Alexson Law http://alexsonlaw.com Fri, 08 Sep 2017 20:22:43 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.2 Legal Assist For Victims of Hurricane Harvey http://alexsonlaw.com/legal-assist-victims-hurricane-harvey/ Fri, 08 Sep 2017 20:06:53 +0000 http://alexsonlaw.com/?p=707 Volunteering Legal Advice Aiding Texas Hurricane Victims My firm signed up with the American Bar Association relief effort to assist victims of Hurricane Harvey with question relating to missed mortgage payments and relief from foreclosure and other servicer remedies.  We are working with the Texas Bar Association to support the Texas Bar in this time […]

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Volunteering Legal Advice Aiding Texas Hurricane Victims

My firm signed up with the American Bar Association relief effort to assist victims of Hurricane Harvey with question relating to missed mortgage payments and relief from foreclosure and other servicer remedies.  We are working with the Texas Bar Association to support the Texas Bar in this time of need.

hurrican relief legal help

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What Is Reverse Veil Piercing In California http://alexsonlaw.com/reverse-veil-piercing/ Thu, 07 Sep 2017 15:40:58 +0000 http://alexsonlaw.com/?p=704 I am writing a book for the entrepreneur on seven (7) legal principles for owning and acquiring a business.  The second chapter explores entity structuring when you start a business and/or acquire assets (or stock) for a growth strategy.  So, why do we want to own a business in a legal structure such as a […]

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I am writing a book for the entrepreneur on seven (7) legal principles for owning and acquiring a business.  The second chapter explores entity structuring when you start a business and/or acquire assets (or stock) for a growth strategy.  So, why do we want to own a business in a legal structure such as a corporation or a limited liability company?  The reason is that if an owner properly complies with corporate compliance, such as record keeping, not mixing corporate and personal funds, etc., then if the business is sued, and the creditor (or other party) obtains a judgement, then such judgement creditor cannot execute the judgement against the personal assets of an owner, meaning a shareholder or a member of a limited liability company.  So, reverse veil piercing (in California) would mean that a judgement is received against an individual owner, and the judgement creditor attempts to execute the judgement against a corporation or limited liability company owned by the judgment debtor.

A recent California case, Curci Investments, LLC (Curci LLC”) v. Baldwin (“B”) (August 10, 2017 GO52764) illustrates the issue of “reverse piercing”.  In this case, Curci obtained a multi-million dollar judgement against B, then tried to financial law practicejoin B’s LLC as a judgment debtor to satisfy the judgement.  The California trial court denied the motion of joinder.  The fact are briefly stated as follows.  B formed JPBI, A Delaware LLC (“JPBI”)  to hold personal investments and cash balances (for him and his spouse.)   B  owned 99% of the membership interests and his wife held 1% of the membership interests of the Baldwin personal LLC. B was the manager and CEO of JPBI.  About 2 years later (on or about 2009), B, individually borrowed $5.5 million from Curci LLC’s predecessor- in- interest. . The loan was memorialized in a promissory note executed by Baldwin and the managing member of Curci’s predecessor (the “Curci note)”. In the Curci note, Baldwin agreed to pay back the principal amount of the loan, with interest, by January 2009. Curci was assigned the lender’s interest in the Curci note shortly after it was executed. One month after executing the Curci note, Baldwin settled eight family trusts to provide for his grandchildren during and after their college years (the family trusts). Not long after the family trusts were settled, JPBI loaned a total of approximately $42.6 million (the family notes) to three general partnerships (the family partnerships) formed by Baldwin for estate planning purposes. Because the partners of the family partnerships are various combinations of the family trusts, certain of Baldwin’s children signed the family notes in their capacity as trustees. Baldwin signed the family notes in his capacity as manager of JPBI. Each family note indicated the principal amount of the loan was to be repaid by July 2015. Although all the family notes are in favor of JPBI, Baldwin and his wife list them as “Notes Receivable” on their personal financial statements.

When the Curci note was due and payable, B did not make the payments required under the terms of the note.    Curci LLC, filed suit, against B for $7.2 million including, prejudgment interest and attorney’s fees and costs in 2012.  By 2014, B had not paid the judgement, so the court granted charging orders against other B entities including JPBI.  So the monetary distributions that were to go to B would go to Curcu LLC.

During the time of the outstanding note, JPBI had paid about $178 million to B and his spouse, so Curci LLC then filed a motion in 2015 to add JPBI as a judgement debtor.  Please note that B argued that Postal Instant Press (162 Cal App 4th 1510), was applicable based upon the holding that third part creditors cannot reach corporate assets to satisfy a personal judgement.  In the Posta case, the entity at issue was a corporation.  However, the court in this case held that the Postal holding was limited to corporations and this entity was a limited liability company.  The court also reasoned that B and his spouse were not “innocent” parties. Most importantly the court reasoned that the entity structure was different, with different statutory requirements and that creditor have different options against a limited liability company.

What we learn from this case, is the analysis for “the pierce the corporate veil doctrine” will be similar when looking at these entity structures but could come out with a different result.    In this case, it appears the promissory note could have been structured to include the proper parties, or, the creditor could have taken collateral to secure the note.    My goal with the entrepreneurial client is to be sure the proper entity structuring is done at the early growth stage, for issues, including but not limited to, liability protection.  For example, if my client operates under a license (such as a real estate broker), a limited liability structure may not be available, depending upon the jurisdiction.  Therefore, there are also many legal and business to address in the emerging growth states.

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Paying Your Credit Card By Phone; What Are The Fees? http://alexsonlaw.com/paying-credit-card-phone-fees-warnings-from-cfpb-to-services/ Mon, 21 Aug 2017 18:16:27 +0000 http://alexsonlaw.com/?p=697 A compliance bulletin discussing fees charged to consumers to pay-by-phone (“Bulletin dated July 31, 2017”) was published by  The Consumer Financial Protection Bureau (the “CFPB”),    The CFPB stated that these fees may amount to unfair, deceptive or abusive acts or practices known as “UDAAP”.  UDAAP practices are prohibited by federal law under 12 USC 5531 […]

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A compliance bulletin discussing fees charged to consumers to pay-by-phone (“Bulletin dated July 31, 2017”) was published by  The Consumer Financial Protection Bureau (the “CFPB”),    The CFPB stated that these fees may amount to unfair, deceptive or abusive acts or practices known as “UDAAP”.  UDAAP practices are prohibited by federal law under 12 USC 5531 and under state law.    As a general practice, financial services providers offer consumers several ways to make payments, including pay-by-phone options.    Pay-by-phone options provide for different payment alternatives such as using an automated phone option or making a payment with a customer service representative.    The Bulletin dated July 31, 2017 discusses providers that charge consumers pay-by-phone fees and/or expedited phone payment fees which are not consistent.

The Bulletin dated July 31, 2017 states the following practices may be classified as UDAAPs:

  1. A recent action was noted, in which the CFPB alleged that a financial services provider deceptively identified a $14.95 pay-by-phone fee to consumers as a “processing” charge.  In actuality, the provider charged consumers this fee for the service of posting the consumers’ payment to his/her account the same day, when in fact many consumers did not need their payments to post to their accounts on the same day.  This could be misrepresentation of a fee or cost.
  2. Under this action, no-cost payment alternatives existed, but the provider had failed to make consumers aware of these no-cost payment alternatives. The provider did not make the consumer aware of this option.
  3. The Bulletin dated July 31, 2017, also noted that many providers rely on their telephone customer service employees to disclose all pay-by-phone fees and available options to consumers, and do not disclose upfront in writing their fees or pay-by-phone options. According to the CFPB, the failure by employees to inform consumers about substantial price differences between pay-by-phone options may “substantially harm” consumers. Consumers may utilize more expensive pay-by-phone options if not advised that other options are available.

The conclusions from this Bulletin are that a provider cannot misrepresent a fee or cost of a phone payment, fail to disclose a no-cost option and/or fail to make adequate consumer disclosures about these options.  We have advised our clients to review the disclosures given in connection with loan and credit card payment options, both written and given by the customer services representatives.

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September ABA Speaking Event for Harriet B. Alexson, Esq http://alexsonlaw.com/september-aba-event-harriet-b-alexson-esq/ Thu, 03 Aug 2017 17:33:40 +0000 http://alexsonlaw.com/?p=692 I will be presenting at the Loan Documentation Subcommittee at the  American Bar Association Annual Business Section meeting in Chicago held from Sept. 13-17, 2017.  My presentation will discuss a recent SBA loan transaction and tips for modification of the loan documents.  Also covered is the release of a guarantor under the SBA 7 (a) […]

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ABA Business Law Event 2017

I will be presenting at the Loan Documentation Subcommittee at the  American Bar Association Annual Business Section meeting in Chicago held from Sept. 13-17, 2017

My presentation will discuss a recent SBA loan transaction and tips for modification of the loan documents.  Also covered is the release of a guarantor under the SBA 7 (a) loan program.  Our roundtable presentation will be at the Sheraton Grande Hotel on Thursday, September 14, 2017 from 3-4:30 CT.

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CFPB Final Rule Prohibiting Class Action Waivers in Arbitration Clauses http://alexsonlaw.com/cfpb-final-rule-prohibiting-class-action-waivers-arbitration-clauses/ Tue, 01 Aug 2017 08:30:30 +0000 http://alexsonlaw.com/?p=689 On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) issued a final rule prohibiting class action waivers in predispute arbitration clauses contained in covered consumer financial services agreements. The four primary provisions of the final rule are as follows: Under the final rule, a “predispute arbitration agreement” is defined as: “an agreement between a […]

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On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) issued a final rule prohibiting class action waivers in predispute arbitration clauses contained in covered consumer financial services agreements.

The four primary provisions of the final rule are as follows:

Under the final rule, a “predispute arbitration agreement” is defined as: “an agreement between a covered person . . . and a consumer providing for arbitration of any future dispute concerning a consumer financial product or service described below.

  1. The prohibition on class action waivers would apply to arbitration agreements with respect to:
    1. Most types of consumer “credit” governed by the Equal Credit Opportunity Act and Regulation B, including but not financial law practicelimited to consumer credit cards, lines of credit, small-dollar or payday loans, private student loans and certain auto loans;
    2. Checking and other deposit and share accounts subject to the Truth in Savings Act (TISA);
    3. Certain auto leases;
    4. Consumer debt relief services for all types of consumer debts (whether arising from secured or unsecured consumer credit transactions, or consumer debts that do not arise from credit transactions – such as medical or tax debts);
    5. Providing consumers with consumer reports and information specific to a consumer from consumer reports (such as by providing credit scores and credit monitoring);
    6. Remittance transfers subject to the Electronic Funds Transfer Act (EFTA);
    7. Transmitting or exchanging funds, including receiving currency, monetary value, or payment instruments from a consumer for purposes of exchanging or transmitting by any means, including, among other things, wire, facsimile, electronic transfer, the Internet, or through bill payment services or business that facilitate third-party transfers;
    8. Payment processing activities that involve accepting financial or banking data directly from the consumer for initiating a payment, credit card, or charge card transaction;
    9. Consumer check cashing, check guaranty, and check collection services; and
    10. Debt collection activities related to the types of consumer financial transactions listed above.  See Section 1040.3(a).
  2. The rule also requires covered providers to include a specified plain-language provision in their arbitration agreements disclaiming the agreement’s applicability to class actions.

The CFPB’s final rule may be viewed at:  http://files.consumerfinance.gov/f/documents/201707_cfpb_Arbitration-Agreements-Rule.pdf

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Seven Legal Issues For Every Business Owner http://alexsonlaw.com/seven-legal-issues-every-business-owner/ Mon, 24 Jul 2017 10:15:02 +0000 http://alexsonlaw.com/?p=684 I am working on a book that every business owner will want to have on the shelf! The topic relates to the legal strategies I have helped clients initiate to launch and/or grow a successful  business.  My passion has always been a concern for access to credit for the small, emerging and growth business.  Recently, […]

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I am working on a book that every business owner will want to have on the shelf!

The topic relates to the legal strategies I have helped clients initiate to launch and/or grow a successful  business.  My passion has always been a concern for access to credit for the small, emerging and growth business.  Recently, I have noticed there is also a legal services access issue.  This book is written based on my years of experience and my concern about these marketplace issues.  My draft outline is shared below.  If you have any suggestions to expand the scope, please sent me a message.

  1. Entity Structure
  2. Intellectual Property
  3. Licenses and Regulation
  4. Acquiring an existing business
  5. Operations
  6. Expansion- strategic alliances and business combinations
  7. Commercial Loan Products

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Alexson Law Volunteer Engagement With GLSA http://alexsonlaw.com/alexson-law-volunteer-engagement/ Mon, 24 Jul 2017 09:15:05 +0000 http://alexsonlaw.com/?p=678 Harriet B. Alexson has been invited to be a contributor to the Group Legal Services Association (“GSLA”) Blog and  Newsletter.  GLSA is a nonprofit, ABA-affiliated organization for those involved in the legal services plan industry, which delivers legal services to a broad range of clients.  GLSA provides the legal services plan community with education, support, […]

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Harriet B. Alexson has been invited to be a contributor to the Group Legal Services Association (“GSLA”) Blog and  Newsletter

GLSA-volunteer

GLSA is a nonprofit, ABA-affiliated organization for those involved in the legal services plan industry, which delivers legal services to a broad range of clients.  GLSA provides the legal services plan community with education, support, collaboration and advocacy. GLSA members are committed to providing affordable access to legal services. I have always been an advocate for access to credit  for the entrepreneur, emerging and growth business.  These legal services can assist the emerging business.

*pictured is GLSA logo

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Speaking and Mentoring Engagement at Teen Entrepreneur Academy 07/24/17 http://alexsonlaw.com/teen-entrepreneur-academy-speaking-engagement/ Wed, 12 Jul 2017 16:42:28 +0000 http://alexsonlaw.com/?p=668 Harriet B. Alexson, Esq. will be participating at the TEEN ENTREPRENEUR ACADEMY (“TEA”)   at Concordia University, School of Business, Irvine, CA the week of July 24th, 2017 as a speaker and mentor.    TEA is a one-week residential program focused on education and training for aspiring high school entrepreneurs worldwide.  The program includes speakers, coaches, mentors […]

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Harriet B. Alexson, Esq. will be participating at the TEEN ENTREPRENEUR ACADEMY (“TEA”)   at Concordia University, School of Business, Irvine, CA the week of July 24th, 2017 as a speaker and mentor.    TEA is a one-week residential program focused on education and training for aspiring high school entrepreneurs worldwide.  The program includes speakers, coaches, mentors and a business plan competition.

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City of Morgan Hill v. Bushey http://alexsonlaw.com/city-morgan-hill-v-bushey/ Wed, 12 Jul 2017 16:24:10 +0000 http://alexsonlaw.com/?p=665 Ballot Referendum on zoning ordinance allowed although inconsistent with the general plan-Land Use and Development In City of Morgan Hill v. Bushey (6th Dist., No. H043426, May 30, 2017) a zoning ordinance was allowed to be placed on the ballot even when the result was potentially to leave in place pre-existing zoning that is inconsistent […]

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Ballot Referendum on zoning ordinance allowed although inconsistent with the general plan-Land Use and Development

In City of Morgan Hill v. Bushey (6th Dist., No. H043426, May 30, 2017) a zoning ordinance was allowed to be placed on the ballot even when the result was potentially to leave in place pre-existing zoning that is inconsistent with the general plan.  

The city council of Norco adopted an ordinance to bring zoning for certain property into consistency wreferendum-ballet-voteith the city’s recently-amended general plan. Norco voters opposed the zoning ordinance by presenting a referendum petition, but the city council refused to place the referendum on the ballot. The council’s position was that the repealing the ordinance would reinstate the prior zoning which was inconsistent with the general plan, therefore creating an invalid zoning scheme.  The court did not agree and allowed referendum on the ballot. The court argued that the referendum does not enact inconsistent zoning; it maintains the status quo by preventing a council-enacted zoning ordinance from taking effect. The referendum at issue targeted a zoning ordinance that represented a portion of the otherwise consistent zoning plan.   Because the council could comply with consistency requirements by adopting different zoning if the referendum had succeeded, the referendum did not prevent the city from complying with its duty to bring inconsistent zoning into consistency with the general plan within a reasonable time.

This case is interesting as it reinforces the requirement that the zoning use must be consistent with a city or county’s general plan.  We can provide a legal analysis of your potential change of zoning use and the need for a general plan amendment.  We also look to structure strategic ventures with land owners who wish to sell their undeveloped property at a premium. 

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Compensation-Overtime Pay for Mortgage Underwriters http://alexsonlaw.com/compensation-overtime-pay-mortgage-underwriters/ Tue, 11 Jul 2017 16:24:53 +0000 http://alexsonlaw.com/?p=660 The Ninth Circuit Court of Appeals issued its decision in McKeen-Chaplin v. Provident Savings Bank, FSB, (“PSB”)  No. 15-16758 on July 5, 2017.     The appeal presents the question of whether a class of mortgage underwriters are entitled to overtime compensation under the Fair Labor Standards Act (“FLSA” or “the Act”), 29 U.S.C. § 201 […]

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The Ninth Circuit Court of Appeals issued its decision in McKeen-Chaplin v. Provident Savings Bank, FSB, (“PSB”)  No. 15-16758 on July 5, 2017.    

The appeal presents the question of whether a class of mortgage underwriters are entitled to overtime compensation under the Fair Labor Standards Act (“FLSA” or “the Act”), 29 U.S.C. § 201 et seq., for hours worked in excess of forty per week. The court decided that because the mortgage underwriters’ primary job duty does not relate to the bank’s management or general business operations, the administrative employee exemption under 29 U.S.C. § 213(a)(1) and 29 C.F.R. § 541.200(a) does not apply,1 and the underwriters are entitled to overtime compensation.

The facts as recited in the opinion are important to understand.  PSB sells mortgage loans to consumers purchasfinancial law practiceing or refinancing homes and then resells those funded loans on the secondary market. Mortgage underwriters at PSB review mortgage loan applications using guidelines established by PSB and investors in the secondary market, including Fannie Mae, Freddie Mac, and the Fair Housing Administration. Loan transactions begin when a loan officer or broker  works with a borrower to select a particular loan product. A loan processor then runs a credit check, gathers further documentation, assembles the file for the underwriter, and runs the loan through an automated underwriting system. The automated system applies certain guidelines based on the information input and then returns a preliminary decision. From there, the file goes to a mortgage underwriter, who verifies the information put into the automated system and compares the borrower’s information against the applicable guidelines, which are specific to each loan product.

Mortgage underwriters are responsible for thoroughly analyzing complex customer loan applications and determining borrower creditworthiness in order to ultimately decide whether PSB will accept the requested loan. They may impose conditions on a loan application and refuse to approve the loan until the borrower satisfies those conditions. The decision as to whether to impose conditions is ordinarily controlled by the applicable guidelines, but the underwriters can include additional conditions. They can also suggest a “counteroffer”—which would be communicated through the loan officer—in cases where a borrower does not qualify for the loan product selected, but might qualify for a different loan. Underwriters may also request that PSB make exceptions in certain cases by approving a loan that does not satisfy the guidelines. After a mortgage underwriter approves a loan, it is sent to other PSB  employees who finalize the loan funding.  Underwriters say that whether a loan is funded ultimately depends on factors beyond the underwriter’s control. Another group of PSB employees sells funded loans in the secondary market.  The key to this fact pattern is that the discretion involved is within the guidelines set forth by PSB.

The law  as applied, FLSA,  require employers to pay employees time and a half for overtime work—that is, work in excess of forty hours per week under  29 U.S.C. § 207(a)(1).    Employees who are “employed in a bona fide executive, administrative, or professional capacity” are exempt from those provisions under 29 U.S.C. § 213(a)(1).   To determine whether employees qualify for the administrative exemption, the Secretary of Labor has formulated a “short duties test.”  A qualifying employee must (1) be compensated not less than $455 per week; (2) perform as her primary duty “office or non-manual work related to the management or general business operations of the employer or the employer’s customers;” and (3) have as her primary duty “the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a). An employee’s primary duty is “the principal, main, major or most important duty that the employee performs.” 29 C.F.R. § 541.700(a).   The Court applied the test and held that the underwriters were entitled to overtime (did not fall within the exemption).

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