Category: News

Evidentiary Issues

Prepare for the relaxation of evidentiary rules in ICC arbitrations. First, remember that hearsay will come in to most ICC arbitrations, but the arbitrator may determine what weight and credibility will be given to such hearsay. Second, motions to exclude such as Daubert motions are less likely to be granted than in a Court setting. In our opinion, arbitrators are more likely to include evidence than a district court or superior court judge would to avoid any confirmation issues related to exclusion of evidence.
Strategically, motions in limine and Daubert motions are still helpful for the arbitrator to determine weight and credibility issues. Furthermore, the motion in limine can result in the rare exclusion of evidence in an arbitration.

ICC Rules

Don’t expect to be operating under a Civil Procedure Act within the ICC arbitration process. The ICC provides some definite rules, but a lot of the procedure is going to be determined by the arbitrator and the parties. The parties and the arbitrator may provide for the federal or state rules to be the default set of rules when there is no guidance from the ICC.
In addition, be aware that certain affirmative defenses normally expected to be applied may not be applied in your case. For example, the statute of limitations defense may or may not be applied as you would expect in the arbitration process. You need to brace your client for the fact that certain affirmative defenses may not receive the same mandatory application in ICC arbitrations as those defenses would in a State or Federal Court case. The results of those decisions may increase the cost and breadth of the litigation within the arbitration process. Also, the arbitrator may not make decisions on such important issues until just before the evidentiary hearings (i.e., trial for all practical purposes).

Due Process of Law

ICC arbitrators do not want to be reversed or have their decisions fail to be confirmed. One significant type of objection or motion, if normal rules of procedure are not followed, is constitutional objections such as a failure to provide due process of law to the parties. If the arbitrator is not following standard civil procedure rules, then this type of motion or objection is an important tactic to utilize.

The Talk

If the case is not going to settle and will be tried in evidentiary hearings, then early in the proceedings, you need to haveTHE TALK with your client. You need to let the client know that the arbitration process can get very expensive including hundreds of thousands of dollars for prosecution or defense of a case, and that your client should not expect a significantly reduced cost to arbitrate the case over litigating a case under a Civil Procedure Act and in Court. This talk will assist clients and will assist your firm before legal costs get out of hand based on the misperception of clients in relation to arbitration being much cheaper than normal litigation.
Conducting THE TALK before engaging in significant discovery is important, because the pace at which ICC arbitration runs is brisk. Once written discovery begins, the calendar will be compressed significantly in comparison to normal litigation.
The amount of documents and the translations needed for written discovery are significant and on deadlines that may or may not be realistic. Both parties will encounter these difficulties and need to be cooperative with opposing counsel. Both parties need to work with the Arbitrator on realistic deadlines to complete discovery, pre-trial motions, and evidentiary hearings.
Also you should note to your client that once depositions begin, the costs and fees will rise dramatically during those months. The timeline is shorter in general than regular litigation, and as a result, the cost and fees will be intense within each month as depositions go forward. You need to prepare your client accordingly.
Also, please note that each arbitrator may handle the discovery process differently. Some arbitrators may limited depositions significantly and push for memorial statements and affidavits as opposed to many depositions. This decision will significantly affect the cost and strategy related to the arbitration.

Subpoena Frustrations

The ability to enforce subpoenas in ICC arbitrations is difficult and cumbersome. Out of state subpoenas, to be enforced, require holding hearings out of state where the witness resides. You would be asking the arbitrator to hold the hearing out of state with the parties counsel. Questions as to the utilization of skype and other such services by the out of state witness counsel are all subject to interpretation and in the end, likely require a court ruling if the out of state witness’s counsel objects or just ignores the subpoena. We can assist you on this issue, but it is very difficult to gain compliance. Some collateral source articles exist on these out of state subpoena enforceability issues.

Evidentiary Hearings

Time is tight in evidentiary hearings. An ICC arbitrator may decide that the arbitration will take a maximum of five (5) business days regardless of the number of documents, depositions, and experts you maintain. Deposition designations, i.e. page and line number demarcations for use of depositions as testimony, may be necessary by stipulation in order to complete evidentiary hearings within the time allotted by the arbitrator. Specific rulings on the use of depositions and affidavits are critical, and the strategic evaluation of such utilization of live and deposition witnesses are critical from the beginning. Also, you should get an idea of the weight affidavits and deposition designations will get from your arbitrator before evidentiary hearings begin.
Pretrial Briefs and Opening Statements are critical. Do not assume that your arbitrator will find the right passages in depositions. Both sides need to be cognizant of the potential need to designate deposition portions for trial.
During the evidentiary hearings, do not expect normal court procedures. In fact, don’t be surprised if the arbitrator engages in significant questioning of the witnesses to your clients advantage and disadvantage at times.
Furthermore, do not expect normal objections to be sustained. Most of the time, the evidence is going to come into the proceeding. Unless exhibits have not been provided previously in discovery, the exhibits are likely to be admitted into the proceeding. Hearsay and other objections will be rarely sustained if a bates stamp number is on the document or prior notice has been received by the opposing party.
A lack of hard and fast rules in ICC arbitration exists for the most part. The best of trial lawyers can be rewarded or frustrated by this lack of formality. However, it is better to be forewarned than to be surprised at these hearings.

Hecht Walker, PC Arbitration Representation

Our firm wishes you the best of luck in your ICC arbitrations. If we can assist you in arbitration or in litigation, we would be honored to serve.  Please feel free to contact us about your international or domestic arbitration, commercial litigation, real estate litigation, employment law litigation, and business disputes of all kinds. Thank you.
Greg Hecht has been a practicing attorney for 28 years. He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Greg Hecht has been a practicing attorney for 28 years. He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Full bio at https://hechtwalker.com/about/attorneys/greg-k-hecht/

Collegiality Rules in Arbitration

Whatever your general proclivity is with opposing counsel, civility and collegiality are critical in ICC arbitrations. Throughout the process, there will be many decisions that you will need to recommend to the arbitrator with opposing counsel. The framework for many of the procedures is not defined as in court litigation under a civil practice act. Discovery, evidentiary rules, use of depositions, laying foundation, authentication, motions in limine, Daubert motions and related matters will be constantly discussed with opposing counsel.  If you are a jerk early in the process or do not provide for certain hospitalities, it will come back to bite you or your client later in the proceedings. With the tight timelines in ICC arbitration, there is no doubt that both parties will need accommodations from the other side. Be smart and professional.

Discovery

An agreed upon Discovery Plan to address the use of interrogatories, request for production, depositions, affidavits and admissions can be invaluable in an Arbitration.  A Discovery Plan can help to streamline the discovery process to reduce costs and attorneys fees and to avoid certain battles over discovery rights. If possible, this plan should be done prior to the selection of an arbitrator so that the arbitrator will not likely add any extra discovery requirements and can early on in the process guide the parties in adherence to the plan. The best way to obtain an agreed upon Discovery Plan is to reach out to the other side to address the needed information and realistic timelines. This is also a good opportunity to determine the likelihood of whether or not the other side is going to file counterclaims, which could impact the scope of discovery in the Arbitration proceedings.

Interaction with Local Counsel and Translator Needs

Early on, you should request interaction with your client’s local counsel or request your client gain local counsel in the other country or countries involved.  Also, remember with local counsel in another country to make your directions explicit.  In one arbitration, we sent local counsel some information which we said explicitly,This information is attorney-client privileged and should not be divulged outside of the attorney-client relationship.  We were working with local counsel on gaining some clarifications from an expert in that country. Local counsel wanted to send our email inquiries directly to the expert, explaining that the information was privileged in their country. We explained that in our country, that once that information reached the testifying expert, the information would have to be revealed if subpoenaed.  Different rules within different countries may yield different results, so you need be cordial but direct with local counsel.

A second area of expense is going to be the need for a translator and often an official translator thereafter.  Most likely, you will get into some disputes about the official translations of certain documents, especially communications.  If early on, the parties agree to one official translator, it can benefit both parties.  However, each party will still need its own translator to determine attorney-client and work product before disseminating certain documents to the other side or to the official translator. The translation of documents can be a significant expense in international arbitrations and litigation.

Terms of Reference

Early in the arbitration process the ICC requires the Terms of Reference to be drafted by the Parties.  Some arbitrators view the Terms of Reference like a pretrial order, even though it is usually filed before discovery begins.

One area of the terms of reference, which should be carefully scrutinized, is the “Summary of Claims section.  While an authoritative treatise (fn 1) denotes that that the Summary of Claims is just as stated, only a summary, some parties will suggest that the Summary of Claims general description may expand claim rights beyond what is plead in the Request for Arbitration (basically the complaint) or Answer and Counterclaims to the Request for Arbitration.  Beware of very general, non-limiting language in the claim descriptions in the Summary section that are brought by your opponent. Such language may reference potential claims, which have not been alleged specifically, to come from discovery documents not yet served or requested at that time. If you are placing such language into the Terms of Reference, it may benefit your client.  On the other hand beware such language from your opponent in that section.

Decisions But Not Awards

Arbitrators are faced with a variety of motions and issues during the arbitration process.  Arbitrators may make informal rulings, or the arbitrator may make an official award.  Early on, before the arbitrator is selected, you may want to ask the potential arbitrator regarding his willingness to draft award decisions as opposed to informal rulings. If the arbitrator makes informal rulings, those rulings are subject to review by the ICC . In addition, a limited right for an appeal to the ICC  is available for official Awards. However, without a specific Award, such rights may not exist.  (Please note that ICC rules may have changed since the publication of this post.)

Greg Hecht has been a practicing attorney for 28 years.  He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Full bio at https://hechtwalker.com/about/attorneys/greg-k-hecht/

International Chamber of Commerce (ICC) arbitration has been growing as an alternative to litigation. Atlanta is becoming a hub for international arbitration along with the busiest airport in the world, Atlanta’s Hartsfield Jackson International Airport.  Depending on the process set out by the arbitrator, international arbitration can serve as an efficient substitute for litigation. However, certain discovery tools may be left out of the process depending on the arbitrator’s decisions, which may work to the detriment of one or both parties.  Advantages and disadvantages exist for ICC arbitration. We review certain advantages and disadvantages of ICC arbitration along with certain practice pointers for parties considering utilizing ICC arbitration clauses for their contracts and for attorneys representing clients in ICC arbitration.

ICC arbitration The Costs of Arbitration

ICC arbitration may save money in the long run, by preventing multiple appeals, through more restrictive discovery, and by the receipt of a definite decision from the arbitrator. There is no actual appellate oversight to ICC Arbitration. Parties are only able to avoid an arbitration award by moving to set it aside based on the limited grounds specified in the New York Convention and in some cases the Federal Arbitration Act.  In addition, the calendar is tighter than in most litigation settings, and depending on the application of discovery rules, the arbitration can be more concise and abbreviated than normal commercial litigation.

While there is opportunity to save money through the more abbreviated ICC arbitration process, ICC arbitration costs a significant amount for filing and service fees.  The ICC and the arbitrator are paid a significant amount as well. To give this comment context, in a recent ICC arbitration in which our firm represented one of the parties, where the value of the combined claims and counterclaims between the parties reached a claimed level of approximately $1.8 Million, ICC fees and costs reached approximately $85,000.00 between both parties. In litigation, tax dollars pay for the administration of justice generally (unless a special master is appointed in rare cases).

The discovery process determined by the parties and the arbitrator can affect your costs greatly in ICC arbitrations. Even well intended positions by one party may cause unintended consequences and costs for both parties.  For example in a recent ICC arbitration, one of the parties wanted no interrogatory allowances and argued that interrogatories would be needlessly costly to the parties. The arbitrator limited interrogatories to three contention interrogatories. The result was that the parties had to develop most of their discovery through many depositions, which were quite costly.  Depending on the process applied by the arbitrator and the parties, the cost of discovery can be greater or smaller than in regular litigation. The parties will not know the range of costs of discovery until well into the first quarter of the arbitration process unless the parties can agree to the process before selecting an arbitrator and asking the arbitrator in the selection process if he or she will honor that process. Before you limit discovery, make sure you do not create unintended consequences.

Selection of the Arbitrator

ICC Arbitration is overseen and considered by an Arbitral Tribunal. The Tribunal may consist of a panel of three (3) arbitrators, or one (1) sole arbitrator.  While it is more costly to appoint an Arbitral Tribunal of three (3) arbitrators, the additional cost will allow for some checks and balances between arbitrators to further fundamental fairness of the proceedings and potentially avoid the risk of arbitrator bias or impropriety.  Both parties have an opportunity to determine the arbitrator(s) under ICC rules.  If the parties cannot agree on the makeup and selection of the Arbitral Tribunal, the ICC will make the selection.

You have one opportunity to select the arbitrator(s), and you need to make it count.  There is little to no review or appeal rights from an ICC Arbitration decision and the Arbitrator(s) is not bound by the general procedural rules of evidence and procedure.  With so much discretion afforded to the Arbitral Tribunal and little to no oversight, it is important to carefully vet and select the Arbitral Tribunal within the time allowed by the ICC

When selecting an arbitrator, you and your attorney should request and review the curriculum vitae or resume of the arbitrator.  If you do not have sufficient information as provided by the CV, you should ask questions about the types of commercial, real estate or other experience of the arbitrator germane to your dispute.   Additionally, unlike legal court proceedings, you are permitted and should interview the arbitrator before agreeing to his or her appointment, and we recommend strongly that you consider interviewing several candidates.  Recommendations and opinions of colleagues and other attorneys may be very helpful as well.  Additionally, although each Arbitrator must execute a statement identifying what if any connection he or she has with either of the parties and/or their attorneys, parties should try to confirm the independence of the Arbitrator as much as possible on their own.  Selection of the Arbitral Tribunal provides the parties with direct influence on how the arbitration will be conducted and should be done with as much reasonable diligence and care as possible within the selection time period allowed by the ICC.

Hecht Walker, PC Arbitration Representation

Our firm wishes you the best of luck in your ICC arbitrations.  If we can assist you in arbitration or in litigation, we would be honored to serve.  Please feel free to contact us about your international or domestic arbitration, commercial litigation, real estate litigation, employment law litigation, and business disputes of all kinds. Thank you.

Greg Hecht has been a practicing attorney for 28 years.  He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Full bio at https://hechtwalker.com/about/attorneys/greg-k-hecht/

Tucker Continues the Trend of Cityhood

On Tuesday, November 3, 2015, the City of Tucker became the eighth new city to be incorporated in the Metro Atlanta area in the past ten years.  Voters came up short by just a few hundred votes from creating a ninth city, LaVista Hills. Proponents of municipal incorporation point to dissatisfaction with County government services, political corruption, higher crime rates, and tax dollars accommodating other areas of the County.  Opponents argue that municipal incorporation would simply add another layer of government that would not be able to serve them any better than the County. While the opponents of municipal control prevailed in blocking cityhood for LaVista Hills, Tucker became the eighth new city in ten years in the Metro Atlanta area that began with the creation of City of Sandy Springs, followed by the cities of Brookhaven, Chattahoochee Hills, Dunwoody, Johns Creek, Milton, and Peachtree Corners. Local government efforts continue as well for residents in South Fulton County pushing for the creation of a new city of South Fulton.

The creation of a new city begins with a grass roots effort to inform and persuade local residents to support and eventually vote for cityhood.  In the meantime, before the issue can be voted on by local residents, the Georgia legislature must first pass a bill authorizing the issue to be placed on the ballot. Residents in Sandy Springs waited more than two decades for the Georgia legislature to allow them to vote on cityhood, and the residents of South Fulton continue to wait for such authorization. Once authorized by the State legislature, it is up to the residents of the involved communities to vote on whether or not to incorporate.

The creation of a new city involves a shift of a number of governmental responsibilities from the County to the new city, such as fire departments, police, water, and even trash collection services.  It is up to the city officials to decide what services to take over and what to continue to pay the County to provide. For example, while the cities of Sandy Springs and Brookhaven have chosen to create their own police force, the new City of Tucker will continue to rely on the law enforcement services of Dekalb County. Cities will also assume the powers and responsibilities to issues bonds, levy taxes (such as a Local Option Sales Tax and ad valorem property taxes), create city parks, establish a municipal court system, buy, sell and use property, issue permits, and hire and fire city personnel.

The incorporation of a new city and the assumption of various governmental services and responsibilities can greatly affect individual residents and businesses alike. One of the largest and most comprehensive duties of a new municipal government is to create a new set of ordinances and regulations to govern its citizens, including a new zoning map and zoning ordinances regulating the use of private property.  In some instances, the new City zoning ordinance may disallow types of property usage in areas of the new City that the County previously permitted, or require new special use permits for certain property uses. These new ordinances can also be extremely costly for new property owners.

Zoning ordinances continue to be more strict and costlier, especially for business owners looking to purchase property in the affected area. Many ordinances follow a growing trend to require expensive improvements to properties before new uses will be allowed, including the creation of bike paths and sidewalks across the property, and even the construction of covered bus stops.  Parking lots may be prohibited from the front of buildings, and brick masonry privacy fences may be required.  Zoning ordinances also can control the design of any new building on property and what materials can be used.  While existing property uses may be grandfathered and protected from stringent new zoning requirements, individuals and businesses looking to move into new cities should familiarize themselves with any new zoning ordinances that could affect the use of their new property. Property owners adversely affected by zoning ordinances should consult with an attorney who may be able to provide advice on the property restrictions, and assist with any rezoning and special use permit needs.

The real estate attorneys at Hecht Walker have represented numerous purchasers, builders, developers and commercial property owners in re-zoning, special use permit and land use matters. Because we have represented several counties, cities, and local authorities, including development, housing, water and re-development authorities, we have developed an in depth understanding of the responsibilities, rights, and limitations of local governments on land use control.  Our familiarity of local zoning ordinances, the rezoning and permitting process, and local governments enable us to better help you protect your property rights. If you or someone you know are ever in need of zoning and permitting assistance in the Metro Atlanta area, please contact us at 404-348-4881 or at laurie@hmhwlaw.com.

This article is not intended to provide legal advice and should not be relied upon as such.  We strongly advise anyone with questions regarding their legal rights to contact an attorney directly in order to assess and advise on particular matters.  This article is based upon information available as of the date above, and contains general information that may change depending on particular circumstances of certain matters. 

There is so much documentation related to foreclosure that it may be difficult to understand all of the nuances for a successful process. Mark Walker is a foreclosure attorney who can help walk you through the process from beginning to end.

Georgia Real Property Foreclosure Part 3 in a series by Hecht Walker Partner Mark Walker

Once your real estate attorney has reviewed and substantiated the documentation and official communication has been sent, you may put into motion what is required in order to sell the property through non judicial foreclosure and recoup some of your losses.

Completing the Process

As a pre-condition to scheduling a foreclosure sale of the property you must put an Advertisement in the newspaper in the legal organ of the county where the property is located. Just like the other tenants of foreclosure, there are specific rules governing when a foreclosure sale may take place as well as what is written in the Ad, where the Ad is placed and the timing of the Ad which must run once a week for four consecutive weeks prior to the foreclosure sale.

Some of the specific requirements for inclusion in an advertisement related to selling foreclosed on property under Georgia law include:
An exact legal description of the property as it appears on the original security instrument
The name of the Grantor (debtor)
The name of the current deed holder
The general time and place of the foreclosure sale
A reference to the Power of Sale (your right to hold the sale as found in The Security Instrument)

In addition, information allowed in the Ad under Georgia law that can help in the sales process includes:
A reference to any superior liens or mortgages of record
The street address of the property (must be in bold type)
The current owner of the property

Accuracy is important. If there are serious or misleading errors in the advertisement it may cause the foreclosure sale to be void.

The Foreclosure Sale

At this point it is important for your attorney to re-check the Deed of Records for new liens or assignments as some county clerks offices may fall behind by months in recording them. There are also specific days of the month and times in which a foreclosure sale may be conducted in order to be valid. Before bidding on the property may begin, the sale must be announced by reading the Ad to anyone present on the Courthouse steps of the Superior Court of the county where the property is located. Even if no one else is present, the Ad must still be read.

Once the Ad is read out loud, the sale becomes open for bids with typically the owner that is foreclosing on the property having the starting bid. The attorney or auctioneer must ask for another bid. If no one else bids, then the property will be announced as sold and the bidding is closed. At that time the foreclosures sale is complete and the highest bidder becomes the owner of the property. If anyone other than the original owner is the highest bidder, the winning bidder must have cash or certified funds in the total amount to pay for the purchase at the time of the sale.

The next step is to have your attorney prepare a Deed Under Power of Sale and a Transfer Tax Form. Appropriate forms must be filed with the court and fees paid. If you are outbid for the property, it is a good idea to have your attorney take a look at the security instrument to confirm the amount of money, including the possibility of attorney’s fees, you are entitled to recover.

The key to navigating the entire foreclosure process is crossing all of the Ts and dotting all of the’s. The entire foreclosure can be determined invalid if any step is missed or in error. It is critical to have our experienced real estate attorneys to help navigate the road for a successful outcome.

The real property tax appeal process is a stringent and technical process and must be strictly adhered to or you may lose your appeal rights altogether. Recent legislation has changed the procedures for notifying property owners and for filing appeals, which may affect your right to file an appeal.

Much of the appeals process has remained the same.  You are still allotted 45 days to file your Notice of Appeal with the Board of Assessors following receipt of your Notice of Assessment.  You still have a right to a hearing before the Board of Equalization.  And you may still appeal the Board of Equalization’s decision to the Superior Court of the County in which the property is located.  However, some of the notice requirements and method for delivering the Notice of Assessment has changed.  Failing to understand these changes may deprive the property owner of the right to appeal their taxes.

Changes in Georgia Ad Valorem Tax Appeals

The Georgia Legislature has passed various bills and the Governor has signed into law some amendments to Georgias law on appealing your Ad Valorem Tax Assessments. Hecht Walker is one of the few law firms in the metro Atlanta area that offers commercial property tax appeal and property tax refund representation and is well equipped to help you understand and properly respond to these changes.  We have successfully represented many companies, landlords, and tenants over the past several years both at the Board of Assessors, known as the BOA, the Board of Equalization, known as the BOE, and Superior Court levels.

Georgia law provides a procedure for property tax appeals at the county level. Taxpayers may challenge an assessment by the county board of tax assessors by appealing to the county Board of Equalization or to an arbitrator or arbitrators. This must occur within 30 or 45 days (depending on the county) from the date of the change of assessment notice that is sent by the Board of Assessors.

Appeals may be filed if there are questions related to any of the following categories:

• Taxability the determination of whether or not the property is exempt from taxation.
• Uniformity of Assessment Are values the same within the same class of property? As an example, if one gas station is taxed at a certain rate per acre, is another property with a gas station, in the same geographic area, taxed at the same rate?
• Value – Did the county board of tax assessors change the appraised value of the owner’s property this year?
• Denial of the homestead exemption.

Changes to Georgias Laws on Appealing Ad Valorem Tax Assessments include changes to the Notice Requirements and to the way in which the County Board of Assessors may notify you of any changes in your Tax Assessment. This year, unlike prior years, each and every taxpayer will receive a Notice of Assessment for their property regardless of whether they have sent in a Tax Return.  The County may also send this Notice by electronic mail as opposed to regular mail, which was required previously.

Pay Attention to the Notice Date

Regardless of when a Notice of Assessment is received, the deadline for filing an appeal begins on the date of this Notice. If you fail to send in your Notice of Appeal by the deadline, there is no way to appeal the taxes for that year and you will be responsible for the taxes assessed even if you have a legitimate dispute.

The County Considers Current Use Value in Determining Taxes

A potential positive change is that, now, the taxpayer may be able to have the value of the property more accurately reflected in the tax assessment.  This is the value that a knowledgeable buyer would pay for the property with the intention of continuing the property in its existing use and in an arm’s length, bona fide sale.  This means you can use the fair market value to help determine the tax value based on what a buyer would pay for the same use. This may be more beneficial to the taxpayer in terms of the valuation, which can reduce your overall tax liability.

There are several other nuances and minor changes to the Ad Valorem Taxation and Appeal Process.  In order to better understand these changes and how they may affect your tax liability, please contact Bob Quinn by phone 404-348-4881 or contact the offices of Hecht Walker P.C. for a consultation.

About Bob Quinn

Robert Quinn is an Associate at Hecht Walker. His practice concentrates on commercial disputes, landlord representation, note and guaranty litigation, employment law, business and real estate litigation, property tax appeals, and government issues.

Many companies utilize non-compete agreements as they may offer critical short-term protection of information and assets. There are many reasons to consider using a non-compete agreement.  In most states, including GA, employers may require certain employees to sign non-compete agreements to prevent employees from taking proprietary information and valuable training to a different company for material gain.

Non-compete agreements can also be used when signing a commercial real estate lease.  As an example, a business that sells pet supplies may ask the landlord to put a non-compete clause in the lease agreeing not to put another pet store in the same shopping center. This would protect the owner of the pet store from direct competition, which can help increase profitability for the tenant and secure payment of rent to the landlord.

A well-crafted non-compete agreement works to protect a business from information or expertise being poached by the competition.

The Benefits of Non-compete Agreements

• Short term protection of training investments and proprietary information
• Less likelihood of losing important client lists to competitors
• Less likelihood of losing employees that you have trained to a competitor
• Less likelihood of employees that do leave taking other employees and customers with them (due to restrictions on competing behavior)

What Non-competes Should Define

In order to be enforceable, non-compete agreements need to be both clearly defined and considered reasonable in light of the particular employers legitimate need for protection.

• Who is a competitor? Typically a competitor is a similar company in a similar industry, operating in a specific geographic area. A competitor can also include an employee who leaves and creates his/her own company.
• The length of time. This is the timeframe your non-compete will be enforceable. Typically this can go from 1 year to multiple years depending on the role of the employee. Defining too long of a timespan can make enforceability questionable.
• The geographic area. Will your non-compete cover the nation, key states or specific cities? This is another key consideration, as covering an unreasonably large area can significantly restrict the employee’s ability to seek employment.
• Compensation. The non-compete benefits the company. Exchanging something of value for the employees agreement to sign the non-compete is an important component in its enforceability. Financial incentives are often used here; however, in some cases, continued employment could be a valuable exchange.

Choose Carefully

It’s important to be selective when considering which employees should sign non-compete agreements and what should be in the specific agreements. If an employer makes every employee sign the same agreement, it may be less likely to be upheld in court. Agreements may be stronger when they are used for employees with access to sensitive & proprietary information that can harm your business in the hands of a competitor.

Will Your Non-Compete Hold Up In Court?

To better protect your business and improve the likelihood that the agreement will be enforceable, careful consideration should be given to the duration, geographic area and scope of the agreement.  It is advisable to have an attorney, with experience related to non-compete restrictive covenants and knowledge of your business, help set reasonable criteria.

Timing is also a consideration. If the employee signed the non-compete prior to employment as part of the hiring package, success of enforcing the agreement is much more likely as employment is part of the consideration given for signing. If the employee signed after being hired, the court will consider if the employee received appropriate consideration in return for signing the agreement.  In that case, additional consideration may be required in the form of money, training or services, to insure that the non-compete is valid.

Enforcing a Non-Compete: Benefit vs Risk

Due to specific requirements in different industries and different states, non-compete agreements also have the potential to backfire.  In 2011, the GA legislature passed HB 30 the Georgia Restrictive Covenants Act, which put better protections in place for both parties to a non-compete agreement by specifying requirements of such an agreement.’  While what constitutes a strong agreement has been clarified, there are still areas subject to interpretation that create risks when it comes to enforcement.

If an employee that leaves a company has signed a non-compete agreement and chooses to ignore it, what should that company do?  When put into a position to take an employee to court, it’s critical to consider the risk of doing so. If a company sues an employee and loses, all of their other similarly worded non-compete agreements become at risk of being unenforceable.

An attorney can be invaluable to review the non-compete agreement and consult with management on the risk and potential implications to the business if that and other non-competes were to be considered invalid. It is also advisable for employees asked to sign a non-compete agreement to have an attorney review this or any other contract before signing.  If you need an attorney to draft or review your non-compete agreement, please contact the offices of Hecht Walker P.C. at 678-331-7274.

The time for negotiation has passed.  You have exhausted other options and determined it is time to foreclose on the property to recoup what you can. While not simple, foreclosure will ultimately allow you to take back the property, in order to help resell it, hopefully to a more solvent buyer.

There are many details that your credit representation attorney will oversee to get you through this process.  Once you have gathered all of the documents, an attorney will need time to verify information related to each of them.  Here is a high level overview of the procedures and how the property gets to foreclosure.

Analyzing the potential monetary impact

Using the proper documentation, including the payment history of the loan, a principal balance of the loan and the arrearage (current past due amount) will help determine the actual debt and the amount past due.  In addition, each of the following documents requires review by your creditor representation lawyer.

The Promissory Note

This is a legal document that includes information about how the loan was to be repaid. Your attorney must confirm that the note is valid and review other provisions in the note to insure they are properly followed.

The Security Instrument

In order to begin the foreclosure process, your attorney must thoroughly review the security instrument, typically the Deed to Secure Debt or Security Deed. The document must include language that allows non-judicial foreclosure. In addition to verifying that all of the parties listed are correct, your attorney will determine if a default notice is required before proceedings can begin.  There may be language determining rights of the borrower, related to timing of notices, how notices are sent, and options for payment within a given period of time, to reinstate the loan.

Default Provisions

In the State of Georgia, there are different types of defaults, four of which are as follows. 1. The borrower fails to pay the lender. 2. The borrower fails to pay property taxes or allows the insurance on the property to lapse, 3. The borrower transfers the ownership of the property to any other entity. 4. The borrower sells the property without authorization from the lender.

Your attorney will need to review the borrowers payment history and scrutiny must be paid to confirm that there has actually been a default under the promissory note and the security instrument. In addition, your attorney will thoroughly view all of the documents to avoid a myriad of other complications.

Title Search

A title search should be conducted to confirm that there is not an additional lender and/or any other liens on the property. If the debtor has taken out a second or third mortgage, it is possible the proceeds of the foreclosure would pay off the first debt ahead of your claim, resulting in you not receiving full payment. It is also possible that other liens already exist. By checking the General Execution Docket (GED) your attorney will determine if there are liens that must be paid off before the property could be sold after foreclosure. There are also additional requirements if the IRS has placed a federal tax lien on the property. Your attorney will also want to check with the County Superior Court with jurisdiction over the foreclosure to ward against other issues.

The investigation phase is complete

Once the research and document review has been completed, your attorney can help you proceed through the foreclosure process and ultimately execute the foreclosure by putting the property up for sale in order to regain as much as possible financially. Mark Walker is an experienced Foreclosure Attorney. Our attorneys can help you negotiate a solution before the only alternative is foreclosure. If it is too late for a negotiated settlement, Hecht Walker attorneys can guide you through the entire foreclosure process.

About Mark Walker

Mark Walker has handled thousands of commercial foreclosure cases in his career. If you have sold property and have any concerns about the borrowers ability to pay, contact Hecht Walker as soon as there are warning signs.

What can all businesses stand to learn from the recent debacle surrounding Sony Pictures and the film The Interview? The recent email hacking against Sony Corporation had a significant damaging effect on the company and its operations.  Not only did the hacking lead to the disclosure of many confidential projects, it also exposed several embarrassing communications by top executives that included less than flattering opinions of the company’s movie stars and put lucrative business dealings at risk.

When considering this and other recent security breaches, fundamental questions emerge:

• If a company as big as Sony can have its email systems hacked and disseminated across the internet, how vulnerable are your business’s communications to a cyber attack?
• What steps can you take to protect your business? 
• If those steps fail, what are the potential legal ramifications and how can you reduce your exposure to those legal liabilities?

Don’t Leave Your Business Exposed

Short of spending millions on cyber security, which is beyond the reach of many small and medium size companies, there are things you can do to reduce the risk that your company correspondence will wind up in the public eye.  You may want to start with IT Security and end with educating your employees.

For little or no cost, there are several data security programs on the market that help keep passwords secure.  By using an electronic master code for one password and locking all the other passwords inside a sort of electronic vault, individual employees can create unique passwords for each application or need, and store all of their passwords on a phone or other device.  This can better protect individual documents and passwords from being leaked. And especially sensitive documents can be encrypted.  As an example, password encrypted email portals are commonly used in the medical field to communicate information to and from patients.

Employees can also be taught to recognize phishing and other suspect computer activity and to avoid viewing websites that are not securely locked.

Emails Are Evidence

Executives, and rank and file employees alike, may not realize that electronic communications may be used in a court proceeding and are subject to discovery.

It was not too long ago that businesses thought of emails as simply an alternate, faster, more informal mode of communication between co-workers and customers.  However, over the past few decades, emails have become the most prevalent form of communication and in many instances have been held admissible in court. In one of the most notorious legal examples, Microsoft’s Antitrust Litigation showed that even Bill Gates, then Microsoft CEO, did not understand the legal significance of emails. Not realizing that such communications were admissible in court led one of the richest men alive and the founder of Microsoft to disclose his intention to thwart dealings between Web Services Interoperability Group and Sun Microsystems.  This is not an isolated incident.  Businesses constantly misuse their emails not realizing the damage these emails could cause in court.  Businesses should take care to make sure that certain information is not disclosed in emails or such communications may be used against them in a legal proceeding.

Protect Your Business Professionalism and Image

Working with employees to maintain a professional image throughout all company correspondence can have a positive affect and avoid a negative impact on a company’s reputation.

There seems to be a prevailing assumption that e-mail is less formal than a standard letter; emails often lack proper punctuation and grammar, and include incomplete sentences.  Unclear or inaccurate information in the subject line can lead to confusion. An email’s tone can cause even the intended reader to receive the wrong message.  In our fast-paced society, accuracy sometimes gives way to speed in electronic communications.  In some instances, the reply all button is hit too quickly and emails are sent to unintended recipients.  This can put sensitive information in the wrong hands and cause misunderstandings or other issues. For added legal protections, consider adding a disclaimer to all e-mails stating, if the communication reaches an unintended party, they are to disregard the communication and contact you immediately.

Additionally, using business email for non-business related communications cuts down on productivity and can be misinterpreted as representing the business. Sending e-mail jokes, forwards or chain letters on company time to friends, coworkers or even customers, often shows a lack of professionalism and may reflect poorly on the company’s image.  Inappropriate or poorly worded emails can cause a marketing disaster and leave a company open to liability that can significantly affect the bottom line. Even when an email is used appropriately for business and purposely sent outside a business as correspondence, a poorly written email, or one that includes damaging or inaccurate information can leave a company vulnerable to a bad reputation and legal risks as well. 

Be Proactive

Allow your electronic communications to work for your business, not against it.  By creating a company policy and guidelines for employees on how to use e-mail appropriately in the workplace, many of these problematic issues can be avoided, or at least the adverse impact on your business can be minimized.  Before sending emails, consider having employees ask themselves  “Would I want a jury reading this email?”  If the answer is no, they may want to revise that email before hitting send. If you have any concerns, contact Hecht Walker today to review your communication policy and guidelines.

As we start the New Year, it is time for businesses to file their Annual Registrations with the Secretary of State to maintain their status.  With the filing of your business Annual Registration, it is also a good time to review your business By-Laws or Operating Agreement to insure that the documents adequately articulate your business plan.  All too often our business attorneys see businesses that have ineffective By-Laws or Operating Agreements or documents that do not reflect the intent of the owners of the business.  Some business owners try to save money on the front end by not having an attorney review and draft their By-Laws or Operating Agreement.  The problem with this approach is that often an ineffective operative document leads to litigation which costs multiples of what an attorney would charge to draft an effective By-Laws or Operating Agreement.

Think Longterm

There appears to be two things many business owners, especially businesses with multiple owners, fail to contemplate when creating their businesses and the business operative documents:

• a disagreement between the owners
• how are we going to close the business down some day

The problem with not contemplating these issues at the inception of the business is that the business owners tend to leave out critical terms in the business operative documents to address these issues.  What happens if the owners disagree on the business budget or marketing plan? What happens if one business owner wants to actively manage the business while the other owner wants to be a passive investor? What business decisions can be made by a majority vote of the owners and what decisions need the unanimous consent of the owners?  What happens when you do not get unanimous consent or there is a tie in voting? When it is time to close the business, which owners get the assets? What if one owner contributed all of the assets but the other owner did all of the work?  If these questions are not addressed in the business operative documents, in some instances the only thing that the Courts are allowed to do under the Georgia Business Corporation is dissolve the company, liquidate the company’s assets, and distribute the company’s assets to the owners.

Strategically Review Your By-Laws for Smooth Business Operations

Because the owners almost always want to avoid such a dissolution, there are a few critical terms that should be contained in your business By-Laws or Operating Agreements. These terms include:

• a breakdown of the ownership percentage of each owner or member
• the rights and responsibilities of the owners or members
• a detailed plan showing how losses and profits will be distributed
• the voting rights of the owners or members
• a management plan for the business and designation of officers or managers for the business
• rules for calling and conducting meetings as well as voting
• buyout or buy-sell rules that govern when an owner or member desires to sell their interest, or in the event of an owner or member’s death or disability
• finally, what happens if the owners decide to wind up or dissolve the business should be specifically outlined

This dissolution provision should not only include how assets are liquidated and distributed but what happens to any existing contracts or patents and copyrights held by the business as well.

Starting a business with the end in mind will help you better understand how to draft your business plan and the business operative documents.  If you are interested in starting a business or have a business and need to determine whether your business operative documents are effective, please contact our office for a consultation with a business lawyer.