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Archive for December, 2020

Important Changes to Georgia’s Garnishment Laws Coming January 2021

Posted on: December 31st, 2020

By: Amy C. Bender

Without much, if any, attention, Georgia’s garnishment laws were amended in ways that will significantly impact continuing garnishments served on employers effective January 1, 2021. Some of the major changes are discussed below.

As background, garnishment is a method by which a creditor may recoup a debt owed by an individual. Once a creditor obtains a judgment in court against the individual for the underlying debt, the creditor can initiate a separate legal action against a business organization that owes money or property to the individual (typically, an employer), which obligates the organization to set aside a portion of the individual’s earnings over a period of time to satisfy the debt – a “continuing garnishment.”

Continuing Garnishments Now Arguably Apply to Independent Contractors

The current statutes address garnishment of “wages earned as the garnishee’s employee” and a continuing garnishment being served on an “employer,” leading to the consensus that continuing garnishments could not be used to recover earnings paid to an independent contractor (albeit with little guidance from the case law). Now, the statutes have been amended to state that a continuing garnishment allows for garnishment of wages or “any sum for goods or services periodically provided to the garnishee” and may be served on an entity that is an employer of “or under periodic obligations for payment to” the indebted individual. Based on these changes, employers likely will have to garnish periodic (although apparently not one-time) payments made to independent contractors.

Time Period of Continuing Garnishment Significantly Expanded

Until now, continuing garnishments had a relatively short shelf life in that entities were required to garnish earnings from each paycheck for a total period of 179 days (roughly 6 months). The amendments expanded that time period to 1,095 days (3 years). As with the current version of the statute, the creditor still will need to file a new garnishment action to recover any amount of the debt outstanding after the 1,095-day period, but this change significantly reduces the frequency of the creditor’s need to do so. The employer’s obligation to garnish will end earlier if the debt is satisfied in full or if the employment relationship/periodic payment obligation terminates.

Continuing garnishments can present pitfalls for employers. In some instances, the failure to respond timely can result in a default judgment leaving the employer on the hook for the entire amount of the debt. FMG’s Labor and Employment Law team can assist your organization with all steps of the garnishment process. If you have any questions or would like more information, please contact Amy Bender at [email protected].

Are Adult Entertainment Clubs Going To Save California’s Restaurants?

Posted on: December 22nd, 2020

By: John Moot

In what could be the beginning of a reopening for restaurants hard hit by California’s new stay at home orders, two San Diego adult entertainment clubs have come to the rescue. A San Diego Superior Court Judge on December 16th granted a preliminary injunction enjoining any governmental entity or law enforcement officer from enforcing cease and desist orders including the State’s Regional Stay at Home Order against two well-known adult entertainment venues in San Diego who also serve food. Using the United States Supreme Court’s recent decision allowing churches in New York to open for indoor services as a jumping off point, the Court applied the First Amendment rights of adult entertainment establishments to find the State’s rational to close their business that included selling food to be woefully deficient. In a careful analysis of the facts including the County’s own witnesses, the Court found there was no evidence the adult entertainment clubs or their restaurant exposed patrons, its staff or employees to COVID-19. The Court found no evidence that “businesses with restaurant services such as Plaintiffs’ establishment who have implemented protocols as directed by the County, have impacted ICU bed capacity throughout the Southern California Region (much less San Diego County).

In what could be read as rebuke to the Governor’s overly broad orders lacking in factual support, the Court after noting “essential businesses” that were allowed to stay open, quoted Supreme Court Justice Gorsuch’s concurring opinion in the Roman Catholic Diocese of Brooklyn stating, “who knew public health would so perfectly align with secular convenience.” In an ironic twist, a conservative Supreme Court majority has put adult entertainment clubs on par with churches as one of the few places Californians may be able to seek respite from the pandemic.

Restaurant owners’ glee however may have hit a roadblock. After the trial court clarified its ruling to apply to all restaurants not just ones in the adult entertainment clubs, the Appellate Court stepped in and stayed the ruling and will not consider the matter. Under the First Amendment, governmental action that infringes on First Amendment rights are subject to higher judicial security. Will the Appellate Court limit the lower court ruling to “Plaintiffs providing live adult entertainment” and businesses with “with restaurant service such as Plaintiffs?” Stay tuned. Either way a California Court has let the cat out of the bag and has questioned COVID orders where the punishment does not necessarily fit the crime.

If you have questions or would like more information, please contact John Moot at [email protected].

PPP is Back with Second Draws and Favorable Tax Treatment

Posted on: December 22nd, 2020

By: Justin Boron

The Paycheck Protection Program is set to return in 2021. 

As part of the $900 billion COVID-19 relief bill passed yesterday, Congress renewed the popular small business relief program administered by the Small Business Administration to allow certain qualifying businesses to take out a second draw on their forgivable loan, re-opened PPP to first-time borrowers that qualify, and set tax law to allow businesses to take advantage of tax deductions associated with PPP-funded expenses.

To qualify for a second draw loan, the business must have 300 or fewer employees, exhaust their current loan proceeds before the second loan is issued, and show a 25 percent decline in gross receipts in any 2020 quarter compared to the same quarter in 2019.  These are new requirements that apply only to second loans.

The loan comes with some of the same conditions as the PPP loans issued in the first two rounds of funding in 2020—such as requirement that 60 percent of the funds be spent on payroll.  But it also eliminated a disfavored IRS ruling that effectively diminished the value of forgiveness by prohibiting deductions for expenses using PPP funds.  The new provision expressly states that the forgiveness amount will not be treated as income and the expenses may be deducted.

Additionally, the new law expands the list of forgivable expenses to include certain personal protective equipment needed to comply with federal COVID-19 guidelines, certain operations expenses such as HR and payroll accounting software, and certain property damage costs caused by public disturbances in 2020.

The amount of the loan will remain the same—2.5 times the business’s average monthly payroll costs in the year prior to the loan or the calendar year—unless the business has a NAICS code beginning with 72, such as restaurant and hospitality businesses.  Congress upped their loan amount to 3.5 times the monthly payroll cost calculation.  But it lowered the cap on all loans to $2 million.

The new law also opened forgivable loans up to 501(c)(6) organizations, such as chambers of commerce or certain industry associations as long as they don’t exceed certain lobbying activities.

It will take some time for the SBA to be set up for new loan applications.  But the law requires it to issue regulations within 10 days after the legislation is signed into law.

FMG’s Coronavirus Task Force is reviewing the entire stimulus bill passed by Congress to advise clients on the benefits and obligations it creates. Please check back for additional posts on this topic.

If you have questions or would like more information, please contact Justin Boron at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Massachusetts Statute of Repose Applies One Building At a Time

Posted on: December 22nd, 2020

By: David Slocum

The Massachusetts Supreme Judicial Court (the “SJC”) recently issued an important decision addressing the previously unanswered question of when the Massachusetts 6-year statute of repose for defective design, planning, or construction is triggered for purposes of alleged defects in the common areas of a multi-building, multi-phase condominium construction project.

In D’Allessandro v. Lennar Hingham Holdings, LLC, 156 N.E.3d 197 (Mass. 2020), the Massachusetts high court held that irrespective of how many phases of development there are or how many buildings are within each phase, where a condominium project is comprised of multiple buildings, each individual building constitutes a discrete improvement for purposes of Massachusetts’ six-year statute of repose. In D’Allessandro, the Hewitts Landing Condominium project located in Hingham, Massachusetts (the “Project”) was comprised of 150 condominium units spread across twenty-eight separate buildings. The Project was built over the course of nearly two-dozen separate phases between 2008 and 2015. During the course of construction, the architect submitted affidavits of substantial completion and the town issued certificates of occupancy for the individual units and separate buildings as they were completed.

In 2017, the Condominium’s trustees filed a complaint seeking damages from the developer and others for alleged defects to the common areas of the Project. Because six of the twenty-eight buildings had been completed more than six years before the complaint was filed, the defendants argued the claims as to those buildings were barred by the statute of repose, which provides no tort action “arising out of any deficiency or neglect in the design, planning, construction or general administration of an improvement to real property” may be brought more than six years after “(1) the opening of the improvement to use; or (2) substantial completion of the improvement and the taking of possession for occupancy by the owner,” whichever date occurs earlier. Mass. Gen. Laws ch.260 § 2B.

The question before the Court was whether the statute of repose was triggered only upon the substantial completion of the entire condominium project, or whether instead the statute was triggered multiple times as each individual building was open to use or substantially completed. In answering that question, the Court wrote: “[w]here a condominium development is comprised of multiple buildings, regardless of how many phases of the development there may be or how many buildings are within each phase, each building constitutes a discrete ‘improvement’ for purposes of [Mass. Gen. Laws ch. 260] § 2B, such that the opening of each individual building to its intended use, or the substantial completion of the individual building and the taking of possession of occupancy by the owner or owners, triggers the statute of repose.” D’Allessandro v. Lennar Hingham Holdings, LLC, 156 N.E.3d. at 203-04.

Under the holding in D’Allessandro, the substantial completion of each individual building and the taking of possession of that building for occupancy by the owner triggers the statute of repose as to the common areas of that individual building. Thus, in the context of a complex condominium project with multiple buildings and phases, the protection afforded to design professionals, developers, contractors and the like by the Massachusetts statute of repose does not have to wait until six years after substantial completion of the entire project. Rather, the statue will be held to apply one building at a time.

If you have questions or would like more information, please contact David Slocum at [email protected].

Coronavirus Effect? Tort Filings Are Down In 2020, but Products Liability Suits Are Way Up

Posted on: December 17th, 2020

By: Barry Miller

Tort lawsuit filings in federal district courts dropped by 27 percent in 2020 according to Lex Machina, the legal analytics arm of Lexis.

The service compiled statistics for suits filed between January 1 to December 6, 2020, comparing numbers for the same period in 2018 and 2019. At 16,725 this year’s tort filings fell below even the 2018 number of 16,958.

Filings were down 10 percent in all categories but one—Products Liability—which was a massive outlier. Federal courts docketed more than 250,000 products cases in 2020 compared to 53,500 in 2019.

Such filings may be spurred even more by recent holdings that online retailers can be liable for defective products manufactured by third parties but sold on the retailers’ platforms. In August a California Court of Appeal overturned a summary judgment for Amazon when a plaintiff alleged that a battery she bought from an Amazon vendor exploded, causing her severe burns. And in late 2019 Amazon settled a similar case in federal court in Pennsylvania before the Third Circuit could review a 2-1 decision panel decision against it. Both courts found that Amazon was in a better position than the buyer to stop the circulation of defective products.

This comes as CNN argues that the COVID-19 crisis has created two distinct groups of retailers: “those with functioning e-commerce businesses, and those without.” Online sales have taken a steadily larger share of the market in recent years, and the pandemic has accelerated that trend.

Freeman Mathis & Gary’s Tort and Catastrophic Loss practice group can assist retailers and others in the products chain who  face such lawsuits. If you have questions or would like more information, please contact  Barry Miller at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**