Atlanta Business Litigation Attorney Blog | Fulton County Commercial Collections Lawyers | Georgia Loan Modication Law Firm

Investors file lawsuit over losses

2012-02-22T18:12:59Z

Even when economic times are difficult, there are investors willing to accept a certain level of risk in exchange for an opportunity to make a profit. While there are almost always opportunities to be found there is always an element of risk when investing. Hedge fund managers and other financial professional take steps to decrease the risk by conducting a due diligence review of potential investments and using their knowledge and expertise to identify the investments with the most potential.

But even when the due diligence has been performed to the greatest extent possible there still remains an element of risk, and sometimes investors lose money. This week one group of investors is seeking certification for a class action lawsuit. The investors claim that the hedge fund managers breached their fiduciary duties in their selection of an investment.

]]> The investment in a Chinese forest product company resulted in a substantial loss. The investors claim that the fund managers failed to analyze the potential risks associated with the investment. The losses were reportedly the result of the company overstating its timber holdings. The forest products company though has denied that it did so.

A spokesman for the fund management group, explained that they must make their investment decisions based on the same audits and underwriter due diligence as anyone else in the public securities market in determining whether the statement by the company are accurate. They content that the lawsuit is without merit.

Source: Bloomberg News, "Paulson Fund Sued Over Sino-Forest Losses,"Saijel Kishan and Laurence Viele Davidson, Feb. 21, 2012

University agrees to settle employment claims

2012-02-16T17:40:31Z

In situations involving claims of employment discrimination, there can be frustration when the desire to be right conflicts with the desire to be pragmatic. Employers who make every effort to successfully foster and maintain a work environment free from the influence of gender discrimination may still find themselves the subject of an employment lawsuit. While in some cases it may make the most sense to settle the dispute and return your focus to running your business, the decision of how to proceed can often be complicated.

A recent incident involving a university soccer coach highlights some of the factors that can feed into these decisions. While the full details of the case are likely only known to the parties directly involved, the details in the news articles on the case offer some insight.

]]> In this case a female soccer coach claimed that she was the victim of discrimination and harassment. It was true that the men's soccer coach was paid about $59,000 compared to her $47,000. But the university noted that the discrepancy was result of the fact that the men's coach had been working at the school for more than 20 years, compared to the seven that she had been there. The university also pointed out that the woman's coach had a losing record in six of the seven years while she was a coach.

The settlement in the case called for the coach to drop her lawsuit, in exchange the university would give her $35,000 and a letter of recommendation. As part of the settlement the school did not admit any liability in the case.

Source: Herald Online, "Winthrop women's soccer coach lawsuit settled for $35,000 By Darin Gantt," Feb. 16, 2012

Jeweler allowed to garnish Allen Iverson's accounts

2012-02-14T16:45:31Z

While there are signs that the economic climate is improving, we still have a long way to go. For businesses, this means that there is no room for lost profits. It is difficult enough to generate attract customers, generate business and convert these into sales. Unfortunately in some cases that is not enough, the merchant must also take extra steps to ensure that they are actually paid for their product and services.

Recently a Georgia judge gave an Atlanta jewelry store permission to garnish the bank account of former NBA basketball Allen Iverson, in an attempt collect unpaid amounts that Iverson apparently owes for jewelry he purchased from the store. The jewelry store contends that Iverson still owes $375,000 for almost $700,000 work of diamond bracelets, watches and rings he purchased.

]]> According to an article in the Atlanta Journal Constitution, Iverson paid a little more than $200,000 of his outstanding bill before he simply stopped making payments. The store then made some initial attempts at collection, including filing a lawsuit, but did not receive any response to these attempts from Iverson. At that point they decide to ask a judge for permission to garnish his bank account.

In your debt collection and recovery efforts there are a variety of options when attempting to recoup your assets. In this case it may be likely that Iverson, having made millions as a basketball player, may actually have the full amount of funds to pay off the debt. In other cases, where the debtor or borrower may not have the funds, a different approach may be more effective. Whatever the scenario it is important to take a strategy approach to collections to ensure that you are able to recover as much as possible.

Source: Atlanta Journal Constitution, "Judge: Jeweler can garnish NBA Iverson's bank account," Fran Jefferies, Jan. 31, 2012

Georgia joins other states in settling foreclosure dispute

2012-02-10T18:23:15Z

Georgia will receive $814 million as part of a deal in which the Georgia Attorney General along with those from a majority of other states agreed not to pursue civil actions related to alleged improper handling of documents in some foreclosure proceedings.

In addition to the monetary payments the financial institutions agreed to expedite short sales for properties that are distressed, take additional steps to avoid foreclosures by seeking an alternative recovery of the debt, and increasing the availability of refinancing at lower rates. Mortgages owned by Fannie May and Freddie Mac are not included as part of this settlement.

]]> Approximately $82 million of Georgia's portion of this settlement will be directed towards homeowners who their homes after 2007 but before 2012 and for whom there was some impropriety in the servicing or foreclosure process. Homeowners in that fall into this category qualify for a cash payment of up to $2,000.

The investigation that lead to the settlement was looking into what is commonly referred to as 'robo-signing.' That is where a document is signed either by an improper person or is not properly reviewed prior to being signed. In general, in these alleged robo-signing situations no one is claiming that the borrower actually made the payments that they had agreed to, or that the foreclosure was not otherwise appropriate, but simply that the signing of the documents was improper.

Source: Atlanta Journal Constitution, "Georgia included in $25B foreclosure settlement," Christopher Seward, Feb. 9, 2012

Business owner to appeal denial of liquor license

2012-02-08T14:58:43Z

It can be difficult enough in Atlanta to satisfy all of the objective requirements to obtain a liquor license from the License Review Board. But apparently even when the business owner is able to satisfy all of these objective requirements there may still be additional hurdles that are much more prone to a subjective influence.

In the case of one Atlanta sports bar, the denial of a liquor license was based on a little used provision that allows a denial when there is an assertion that "granting the license would be against the public convenience and advantage." The business owner is now preparing to challenge the denial in court.

]]> We have talked in this space before about similar situations. Even though the business owner has satisfied every specific requirement, there exists an arbitrary provision which allows the board or other city officials to block the liquor license for less articulable reasons.

Often times the less articulable reasons have to do with a few vocal detractors in the area surrounding the business. These may be people who are opposed to the increased traffic a business can bring to the neighborhood, or have other reasons for voicing their displeasure with the prospect of a liquor license approval.

The ability of the city to prohibit an otherwise qualifying business from obtaining a liquor license because it is deemed to not be in accord with, "public convenience and advantage," leaves business owners subject to the whims of regulators. The alcohol licensing board certainly has a role to play to ensure that businesses comply with express regulations, allowing the city to deny a license on these arbitrary grounds may not fit well within that legitimate role.

Source: Atlanta Journal Constitution, "The Biz Beat Owner of Kirkwood bar to sue city over liquor license," Fran Jeffries, Jan. 31, 2012

Wal-Mart faces discrimination lawsuits

2012-02-03T23:06:08Z

You may remember the recent U.S. Supreme Court decision in which the court determined that the claims made by a group of Wal-Mart employees did not qualify for a class-action certification. The claims by the employees related to allegations of discrimination in the company's decisions regarding pay and promotions.

Now, more than 500 of these employees, including some from Georgia, have filed individual sex-discrimination claims with the U.S. Equal Employment Opportunities Commission.

]]> The Supreme Court had found, in its majority opinion, that the employees had failed to provide "convincing proof of a company-wide discriminatory pay and promotion policy." Absent this or other justification there was apparently not a sufficient basis for all of these separate actions to be consolidated into a single class action case.

A spokesman for Wal-Mart noted that none of these claims have ever been heard on their merits and that anyone who had a legitimate claim should have their day in court.

It can be amazing sometimes the amount of logistics and proceedings that can occur in an employment dispute involving allegations of discrimination before there is even any consideration of whether the claims have any validity. Even where the claims are found to have absolutely no merit, the amount of time and energy required for business owner can be daunting.

To avoid the unnecessary waste of time, energy and assets, it is important to work with an employment attorney who has substantial experience in these types of matters and knows how to make certain that you are able to focus on growing and maintaining your business rather than slogging through litigation.

Source: Bloomberg, "Group of 500 Female Wal-Mart Workers File U.S. Bias Claims," Andrew Harris, Feb. 2, 2012

Credit Union faces lawsuit over failed real estate deal

2012-02-02T17:16:43Z

A Georgia judge has ruled that Delta Community Credit Union improperly blocked a real-estate developer from loan funds that he had intended to use by property for a development project.

The CEO for Delta said that they were particularly upset about the size of the $75 million award, "We think it's unwarranted and contrary to the facts or applicable law. We will file an appeal and believe we have a strong legal basis for doing so." He went on to say that even if the award is upheld, the credit union is well capitalized and able to cover the cost.

]]> The judge in the case said that although the loan apparently had a payment default, the credit union had not taken to the proper step steps in applying the payments, or had allowed a misapplied payment to go uncorrected. The original loan was for $30 million.

The developer claimed that when he attempted to draw on the loan to purchase the property for development he was blocked from doing so by the credit union and because of this lost the deal.

It is interesting in this case that the damages awarded more than doubled the value of the initial loan. The credit union has noted that the damages were not based on a failure to accept loan payments but rather the lost opportunity related to the failed real estate deal.

Source: The Marietta Daily Journal, "Marietta attorneys help win 75 4M judgment" John Gillooly, Feb. 2, 2012

Franchisees seek greater disclosure from Cold Stone Creamery

2012-01-28T17:34:38Z

There are a wide variety of options for those that decide they would like to start their own business. Some have a new or improved product or service and are ready to take on the world. For others it makes more sense to hit the ground running by teaming up with an established brand. For many business owners this is best done by investing in a franchise.

A franchise can be great way to have a business that already has a customer base. When it is working well, the franchisee can benefit from the national marketing efforts and other efforts of the franchisor, and the franchisor can benefit from the ownership and management skill of each of the franchisees. Unfortunately not everything always runs as smoothly as it should.

]]> You are surely familiar with the Cold Stone Creamery franchise; there are many locations in the Atlanta Metro and across Georgia. Recently an associate of franchisees filed a lawsuit against Cold Stone Creamery asking that the company disclose the amount of assets in its Flexible Marketing Program and account for the amount of profits realized from unused gift cards.

The franchisees had been told that the certain funds would be put towards the marketing program and that the unused gift card assets would be used to offset certain costs. This situation highlights the challenge that can come with being a business owner but at the same time being part of a larger business entity.

Source: Florida Business Journal, "Franchisees sue Cold Stone Creamery," Paul Brinkmann, Jan. 26, 2012

Applicant for Atlanta police force denied due to HIV status

2012-01-24T21:40:29Z

It is not an easy, nor always rewarding, calling to be a police officer in the city of Atlanta. The hours can often be difficult and the work dangerous and thankless. But still, there are those that choose to accept the sacrifice in the service of our city. But not every applicant that desires to be a police officer is necessarily deemed to be a suitable candidate.

This week, a federal appeals court will hear arguments in an employment discrimination case brought by an applicant who was refused an opportunity despite passing all the tests he was given, all that is with the exception of the blood test. The applicant was denied a position on the police force because he is HIV positive.

]]> We first shared new about this story with you last fall, but now the applicant will have a chance to have his case heard by the appeals court. A lower court judge had sided with the City of Atlanta in its refusal to consider this applicant. The judge said that the applicant had failed to demonstrate that he would not pose a direct threat to the health and safety of others. The applicant had formerly been a criminal investigator with the icy of Los Angeles. He has known he was HIV positive since 1997, but indicated that it had never hindered his ability to work.

Source: KCAUTV Channel 9 News, "HIV-infected man fights to become Atlanta officer," Greg Bluestein, Jan. 24, 2012

U.S. Supreme Court rules on collections practices case

2012-01-21T05:13:27Z

As any creditor or collections professional is certainly aware, collecting from can be a difficult process. It seems as though policy makers, public opinion and the news media are always on the side of the person who defaults on a payment rather than the party who actually suffers the loss when the owed money is not paid.

This week the U.S. Supreme Court sent a case base to the federal Circuit Court of Appeals after ruling that a person can bring a suit in federal court against a debt collector for alleged violations of the Telephone Consumer Protection Act. The debt collector had been attempting to recover a debt that the consumer had taken out for a student loan.

]]> While policymakers and public opinion often seem to be ready leave creditors out to dry, there is also a complaint in some quarters that banks and other lenders are not facilitating the flow of commerce by lending more freely. It seems that lenders would be much more willing to extend credit if there were stronger tool available to ensure that creditors would be repaid.

In any collection situation it is always important to ensure that your practices are in compliance with the wide variety of laws and regulations that could potentially apply to collection practices. And as this case demonstrates the regulatory landscape in which collections professionals must operate can change and can cause trouble if your practices are not all up to date.

Source: The Associated Press, "Court lets telemarketers be sued in federal court," Jesse Holland, Jan. 18, 2012

Atlanta payment processor in litigation with merchants

2012-01-18T18:57:38Z

Across the United States, more than eight million merchants are able to accept via Mastercard and Visa. This payment method is vital for many businesses and is made possible by a system of banks and payment processors, such as the Atlanta based payment processing company that now finds itself engaged in litigation with one of these merchants who benefit from this service.

The security of consumers' accounts and credit card information is, of course, one of the top priorities of the banks and payment processing companies. In order to maintain this security these companies investigate potentially fraudulent transactions, and require that merchants abide by certain data retention practices to keep customer information safe. This appears to be at the heart of this dispute.

]]> If it is determined that the security customer account information has been breached, they require that the merchants involved hire an independent forensic examiner to investigate the situation. Visa and Mastercard also prohibit certain account specific information from being stored on merchants' computer systems. In this case Visa claims that more that 30,000 accounts were improperly stored on this merchant's computer. The merchant involved acknowledges that account information was improperly stored on its computer, but claims it was many fewer accounts than Visa claims.

The current dispute between the merchant and the payment processor and bank involves the legitimacy and amount of the fines imposed on the merchant for the alleged security breach and the method by which those fines have been collected.

Source: Delaware Online, "Utah eatery balks at credit card fines in rare lawsuit," Thom Weidlich, Jan. 11, 2012

Small business sued by design firm

2012-01-13T20:00:44Z

It is difficult enough to keep a small business afloat in these tough economic times, even when all you have to worry about is selling enough products and services to cover your costs. But when a commercial dispute ends up in court, the business may be at risk of being liable for extensive monetary damages. When facing this type of situation it is important to work with a law firm that not only understands the law but also understands your business.

A Georgia contractor, who also owns a small flea market testified at a trial recently in which the Louis Vuitton company is seeking millions of dollars in damages against flea market owner for allegedly allowing trademark infringement to occur at the market. The $55 million dollar claim is on stark contrast to the $20,000 that the Georgia man claimed his flea market made in a recent year.

]]> The French fashion designer asserted that the owners of the flea market had turned a blind eye to the sale of goods falsely bearing the name of the label. The design company had hired investigators to make undercover buys of the allegedly infringing products; they then followed up with police. This resulted in police raids of numerous vendors' booths.

The flea market owner fears that the lawsuit may put him out of business. While intellectual property owners certainly have a right to protect their interests, it is troubling to see a small business owner put in such a difficult situation.

Source: MySA.com, "Flea market owner: Louis Vuitton wants me out of business," Guillermo Contreras, Jan. 12, 2011

Intra-company legal disputes

2012-01-12T19:42:44Z

Commercial and business lawsuits often involve disputes between two separate businesses. Alleged business torts or breaches of contracts can pit one company against another in court. But it is also not uncommon for a dispute to arise within a single company. It seems that whenever there is more than a single person who has a financial interest in a company, there is a distinct possibility of a disagreement within the company.

An Atlanta man was recently granted a temporary restraining order against his business partner in order to stop an emergency meeting of the holding company's board. The underlying lawsuit in this matter involves allegations by the Atlanta partner that his business partner had misused funds their business had borrowed to renovate a boutique hotel.

]]> The suspected purpose of the board meeting that was stopped by the temporary restraining order was to give the business partner authority to satisfy the unpaid bills related to the renovation by transferring the deed for the hotel. The temporary restraining order did more than simply block the board meeting; it also barred the business partner from attempting to restructure the company, or negotiating and amending its existing business contract.

The business had obtained a $13 million loan in order to fund renovation to a hotel property. But the Atlanta man asserts that the business partner diverted approximately $2 million of that loan for his own purposes. These are alleged to include payroll for a business that the partner owns separately and attorney's fees for unrelated lawsuits.

Source: The Tennessean, "Hotel Indigo owners' battle leads to suit," Anita Wadwani, Jan. 12, 2012

Late payments of already modified mortgages

2012-01-07T01:06:36Z

For most banks their preferred business model is to make loans and have borrowers repay the principal and interest in accordance with the original lending agreement. But unfortunately the lingering effects of the housing crisis in Georgia and across the nation have left banks with difficult choices. Because few banks want to be in the business of owning or selling homes, they may choose to try to facilitate a loan modification that will allow for as much recovery as possible.

Most people employed in the lending and banking industry have likely seen the story that has appeared in the news in the last few days about the man who very nearly lost his house after one of his payments was 80 cents short. From the headlines a casual reader would be led to believe that this man had been regularly making all of his payments until one day he accidently paid 80 cents too little, at which point the bank sent immediately sent in the black helicopters to throw the man forcibly from his house. Of course it did not transpire quite like that.

]]> A closer review of the story indicates that a man who was potentially going to be facing a foreclosure due to his inability to make payments was granted a modification. The bank lowered his monthly payment by $200 dollars, with the sole condition that he make timely payments for three months. If he was able to make the newly reduced payment on time for three months the reduced payment would be permanent. Apparently due to a typographical error the man underpaid, by 80 cents, he contacted a customer support person who advised him to send in a check for the difference. While the bank initially rejected the payment in notified him that he had violated the terms of the modification, they soon followed up to let him know that he was still going to be able to receive the modification and that the 80 cents would not cause any additional problems.

Source: TBO.com, "Typo involving 80 cents nearly cost man his home," Shannon Behnken, Jan. 4, 2011

Georgia banks work to recuperate

2012-01-03T20:24:09Z

As the economic recovery in Atlanta and across Georgia fails to overwhelm, many banks still find themselves struggling. Many of their customers that were formerly credit-worthy are now unable to make payments and banks are attempting to recover as much of their assets as possible through loan-workouts and other tactics.

Numerous banks in Georgia have entered into consent orders with the Federal Deposit Insurance Corporation. The consent orders, entered into most recently by two community banks, do not require the banks to admit or deny any wrongdoing, but do require the banks to make modifications to their operations.

]]> The orders call for the banks to increase their investor capital and maintain capital requirements. The banks will also have to reduce the amount of 'problem loans' and review their policies to help ensure that they are well positioned to move forward.

There was also a separate lawsuit involving a former bank officer, this consent order resolved a suspected insider trading investigation with the FDIC with the bank officer neither admitting nor denying any wrongdoing. The officer had previously pled guilty to securities fraud charges related to this matter. The matter allegedly involved the sale of bank shares based on knowledge that a major customer was likely to default.

As you are certainly aware, recovering outstanding loan payments can represent a significant expense for lenders. Determining and executing the most efficient recover method is vital for any bank. Often there is no single answer that fits every situation. Addressing the unique needs of each loan-workout or other recovery situation will help lenders maintain a healthy position going forward.

Source: Atlanta Journal Constitution, "Regulators tighten grip on two small Georgia banks," J. Scott Trubey, Dec. 30, 2011