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Business Law

Internal Limited Liability Company (LLC) Disputes: Direct or Derivative Claim?

As a member of a Limited Liability Company (LLC), you may find yourself in a position in which you believe legal action must be taken to prevent or remedy wrongdoing. If so, you may be entitled to file a direct claim or a derivative claim. If you file a derivative claim, you must first make a formal demand unless the exception to the demand requirement is applicable.

Direct vs. Derivative Claims

A direct claim is a claim based on a member’s right of action against another member. As such, a direct claim is made directly on behalf of the member or manager of the limited liability company against another member or manager of the limited liability company. For example, if a member was singled out and not allowed to vote on a particular company action, that harm might form the basis of a direct claim.

A derivative claim is based on a wrong that impacts the company itself. A derivative claim, therefore, stems from the company’s right of action not an individual member’s right of action. In a derivative lawsuit, a member seeks to enforce a right or to prevent/remedy a wrong to the company when the company has failed or refused to do so itself. Misappropriation of the limited liability company’s assets, for instance, might give rise to a derivative action. Although that misappropriation may indirectly harm the members of the LLC, the primary harm is to the LLC itself.

Derivative Claims and the Demand Requirement

If you are entitled to bring a derivative claim you need to first make a demand unless the exception to the demand requirement applies.  In the State of Florida, LLC derivative claims are governed by Fla. Stat. § 605.0802 which allows a member to pursue a derivative action to enforce a right of a limited liability company “if the member first makes a demand to the other members (in a member-managed limited liability company) or a manager (in a manager-managed limited liability company) requesting that either the members or managers cause the company to take suitable action to enforce the right and then the members or other managers do not take the action within a reasonable time, not to exceed 90 days.”

The only exception to the demand requirement under Florida law is found in subsection (2) of the statute which allows a derivative action to proceed without first making a demand “if a demand (as described above) would be futile or irreparable injury would result to the company by waiting for the other members or managers to take action to enforce the right.”

Contact the Tampa Bay Business Attorneys at Lieser Skaff Alexander

If you are a member of an LLC and believe you are entitled to file an action against a limited liability company, consult with an experienced business law attorney first to determine what type of action to bring and whether the pre-suit demand requirement applies.

Categories
COVID-19 Real Estate

Landlords and tenants should work together to reduce evictions in Tampa after moratorium lift

Everyone has been impacted by COVID-19, and renters and landlords are feeling especially vulnerable.

Various state and federal safety nets have been created to help tenants remain in their rental homes or apartments if they’re having problems coming up with rent due to job losses, health costs or other challenges due to the pandemic.

But there’s less attention to the other part of the equation: the landlords, who are also impacted by COVID. Not only do many have their own personal and professional challenges, they also are restricted from taking action on tenants unable to pay their rent.

In Pinellas County, about $45 million in rental assistance has been put aside from various federal, state and local sources. As of late September, more than $14 million has been allocated to about 1,800 homes to help pay landlords on behalf of their tenants, and hopefully put the tenants on a path toward financial stability.

But while many families continue to benefit from these programs, conditions are changing.

A federal freeze on evictions has just ended, which means landlords can begin to take action on families delinquent on their rent payments. Potentially millions of people could be evicted, increasing the numbers of homeless as well as leaving landlords with months of unrecoverable, unpaid rent.

The current dynamic rental housing situation was recently discussed on “To The Point Already,” a podcast hosted by Rick Elmhorst and Roy DeJesus from Spectrum Bay News 9.

One guest was Michael Singer, a Lieser Skaff Alexander real estate attorney who has represented all types of landlords. While he applauds programs which help hard-working families, he said these programs also create challenges for landlords, who may not get some or all of the rent due to them. They still must pay standard costs (upkeep, utilities, mortgages) without the rent revenue.

“It has been frustrating,” Singer said.

The end of the moratorium has created another interesting challenge. Some landlords are expected to begin the process of evicting delinquent tenants at the same time that local municipalities are trying to get funding to landlords on their behalf. This could stay or cancel any eviction efforts.

“It’s become a race to get this money out,” he said.

Joining him on the podcast was Bruce Bussey, community development manager for Pinellas County, who said that the Tampa area still has more than $30 million available in the form of rental assistance. Some potential applicants may not be sure of their eligibility or understand all the paperwork. Some tenants may have put the application off while the eviction moratorium was in effect, and may be scrambling now to fill it out, if they remember.

Bussey said some restrictions have even been lowered to encourage more families to apply.

He and Singer encouraged landlords to be involved in this process and work to create positive relationships, which can include encouraging or even assisting tenants with the paperwork. Once submitted, funding can be received within a month.

Categories
Firm Updates

LSA Attorneys Prove Super Lawyers and Legal Elite Again in 2021

We are delighted to announce that once again, our namesakes have been recognized as Super Lawyers and/or Legal Elite by a panel of peers and experts.

Super Lawyers

The Super Lawyer designation is awarded to a select few attorneys who excel in their chosen fields. Fewer than 3% of attorneys are recognized each year. This year, Super Lawyers magazine has selected Jeff Lieser, Ghada Skaff, and Joe Alexander as recipients of this prestigious designation.

Florida Trend’s Legal Elite

In addition to being recognized as SuperLawyers, Jeff Lieser and Ghada Skaff have been named Legal Elite members.  This distinction is provided to just 1.3% of Florida lawyers.   Legal Elite by Florida Trend Magazine recognizes the top Florida attorneys. Florida Trend’s Legal Elite attorneys are chosen by peers for their knowledge, expertise and experience in various areas of Florida law.

Both the Super Lawyers and the Legal Elite awards are given after careful consideration and peer voting. Lawyers who are awarded these designations have been chosen as leaders in their fields by attorneys throughout the state of Florida.

Categories
Business Law COVID-19

Business COVID-19 Waivers for Employees and Customers

The COVID-19 pandemic has taken all of us into uncharted waters. After an unprecedented near nationwide shutdown, many states are going through the process of reopening. For business owners, the ability to re-open is often crucial to the very survival of the business. At the same time, a business may have valid concerns about the possibility that an employee or customer could contract the virus while on the premises, resulting in the filing of a lawsuit against the business. In an effort to avoid costly litigation, some businesses are requiring workers and/or customers to sign a liability waiver — but do waivers actually work?

Are Waivers the New Normal?

Businesswoman hanging an "Open" sign after COVID-19 shutdown.

Just as social distancing and wearing a mask in public have become the new normal, signing a liability waiver before returning to work or entering a business may also be commonplace going forward. The New York Stock Exchange is requiring traders to sign a waiver before entering the trading floor, while Walt Disney Co.’s website cites “severe illness and death” risks for customers at its Orlando, Florida, amusement parks. The Trump campaign even had attendees at a rally sign a waiver agreeing not to sue the campaign if they contract the virus.

Why Are Businesses Requiring Waivers?

Business owners are contemplating the use of waivers to avoid the very real possibility of costly litigation that could ensue if a worker or customer claims they contracted COVID-19 at the business.

Typically, workers are covered under workers’ compensation if they are injured or become ill on the job, but questions remain unanswered regarding Covid-19 coverage. In order to qualify for workers’ compensation benefits, a worker need not prove that the employer did anything wrong, only that the injury or illness is job-related. Illnesses like the cold or flu, however, are not usually covered under Florida’s workers’ compensation laws, because they are seen as a hazard of daily living. Though the Florida Department of Financial Services has issued a directive to honor Covid-19 claims made by frontline state employees (such as police officers, first responders, corrections officers, state healthcare employees, child safety investigators and active national guard members), this directive has not been categorically extended to all employees, which could leave employers vulnerable to negligence lawsuits if Covid-19 claims are treated like cold or flu claims. 

Customers have long been able to pursue a personal injury lawsuit based on the concept of premises liability if they were injured or became ill as a result of the business owner’s negligence. For a business that already suffered significant economic losses during stay at home orders, the prospect of a hefty damages award may be enough to implement the use of a liability waiver.

Does a Liability Waiver Really Work?

It depends. The basic idea behind a liability waiver in the context of the coronavirus pandemic is to protect a business from liability for damages if someone contracts the virus while working or visiting the business. In legal terms, this is accomplished by asking the person executing the waiver to “assume the risk” of contracting the virus. Can a waiver actually protect a business though? The answer is less than certain, – and depends on a variety of factors that are likely to change in the coming months.

Liability waivers have historically been limited by the courts in three important ways. First, only known risks can be assumed by the person signing the waiver –, meaning a waiver must clearly state the risks – (in this case, contracting COVID-19). Second, it must be a voluntary assumption of the risk.  Finally, a waiver must be consistent with public policy, which may present issues for both employee and visitor waivers due to the bargaining position between employees and employers, as well as certain businesses and visitors that are consumers.

Additionally, Florida courts have made clear that they will not enforce waivers that attempt to protect a business from actions arising from the business’s gross negligence or intentional acts.  Likewise, a waiver that requires an employee to waive the right to workers’ compensation or unemployment benefits is also unenforceable.

Should I Require a Waiver for My Business?

If you are a business owner who is concerned about your liability exposure during the coronavirus pandemic, it is in your best interest to consult with an experienced business law attorney before you consider utilizing a liability waiver. Additionally, business owners should carefully analyze the potential non-legal impact of requiring visitors or employees to sign waivers (i.e., potential effect on image). While a carefully drafted waiver may provide your business with some protection, it should be uniquely tailored both to your business and to the ever-changing laws relating to COVID-19

Categories
Business Law COVID-19

Jeff Lieser Joins AM Tampa Bay to talk about Payroll Protection Program

On April 3, 2020, the Paycheck Protection Program was established with the intent to support small U.S. businesses during the COVID-19 pandemic. Program funding was depleted within a few days, in part, because some of the loans were distributed to companies that were not the intended recipients. The Paycheck Protection Program received an additional $484 billion on April 24, 2020, when President Trump signed a second COVID-19 rescue bill.

Problem with the Original Paycheck Protection Program Structure

As originally structured, there was an inherent flaw in the Paycheck Protection Program (PPP). Under PPP requirements for loan forgiveness, businesses had to spend 60% of the loans on payroll with the other 40% on rent, mortgage, interest, or utilities within 8 weeks of receiving the funds. For struggling businesses that had been forced to close due to the pandemic, there was no payroll, which meant that the loan could not be forgiven. 

Issue Rectified with Second Payroll Protection Program Structure

The second COVID-19 rescue bill extended the timeframe that businesses were required to use the funds from 8 weeks to 24 weeks. As states allow businesses to reopen, more small businesses can seek forgiveness of the loans under the federal guidelines. However, challenges still remain. 

During an interview with WFLA News, Jeff Lieser, an attorney at Lieser Skaff Alexander, said that while the Small Business Administration (SBA) has a guide for loan forgiveness, this process is dense and difficult to understand. Mr. Lieser urges businesses to stay in contact with their lender and to ask questions about any part of the process that is unclear. In addition, Mr. Lieser encourages business owners to continually review the Frequently Asked Questions (FAQ) of the SBA’s website to stay current of changes and updates to the loan program. 

Loan Forgiveness Process

The main purpose of the Paycheck Protection Program was to ensure that small businesses could continue operations during the shutdown but qualifying for loan forgiveness is a complex process. Business owners must be prepared to provide their lenders with complete and detailed documents of how the loan funds were spent and prove that the disbursement complied with the payroll percentage requirement.  For businesses that utilize payroll programs or third party payroll process companies, this part of the process may be simplified but rent, interest, and other expenses must also be fully documented. 

Mr. Lieser encourages business owners who are having difficulty documenting their qualifications for loan forgiveness to contact an attorney specializing in business law to support them in this process. 
 

Categories
Firm Updates

LSA attorneys recognized by Super Lawyers and Florida’s Legal Elite for 2020

LSA Legal Elite Super Lawyers 2020 ChartWe are proud to announce that Jeff Lieser and Ghada Skaff were recognized as 2020 Florida Legal Elite and Joseph Alexander was named Super Lawyer for 2020. In addition, Associate Alissa Kranz was named both a Super Lawyers Rising Star and Florida Legal Elite Up & Comer for 2020.

Florida Legal Elite is an honor bestowed to the top 1.4% of Florida attorneys. 

Florida Legal Elite has recognized Jeff each year since 2017, making this his fourth year to receive this honor. Jeff was also named a Rising Star by Super Lawyers Magazine from 2013 to 2017. A co-founder of Lieser Skaff Alexander, Jeff’s practice focuses on complex business and real estate litigation. He also serves as class action counsel and Reserve Judge Advocate in the U.S. Army J.A.G. Corps.

This is the third year in a row that Ghada Skaff has been recognized by Florida Legal Elite. She has also been recognized by Super Lawyers as a Rising Star from 2015 through 2017. She is a member of Leadership Tampa class of 2020, a program designed to enhance the skills and opportunities of local business leaders. Serving as counsel for many of Tampa Bay’s finest businesses and entrepreneurs, Ghada’s practice is focused on transactional and business law. 

Joe has been named a Super Lawyer every year since 2016. He is known for excellent representation as well as his extensive service to the community. 

For Alissa, this is her third consecutive year to be named a Super Lawyer Rising Star, which is an honor reserved for the top 2.5 percent of attorneys under the age of 40. This is the second year she was named Florida Legal Elite Up and Comer. Alissa specializes in complex commercial and real estate litigation and represents clients in both federal and state courts. Her client base ranges from individuals to Fortune 500 companies.

 

Categories
COVID-19 Employment Law

Employer responsibilities under the Florida Domestic Violence Leave Law

In what the United Nations has described as a “shadow pandemic,” the reported cases of domestic abuse have risen by at least 20% since COVID-19 started and is likely much higher because of unreported cases. As employers welcome staff back to the workplace, they should be aware of potential domestic violence issues and the Florida Domestic Violence Leave Law. This Statute applies to businesses that employ 50 or more employees and to employees who have been employed by the employer for three or more months.

The law protects a worker’s job if the worker needs time off because of domestic violence. Specifically, the law allows an employee up to three working days of leave from work in any 12- month period if the employee or a family or household member of an employee is the victim of domestic violence or sexual violence. An employer retains the ability to decide if the time off is paid or unpaid leave. The requested leave may be used to:

  • Seek a court order against domestic or sexual violence.
  • Obtain medical care or mental health counseling needed because of domestic violence.
  • Obtain services from a victim services organization.
  • Make the employee’s home secure from the perpetrator or to seek new housing to escape the perpetrator.
  • Meet with an attorney or attend court related to domestic or sexual violence.

While an employer must comply with the Domestic Violence Leave Law, the law also affords several significant rights and protections to an employer. First, an employee is required to provide an employer with “appropriate advance notice” of the intention to take leave unless
doing so would result in “imminent danger to the health and safety of the employee.” Second, an employer has the right to request “sufficient documentation of the act of domestic violence or sexual violence” from the employee. Finally, an employee has the right to require an employee to use any available vacation, personal, or sick leave before granting leave under the Domestic Violence Leave Law.

Categories
COVID-19 Employment Law

Employee mental health concerns for businesses reopening from COVID-19

As we all cope with the COVID-19 pandemic, feelings of anxiety, sadness, and fear are commonplace.

Pandemic-related factors that may add to a workers’ stress, are sundry, but may include fears regarding health or job security.

A proactive response to employee mental health needs is not only prudent for continued business operations, but may also be necessary to remain compliant with Occupational Health and Safety (OSHA) and the Americans with Disabilities Act (ADA).

The Occupational Safety and Health Administration (OSHA) guidelines, for example, indicate that mental illness can be considered work-related if an employee “voluntarily provides the employer with an opinion from a physician or other licensed health-care professional with appropriate training and experience stating” as such. If an employee’s mental health issues are deemed work-related it can have serious consequences for the employer.

In a recent article published in the Daily Business Review and Law.com, attorney Jeffrey Lieser discussed employer considerations regarding the impact of COVID 19 on employee mental health. In the article, Mr. Lieser reviews OSHA guidelines and ADA requirements that employers may have to address and presents suggestions to employers on employee mental health issues in the COVID-19 workplace.