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Alexander Villamar
Civil Law
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Civil Law
Q: Under what circumstances is a party to a lawsuit entitled to an award of attorney's fees?
A: A prevailing party to a lawsuit, whether plaintiff or defendant, probably expects to have his or her attorney's fees paid for by their adversary. In Nevada, however, each side is required to pay its own attorney's fees unless a statute, rule or contract provision provides otherwise. Generally speaking, attorney’s fees are permitted by statute as costs of litigation when a prevailing party attains a monetary judgment worth less than $20,000; when a prevailing party opposes a claim or defense brought without reasonable ground or to harass; as well as when the recipient of an offer of judgment rejects the offer, proceeds to trial, and fails to achieve a more favorable result than that contained in the offer. In the latter case, not only might the recipient of the offer be required to pay the costs and attorney's fees of the party making the offer, he or she will be barred from recovering their own attorney’s fees even if they prevail at trial. There are also very limited circumstances in which attorney’s fees may also be awarded as damages. Ultimately, when attorney's fees are permitted the decision whether to award such fees is within the sound discretion of the court.
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Business Law
Q: What legal options does an employer have in order to fully enforce employee non-compete contracts?
A: Determining the enforceability of non-competition agreements often requires a case-by-case analysis of the terms of the agreement and the manner of its violation. However, several considerations can guide employers in creating and enforcing effective non-compete agreements.
In Nevada, a non-compete agreement is enforceable against a former employee if it is reasonable and not countered by a prevailing public policy. Reasonableness is determined by whether the agreement restrains only such conduct necessary to protect the business and good will of the employer. If the agreement reaches further than necessary, it could impose an undue burden or restraint and a court may refuse to enforce the entire agreement. The principal factors considered are the duration of the non-compete term and the territory to which it applies. A one or two-year non-compete provision is generally reasonable, but longer time periods may be more difficult to enforce. The defined territory covered by a non-compete agreement must be tailored to protect the employer. For example, if an employer does business only in Clark County, a post-employment restriction that prevents a former employee from engaging in competing work anywhere in the state of Nevada may be unenforceable.
While the terms of a non-compete agreement must be reasonable, a court may choose to look at the position and responsibilities of a former employee, as well as the nature of the alleged breach, in deciding whether and how to enforce a non-compete agreement. A court may be inclined to enforce a non-compete agreement against a regional sales director that had access to sensitive customer information and substantial decision-making authority, but reluctant to enforce the identical non-compete agreement against a routine file clerk who had limited responsibilities or access to information.
Be sure to consult your attorney with questions regarding the creation or enforcement of employee non-competition agreements.
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Holly A. Fic
Family Law
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Family Law
Q: How are child custody and visitation matters handled by the Nevada Family Courts?
A: When a matter relating to child custody or visitation is brought before the Nevada Courts, the judges will refer the parties to mediation, because Nevada requires mandatory mediation. Mediation helps parties throughout the dispute process in four ways. First there is a neutral third party, a mediator, who assists the parties in resolving their disputes and helps people communicate so that the parties themselves reach a mutually acceptable resolution to their disputes. The mediator helps to identify and clarify the issues, reduce misunderstandings, vent emotions, facilitate agreement, and explore areas of compromise and solutions. Second, through the mediation process, people are empowered because they are mutually making their own decisions and agreements. The parties talk through the dispute to come to resolution in a cooperative and collaborative setting which benefits their children and future relationships. Third, since people speak for themselves and make their own decisions, a sense of fairness naturally evinces. The parties choose their own resolution rather than having a judge impose a resolution upon them. Finally, mediation takes place in an informal, private setting rather than in a court room.
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Thomas J. Standish
Family Law
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Family Law
Q: How are Business Assets handled in a Premarital Agreement?
A: One of the major reasons for premarital agreements is to protect an existing business asset after marriage. The owner/spouse (“owner”) may wish to protect their interest in a business, which they acquired prior to the marriage, and there may be co-owners or partners who the “owner” does not wish to be drawn into a future divorce proceeding as a result of a claim made by the non-owner spouse (“spouse”).
A properly drafted premarital agreement can effectively exclude claims from a spouse against the business interest of the owner. The language of the agreement must be specific and must target precisely this type of claim, generally referred to as a “Pereira” claim. It asserts that the work and efforts of the owner during the marriage, including the increase in value of the business, are community property efforts.
A Pereira claim appraises the business at the date of marriage, attaching a reasonable rate of return to that date-of-marriage value, and then awards the rest of the increase in value to the community. There is a competing argument, usually called the “Van Camp” approach, which basically argues that the community has been compensated by the owner’s salary and benefits from the business during the marriage, and therefore the community should receive nothing further.
The reasons, then, for a premarital agreement protection against a Pereira claim are clear: Not only can a potential large liability accrue to the owner (i.e. the owner would have to buy out the spouse’s Pereira interest in the business) but such claims are very expensive to litigate.
In these matters, it is necessary to retain a highly specialized family law attorney with expertise in the drafting of premarital agreements, so that the client’s business interest will be properly protected.
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Thomas J. Standish
Family Law
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Family Law
Q: What if a couple/business partners decide to dissolve their marriage, yet keep their business as one entity?
A: A divorcing couple who are business partners can determine, by mutual agreement, to stay together in a business after their divorce. Without an agreement, a divorce court will likely separate out spouses from owning a business together, to prevent ex-spouses from coming into conflict over business issues in the future. The substantial cost of litigating a business valuation buy-out issue also might compel divorcing spouses to consider, in special situations, whether they might continue to operate the business together after the divorce.
Regardless of whether one or both parties will continue to work full time in the business, it is very important to have a detailed agreement between the ex-spouses regarding their future business relationship, i.e. - an operating agreement in an LLC, a partnership agreement in a limited or general partnership, or a shareholder agreement in a corporation. All of these agreements are similar in the sense that they address basic business operation issues between or among owners. An agreement between divorcing spouses regarding a business should, at a minimum, address issues such as:
- job definitions;
- management and control issues;
- how salaries will be set;
- calculation of “net profit” and how profits will be distributed;
- rights of the parties upon death or disability of a party
The parties should also carefully reflect on any other potential areas of conflict which are unique to that couple and as much as reasonably possible, provide specifics in the agreement, i.e. - business entertainment or business promotion spending, etc.
The spouses should also consider a “dispute resolution” mechanism in their agreement for disagreements - an informal procedure such as appointing a neutral person who will act as a type of “arbitrator” between the parties or a formal provision such as binding arbitration with the American Arbitration Association.
A couple considering a post-divorce business relationship may have a better idea of the personality, quirks, problems or difficulties that might be involved in the future business relationship with an ex-spouse; that knowledge can be put to good use in fashioning an agreement that will allow a former married couple to operate a business after divorce in a positive and successful manner.
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Charles T. Cook
Real Estate Law
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Real Estate Law
Q: A house is listed for sale as a "Short Sale." What does that mean and what is required?
A: A “Short sale” is a sale for less than what is owed against the property and where the lender accepts less than the full amount owed, but allows their lien to be released from the property.
Assume a property with a current value of $440,000 is encumbered by mortgages totaling $450,000. After adding late charges and deducting closing costs, this apparent $10,000 deficiency may be closer to $50,000.
While the shrinking of a borrower’s equity, for whatever reason, is the borrower’s problem, not the lender’s, a short sale is one way for the lender to avoid taking the property into their REO inventory.
The lender may demand that the debtor remain liable for all, or a portion of, the debt. The owner will need to explain their financial hardship, provide proof of their income and assets, and provide the lender with a copy of the listing and sales agreements. The lender can then compare the numbers with what it might recover in a foreclosure scenario. Whatever the lender determines, the key to a short sale is that the lender’s lien is released so a new owner can take title to the property free of the previous owner’s debts.
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Charles T. Cook
Real Estate Law
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Real Estate Law
Q: What benefits can I expect from purchasing a Title Insurance Policy as it pertains to commercial leasing?
A: Leasehold title insurance coverage provides all the same affirmative coverages as the Standard Owners or Lenders policy of title insurance. It insures the lessee (tenant), or the lessee’s lender, against loss or damage arising from defects in title, ownership, access or marketability to the real property on which the rented premises are located.
If the insured is evicted by someone having paramount title to their lessor, the following items of loss will be included in computing loss or damage incurred by the insured:
- The reasonable cost of removing and relocating any personal property that the insured has the right to remove and relocate from the premises, the cost of transporting the personal property for the initial one hundred miles, and the reasonable cost of repairing the personal property should damage result.
- Rent or damages for use and occupancy of the land prior to the eviction which the insured is obligated to pay to any person having paramount title to that of the lessor.
- The amount of rent, if any, that the insured must continue to pay to the lessor after eviction.
- The fair market value, at the time of the eviction, of the estate or interest of the insured in any lease or sublease made by the insured as lessor.
- Damages that the insured is obligated to pay to lessees or sublessees on account of the breach of any lease or sublease caused by the eviction
- Reasonable costs incurred by the insured to secure a replacement leasehold equivalent to the leasehold estate.
- If tenant leasehold improvements are not substantially completed at the time of eviction, the net cost incurred by the insured for the tenant leasehold improvements up to the time of eviction.
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Charles T. Cook
Real Estate Law
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Real Estate Law
Q: Does a builder/seller of real estate have a right to keep a buyer’s earnest money deposit in the event that the buyer fails to perform under the purchase and sale agreement?
A: It depends. Most builder/sellers utilize a purchase and sale agreement (PSA), that allows them to keep the earnest money deposited as liquidated damages in the event that the buyer does not complete the purchase. Liquidated damages provisions are generally very broad and allow the seller to retain the earnest money in place of their actual damages, because damages in the event of a breach of the PSA are difficult to estimate with certainty at the time the PSA is signed.
In Nevada, liquidated damages provisions are presumptively valid. The party challenging the provision must establish and persuade the court that the provision amounts to a penalty, as opposed to compensation for damages incurred by the builder/seller. This means that unless the liquidated damages provision provides for an amount disproportionately larger than the actual damages incurred by the seller, the provision will be upheld and the seller may keep the earnest money as damages for the lost sale. Courts have routinely upheld liquidated damages provisions that amount to as much as 10 percent of the purchase price.
Generally, a defaulting buyer is not entitled to a refund of their earnest money if they signed a PSA with a liquidated damages provision. On the other hand, if the amount provided for liquidated damages amounts to a penalty, is disproportionate to the actual damages sustained by the injured party, and was not arrived at by a good faith effort to estimate the actual damages that would probably ensue from a breach, the liquidated damages clause may be unenforceable.
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David J. Malley
Landlord/Tenant Law
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Landlord/Tenant Law
Q: The tenant renting my house is behind in rent and I’m afraid he’s going to destroy the house. What can I do to protect my property?
A: Although Nevada law prohibits tenants from damaging property, residents facing eviction commonly take their anger out on the home. The best way to protect yourself is to carefully select your tenant and get the maximum legally allowed security deposit. If your tenant falls behind in rent, try to work out a solution where the tenant leaves peacefully rather than face an eviction hearing, saving both of you time and court costs. You may need to forego collection of a portion of the rent obligations in order to get the tenant to agree.
You can also inspect the property upon at least 24 hours’ notice to the tenant. If damage has already occurred, you may go to court to terminate the rental agreement, obtain an injunction against further damage, and/or obtain a money judgment for the damage incurred.
Finally, you can initiate the summary eviction by serving the tenant with a 5-day notice to pay rent or quit. The tenant can either pay the amount owed or file an affidavit with the Justice Court requesting an eviction hearing. If the tenant does nothing, you can apply to the Justice Court for a lock-out order. The judge cannot enter a monetary judgment in a summary eviction, so you may wish to consult an attorney to explore your options regarding collecting the money owed to you.
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