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Archive for January, 2018

Show Me the Money! Georgia Court of Appeals Affirms HOA’s Right to Recover Attorneys Fees

Posted on: January 31st, 2018

By: Cheryl H. Shaw

Community associations are funded through assessments paid by property owners. When owners fail to pay, the association’s ability to meet financial obligations and provide for upkeep of the community is diminished.  Common area repairs and replacements don’t go away just because the association’s bank account is lean, and maintenance projects get more expensive when delayed. Owners who pay their assessments end up subsidizing those who do not, while delinquent owners continue to enjoy the benefits of the association.  Pursuing delinquent property owners in court can be a long, arduous, and expensive process. However, the Georgia Court of Appeals recently affirmed an association’s right to recover attorney fees incurred in that effort, making the process a little less painful.

In Summit at Scarborough Homeowners Ass’n v. Williams, 343 Ga. App. 343 (2017), an HOA sought to recover its court costs and attorney fees after obtaining judgment against a property owner for unpaid annual assessments. The trial court denied the motion and the HOA appealed, asserting it was entitled to the fees under a provision of the recorded Declaration of Covenants, Conditions, Restrictions and Easements which stated:

The annual and special assessments [imposed by the Declaration], together with late charges, simple interest at the rate of twelve percent (12%) per annum, court costs, and attorneys’ fees incurred to enforce or collect such assessments, shall be an equitable charge and a continuing lien upon the property against which each such assessment is made and shall also be the personal obligation of the person who is the record owner of the property at the time the assessment fell due.

Siding with the HOA and reversing the trial court’s order, the Court of Appeals reiterated that under Georgia law, the Declaration of a homeowners’ association is considered a binding contract: “Where parties contract for the recovery of attorney fees, a trial court does not have the authority to alter that arrangement unless it is prohibited by statute.”  Finding no statute that prohibited recovery of fees in this context, the Court held the Declaration obligated the property owner to pay the HOA the reasonable attorney fees incurred in its collection efforts.  The Court reversed the trial court’s order and remanded the case with instructions to enter an award of costs and fees consistent with the Declaration. Id.

The Williams case confirms Georgia courts will enforce an HOA’s right to recover attorney fees if clearly set forth in the recorded declaration. Making sure your association has the right language in its governing documents is critical.  Cheryl H. Shaw is licensed in Georgia and has successfully represented community associations and property management companies in all manner of claims, including consultation concerning governing documents and daily business operations.  If you have questions or would like more information, please contact Ms. Shaw at [email protected].

Insurer Entitled To Prejudgment Attachment Against Insured Upon Establishing Probable Validity of Coverage and Recession Defenses

Posted on: January 29th, 2018

By: Rebecca J. Smith

A California Appellate Court recently ruled that an insurer was entitled to a prejudgment attachment on the property of its insured when the insurer provided what the court deemed to be ample evidence to support its argument that an exclusion in a policy barred coverage under the intentional non-compliance exclusion.

Allied World National Assurance Company (“Allied”) issued a primary environmental liability insurance policy for $2 Million and an umbrella policy for $5 Million to Santa Clara Waste Water (“SCWW”). Intentional non-compliance provisions were included which excluded coverage for damage resulting from the intentional disregard of or deliberate willful or dishonest non-compliance with laws or regulations.  In 2014, a huge explosion at the SCWW plant occurred and SCWW made a claim to Allied for payment to clean up the facility from the damages resulting from the chemical spill, explosion and subsequent fire.

Allied initially denied the claim; however, ultimately agreed to pay $2.5 million to cover the facility owner’s cleanup costs with the caveat that the plant owner would have to reimburse the insurer if a court later determined that the policy’s coverage did not apply.  SCWW then sued for the full amount, triggering Allied to file a cross-complaint.  Allied then sought a prejudgment attachment against SCWW for the $2.5 Million plus costs and interest to protect their ability to recover from SCWW should they prevail at trial.  The application for a right to attach order and writ of attachment was granted by the trial court.

Under the statute governing attachments, a party seeking a prejudgment attachment must demonstrate the probable validity of prevailing on its claim.  In affirming that decision, the Second District Court of Appeal recognized that where an insurer pays an amount not covered under the policy, it has a right that is implied at law under an unjust enrichment theory.  The court declared that Allied had established the probable validity under both their unjust enrichment and recession claim because substantial evidence supported the trial court’s finding that SCWW failed to report their Hazardous Materials Plan under the Health and Safety Code, concealed chemicals from inspectors and misrepresented and concealed a material fact – that being that they did not accept, process, transport or discharge hazardous waste.

Accordingly, upon return to the trial court, Allied may attach the property of SCWW pending ultimate determination of the action for the amount they paid, plus pre-judgment interest.

If you have any questions or would like more information, please contact Rebecca Smith at [email protected].

Look Mom, No Hands!

Posted on: January 24th, 2018

By: Seth F. Kirby

On January 22, 2018 a Tesla Model S slammed into a parked fire truck on California’s 405 near Culver City.  The driver of the Tesla stated that prior to the accident he had the car’s autopilot system engaged.  This is just the most recent in a series of accidents in which Tesla’s autopilot system has been implicated.   At present, Tesla’s autopilot system is limited to what it refers to as Traffic-Aware Cruise Control.  This feature, which is also provided by other car manufactures, allows the car to maintain a lane and speed up or slow down depending upon traffic conditions.  The system relies upon driver input to observe and avoid stationary objects, which may be the true culprit that resulted in the recent crash.  Interestingly, all Teslas are equipped to function autonomously, taking its passengers to a destination with no human interaction.  Such features are not yet enabled due to the need to obtain regulatory approval, and the features of the current systems have been changed several times to encourage drivers to be attentive when behind the wheel (i.e. requiring the driver to maintain their hands on the wheel).

The advent of various levels of autonomous driving presents challenges and opportunities for the insurance industry.  Theoretically, the implementation of autonomous vehicles over the next decade or longer will result in fewer accidents and injuries as computers will be more reliable and predictable drivers.  Of course, machines can have errors, and on the road at 60+ mph, errors can have drastic consequences.  This begs the question.  As vehicles become autonomous, who will the auto carrier be insuring?  The easy answer is that the policy is issued to the individual that owns the car, so clearly the carrier is insuring the individual for their potential liability. In many states, however, the insurance “follows the car” and covers bodily injury and property damage arising from the use of the vehicle no matter who (or what) is operating the vehicle.  If the autonomous car makes a mistake, the law presently considers the human driver to be responsible for the vehicle’s operation and the liability is placed on the driver.  That seems reasonable in our present environment in which driver interaction is required for the system to operate.  It may seem less reasonable once the systems become fully automatic.  At that point, the individual’s carrier is essentially insuring the machine and its software, effectively turning auto liability policies into product liability policies.

In the short term, the transition between human and computer controlled driving presents problems as it can lull the driver into a false sense of safety.  It appears that when the driver has less interaction with the driving process their attention wanes and they may fail to avoid obvious hazards.  This is no different than the problems caused by other forms of distracted driving (texting, eating, tuning the radio), it is just a new dynamic that is being added to the roadway.  Eventually, the human element may be removed from the equation, but whether that will result in a net improvement in vehicle safety remains to be seen.  I fully suspect that many aspects of auto liability insurance will need to evolve as technology begins to take over the wheel.

If you have any questions or would like more information, please contact Seth Kirby at [email protected].

New Developments in TPS and DACA

Posted on: January 18th, 2018

By: Kenneth S. Levine

This past week the Department of Homeland Security announced the termination of Temporary Protected Status for citizens of El Salvador.  DHS reports that there are approximately 200,000 El Salvadoran citizens living and working in the United States.  TPS designation for El Salvador will officially terminate on September 9, 2019.  USCIS has publicly stated that if TPS recipients are unable to obtain green cards or acquire a different legal status prior to that date, then they will be placed into deportation proceedings.

While the general public may perceive the USCIS advisory to “obtain a green card or seek a change of status to a different visa category” to be an easily attainable option, the reality is far different.  TPS recipients must still fully satisfy strict legal criteria to qualify for those options.  For the vast majority of TPS recipients, this will prove exceedingly difficult to achieve.

FMG Immigration Attorneys are currently engaged in assessing whether any of our TPS clientele from El Salvador qualify for permanent residency or a different visa category.  It is important to note that for those who do not qualify, legal options may be available in the context of deportation proceedings.  It is anticipated that this current administration will continue to terminate TPS designations for countries remaining in the TPS program.  Therefore, it is critically important that all TPS recipients promptly seek legal advice from experienced immigration counsel to assess their legal options.


Another significant development in the immigration field occurred on January 9th when U.S. District Judge William Alsup issued an injunction against the current administration from ending the Deferred Action for Childhood Arrivals (DACA) program.   This program was scheduled to end on March 5th.  For now, DHS must accept DACA renewal applications.  It is anticipated that the court’s injunction will be promptly appealed and therefore it is entirely uncertain how long the injunction will remain in place.  For now, FMG Immigration Attorneys strongly recommend that all DACA recipients who otherwise would be eligible to renew their status do so as soon as possible.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected].


Will Innocent Sellers Catch a Break?

Posted on: January 12th, 2018

By: Jeremy W. Rogers

In a products liability case, any party along the line of distribution, from the design and manufacture, all the way down to the seller, may be held liable to a party injured from use of a defective product.  While it is easy to understand holding an entity liable for issues with the design or manufacture of the product, it can be less so with regard to a distributor or seller of the product. Under strict product liability, these entities are held liable because, the argument goes, it is more fair for an entity that places a defective product in the stream of commerce to bear the financial burden of an injury than an innocent consumer. But is that “fair” to an innocent seller or distributor of the product who committed no active negligence?  There are those in Congress and in some states that believe it is not.

In 2007, the Innocent Sellers Fairness Act was introduced into the House of Representatives.  That bill would make it so no seller of any product can be held liable for personal injury, monetary loss, or damage to property unless it can be proven that the seller was actively involved in some negligent act, such as manufacture, design, or installation.  Without proof of such active participation in a negligent act, the seller is, arguably, “innocent.” While the bill was never passed into law, several states have passed similar laws, including Colorado, Delaware, Kansas, Kentucky, Maryland, Minnesota, Mississippi, Missouri, New Jersey, North Carolina, North Dakota, Tennessee, and Washington. Unfortunately, Florida is not one of those states.

However, for those states that have not passed their own law, like Florida, those who support this premise on a national scale have not given up. The bill was re-introduced again in 2015.  Then, in February 2017, it was once again introduced.  Currently, the bill has not made it out of committee, but has been referred to subcommittee. Given the length of time it has been in committee, it does not appear the Innocent Sellers Fairness Act has much opportunity to be passed into law in the near future.  However, given the current makeup of Congress and the business friendly administration, one has to believe that the chances of seeing the bill come up again are good.

If you have any questions or would like more information, please contact Jeremy Rogers at [email protected].