California Litigation Attorney Blog

If you have been married less than two (2) years by the time you get to the interview on your permanent residency application, and assuming you meet all other requirements, you and your foreign-born children will be granted conditional residency for a period of two years. At the end of the two years, you will need to file a separate application to remove the conditions and obtain permanent residency.

In essence, filing for the removal of conditions on your residency requires that you prove to U.S. Citizenship and Immigration Services (USCIS) that your marriage was not entered into simply to evade immigration laws. You are eligible to remove the conditions on your residency if you (1) are still married to the same U.S. citizen, (2) are a child who cannot be included in your parents’ application, (3) are a widow or widower who entered into the marriage in good faith, (4) entered into the marriage in good faith, but the marriage ended through divorce or annulment, or (5) you entered into a marriage in good faith, but you or your child  were battered or subjected to extreme hardship by your U.S. citizen spouse.

You and your spouse must apply together to remove the conditions on your residency within the 90-day period before the expiration of your residency card. If you are late in filing your application, your conditional resident status will automatically be terminated and USCIS will begin removal proceedings against you. If you are unable to apply together with your spouse, you may apply to waive the joint filing requirement, which requires additional evidence, such as a showing of extreme hardship, depending on the reason for not filing together.

To apply to remove the conditions together with your spouse, you must use Form I-751, Petition to Remove Conditions on Residence, and provide documentation proving that your marriage was entered into in good faith. Evidence of a good faith marriage includes, but is not limited to, birth certificates of children born of the marriage, property deeds showing joint ownership, life insurance showing each other as the beneficiary, joint tax returns, joint bank account statements, driver’s license or correspondence showing the same address, and pictures of the couple, with family, with friends, etc.

Lastly, although the majority of applications are not scheduled for an interview, you may be scheduled for an interview if there are questions regarding your eligibility.

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Christopher_JohnsonBusiness transactions or investments often require the formation of an entity. Individuals are tempted to use on-line legal services to obtain the formation at a low price. Are there any benefits to these individuals if they consider meeting with a local business lawyer before forming the entity on-line?

The answer is yes. The benefit is the opportunity to listen to the “right questions”.

Sitting down with a business lawyer for a consult should involve the professional asking questions. Those questions should uncover some issues that need to be considered prior to going forward with the formation and the underlying transaction or investment.

It has been my experience that people spend a lot of time trying to decide which type of entity they should form. Should it be a Subchapter S corporation or a limited liability company? While this analysis needs to be undertaken, the better questions often consider the three “C” building blocks of any investment or formation that involves more than one party. Those three “C”s are: (1) contribution, (2) control; and (3) conclusion.


The question at the outset should be “what is each participant bringing to the joint venture”? Often one party is bringing technical ability or business experience. Another party may be bringing an extensive history of networking or business contacts. Another party may be bringing access to financing or to the land or a key asset to be used by the joint venture.  In addition, it is imperative the parties agree on the value of each contribution at the formation stage.


Both specific practical concerns and technical rules apply to the governing or control issues. Formal rules exist that concern various subcategories such as the appointment of directors and officers or managers, limitations on the power of those individuals, and the reasons for their removal both voluntary and involuntary. Both these rules and the practical concerns must be reviewed and approved during the formation stage.


Sophisticated clients or experienced investors review the conclusion scenario first before they consider contribution and control issues. Put simply, they ask the overriding question: “if this joint venture or investment fails miserably, how am I affected?” Or to put it another way, “does a failure affect my lifestyle?” If the answer is “yes, it probably would affect my lifestyle”, then the risk is most likely too high for the potential reward. At a minimum, a serious and impartial analysis of the risk involved must be undertaken often by a trusted unbiased third party advisor. If the risk/reward analysis indicates going forward is acceptable, the crucial tool for the conclusion category is a thoughtful and comprehensive buy-sell agreement. This agreement must attempt to consider all possible scenarios for business succession. Those scenarios include a voluntary third party buy-out, an involuntary forced sale or entity reorganization, death, disability or divorce.

On a final note, it is important to remember the on-line legal services market typically offers the questionnaire and one-size fits-all approach. Often this approach omits the most important “conclusion” document – the comprehensive buy-sell agreement. While the on-line alternative is a valid approach to formation, it is important for the reader to consider each of these categories and the potential sub-questions before entering into a new business venture and making a new investment.

Chris Johnson is an Attorney with the Riverside law firm of Reid & Hellyer, and manages the Temecula Office. Chris’s practice areas are Business Transactions, Real Estate and Estate Planning.

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A Mediation Scuttled by Emotions       

     Recently, I participated in a mediation with a highly-regarded and experienced mediator who was frustrated that the “claimant” remained “offended” from the opening gambit through the end of the wasted day. 

      Apparently, the claimant and its counsel thought it was OK for them to demand 100 cents on the dollar and hardly budge throughout the day, but that it was “offensive” that the opposing parties made low-ball offers and didn’t raise them much when the claimant didn’t reduce its demands very much. 

      First, this demonstrates a lack of client control by the lawyer for the claimant, expectation management and proper analysis of the claimant’s case. 

      Second, it also demonstrates that one has to have the proper client representative at a mediation.  The claimant was represented by a low-level administrator who knew only one thing…that person lacked any kind of analytical ability and had no financial skin in the game.  The person with authority was elsewhere doing other things. 

      Third, it also demonstrates bad faith…why agree to mediate if no give-and-take is acceptable because it’s more important to be “offended.”

      Last, when did emotions become the over-riding consideration in business litigation? 

      The moral of the story is to “test” all parties’ willingness to mediate by asking one key question – what are the clients’ expectations?  If any of them are unrealistic, it may be better to save the time, expense and aggravation of a wasted mediation.

     (BTW, the claimant accepted a pittance from one of the opposing parties on the eve of trial…that could have been accomplished at the mediation.)


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The California State Legislature and various State agencies continue to expand employer responsibilities and duties.  In case you missed it, effective April 1, 2016, (and pursuant to new regulations promulgated by the Fair Employment and Housing Council) all California employers with five or more employees must create detailed written policies for preventing harassment, discrimination, and retaliation.  The written policy, among other items, must: (1) list all protected groups under the Fair Employment and Housing Act; (2) allow employees to report claims to someone other than a direct supervisor; (3) instruct supervisors to report all complaints; and (4) state that all complaints will be followed by a fair, complete, and timely investigation. 


Why should you care about the new FEHA regulation?  Well, the California Supreme Court in Brinker Restaurant Corporation v. Superior Court held that class action certification may be appropriate when an employer fails to enact policies, or when the employer has policies that are non-compliant with existing laws or regulations.  Therefore, to the extent that you fail to create the above required written policy, and to the extent you are subsequently sued via class action by a disgruntled employee alleging your company systemically failed to prevent harassment (e.g. there was no way to report harassment), your failing to have a written policy comporting with the new FEHA regulation may tip the scales and cause the court to certify the class action—something you want to avoid at all costs.      


Therefore, it is a good idea to review your written policies and procedures (including your employment manual) on at least an annual basis to ensure that your written policies comply with all California laws and regulations, including all wage and hour laws and anti-discrimination regulations. 

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My company is growing but I am unable to find qualified workers to keep up with business demands. Are foreign workers an option?

Yes, albeit a qualified yes, given the strict requirements imposed by Congress. Immigration law allows employers in various industries to bring in foreign workers to support their business needs when the employers are unable to find qualified U.S. workers. There are many employment-based visa classifications, including those for professional, skilled, or unskilled workers.

The H-2B classification permits U.S. employers who meet specific regulatory requirements to bring foreign workers from certain eligible countries (currently 58 countries) to the United States to fill temporary non-agricultural jobs. (The “other half” of the H-2 classification is the H-2A visa, which is reserved for agricultural workers, a topic to be discussed in a future article.) Examples of occupations sought for H-2B classification include, but are not limited to: (1) landscaping and groundskeeping workers; (2) maids and housekeeping cleaners; (3) amusement and recreation attendants; (4) meat, poultry, and fish cutters and trimmers; (5) constructions laborers; (6) production workers; (7) cooks; and (8) laborers and freight, stock, and materials movers, to name a few. (U.S. Dept. of Labor, Office of Foreign Labor Certification, FY 2016 YTD.)

The process of bringing in foreign workers, however, is far from easy and it requires the petitioning employer, through the U.S. Department of Labor (DOL), to first test the labor market to make sure there are not enough qualified U.S. workers who are able, willing, qualified, and available to do the temporary work, and the employment of the temporary workers will not adversely affect wage rate and working conditions of similarly employed U.S. workers.

The employer, thus, must first apply for and obtain approval for a temporary labor certification from DOL, which includes advertising for the position in different forums. The employer then applies for and obtains approval for H-2B classification from U.S. Citizenship and Immigration Services (USCIS), which works with a Congressionally-mandated cap or limit of 66,000 visas per fiscal year. Once USCIS issues approval, it is up to the foreign worker to apply for a visa with a U.S. embassy or consulate abroad and meet a host of other requirements. After obtaining his/her visa, the worker then applies for admission with U.S. Customs and Border Protection (CBP). Lastly, the foreign worker enters the U.S., starts working for the employer and, like a U.S. worker, is subject to taxation requirements.

The H-2B visa classification is authorized on a temporary basis, typically no more than one year. If the employer wishes to extend it, then the employer must again test the labor market before applying for an extension. Spouses and unmarried children under 21 years of age of the foreign worker may also seek admission, but these family members are not permitted to work.

For U.S. employers, planning is key given the complexity of this process, the cap on annual visas, and the strict deadlines that need to be adhered to in order to have an application processed and approved.

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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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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 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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