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The use of the internet, email, text messages, and cell phones are rampant in the workplace because of good reason.  As the US moves ever closer to an information worker/service type of economy, the convenience and speed of electronic communications increase the efficiency and productivity of employees, and any business without these tools is at a severe competitive disadvantage. 


On the downside, the use of the electronic devises can actually result in a loss of efficiency due to employees’ use employer-provided devices for personal, non-work-related use during work hours.  Employees might use the web to visit pornographic websites or disburse inappropriate materials via company email, and therefore expose employers to legal liability for permitting a hostile work environment due to harassment or defamation. Further, the unscrupulous employee could expose the employer’s trade secrets, proprietary and confidential information, or engage in inappropriate contact with competitors or customers. Continue reading ‘CAN EMPLOYERS MONITOR EMPLOYEE ELECTRONIC COMMUNICATIONS IN THE WORKPLACE?’

Is a Buy-Sell Agreement Right For Your Company?

 You’ve worked so hard to get your company up and running.  The business is finally turning a profit, and you and the other owners of the business are getting on famously.  Any ownership issues have been ironed out and it’s going to be smooth sailing from now on, right?   

 Wrong.  The only thing for certain is change, and some changes in the ownership of a small business are inevitable and can be devastating to the company.  Continue reading ‘Is a Buy-Sell Agreement Right For Your Company?’

Why should my corporation hold annual meetings?

 Our corporate clients who are not publically traded, and maybe only have one or two shareholders, sometimes don’t understand the necessity of having annual shareholder and director meetings. But there are some very good reasons why it is a good idea to do so:

 First, it is required by law.  Continue reading ‘Why should my corporation hold annual meetings?’

Are You a Fiduciary? Are You Sure?

California law describes a broad definition of fiduciary, involving trust, confidence, and good faith between a principal and their agent.  In a recent case, however, the federal bankruptcy court construed fiduciary capacity in a different and significantly narrower manner, with dramatic results. 

In a holding at odds with other bankruptcy cases, a bankruptcy court recently held that a debtor’s status as a California real estate agent was insufficient to show that she stood in a ‘fiduciary capacity.”  That holding allowed the agent, who had filed a Chapter 7 bankruptcy, to discharge a $356,000 state court judgment, awarded to her client, a potential real estate buyer.  The California state court jury had found that the agent negligently and intentionally breached here fiduciary duty to the buyer, by misrepresenting the purchase agreement and falsely informing the seller that the buyer could not satisfy the financing requirements.  While the jury found that the buyer was entitled to the $356,000 damage award, the bankruptcy court said no; under the federal bankruptcy statues, the agent was not acting in a fiduciary capacity because she did not hold property in trust for her client, the buyer.    Thus, a damage award that may otherwise have been nondischargeable in bankruptcy because of the debtor’s fraud was found to be dischargeable.

             Real Estate Agents in Bankruptcy

Under this holding, California real estate agents who negligently or intentionally breach their fiduciary duties may find refuge in bankruptcy court, where they may be able to avoid and discharge judgments against them.  Even if no judgment is rendered, the settlement of high value disputes concerning brokers and agents may be influenced by the possibility that the insolvent wrongdoer will seek to discharge the debt in bankruptcy.   In the future, the holding may extend to other types of fiduciaries as well. 

             Attorney’s Advice Can Maximize Outcomes

Conflicts in the law sometimes arise between federal and state courts.  The law is sometimes  more fluid than solid.  An aggrieved party must look beyond the mere fact that they were wronged and, with competent counsel, broadly evaluate the chances of achieving and collecting a monetary judgment.     

Leslie Baxter is a Partner, practicing Real Estate and Business Law at Randick, O’Dea & Tooliatos, LLP; she is an author of “California Real Estate Brokers Law and Litigation,” published by Continuing Education of the Bar. 

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