California Litigation Attorney Blog

There is a common misconception that the practice of immigration law is limited to individuals seeking to immigrate to the United States via a U.S. citizen spouse or child. The reality, however, is that the practice of immigration law is much broader and complex, and it often crosses over into other practice areas such as employment law, business law, criminal law, family law, probate, and regulatory compliance, to name a few.

Immigration law can be generally divided into two categories of visas, immigrant and non-immigrant, and be further subdivided into family-based immigration, employment-based immigration, business-based immigration, and asylum. There are also many other categories such as traveling without a visa, deferred action programs, and temporary protected status programs, but these topics will be reserved for future blogs.

The U.S. Constitution is the main source of immigration law via its Commerce Clause, Naturalization Clause, Migration and Importation Clause, War Power, and other implied Constitutional powers. Although the Legislative Branch, through acts of Congress, has enacted the majority of immigration laws, including setting a cap on the number of visas within each category that are issued per fiscal year, the Executive Branch has also acted on immigration matters. As you may have guessed, this means that the authority of state governments to act in immigration-related matters is limited or preempted by the Supremacy Clause. Because immigration law is a creature of the federal government, an immigration practitioner may represent clients throughout the United States.

As the name implies, the first category of visas, immigrant visas, are available to those who seek to immigrate or live permanently in the United States. Immigration can be accomplished via a petition filed by a U.S. citizen or legal permanent resident (“green card” holder) petitioner, who is either a family member or an employer or, in certain cases, a foreign investor. In most circumstances, an immigrant who has been a legal permanent resident for at least five years, and is a person of good moral character, may apply to become a naturalized U.S. citizen. If the legal permanent resident is convicted of certain crimes, however, he/she may be placed in removal proceedings and ordered removed from the United States.

The second category of visas, non-immigrant visas, on the other hand, are available to those individuals who seek to visit the United States on a temporary basis for business, tourism, pleasure, or education purposes. Before approval, the intending non-immigrant must show strong ties to his home country, such as property and/or business ownership, education, and family, and agree to depart the United States upon expiration of his/her visa (unless extended or changed to a different visa).

For those of you who like numbers, and to provide some perspective, according to the U.S. Department of State, Bureau of Consular Affairs, in 2014, the United States issued a total of 437,370 immigrant visas and 9,932,480 non-immigrant visas.

A further category of immigration law is family-based immigration, which is reserved for those immigrants who have a family member, either a U.S. citizen or legal permanent resident, who can petition for them to immigrate to the United States. The “immediate relative” category is reserved for spouses, minor children, and parents of U.S. citizen, and there is no cap on the number of visas that may be issued in a given fiscal year. Keep in mind, however, that having a U.S. citizen or legal permanent relative does not give you an automatic right to immigration benefits. The intending immigrant must also meet a host of other requirements to be eligible for permanent residency, including having a financial sponsor. In addition, although a U.S. citizen child may petition for his/her parents, the child must be at least 21 years old before he/she may file a petition on behalf of his/her parents. The “family sponsored preference” categories are reserved for children over 21 years old and siblings of U.S. citizens, and for spouses and children (under and over 21 years old) of legal permanent residents. Legal permanent residents cannot petition for their parents or siblings.

Congress has set a cap of 480,000 annual visas under the family-sponsored category, less any visas issued under the immediate relative category, plus any unused employment-based visas. Because of this cap, intending immigrants in certain categories, such as siblings, must wait 15-25 years or more before they can apply to obtain an immigrant visa.

In addition to family-based immigration, employers or businesses can also be petitioners. Employment-based immigration allows a U.S. company or business to petition for a foreign worker or workers. Each year, thousands of foreign workers enter the U.S. to work in multiple occupations or employment categories, including artists, researches, cultural exchange participants, information technology specialists, religious workers, investors, scientists, athletes, nurses, agricultural workers, non-agricultural workers, entertainers, and others. As is the case with family-based immigration, having a U.S. employer petitioner alone does not guarantee visa approval as the employer and employee must meet other requirements. For instance, the petitioning employer must first test the labor market to ensure there are no qualified, willing, available U.S. workers to fill the permanent job opportunity. The intending employee/worker must also meet certain requirements and conditions, and he/she must depart the U.S. upon expiration of the period of authorized stay unless his/her stay is extended or changed to a different status.

Business-based immigration is reserved for those individuals or companies who wish to conduct business in the U.S. by establishing subsidiary companies or by sending foreign-qualified individuals to work at their existing U.S. subsidiaries, or for those who wish to invest in the U.S. economy by creating jobs for U.S. workers. There are a number of requirements and conditions that must be met depending on the type of visa sought by the foreign entity.

Lastly, asylum is available to those individuals in the United States (or those presenting themselves for asylum at the border) who have suffered or fear that they will suffer persecution due to race, religion, nationality, membership in a particular social group, political opinion, and meet all other qualifications. An applicant must apply for asylum within one year of arrival to the United States. After one year in asylum status, the applicant may apply for permanent residency. The United States also offers refuge to those outside of the U.S. who are “of special humanitarian concern,” and have been persecuted or fear persecution due to race, religion, nationality, political opinion, or membership in a particular social group. Unlike asylum, a refugee, however, must receive a referral to the U.S. Refugee Admissions Program for consideration as refugee.

Keep in mind that the above list is limited to only the broad categories of immigration law. We look forward to exploring specific programs and topics in future blog posts.

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Deed Record - Real Estate - Real PropertyTitle insurers often discover defects in transactions after escrow has closed. When this occurs, they regularly request that parties to a real estate transaction execute “corrective” trust deeds or grant deeds. However, parties should consult with counsel before doing so, as the title insurer may have a bigger problem on its hands than it is causing the owner to believe.

For example, in the 2015 case of Whitmore v. Wells Fargo, the Chapter 7 Trustee of a bankruptcy estate filed an adversary complaint contending that what the title insurer labeled a “corrective deed of trust” signed shortly before the bankruptcy was in fact an unenforceable obligation. Specifically, the title insurer covenanted to the lender that the debtor owned certain real property when the lender provided a trust deed signed by the debtor in refinancing the property. In fact, the debtor’s wholly-owned corporation owned the property at that time and at all times thereafter. In other words, the debtor’s trust deed was worthless, meaning the property was free and clear of any valid, enforceable liens. Before the bankruptcy, the lender, through the title insurer, filed a lawsuit and demanded a corrective deed of trust, which the debtor signed as president of his wholly-owned corporation.

After the bankruptcy was filed, the Trustee alleged that this made the debtor a guarantor of the corporation’s debt, and that such a guarantee was unenforceable for lack of contemporaneous consideration. Specifically, under California Civil Code § 2787, a guarantor is “one who…hypothecates property as security” “for the debt of another,” and that guarantor/surety relationship is created when one party executes a mortgage/deed of trust on their own property to secure the debt of another. See Bull v. Coe, 77 Cal. 54, 61-62 (Cal. 1888).

In turn: “Where a suretyship obligation is entered into at the same time with the original obligation, or with the acceptance of the latter by the creditor, and forms with that obligation a part of the consideration to him, no other consideration need exist. In all other cases there must be a consideration distinct from that of the original obligation.” Cal. Civ. Code §2792. Indeed, in Rusk v. Johnston, 18 Cal.App. 2d 408, 409 (Cal. App. 1930), the court invalidated a guarantee of a deed of trust and note for lacking consideration when there was no evidence that the guarantee was given for any consideration separate from that in the underlying transaction, noting that “the guaranty was not requested nor given until after the note was executed and the consideration for the note passed.” See Rancho Santa Fe Pharmacy, Inc. v. Seyfert, 219 Cal. App. 3d 875, 878 (1990) (citing Rusk for the proposition that “where a promissory note is given for consideration, a later guaranty of the note lacks consideration and cannot be enforced”).

The court agreed with  the Trustee, issuing a ruling that the trust deed was invalid. As of 2016, the lender’s appeal to the District Court for the Central District of California is still pending.

If you have been asked to sign a corrective trust deed, corrective grant deed or otherwise, or have already signed such a document, you may wish to seek the advice of a qualified real estate attorney in California. Indeed, sometimes, the loss may fall to the title insurer, not the borrower.

This post describes Central District of California Bankruptcy Adv. No.: 6:15-ap-01047-WJ / Case No. 6:14-bk-18815-WJ.

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Anonymous Internet SurferREALTORS: Beware of the company you keep, and the vendors you do business with.

This point is illustrated by the recent decision of a Realtor in the Los Angeles area whose clients engaged First American Title Company to handle title and escrow. That Realtor is now being  sued by First American Title Company (“FATC”; NYSE: FAF) in Los Angeles County Superior Court Case No. BC620704.  The case involves an email wire instruction escrow scam in March 2016 that this blog warned about in October 2014.

As alleged in the complaint (at ¶ 20), the “case involves a scheme” by certain “Fraudsters” “to steal $513,708.45 by ‘hacking’ the email account of defendant [Realtor] Mark and using that account to send false wiring instructions in connection with an escrow transaction involving real property in the City of Redondo Beach, County of Los Angeles.”

The complaint continues (at ¶ 21) that on “March 15, 2016, one or more of the Fraudsters . . . sent an email to FATC’s escrow from Mark’s email account purporting to be from Mark, agent for the sellers of the Property . . . (‘Vu’), advising that Vu had problems with his bank, Bank of America, and that the funds should be wired to an account at Chase Bank. The email appeared to be genuine, having the correct email address and other information used by Mark in connection with earlier email communications.”

The complaint further explains (at ¶¶ 3, 22) that: “Believing the email to be genuine and the instruction to, in fact, be the instruction of Mark as the agent for the sellers of the Property, Vu, FATC honored the instruction and upon the close of escrow [one day after the changed wired instruction email] on March 16, 2016 wired $513,708.45 to Chase Bank to an account of ‘TZ,'” explaining that “TZ Simple Deals, Inc. (‘TZ’) . . . . [is] a Florida corporation.”

The complaint does not allege that FATC’s escrow officer called the Realtor or seller to confirm the change or even to ask why there was a change. The complaint does not allege that FATC’s escrow officer had any reason to believe that the sellers had any connection to TZ or the State of Florida, nor does it allege that the escrow officer had any reason to believe the sellers had an account at Chase Bank. The complaint fails to allege whether FATC had any protocol for wire instructions, or whether the escrow officer followed any such protocol of FATC after receiving the “changed” wire instructions.

The complaint (at ¶ 24) continues that: “Although unknown by FATC at the time the funds were wired, FATC is now informed and believes that the email instruction was not from Mark and was not genuine because on March 18, 2016, FATC was informed by the listing agent, Mark, that the sellers, Vu, had not received the sales proceeds via wire transfer as directed. The sellers, Vu, filed a police report with the Glendale Police Department.” In other words, the complaint does not allege that the Realtor had any knowledge that the scam was occurring or that the Realtor’s email account might be compromised before the wire was sent by FATC’s escrow officer.

The complaint (at ¶ 25) goes on to contend that “the Fraudsters, and others acting in concert with them, used the forged email generated through the hacked email system of Mark to steal the proceeds of the sale of the Property and the U.S. Secret Service is investigating this matter.”

The complaint (at ¶ 33) further contends that: “Upon discovering the fraud, FATC was able to reacquire $186,380.00, for a total loss of $327,328.45.”

The complaint sues the Fraudsters based on obvious grounds, while going on to allege (at ¶¶ 67-83) that the Realtor should be liable for violation of California’s Database Breach Act, negligence per se, and negligence.

The complaint does not name FATC’s escrow officer handling the transaction, nor does it allege whether the escrow officer is still employed at FATC. However, web.archive.org shows that the URL for the escrow officer’s profile on FirstAm.com resulted in a “404 Page Not Found” within five weeks of the scam.

The complaint does not allege whether FATC trains its escrow officers on the scam set forth in the complaint.

The complaint also does not attach what Krebs on Security contends was a warning issued by First American Title to “All National Agents” on April 16, 2014 about “Email Wire Fraud Scams.”

Moreover, the complaint does not set forth whether FATC trained the escrow officers in a manner similar to the training led by First American Title Legal Counsel Jay Dobson on March 14, 2015 entitled “Cyber Fraud: The Risks to the Title Industry,” which, according to the Oregon Land Title Association website, included a section on “Fraudulent Disbursement Instructions” warning that the “most common” fraud is a “last second ‘change,'” concluding: “Don’t Trust E-mail,” “VERIFY,” “VERIFY,” “VERIFY,” “Use Old Fashioned Technology – Phone.”

Realtors may believe that as long as they use an outside escrow (rather than handling the escrow in house), they have no duty to see that the escrow proceeds as it should. Until the California courts issue a ruling that escrow companies are fully responsible for losses caused by this scam, Realtors should be warned. Realtors may want to look for clues that they are working with an escrow officer who may not exhibit the greatest level of competence. Realtors may also want to find out whether the employer has taken responsibility in the past for employee errors, or whether they seek to hold others liable. Moreover, Realtors may want to use escrow holders who demand more sophistication in the method of transmission of wire instructions.

In this digital age, working with competent professionals has never been more important.

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Professional employeeIt promises to be another long, hot summer for employers as the California State Legislature and the courts continue to expand employer responsibilities and duties to employees.  A relatively recent case that hasn’t garnered too much attention (Cochran v. Schwan (2014) 228 Cal.App. 4th 1137) involves the requirement for employers to reimburse employees in many circumstances for cell phone expenses. 

In ruling that cell phone expenses were reimbursable, Cochran held that the only issue was whether an employee was required to make work-related calls on a personal cell phone, and that it was irrelevant whether the employee changed plans to accommodate work-related cell phone usage or even whether the employee actually paid for his cell phone (as opposed to a parent or spouse).   Thus, if the nature of your employee’s work requires them to regularly use a cell phone (e.g delivery driver, etc.), you may want to consider providing a company cell phone or having the employee provide his/her cell phone bill to you for payment on a monthly basis to avoid the administrative nightmare of having to determine the “reasonable percentage” of the employee’s monthly bill you are obligated to pay. 

Also, keep in mind that you may still be responsible for reimbursement of cell phone expenses even if you do not specifically require the employee to use a cell phone for work purposes if the employee can demonstrate that you knew or should have known that a cell phone was reasonably required to carry out the employee’s duties.  Therefore, it’s probably a good idea to review the job descriptions of all of your employees and attempt to figure out whether you should be implementing a cell phone reimbursement protocol. 

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corporate lawIn California, an entity that has been suspended is disqualified from exercising any right, power or privilege as an entity during the time of the suspension. Therefore, the suspended entity lacks the legal ability to enter into a binding and enforceable contract with a third party. However, the contracts entered into during a time of suspension are not void; rather, the contracts are voidable at the option of the other party – but not at the option of the suspended entity. (Calif. Rev. & Tax Code §23304.1)

Any party that enters into a contract with a suspended entity should immediately determine whether or not that party wants to rescind the contract. The reason that an immediate decision is needed is because the right to rescind the contract is not permanent; the right to rescind may only exist during the time that the entity remains in a suspended status.

A suspended entity has the ability to revive the entity by filing an application with the California Secretary of State. In conjunction with the filing of the application, the suspended entity must (1) pay all delinquent taxes owed, including penalties, fees and interest, (2) file any delinquent tax returns, and (3) file a reviver request form. Additionally, at the option of the suspended entity, it may file an application to seek relief from the voidability of its contracts. If such an application is filed, so long as the contracts were not previously rescinded while the entity was suspended, the entity receives relief from the voidability of its contracts. Therefore, any party that wants to avoid a contract entered into with a suspended entity must move quickly to rescind the contract before the entity is revived and before the entity obtains relief from the voidability of its contracts

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Plaintiff homeowner sued a contractor for improper work, alleging (among other things) that the contractor is/was licensed.

At trial, plaintiff homeowner’s lawyer demanded that the contractor provide a verified certificate from the California State Contractors License Board confirming proper licensure, despite the allegation of proper licensure in the complaint.

The trial court ruled that the lack of the certificate was fatal to the contractor’s case, so California Business & Professions Code section 7031 required disgorgement of payments received by the contractor.

The appellate court reversed, ruling that plaintiff homeowner’s complaint alleging that the contractor was licensed meant that licensure was not “controverted” (per the statutory language), but had been judicially admitted. (Womack v. Lovell, et al. (2015) 237 Cal. App. 4th 772.)

No doubt, plaintiff’s complaint was boilerplate in certain regards, but boilerplate may be judicial admission. So, be careful what you allege!

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ADAThe Federal American with Disabilities Act (Title 42, sections 12101 et. seq. of the United States Code [“ADA” for short]) the California Unruh Act (Civil Code sections 51 – 53) present pitfalls for owners and tenants of commercial properties.

While the Unruh Act protects against discrimination generally, with disabilities among the areas of protection, the ADA covers disabilities specifically.  One area these statutes cover is the denial of access to businesses open to the public.  Violations can include inadequate parking and failure to provide ramps to entry ways for wheelchair bound individuals.  Other violations are less obvious.  Penalties for violations include statutory fines (currently $4,000 per violation under the Unruh Act) and remedial orders.  The ADA is very technical and violations unknown to the property owner and tenant often exist.

Enforcement of the ADA and the Unruh Act can be by private lawsuit, with the owner and tenant both potentially liable.  In addition to statutory damages and remedial orders, a successful plaintiff is entitled to reimbursement of attorneys fees and other legal expenses.  Violations can be costly for the unwary.  A defendant need not intend to violate these statutes to be liable.  Additionally, there is no requirement that a property owner or tenant be given an opportunity to cure a defect, no matter how small, before being sued.  In fact, some law firms and plaintiffs exist for the sole purpose of searching for noncompliant properties.

One way to limit your potential exposure is to obtain an evaluation of your property from a Certified Access Specialist.  A list can be obtain from the ca.gov site for the State of California.  These evaluations are relatively inexpensive and can be performed in a day.  Do not rely on representations of compliance with the law in a purchase and sale agreement or in a lease.  These representations are standard and are often made in the face of unknown violations and will not prevent you from being sued.  If you are unfortunate enough to be sued for violating the ADA and the Unruh Act, hire competent counsel to resolve the matter for you as expeditiously and inexpensively as possible.

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Effective January 1, 2016, the contractor’s licensing bond for California contractors, as required by Business & Professions Code section 7071.6, was increased from $12,000 to $15,000. Under section 7071.6, the bond must be in place before the Contractor’s State Licensing Board (“CSLB”) can issue an active license, reactive or inactive license, or renew an active license.

In California, the following are the requirements for a valid Contractor’s Licensing bond:

(a)              It must be written by a surety company licensed through the California Department of Insurance;

(b)             It must be in the amount of $15,000;

(c)              The business name and license number on the bond must correspond exactly with the business name and license number on the CSLB’s records;

(d)             It must have the signature of the attorney-in-fact for the surety;

(e)              It must be written on a form approved by the Attorney General’s office; and

(f)              It must be received at the CSLB’s headquarters office within 90 days of the effective date of the bond.

 

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Assembly Bill 622 was recently adopted, adding Labor Code section 2814 in California. Under section 2814, it is an unlawful business practice for an employer to consult the E-Verify system for a prospective employee until after an offer of employment has been extended to the prospective employee. Thus, an employer cannot check on the residency status of the prospective employee as part of the process of evaluating the employee for hire, but must wait until after an offer has been made to verify that the individual is authorized to work in the United States. It is also an unfair business practice to check on the residency status of existing employees.

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A Trap for the Unwary?

 

Word processing programs make it easier to archive and re-use work product, as we all know.  This has led to the expansion of standard agreements by adding boilerplate, sometimes without thinking.

 

One example is a Confidentiality Clause in a settlement agreement between parties in a lawsuit. 

 

How can one make a settlement “confidential” if one needs a Good Faith Settlement order from the court to immunize at least one of the settling parties from claims by non-settling parties in the same suit?  The latter are entitled to know the settlement’s terms.  Confidentiality makes no sense and would be impossible, without all kinds of additional court procedures, including gag orders, etc.

 

Then, there’s the problem of enforcement.  First, how would one know who breached that provision?  Machiavelli might leak the settlement terms then blame the other party in order to exact some revenge, whether by a sanction in the settlement agreement (e.g., give back money paid) or by filing a motion or by publicly complaining about the innocent party blabbing (which it didn’t do). 

 

Second, a settlement agreement is supposed to settle a matter, not provide a vehicle for continuation of the battle, but on different grounds.

 

Too often, we leave standard provisions in our forms and forget to edit them appropriately.  Editing is appreciated by our clients, if not by our fellow practitioners.

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Businesses are often contacted by other businesses that are seeking information about the job performance of a former employee. The first step that should be taken by a prudent business is to establish a company-wide policy on how such inquiries are to be handled. Such a policy should include the following:

(1)           All inquiries about former employees should be directed to only one person, such as the human resource director;

(2)           The designated person should limit the information provided to the dates of employment and the job title; and

(3)           No opinions as to the former employee’s job performance should be expressed.

There is potential liability to an employer if false information is provided about a former employee based upon a defamation claim. A policy which restricts the amount of information provided can limit the exposure on such claims. Additionally, in California, such a claim may not be available if the statement is based on an employer’s evaluation of an employee’s performance, so long as the evaluation is considered only an opinion and is not false. (See, Jensen v. Hewlett-Packard Co. (1993) 14 Cal.App.4th 958.)

Any business that is sued by a former employee will be aided if it can establish the existence of a written policy that addresses the type of information that is provided about former employees. Also, there are aggressive ways of responding to complaints of the defamation nature, such as a motion to strike under Code of Civil Procedure section 425.16, that can be supported by the existence of a written policy. Therefore, it is important for all businesses to adopt and implement such a written policy.

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Last month we discussed the effect that California’s new minimum wage of $10.00 has on salaried employees.  This month, we tackle the effect on employees who work split shifts.

Many employers (such as restaurants) have employees who work a morning shift (e.g. 9am-noon) and then an afternoon shift (4pm-9pm).  California regulations require employers to pay a split shift premium of one hour’s pay if their employees only make the minimum wage.  Under the old $9 an hour rate, if an employee was paid $9 an hour and worked 9am-noon and 4pm-9pm, the employee must be paid at least $81 or an effective hourly rate of $10.13.  Under the new $10 minimum wage, if an employee is paid $10 an hour and works 9am-noon and 4pm-9pm, the employee must be paid at least $90 or an effective hourly rate of $11.25.  Therefore, the increase in the minimum wage also effects whether an employee receives a split shift premium.  If an employer already pays its employees at least $11.25 an hour, it will not have to pay any premium for having them work a split shift.

 

Many wage and hour regulations are tricky and non-intuitive.  Make sure to consult with an employment law attorney if you have any concerns regarding whether your practices and procedures comply with California’s myriad of requirements.

Worker Factory

Worker Factory

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