legal custody” means the authority to make life decisions for the child – where he will go to school, for example, or what his religious upbringing will be.

Factors That Can Tip the Scales

The following are a few of the circumstances that can tip the scales of justice in favor of one parent at the expense of the other:

• The child was conceived when the father raped the mother.

• One parent has been convicted of child abuse or domestic abuse.

• One parent has been credibly accused of child abuse (by child protection authorities, for example), even if no conviction resulted.

• One parent has falsely accused the other parent of child abuse or other dangerous behavior (narcotics abuse, for example) to gain advantage in a custody proceeding.

• One parent commits other reprehensible behavior that might adversely affect the child’s well-being (encouraging the child to smoke or take drugs, for example).

If any of these factors are present, a judge may deny custody to one parent altogether or limit the offending parent’s rights to supervised visitation only. In extreme cases, procedures may be undertaken to deprive the offending parent of all parental rights, including even the right to know of the child’s whereabouts.

Consensual Custody Arrangements and Mediated Solutions

Absent unusual or dangerous circumstances, courts encourage parents to come to voluntary agreements on legal and physical custody. If such an agreement cannot be reached, mediation is required. Only when mediation fails can litigation be resorted to.

Decisive Action Can Make a Difference

At CKB Vienna LLP, we can help you reach an amicable resolution to child custody issues. If necessary, however, we can initiate litigation to resolve intractable disputes. Telephone us at 909-980-1040 or fill out our contact form to learn how we can best assist you in your child custody dispute. We serve clients from all over Rancho Cucamonga, including Alta Loma, Fontana, Chino Hills, Claremont, and elsewhere in the area.

How Does the Legalization of Recreational Marijuana Use Affect Employee Rights in California?

Is recreational use of marijuana now legal in California? Well, yes and no. Yes, because it is now legal under state law (subject to certain restrictions, of course). No, because federal law still prohibits the use of marijuana, even for medical purposes. Since federal law trumps state law (no pun intended), the answer seems clear: marijuana use is still illegal in California – sort of.

The catch is that, for now, the federal government is refraining from enforcing its anti-marijuana laws in states that have legalized its use. So how does the federal government’s voluntary forbearance affect the relationship between employers and employees who indulge in this practice?

Not Much Has Changed – for Now

Although the law is changing rapidly in this area, at present, the following state of affairs prevails:

• Both public and private employers have the right to insist upon a drug-free workplace. Marijuana is still classified as a “drug”, even though California has legalized it. Some employers (employers of delivery drivers, for example) are required to insist that their employees remain drug-free on the job, for obvious reasons.

• An employer may forbid the use, consumption, possession, or display of marijuana in the workplace, even if such prohibition has no direct bearing on the mission and function of the organization. A stockbroker can still be fired for bringing a bag of marijuana to work, for example.

• An employer can terminate an employee for off-duty use of marijuana. Since it remains illegal under federal law, an employer is not forbidding an employee from engaging in a “lawful off-duty activity,” which could, in certain circumstances, raise serious legal questions.

• An employer may administer drug tests to prospective employees and refuse to hire those who test positive for marijuana use.

• Employers may carve out exceptions to normal marijuana prohibitions for the benefit of employees who use marijuana for medical reasons (someone suffering from glaucoma, for example, might be hired even after a positive marijuana test), but they are not required to do so since even medical marijuana use is barred under federal law.

• In most cases, an employer can ignore a positive marijuana test and go ahead and hire a prospective employee anyway unless there is a law expressly prohibiting it (for certain federal jobs requiring high-level security clearance, for example).

Marijuana law, as it relates to employee rights, is in a state of flux right now, and some legal scholars anticipate rapid changes in the future. Employers would do well to keep abreast of these changes, especially if (i) the federal prohibition against marijuana use is lifted, or (ii) the U.S. Attorney General begins strictly enforcing federal marijuana law even in states that permits its medical and recreational use. Either way, however, many employer rights and obligations will not change.

At CKB Vienna LLP, we can help you navigate the legal minefield that the semi-legalization of marijuana has created for employers and we can aggressively represent you if a dispute should arise over your treatment of your employees. Call us at 909-980-1040 orfill out our online contact form to learn how we can help you protect your interests. We serve clients from all over Rancho Cucamonga, including Alta Loma, Upland, Fontana, Chino Hills, and Claremont.

How to Protect Your Company from Lawsuits in the #MeToo Era

The #MeToo movement has taken the country by storm, and many observers wonder whether it will ever be the same again. Nowhere has it impacted life more than at the workplace, where men and women congregate in close proximity and where a particularly successful lawsuit can create a millionaire overnight.

An employer can be sued for sexual harassment even if the company is not at fault, because under California law, misconduct by an employee can be imputed to the employer and the employer can be held liable. Obviously, employers need to take heed – but how? The following are some pointers.

Understand the Legal Definition of Sexual Harassment

“Sexual harassment” can include anything from unwelcome sexual advances, an uninvited back rub, requests for sexual favors, and a wide variety of similar conduct, including offensive statements about women in general. Legally, the sexual harassment bull has two horns:

• The hostile work environment claim; and

• The quid pro quo claim.

A “hostile work environment” sexual harassment claim is based on a pattern of harassment that is so pervasive that it creates a hostile work environment. In a quid pro quo claim, the plaintiff alleges that he or she suffered an adverse employment outcome (being fired or passed up for promotion, for example) as retaliation for refusing sexual advances.

Create a Sexual Harassment Policy

It is imperative that you create a formal sexual harassment policy that every employee is required to sign. This policy must be structured so that it not only forbids sexual harassment but also forbids or discourages conduct that might lead to sexual harassment or might be characterized as such – personal questions about a co-worker’s social life, for example.

Be Careful Who You Hire

Carefully check the background of any job applicant before hiring him or her, using a reputable investigator. Check references, not only for job competence but also for personal reputation. By all means conduct thorough research of the applicant on the Internet, including social media posts. Dig deep. Certain internet companies will help their clients “crowd out” negative information by filling up the first page of search results with manufactured praise.  

Institute Sexual Harassment Prevention Training

California law requires all workplaces with at least five employees to provide at least two hours of sexual harassment prevention training to supervisors and one hour of such training to non-supervisors. It might be a good idea to exceed these minimums.

Maintain an Effective Claims Process

Yes, your company could lose a sexual harassment lawsuit even if the company itself was not at fault as long as the at-fault individual was a company employee (rather than an independent contractor). If company management is found to have acted negligently in handling a sexual harassment complaint, however, things could get even worse. Make sure you have an effective claims process in place.

We’re on Your Side

At CKB Vienna LLP, we can help you formulate sexual harassment policies that will offer you maximum protection. And if you find yourself on the wrong end of an employee sexual harassment lawsuit, we will use every weapon in our legal arsenal to help you fight back.

Call us at 909-980-1040 or complete our online contact form to schedule a consultation with us. We serve clients from Rancho Cucamonga as well as elsewhere in California.

Resolving Shareholder Grievances in California: Direct Actions vs. Derivative Actions

When a shareholder of a corporation develops a grievance against a corporation with a separation of ownership and management, he must choose between two different approaches, depending on the nature of the complaint and the circumstances: direct action or derivative action. A shareholder must generally choose between these two options – a single complaint will either be eligible for resolution through a direct action lawsuit or a shareholder’s derivative lawsuit, but not both.

Direct Action Lawsuits

In a direct action lawsuit, the shareholder alleges that the company has directly violated his rights in some way (refusing to distribute a dividend he is entitled to, for example, or by refusing to count his vote). The right violated must belong to him specifically, not to the corporation in general. In other words, he cannot maintain a direct action lawsuit if his complaint is based on injury to the corporation.

To maintain a direct action, the shareholder must show that the company’s behavior impacts some but not all of the shareholders. Or, the shareholder must show that the complaint can otherwise be characterized as a complaint about direct injury to him as a shareholder rather than to the corporation itself.

Derivative Action Lawsuits

In a derivative action lawsuit, the shareholder alleges that the directors have indirectly violated his rights by failing to look out for the best interests of the corporation. Since a corporation is a fictional entity, corporate directors act as representatives of the corporation; as such, they are subject to a fiduciary duty to act in the best interests of the corporation. This, of course, indirectly benefits the corporation’s shareholders.

A shareholder who files a derivative lawsuit is alleging that the corporation’s officers and/or directors have failed to properly look out for the corporation by performing acts (or by failing to perform acts) in a manner that is not in the best interest of the company. This indirectly harms the shareholders by reducing the value or marketability of the company’s shares.  

Demand and Futility: Before filing a shareholder’s derivative lawsuit, a shareholder is generally required to issue a formal demand to the company’s board of directors the rectify the complaint. If the board fails to do so within a reasonable time, the shareholder will have standing to file a derivative lawsuit. The demand requirement can be excused if the shareholder shows that any demand would be futile.  

Remedy: Since the shareholder’s claim against the company is derivative, the shareholder’s benefit is also derivative. If the shareholder wins the lawsuit, the court will order the board to remedy the shareholder’s complaint by acting, or ceasing to act, in a manner that will remedy the complaint (by refraining from further licensing its technology to a competitor owned by one of its former directors, for example).

Contact Us ASAP

If your company is subject to or anticipates shareholder litigation or if you are a shareholder contemplating litigation against the company that you hold shares in, call CKB Vienna LLP at 909-980-1040 or fill out our online contact form to learn how we can help you. We serve clients from the Rancho Cucamonga area, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.

Defenses to Automobile-Based Product Liability Claims in California

There are two ways to defend against an automobile product liability claim. One way is to submit evidence to directly refute the plaintiff’s claims – as in “Yes, you did”/”No, we didn’t”. The other way is to raise additional facts that will partially or fully release you from liability. The following list describes several well-known examples of the second variety:

• The Statute of Limitations: The statute of limitations defines the deadline by which you must either file a product liability lawsuit or forever hold your peace. In California, the general statute of limitations deadline is two years from the date that you knew, or should have known, of the injury caused by the product (exceptions exist). If filed too late, your lawsuit can be dismissed.
  

• The Statute of Repose: Many states have passed statutes of repose. A statute of repose sets an age limit on the product itself: the clock begins ticking the day that the product is first sold, and once the deadline expires, no injury arising after the expiration date will be entertained by the courts. Although California has passed a ten-year statute of repose, it applies only to improvements in real estate. No statute of repose exists for any other product.
  

• Comparative Negligence: If the plaintiff shares fault for his own injury (an intoxicated driver sues an automobile manufacturer for faulty brake drums, for example), the plaintiff’s percentage of fault will be used to reduce the amount of damages – if he was 25 percent at fault, he would lose 25 percent of his damages; if he was 60 percent at fault, he would lose 60 percent of his damages.
  

• Unavoidably Unsafe Products: Certain socially useful products carry with them inherent risks that cannot be completely eliminated. In the case of drugs and vaccines, the defendant can assert this as a defense as long as the drug was properly prepared and accompanied by appropriate risk warnings based on current scientific knowledge.
  

• Product Misuse or Modification: If the product was misused or modified after it left the defendant’s possession in an unforeseeable manner, the defendant can claim that the misuse or modification was (i) the sole cause of the plaintiff’s injury and, therefore, the defendant should not be held liable, or  (ii) a contributing cause of the plaintiff’s injury and, therefore, the defendant’s liability should be reduced.
  

• State of the Art: In a design defect case, a defendant may argue that the use of the product carries inherent dangers and that the product’s benefits outweigh its inherent risks. In a failure to warn case, the defendant may argue that the product’s unmentioned risks were neither known nor knowable by the defendant based on the current state of scientific advancement.
  

The foregoing is not an exhaustive list of defenses available to defendants in product liability claims. A variety of contractual defenses, for example, may be available between commercial parties.

Contact Us ASAP

If your company has become the subject of an automobile product liability claim, telephone CKB Vienna LLP at 909-980-1040 or fill out our online contact form to learn how we can help you defend your interests. We serve clients from the Rancho Cucamonga area, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.

Preferred Ship Mortgages

Ships are expensive, which means that they can be used as collateral for more than one debt at a time. This reality often leads to conflicts among competing creditors with liens on the vessel. Since ships are mobile and can traverse the waters of more than one state, the federal government has exercised jurisdiction over ship mortgages in the form of the Ship Mortgage Act. This Act and its implications form most of the law applicable to ship mortgages.  

The Federal Ship Mortgage Act

The federal Ship Mortgage Act created the Preferred Ship Mortgage as an alternative to a mortgage under state law. Creditors who meet the qualifications and create such a mortgage are entitled to priority over most (but not all) possible creditors that may have claims against the ship. If the lender, instead, relies on a state mortgage (which almost never happens), the creditor will rank near the bottom of the line of creditors in the event of a foreclosure.

Requirements for a Preferred Ship Mortgage

Following are some of the requirements for a Preferred Ship Mortgage:

• The mortgagee must be a U.S. citizen or an FDIC-insured, state or federally chartered, financial institution;

• The vessel must have been built in the US; and

• The mortgage must cover the entire vessel, including fixtures.
  

Other requirements exist as well. One of the benefits of a preferred ship mortgage, however, is that there are no limits on the interest rate that can be charged – even state usury laws are generally preempted under the Ship Mortgage Act.

Superior Claims

Even with a Preferred Ship Mortgage, your lien will not necessarily enjoy priority over all other claims. Claims that enjoy superiority over preferred ship mortgage claims include:

• Some claims by vessel employees

• Salvage claims

• Tort claims

• General average liens

Despite these limitations, a preferred ship mortgage is probably the most reliable way of holding a lien against a ship.

Remedies

If the borrower defaults on the mortgage, the mortgage holder can choose between two possible remedies:

• Take action against the ship itself in federal court. If the action is successful, the ship can be sold and the proceeds can be used to pay the mortgage The disadvantage of this method becomes apparent when the proceeds of the sale are insufficient to pay off the mortgage.

• Take action against the shipowner in state or federal court. An action against the shipowner allows you to secure a deficiency judgment that the owner will be ordered to pay if the proceeds from the sale of the ship turn out to be insufficient to cover the mortgage.

Take the First Step Today

If you anticipate litigation over a ship mortgage or if you simply need transactional advice so that you can more intelligently explore your options, call CKB Vienna LLP today at 909-980-1040, or fill out our online contact form to learn how we can help you. We serve clients from Rancho Cucamonga and surrounding areas, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.

Five Common Employment Law Mistakes Committed by California Employers

California employment law is among the most extensive and employee-friendly of any state in the union. Despite the great volume of legal requirements that apply, ignorance of the law is no excuse and failure to comply with the law could lead to disastrous consequences. The following are only a few of the most common legal mistakes committed by California employers:

• Misclassifying an employee as an independent contractor: An employer’s duty towards an independent contractor is far less burdensome than his duty towards an employee. This also applies to third parties – an independent contractor’s negligence towards a third party is not automatically imputed to the employer, for example. Nevertheless, it is the courts that ultimately decide whether a laborer is an employee or an independent contractor.   
  

• A lackadaisical attitude towards sexual harassment complaints: Sexual harassment complaints must be taken very seriously. In California, for companies with at least 50 employees, all supervisors must be compliant with AB1825. Your company must institute an anti-harassment policy along with a detailed mechanism for handling complaints.
  

• Failure to regularly and appropriately revise the Employee Handbook: The most common mistakes in this regard are (i) failure to create an Employee Handbook in the first place, (ii) failure to update it at least once a year, and (iii) allowing an unqualified person to handle the drafting or revisions. Failure to create and maintain an Employee Handbook will give your employees (and ex-employees) a lot more leverage should a dispute break out between you.
  .

• Insertion of a non-compete clause into an employment agreement (particularly without a severance clause): The temptation to insert a non-compete clause into an employment agreement that applies after separation of the employee from the company can be a great temptation, especially if your company is guarding valuable intellectual property.
  
  California courts are notoriously unfriendly to non-compete clauses, however, and including one in an employment agreement without a severance clause can result in the entire agreement being invalidated – with unpredictable results. Consult a California employment lawyer before you even consider inserting a non-compete clause into an employment agreement.
  

• Inappropriate handling of employee disabilities (including pregnancy and psychiatric conditions):  Employers cannot unfairly discriminate in hiring people with disabilities. Hiring a disabled employee, however, triggers a host of legal requirements. Failure to take them seriously can result in lawsuits for astronomical damages.   

The foregoing is only the tip of the iceberg of potential California employment law violations. We have not even discussed many common violations such as failure to provide appropriate meal and break periods and requiring off-the-clock work. The services of a top-tier California employment lawyer become more and more necessary as your company grows.

Contact Us Today

If you are concerned that your company may be in violation of California employment law or if you simply need some questions answered to remain in compliance, call our office at 909-980-1040 or complete our online contact form to schedule a conference with us. We serve clients from throughout the Rancho Cucamonga area, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.

Issues to Resolve in a California Construction Contract: The Contractor’s Point of View

Construction contracts can run hundreds of pages long. Despite all of this verbiage, however, the same problems seem to arise again and again in project after project. Many of these problems are completely avoidable. The following are just a few examples of common construction project problems along with some advice on how to deal with them at the contract negotiation stage.

Scope of Work

The scope of work provisions are perhaps the most important provisions in a construction contract and arguably some of the most overlooked. Typical problems that produce conflict in this area include: (i) inadequacies or incompleteness in the owner’s design documents, only later discovered, gives rise to a need to change the scope of work, and (ii) linguistic ambiguities in the construction contract are interpreted differently by the contractor and the owner.

The way to head off these problems before they arise is to secure a warranty from the owner that his design documents are complete, coordinated with each other, and free from defects; to spend time drafting the scope of work provisions with great care and foresight. A bit of extra care at the negotiation stages of the project might save millions of dollars down the road.  

Indemnification

Contractors almost always agree to indemnify the owner against any liability to a third party that arises as a result of their work – personal injury liability, for example, as well as property damage and even intellectual property infringement. A contractor should attempt to limit its indemnification liability to those liabilities it can insure against. The subcontractor should also ask the owner to indemnify it against third-party liability caused by design defects.

Warranties and Bonds

There is no way that a construction contractor for a major project can avoid providing a myriad of warranties and bonds for its various contractual duties. The trick at the negotiation stage is to limit your liability as much as possible. A contractor should generally insist on a general warranty of one year for materials and labor and demand precise commencement and ending dates for all warranties.

A contractor should also “flow down” its risk to subcontractors as much as possible by (i)

insisting on equal warranties from subcontractors, and (ii) having major subcontractors provide their own maintenance bonds. This approach should reduce your risk to a manageable level.

Project Delays

Project delays are perhaps the greatest liability a contractor faces. Naturally, the contract should include a carefully drafted force majeure clause that eliminates the contractor’s liability for delays that are not their fault. It should also provide for very specific compensation to the contractor when the delay is the fault of the owner. Ideally, acceleration of work requirements should be the owner’s sole remedy for most contractor-caused delays.

At CKB Vienna LLP, we can help you draft construction project contracts that keep you out of court or arbitration by heading off disputes before they arise. If your dispute has already begun (or seems inevitable), we can help you win while preserving your business relationships to the extent that you require.

Telephone us at 909-980-1040 or fill out our online contact form to learn how we can best assist you. We serve clients throughout the Rancho Cucamonga area, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.

Boilerplate Provisions in California Business Contracts: What They Mean, Why They Are Important, and How They Prevent Litigation

Most people are at least a bit familiar with contract “boilerplate” clauses. They are the clauses that inevitably appear at the end of a contract that look suspiciously similar to clauses found at the end of other contracts that have very little else in common. The purpose of contract boilerplate clauses is not to add to the length of the contract so that the lawyer can pad his billable hours – each clause exists for a specific reason. The following are some examples:

Attorneys' fees: If a legal dispute arises, the losing party must pay the winning party’s legal fees. This raises the cost of litigation and lowers the parties’ willingness to engage in it.

• Arbitration: All disputes must be resolved through arbitration rather than courtroom litigation. Arbitration rulings are typically non-appealable. This saves time and money but is dangerous because the losing party has no recourse to the courts.

• Jurisdiction: This clause determines where a lawsuit can be filed (the specific county) to prevent “forum shopping” by parties seeking a home-court advantage. It is not the same as a choice of law clause (a California court can resolve a dispute under Louisiana law, for example).

• Severability: What happens if a judge invalidates one clause of a contract (for example, California often strikes down non-compete clauses in employment agreements)? A severability clause allows the remainder of the contract to remain intact.

• Merger: A “merger” or “entire agreement” clause asserts that the contract represents the entire agreement between the parties (at least with respect to subject matter relevant to the contract) on the date that the contract is signed. This prevents either party from asserting that a prior agreement, exchange of memos, or verbal assurance can be considered part of the agreement between the parties.

• Force majeure: What happens if a hurricane destroys my warehouse? What happens if the product you ordered is declared illegal under local law? A force majeure clause excuses a party from performing their duties under the contract if an unforeseen event makes it impossible or highly impractical to do so.

• Indemnity. In an indemnity clause, one party agrees to pay the costs of certain disputes asserted by third parties. In a classic example, I license software to you and a third party sues you for copyright infringement claiming that the algorithm actually belongs to him and not me.

• Confidentiality. A confidentiality clause guarantees that neither party will disclose some or all of the information they learned during the course of negotiating or performing the contract.

The foregoing is only a sample of possible “boilerplate” clauses. It is critical to remember that you should never use a generic boilerplate clause that you find online or in another contract. Each contract is unique and should be treated as such. Your “boilerplate” should reflect your particular needs and concerns.

At CKB Vienna LLP, we can help you draft business contracts that avoid disputes and help you win disputes that have already arisen. Call us at 909-980-1040 or fill out our online contact form to learn how we can assist you. We serve clients from all over the Rancho Cucamonga area, including Alta Loma, Etiwanda, Upland, Fontana, Ontario, Chino Hills, and Claremont.