Banking and Commercial Transactions, Bankruptcy Law, Blog
Indiana’s Dislike of Cognovit Notes
Indiana doesn’t look kindly upon cognovit notes, even though its neighbor, Ohio, routinely uses them. In fact, Indiana’s dislike of cognovit notes is demonstrated by the existence of an Indiana statute providing it’s a Class B misdemeanor to procure, retain possession of, or attempt to recover upon a promissory note with a cognovit provision in it. (see Indiana Code §34-54-4-1.) So, cognovit provisions aren’t just unenforceable in Indiana, they’re illegal. How can two states with a common border disagree so vastly about the legal attributes of the cognovit note? To answer this, it’s important to understand what a cognovit note is. A cognovit provision is a legal device by which a debtor gives advance consent to a noteholder obtaining a judgment against him or her without prior notice or hearing. A cognovit is essentially a confession of judgment included in a note. Should there be a default, the holder can obtain judgment without giving the debtor notice or a hearing. This allows the noteholder to obtain a judgment without the delays inherent in having to serve notice on the debtor or dealing with any defenses the debtor might throw up. This makes the process much smoother and quicker for the noteholder. But, what about the debtor? Doesn’t this fly in the face of constitutional due process? Indiana thinks so, although several states, not just Ohio, think cognovits are okay. The states who agree with Ohio and consider cognovit notes legal are: Delaware, Virginia, Pennsylvania, and Maryland. Why would any borrower agree to this? Simply because a…
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Blog, Real Estate
Title Commitments A-Z
So you’re buying your first apartment building or commercial property and you receive a copy of title commitment. Now what? A title commitment shows the current state of title as identified by the title examiner. It consists of three parts: Schedule A: This part of the commitment represents the basic facts of the transaction, including the effective date, the proposed insureds (purchaser and lender), the types and liability amounts of the policies to be issued, the estate being insured, how the title to the state is currently vested, and the legal description and address of the subject property. Schedule B-1: This section lists the requirements that must be met before a title policy will be issued, including any or all of the following items: releases of mortgages, releases of tax liens, entity or estate documentation, releases of judgments, correction deeds, and warranty deeds. Schedule B-2: This section lists the title insurance exceptions. The items not being insured by the title company will initially include standard exceptions, taxes not yet due and payable, and further burdens such as covenants, conditions, and restrictions, easements, and/or mineral reservations Obtain complete copies of each exception document identified in Schedule B-2. An experienced real estate attorney will perform a thorough analysis of the Title Commitment. With respect to Schedule A, the attorney will ensure the Owner’s name and Lender’s name are spelled correctly and the policy is the correct amount (which may vary depending on cross-collateralization). With respect to Schedule B-1, the attorney—if representing the owner—will ensure that all documents requested…
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Blog, Business, Employment Law
“Announcing” Employee Departures – A Practical, Nitty-Gritty Guide To Minimizing Disclosures About Former Employees
Clients frequently ask me what the “best” way is to announce a particular employee’s departure from their organization, and – as you might expect – that question gets asked more often when the departing employee is leaving under “less than ideal” circumstances. Sometimes it’s because the employee has done something “sensationally” wrong (bad behavior towards coworkers or clients, using the company Internet for things you’d have been happy never to hear about, criminal activity, etc.); sometimes the employee’s transgressions are objectively ho-hum but they’re a long-tenured or popular fixture with colleagues or customers who undoubtedly will be upset by their exit. Whatever the specifics, the same risks and recommendations generally apply. Legal Considerations Indiana has no specific statute or regulation governing how to “announce” an employee’s departure. Indiana does have a “service letter law” that requires employers to provide certain information in writing to the departing employee, but only in response to a qualifying request from that employee. That’s not the sort of “announcement” most employers ask about (though you should be aware of that law and consult counsel if you ever receive anything you think might be a qualifying request from a former employee). Indiana also has a statute that gives a certain amount of immunity (read: “protection”) to employers who provide truthful information in response to requests from other prospective employers, but that too usually doesn’t apply to the situations causing employers to ask questions about “announcements.” Most often, employers want to know what they can/should tell the rest of their workforce and/or customers,…
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Blog, Construction Law
Indiana is No. 1!
For the best infrastructure in the nation. Wait, what? CNBC’s America’s Top States for Business ranked Indiana’s infrastructure as No. 1 in the country. The rankings were put together using data from the Census Bureau, the Environmental Protection Agency and the U.S. Department of Transportation. The condition of each state’s roads, bridges, railways, waterways and ports, airports and other utilities were considered, along with how much of the country’s population is within a day’s drive of the state. Four major interstates criss-cross the Crossroads of America. Kentucky was ranked No. 2, just ahead of No. 3 Kansas and No. 4 Ohio. Tennessee and Georgia tied for No. 5. The data indicated that Indiana’s bridges are in good condition (just 6.2% in poor condition). That combined with Ohio River and Lake Michigan ports earned big point in the rankings. And in news that may surprise some Indianapolis drivers, just 9.4% of roads were listed as in unacceptable condition. Our first thought is if Indiana’s infrastructure is the best in the country, we’d like to see the worst. They are, in order: Rhode Island, Hawaii, Massachusetts, Maine and Alaska. CNBC rankings of overall business climate ranked Indiana No. 11 nationwide, with good rankings across the board but room for improvement in quality of life.
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Bankruptcy Law, Blog
Coulda, Shoulda, Woulda: Delay in Accelerating Note After Default Fatal
A lender that waited 16 years after default before invoking an optional acceleration clause in a promissory note was prohibited from collecting the unpaid balance and from foreclosing on the mortgage that secured the note. Borrowers Dean and Paula Blair borrowed $110,300 in 1992 from United Companies Lending Corporation (“UCLC”), and granted a mortgage to UCLC on two properties to secure repayment of the loan. Both the promissory note and the mortgage contained an acceleration clause, which permitted UCLC to require payment of the entire balance of the loan when the note or mortgage was breached. Less than a year later, in November 1993, the Blairs sued UCLC and its agent for breach of contract and various torts (the “Ash Suit”). The Blairs stopped making loan payments in June 1995 and filed a bankruptcy petition in August 1997. Although the bankruptcy court subsequently permitted UCLC to file a foreclosure action in state court by terminating the automatic stay, and the trial court in the Ash Suit entered an order in October 1998 permitting UCLC to file a counterclaim against the Blairs to foreclose the mortgage, UCLC did neither. Instead, UCLC filed its own bankruptcy petition in Delaware in March, 1999, and in July 2000, assigned the note and mortgage to EMC Mortgage (“EMC”). The Delaware bankruptcy court did not authorize the sale of UCLC’s assets until September, 2000. What followed was years of delay: October 2003 – the Blairs Chapter 13 bankruptcy discharge was entered March 2007 – the Blairs obtained judgment against the broker in…
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Blog, Construction Law, News
New Protections for Architects, Engineers and Other Design Professionals Senate Bill 230 Becomes Law
On July 1, 2019 Senate Bill 230 becomes law giving important new protections for architects, engineers and other design professionals (DPs). The DPs “duty to defend” their clients becomes null and void for contracts entered into after July 1st. This duty was uninsurable and exposed DPs to significant costs during litigation, prior to any finding of negligence. Also on July 1st, indemnification between parties to construction contracts is reconfirmed, reversing a prior Court ruling. Greg Cafouros, Chair of KGR’s construction law practice group, assisted the American Council of Engineering Companies in shepherding this new law through the Indiana Legislature. Greg is standing third from left at the bill signing ceremony with Governor Holcomb, with Rep. Jerry Torr and Sen. Mark Messmer.
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Blog, Foreclosure
SHERIFF’S SALES IN MARION COUNTY INDIANA ANNOUNCES TIME CHANGES
The Marion County, Indiana Civil Sheriff’s Office has recently announced time changes to their monthly sale process, bidder pre-registration and registration process. The changes announced on March 28, 2019, include: EFFECTIVE APRIL 17, 2019 Sheriff’s sale bidder’s pre-registration and pre-registration packet is due no later than noon one business day before the corresponding sale date. This change will take effect for the April 17, 2019 Sheriff Sale. Preregistration packets should include copies of the pre-registration form (link to the form), state identification card, W-9, Articles of Incorporation, and Legal Entity Confirmation. Registration forms will be due no later than noon before each respective sale date for which an entity participates. Plaintiff bid packages are due no later than 3 p.m. the Friday before the sale date. Preregistration is due no later than one business day before the first respective sale date for which that entity participates. Then yearly after that in January one business day before the sale date. EFFECTIVE MAY 15, 2019: The Oral Auction, previously set at 2:15 p.m., will begin at 10:30 a.m. on the sale date. This change will take effect with the May 15, 2019 Sheriff Sale. Update these changes on each Notice of Sale that is due April 1, 2019. If you have already provided Notices revise and resubmit if necessary.
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Blog, Business, Corporate Law, Employment Law
So…Now What? What Employers Should Know And Be Doing About The New Proposed Overtime/Minimum Salary Rule
If you run a business, there’s a decent chance your inbox has been/will be more crowded than usual this days with alerts about the new Department of Labor (DOL) Overtime/Minimum Wage Rule. And you may also get a slight feeling of déjà vu, because the same thing happened back in the Fall of 2016. That’s when a federal judge blocked the Obama Administration DOL from implementing a rule that would have significantly increased the minimum salary employers have to pay employees who are classified as exempt under the Fair Labor Standards Act (FLSA). Rather than fighting over that version of the rule in court, the DOL went back to the drawing board, and it’s been working on a revised regulation for the last couple years. On March 7, 2019 DOL unveiled its long-awaited proposal for the “Minimum Salary Rule 2.0.” The full DOL proposal exceeds 200 pages, but your friendly neighborhood @HoosierHRLawyer prefers bullet points where possible (actually, one of my mentors taught me to hate bullet points, so here’s some ordered lists instead): What’s The New (Proposed) Rule Say? Well, a lot. But here’s some highlights: If you’re an employer in any of the 50 U.S. States and have “white collar exempt” employees (administrative, executive, or professional), you’ll need to pay them at least $35,308 annually ($679 per week). This is an increase from the current rule, which requires only $23,660 annually ($455 per week). If you don’t pay your exempt workers the minimum salary (consistently each week), you can’t treat them as exempt, and…
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Blog, Environmental Law
PFAS – New Drinking Water Standards Coming
PFAS. They’re everywhere and they’re not going away. PFAS are the toxic substances known as per- and polyfluoroalkyl. Most Americans have PFAS in their blood, it accumulates and it does not break down. According to US EPA, recent studies indicate that PFAS compounds can cause reproductive and developmental, liver and kidney, and immunological effects in laboratory animals. Both per- and polyfluoroalkyl have caused tumors in animals. The most consistent findings are increased cholesterol levels, with more limited findings related to low infant birth weights, effects on the immune system, cancer, and thyroid hormone disruption. PFAS has been around since the 1940s. People can be exposed through cookware, pizza boxes, and stain repellents, among a host of other household products. Although its production has been curtailed in the US, it can be found in carpet, leather apparel, textiles, paper and packaging, coatings, rubber and plastics. And it’s been found in our drinking water. US EPA has just announced that new drinking water standards will be developed to cope with PFAS. The first steps will be taken by the end of the year. US EPA has been using a drinking water advisory level of 70 parts per trillion, with a “t”, approximately 1000 times as strict has the most toxic drinking water standards. The new drinking water standard may result in a higher or lower standard. PFAS may be added to the Superfund list of hazardous substances and the Toxic Release Inventory under TSCA’s Significant New Use Rules. Much additional work will be needed to understand the sources…
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Blog, News
Announcing Our 2019 Best Lawyers
We are pleased to post that the following attorneys from the firm have been selected to the The Best Lawyers in America (2019 Edition). Banking and Finance Law Jay P. Kennedy Madalyn S. Kinsey James G. Lauck Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law Jay P. Kennedy James A. Knauer Closely Held Companies and Family Businesses Law Brian C. Bosma Corporate Compliance Law David E. Wright Environmental Law Gregory P. Cafouros Government Relations Practice Brian C. Bosma Litigation – Banking and Finance Jay P. Kennedy James G. Lauck Litigation – Bankruptcy James A. Knauer
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