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Friday, February 28, 2014

Ducking Service -- can I hide from a lawsuit?

Question:

Can I hide?
How important is it to have the parties' names spelled correctly on the complaint and other documents? An unhappy individual is attempting to sue my small corporation and me personally. If my name is John Smith and the corporation is ABC Inc. but the named defendants are John Smyth and ABCs Inc., could eventual default judgments be enforced against the correctly named parties? “John Smyth” has been "served" by posting at an incorrect address and the sheriff has been unable to locate a registered agent for the non-existent corporation, but I noticed in courthouse records that the plaintiff recently gave the sheriff a new address for an uninvolved person bearing my registered agent’s name. (Does the sheriff ask “Are you John Doe, registered agent for ABCs Inc.” or does the sheriff merely ask “Are you John Doe?”)

I know the State Corporation Commission FAQ specifically says that ABC Inc. is distinguishable from ABCs Inc., but I don’t know if the same principle applies to individuals. I’m debating whether or not to respond, despite the misspellings.

Answer:

Do names matter?
The answer is -- sort of. A typo is not going to invalidate a suit. If the Court can determine who was meant, then the name itself will not be a bar. Often, when a defendant is unknown, a suit will be brought in the name of Jane or John Doe, and only after discovery will the actual parties be named.

However, of more importance is service. Unless there has been service on the defendant, corporation of individual, the suit cannot go forward. There are ways to serve a party by publication, but this is much more difficult, and generally frowned upon.

You should be careful, however. In almost every circumstance, the Virginia Corporation Commission requires that every company, other than a sole proprietorship, have a registered agent in Virginia who is authorized to accept service on behalf of the company. If you don't have that, the person trying to sue your company can serve notice on the Corporation Commission itself, and this can, in most instances, act as sufficient service to move forward in the suit. Not to mention, you can get in hot water for not have a registered agent. Not advisable.

Also, in Virginia, other than in small claims, a corporation may only be represented by an attorney (in small claims, attorneys are not permitted in VA).

So -- as to personal service for a suit naming you -- probably can be avoided by ducking service. As to your company -- probably cannot be avoided without defaulting. Best to get an attorney and head that one off at the pass. By the way, an attorney can represent your company, but not be authorized to accept service on your personal behalf. Hence, you could still remain anonymous. At least until you had to come to court for your company...

If you need further help with company, corporation, or personal service questions, feel free to give us a ring at 703-402-2723.

Sean Hanover, Esq.
Hanover Law
www.hanoverlawpc.com
Offices in Fairfax and DC
888 16th St. NW
Washington, DC 20006

Wednesday, February 26, 2014

HOME EQUITY CREDIT LINES -- AND DIVORCE

At a recent discussion on family law matters, I answered the following question:

Question:

HELOC Obtained without Joint Deed Holder Signature or Approval


My spouse obtained a $50K home equity loan behind my back, without me knowing about it, on our home in Virginia. We have since divorced, and now the bank is coming to me. Nothing was ever disclosed. I had no idea. What can I do?

Answer:

Unwanted HELOC and Divorce


I am presuming that the property and the loan were taken in VA. If this is not the case, then the advice needs to modified (obviously). Two core issues:
  • First, the divorce and the separation agreement attendant to the divorce;
  • Secondly the Virginia Code section dealing with property and property transactions within a state.

As to individuals (vice corporations, etc.), there are three methods for holding assets -- tenants in common, joint tenants, and tenants in the entirety. The last two require assent by both parties before a property can be voluntarily encumbered. The first does not -- that portion belonging to one of the parties may be mortgaged or bound.

The code section dealing with mortgages is VA Code §55-48 thru 79. The rights of the parties is covered under §55-59. The federal law is called RESPA - Real Estate Settlement Procedures Act found at 12 USC Chapter 27 ( 12 U.S.C. § 2601). The Dodd-Frank Act does apply, as this is a protected transaction, but there is nothing therein requiring signature verification (not discussed in the Act) -- only that an investigation is done to ensure the signatory (grantor) is capable of repaying the loan adequately. Essentially, the federal laws point back to the state regulations in this matter.

If you held the property jointly, then your spouse could not be a grantor under 55-59 because it requires both parties, not a single party, to encumber a joint property. See generally: http://www.americanbar.org/newsletter/publications/law_trends_news_practice_area_e_newsletter_home/2011_summer/real_property_interests_deeds.html for an explanation of the different forms of ownership, and the rights attendant thereunto.

You can and should file an action in circuit court to stop any action of the bank. This action is called "Motion for Quiet Title" and causes the nature of the title of the property to be put before the judge, and forces all interested individuals (or banks, in your case) to present their claim and argue why they should have right to the property. If the banks (or individuals) fail to do so, or fail to provide such evidence as a judge may deduce some valid claim, then the title is "quieted" by removing those banks or individuals from the record books.

Secondly, you need to file to re-open your property settlement agreement (and/or order) from your divorce. A material omission, such as a $50K HELOC, from the asset and debt disclosures between the parties is grounds for finding fraud in the divorce proceedings. Move to amend the property settlement, and file for sanctions.

Finally, you can bring a private action against your ex for fraud and material misrepresentation in both the divorce, and the encumbrance and reduction in value of the property.

If you would like help with any of these items -- please give us a ring at 703-402-2723. We've been handling family law matters for years, and would be glad to discuss this further.

Sean Hanover, Esq.
Hanover Law
www.hanoverlawpc.com
Offices in Fairfax and DC
888 16th St. NW
Washington, DC 20006

Monday, February 24, 2014

Problems with Protective Orders

Another divorce question from the Boards:

Question:
Can i file a harassment suit against wife, she keeps taking me to court to get protective order but they won't grant and i have to keep taking off work.

Answer:

How to deal with harassment via protective orders:

A couple of potential angles.
  • First, you need to review your custody or divorce order and determine if there is a provision you can charge her with violating. If so, see about a show cause (contempt) order.
  • Secondly, you can possibly bring an action for interference with your employment contract. Don't know enough if that will work.
  • Finally, you can file a show cause on the current protective order itself.
However, you definitely need to meet with an attorney about this. Why did you get a protective order in the first place? Why does a magistrate continue to allow complaints to be filed against you if they are groundless? What is the genesis of the problem? If you don't fix this, you'll be at this forever. An attorney can help you interpret what the heck is happening and how to stop it. Do not presume you know how to do this. You could find yourself truly violating the order, or doing something very bad. Talk to someone who handles these types of family matters. You are not the only person going through this -- not uncommon at all in family litigation. Unfortunately, there are even attorneys who tell their clients to file as many protective order violations as possible. This is never a good idea. If you would like to review those papers and discuss how you can stop this and re-take control of the situation, give us a call. 703-402-2723.

Sean Hanover, Esq.
Hanover Law
www.hanoverlawpc.com
Offices in Fairfax and DC
888 16th St. NW
Washington, DC 20006

Sunday, February 23, 2014

A question of BANKRUPTCY -- can you hide an asset?

I was discussing bankruptcy on an Internet legal site, and was asked the following question:

Question:
If a family member is on the verge of bankruptcy, can I purchase their house for the small amount still owed to the bank and have the house exempt as an asset when they declare bankruptcy? Or, would this be considered conspiracy to commit bankruptcy fraud?

My answer:

There is no conspiracy here!

Interesting idea, though. Generally, when a person declares bankruptcy, any asset is fair game for creditors. If the house in question has a good amount of equity, and the person declaring bankruptcy sells it for "a song" just before declaring bankruptcy, the trustee will yank it back (generally, a sale within 2 years of bankruptcy will be scrutinized -- beyond that, only if one of creditors ask for an investigation).

He or she will void the sale and take possession of the property in the interest of the other creditors. Now this is just a general overview -- there are exemptions (called "homestead") at both the state and federal level (you must choose one, not both), and there are certain protected transactions.

The bottom line, however, is before someone declares bankruptcy, they should consult a qualified professional to make sure they don't step on a landmine. If you need help with your bankruptcy, or advice on how to proceed, feel free to give us a ring! We have considerable experience in tax, bankruptcy an maximizing exemptions for both!

http://www.hanoverlawpc.com
703-402-2723

Sean R. Hanover, Esq.
Principal Attorney
The Hanover Law Firm is located in Washington, DC and Fairfax, VA. We practice
in both state and federal courts in VA, MD, and DC.

Friday, February 21, 2014

401K Rollover WARNING!

Folks - just a friendly reminder. I wrote a blog about QDRO's a few days past, and I had a couple of questions asked as follow-up to that post. There is a critical error you want to watch for when dealing with 401K and other "qualified plan based" retirement programs. ALWAYS ALWAYS ALWAYS do a rollover from the source retirement plan into a qualified retirement account (usually an IRA of some type is easiest and fastest to setup).

There are some exceptions to this -- especially for folks that are particularly young, or for emergency situations. Here is why you want to do this:

  • There is a 10% penalty if you withdraw funds from a retirement plan before you are 59.5 years old. You do not have this penalty if the funds are rolled into another retirement account.
  • Taxes are withdrawn from the amount transferred unless the funds are stored in a qualified retirement account.


If you have funds you need moved from an employer qualified plan, be certain to speak to a professional who can help you. Mistakes here can be disastrous.

Do you need help with a divorce or inheritance question regarding retirement funds or protected assets? Contact us! We can help. We operate in Virginia, Maryland, and DC -- and we have many years of family law experience.

http://www.hanoverlawpc.com
703-402-2723

Sean R. Hanover, Esq.
Principal Attorney
The Hanover Law Firm is located in Washington, DC and Fairfax, VA. We practice
in both state and federal courts in VA, MD, and DC.

Saturday, February 15, 2014

Drugs in DC - a posted question

I recently answered a DUI/Drug question on a legal board, and I thought the information was relevant to all visitors on our site -- so I am reposting it here:

Question: So I live in DC and me and a few friends got caught the other day with about 6 grams of marijuana between us....the cops took us in finger printed us and all. I have a court date set for February 20th but I do not know what will happen to me in DC since I just moved here. The officer arresting me said that I would not be sent to prison but would likely have the charges dropped or be fined....how much would I be fined though? and would I have to go on probation for a first offense to get my charges dropped? Will i get drug tested in court? Please help...this whole thing is stressing me out...horrible way to start second semester.

Reply: Firstly -- stop using drugs. This is neither humorous nor a light matter. Regardless of your personal view, drugs are still illegal and you will still go to jail.

Next, if you have a clean record there area a variety of options to mitigate this case. These include DSA's (deferred sentencing agreements), dismissal outright, and referral to drug treatment in lieu of prosecution (occasionally, you can the case sent to drug court -- a subset of the Superior Court which tends to be much more flexible in dealing with drug issues).

Yes, you will most likely need to test on the day you go to Court. If there is a problem with you testing, or you think you will fail, you need to contact us right away -- again, this may appear trivial, but could be very serious indeed. We would be glad to help. We have considerable experience handling drug cases in DC.

http://www.hanoverlawpc.com
703-402-2723

Sean R. Hanover, Esq.
Principal Attorney
The Hanover Law Firm is located in Washington, DC and Fairfax, VA. We practice
in both state and federal courts in VA, MD, and DC.

Thursday, February 13, 2014

The QDRO - Qualified Domestic Relations Order...or, Divorce and Retirement Funds

This week I helped coordinate the amicable end a cantankerous divorce case -- favorably, I might add. This issue revolved in part around the elderly couples retirement accounts (married for over 26 years - in their late 60's). As I completed the negotiations and concluded the settlement, one remaining task made me think about writing this blog -- the drafting of the QDRO (Qualified Domestic Relations Order). Now, a QDRO is a tricky beast. It involves dividing a qualified retirement plan (that's a 401K, IRA, or really most employer sponsored plan -- which includes non-profits, too!). Interestingly, as a small footnote, military and many federal government retirement plans are not handled via a QDRO, but rather through a separate procedure relative to each federal government plan! Be careful here.

Where is the code defining a QDRO (pronounced "quad-roe") live? That would be 29 U.S. Code § 1056(d)(3)(A) which reads:
Paragraph (1) shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order [ed: paragraph one prohibits alienation or assignment of plan benefits], except that paragraph (1) shall not apply if the order is determined to be a qualified domestic relations order. Each pension plan shall provide for the payment of benefits in accordance with the applicable requirements of any qualified domestic relations order.


What qualifies as a QDRO? That's a tricky question, and you want to be sure to speak to an attorney. However, the minimum requirements of a QDRO are discussed at 29 U.S. Code § 1056(d)(3)(B), (d)(3)(C), (d)(3)(D). Essentially, they are:
[A plan] which creates or recognizes the existence of an alternate payee’s right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, and

  • (i)the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,
  • (ii)the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined,
  • (iii)the number of payments or period to which such order applies, and
  • (iv)each plan to which such order applies and


  • (i)does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan,
  • (ii)does not require the plan to provide increased benefits (determined on the basis of actuarial value), and
  • (iii)does not require the payment of benefits to an alternate payee which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order.


Now a QDRO generally comes in two flavors: shared payment and split interest. The code that discusses these provisions can be found at 29 U.S. Code § 1056(d)(3)(C)(ii) [requires the plan to specify how the benefits should be paid -- see above]. If you don't like ERISA code (that's 29 U.S. Code), you can saunter over to the Internal Revenue Code for the exact same wording -- see 26 U.S. Code §414(p)(2)(B). Exciting.

SHARED PAYMENT: Under this approach, the alternate payee (that's the spouse who is getting part of the benefit in the divorce settlement) does not segregate a lump sum from the participant (that's the person that owns the plan now). Instead, when the participant retires, part of the payment he/she receives each period (usually once per month) is paid to the alternate payee.

SPLIT INTEREST: Under this approach, at the time the QDRO is implement by the plan administrator, a portion is split off from the participant and assigned to the alternate payee. This amount may then be maintained in the plan, distributed to another retirement account, or paid in a lump sum (often with penalties) to the alternate payee.

There is a considerable amount of calculation and planning that must go into advising a client on how best to handle retirement benefits. This includes such things as gain/loss provision for split interest (determining when the actual split occurs such that changes in the value of the plan total are reflected (gain or loss) in the alternate payees distribution -- or not), the duration of the payments under the plan, the taxable implications of rollovers, etc.

QDRO's can be tricky, but can be managed well if planned in advance of the actual divorce trial or settlement. Do not be pressured into agreeing to any term within the QDRO, and be sure to read the QDRO carefully. The differences as to how much is paid, who shares the gain/loss risk, and when payments are made is critical. Further, and most importantly, make sure that a QDRO is the right tool for dividing the retirement amount.

Do you need help drafting or reviewing a QDRO? Contact us! We can help. We operate in Virginia, Maryland, and DC -- and we have many years of family law experience.

http://www.hanoverlawpc.com
703-402-2723

Sean R. Hanover, Esq.
Principal Attorney
The Hanover Law Firm is located in Washington, DC and Fairfax, VA. We practice
in both state and federal courts in VA, MD, and DC.

Wednesday, February 12, 2014

IRS Regulations Concerning Short Sales and Debt Forgiveness - FORM 982

Tax season is once again upon us. As our firm considers different methods for helping folks, one common theme we often encounter is short sales. We're located in the Northern Virginia/DC Metropolitan area. The number of short sales and foreclosures in this area is, and has been, high. Short sales, and foreclosures, often result in a write-off for the bank that holds the mortgage. This means that the bank cannot collect all the money that you owe on the mortgage itself, and just writes the reamining balance off as a loss. They agree not to pursue you to collect the difference.

The problem, however, is that by writing that amount off, the bank is, in essence, giving you the balance of the loan as a gift. You are being told that you don't have to pay it any longer, and the bank will forgive the debt. Good news when your debt is forgiven. Bad news when it comes to taxes. A debt "forgiven" counts as income, and you should expect to get a tax form from the bank showing that you have been "paid" the amount that was written-off. Called a "cancellation of debt", it is provided on a 1099-C form.

Example of Deficiency "Income" Caused by Short Sale or Foreclosure

For example, if you sold a property with an outstanding mortgage of $500,000 for the approved short-sale amount of $350,000 -- there is a $150,000 deficiency. That amount with be credited as income to you at the end of the year -- and you should expect a 1099-C form from the holder of the mortgage. Imagine getting a notice in the mail that you earned an extra $150,000 this year? That's enough to make your stomach turn!


Fortunately, there is relief. The Mortgage Forgiveness Debt Relief Act of 2007 specifically allows short-sales and foreclosures deficiencies to be excluded from taxable income. In order for this be done, the tax payer must file an IRS Form 982. This form is designed to exclude canceled debt from taxable income, and much of the form does not apply to the residential home owner. However, up to $2 million (jointly filing) or $1 million (individually filing) may be excluded based on the sale, refinance, or foreclosure of your principal residence. Be careful with TurboTax! It won't automatically suggest this.

As an aside, there are many other forms of canceled debt that alsoo qualify for exclusion from your taxes. If you have received a 1099-C from your lender (any lender), be sure to consult with a tax attorney (that would be us!) to see if you can safely avoid paying taxes on the canceled amount. Examples of good reasons for this include insolvency, bankruptcy,and farm debt.

Need help with a tax matter? Give us a ring! We'll discuss your case for free on the phone. We have several VA, DC, and MD lawyers who have considerable experience in sorting out complex IRS matters.

http://www.hanoverlawpc.com
703-402-2723

Sean R. Hanover, Esq.
Principal Attorney
The Hanover Law Firm is located in Washington, DC and Fairfax, VA. We practice
in both state and federal courts in VA, MD, and DC.

Monday, February 3, 2014

Jury Instructions -- key to victory at trial

A jury trial is comprised of multiple steps -- and one of the most critical is the formulation of jury instructions. Instructions are drafted, generally, at the pre-trial conference stage. Opposing parties exchange suggested jury instructions on each area of contested law. Now, if there are nbo novel concepts to consider, then the instructions can be taken from the "generic" jury instruction selection provided by each Courthouse. You can find these in the law library or online from a sevice such as Lexis. However, when specialized, or non-normative instructions are required, you will need to write them yourself.

A jury instruction is comprised of three components: (1) any statute or ordinance on point, (2) relevant case law, and (3) the instruction itself.

An example of a jury instruction on "equitable estoppel" (lulling) might be:
Governing Statute
None known.

Case Law
From JANKOVIC v. INTERNATIONAL CRISIS GROUP, 494 F.3d 1080 at 1086 (2010):

"Similar to equitable estoppel, the doctrine of lulling applies when the defendant “ha[s] done something that amounted to an affirmative inducement to plaintiffs to delay bringing action,” Bailey v. Greenberg, 516 A.2d 934, 937 (D.C. 1986) (quoting Hornblower v. George Wash. Univ., 31 App. D.C. 64, 75 (1908)), as when a defendant promises to settle a dispute outside of court.)

From Property 10-F, Inc. v. Pack & Process, Inc., 265 A.2d 290, 291 (D.C.1970):

Equitable estoppel (lulling) is appropriate where “[The defendant has] done anything that would tend to lull the plaintiff into inaction and thereby permit the statutory limitation to run against him."

Proposed Jury Instruction
Lulling occurs if one party has created an affirmative inducement to the other to prevent or delay them from bringing action on the case.

You must find lulling when a party to a contract has done something that would tend to lull the plaintiff into inaction and thereby permit the statutory limitation to run against him.

An "affirmative inducement" is some action, no matter how minor, taken by a party, designed to intentionally trigger a reaction or action in the other party. Inaction or "doing nothing" cannot be an affirmative inducement.


Once you draft your custom jury instruction, you must submit a copy to opposing counsel and a copy to the judge who will be involved with the case. The final written instructions, including your proposed jury instruction, will be made by the judge. He/She will consider both your proposed instruction, and the instruction of opposing counsel.

Do you need help with an upcoming jury trial? Give us a ring! We've been doing this for a while and would be glad to handle your case, or consult on the jury management process. Remember -- ~30% of the outcome of your case is decided in the proper selection of your jury. Another ~15% is decided by the proper instructions and verdict form. Do the math, folks. That is ~45% of your case decided before the trial starts. Be sure you have an attorney you can trust.

Sean R. Hanover, Esq
www.HanoverLawPc.com
Contact Us
703-402-2723