Michael K. Kelly Appointed to Teen Addiction Anonymous’ Board of Directors

Michael K. Kelly

PHOENIX, Ariz. (September 24, 2015) – Jennings, Strouss & Salmon, P.L.C., a leading Phoenix-based law firm, is pleased to announce that Michael K. Kelly has been appointed to Teen Addiction Anonymous’ Board of Directors.

 

“Teen AA and their MPOWRD Leadership program provides a safe space for our teens to take control of their lives, and to be ambassadors for other teens in need,” stated Kelly, Chair of Jennings, Strouss & Salmon’s Intellectual Property Practice Group. “It is a privilege to witness their journey.”

 

Teen Addiction Anonymous (Teen AA) was established to help educate the youth about personal empowerment, addictive behavior, steps for healing, recovery, and leadership. The Board of Directors’ mission is to help educate and empower teens to overcome their addictive behavior through the support of their Teen AA 12 step program.

 

Kelly has over twenty-seven years of experience in all areas of intellectual property, including the procurement, enforcement, and defense of patents; trademarks, copyrights, and all aspects of trade secrets and unfair competition; international dispute resolution; Internet and new media; and related mergers, acquisitions, joint ventures, strategic alliances, and IP asset acquisitions. He is intimately familiar with the rules and procedures of U.S. patent and trademark prosecution, as well as the evolving protocols in Europe and Asia.

 

Kelly’s intellectual property transactional and litigation experience extends to a wide-range of areas and industries, including encryption, cybersecurity, medical imaging, software architecture, data cache and database systems, microprocessors, optics, semiconductor processing and wafer fabrication technologies, cloud computing, advanced weapons systems, medical devices, supersonic aircraft design, automotive systems, business methods, avionics, credit and financial services, mobile devices, smart phone applications, and consumer electronics.

 

About Jennings, Strouss & Salmon, PLC
Jennings, Strouss & Salmon, P.L.C., has been providing legal counsel for over 70 years through its offices in Phoenix and Peoria, Arizona; and Washington, D.C. The firm's primary areas of practice include agribusiness; bankruptcy, reorganization and creditors’ rights; construction; corporate and securities; employee benefits and pensions; energy; family law and domestic relations; health care; intellectual property; labor and employment; legal ethics; litigation; professional liability defense; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit www.jsslaw.com and follow us on LinkedIn, Facebook and Twitter.

 

The firm’s affiliate, B3 Strategies, assists clients with lobbying and public policy strategy at the local, state, and federal levels. For more information please visit www.b3strategies.com.

~JSS~

Bail Bond Sureties – Factors Arizona Courts Consider When Addressing Exoneration

By Patrick F. Welch

Sureties issuing bail bonds in the State of Arizona should be aware of a new case issued by the Arizona Court of Appeals (Division Two): State v. Int’l Fid. Ins. Co., No. 2 CA-CV 2014-0157 (Aug. 28, 2015). The case provides sureties with a list of factors that Arizona courts should consider when deciding whether to exonerate a bail bond. Also, the case holds that the State has the burden of demonstrating that it incurred costs “as a result of the defendant’s violation” in order to recover under a bail bond.

The basic facts of the case are as follows: In March 2012, Augustin Rivera (“Rivera”) was arrested and charged with multiple felonies. Following his arrest, Rivera was released from custody in June 2012 after Regulator Bail Bonds (“Regulator”) posted a $100,000 appearance bond issued by International Fidelity Insurance Company (“Surety”). Rivera’s mother (“M.V.”) and his former girlfriend and the mother of his children (“E.G.”) became indemnitors on the bond. The appearance bond provided:

If the defendant has a pending criminal charge, this bond secures attendance at future court dates. Should the defendant fail to appear at any future court date for this charge, the bond may be forfeited.

In September 2012, Rivera and his co-defendant, Rosario Soto (“Soto”) failed to appear for the pretrial hearing, causing the court to proceed with trial in absentia. Neither man appeared at trial, and following the jury’s guilty verdicts, the court ordered that a bench warrant issue for Rivera and that forfeiture proceedings commence. Rivera surrendered on October 31 following a standoff with twenty to thirty officers. Rivera was remanded to the Pima County jail on November 6, 2013, and on December 2, the court found that the State had proven Rivera’s prior conviction. The trial court sentenced Rivera to a prison term exceeding thirty-one years on January 16, 2014. Thereafter, counsel for the State sent an e-mail to Surety’s counsel providing evidence of jail and medical costs incurred by Rivera and Soto after their surrender. The State claimed total jail costs for Rivera in the amount of $7,039.12 based on “a per diem rate multiplied by the 84 days of Rivera’s incarceration from November 6, 2013 through his sentencing on January 16, 2014, and his eventual release to the Arizona Department of Corrections on January 29, 2014. The medical bills were for Soto only and totaled approximately $80,000.

At the bond forfeiture hearing, Surety introduced evidence that its fugitive-recovery agent, Marvin Bordeaux, had spent hundreds of hours looking for Soto and Rivera with the cooperation of the indemnitors and the U.S. Marshall’s office. Ultimately, a U.S. Marshall based in New Mexico located Rivera in Hurley, New Mexico. Following the hearing, the trial court stated that it found no legally recognizable reason for Rivera’s failure to appear, but further observed that Bordeaux had made substantial efforts to secure Rivera’s appearance at a cost of $2,400 or $2,500. The trial court decided to exonerate the bond by $5,000 – essentially doubling Bordeaux’s out of pocket costs – and entered a formal order forfeiting $95,000 of the $100,000 bond. The Surety appealed the trial court’s forfeiture order.

Under Rule 7.6 (c), Ariz. R. Crim. P., a trial court has discretion to forfeit “all or part of the amount of [a surety] bond” when a criminal defendant “has violated a condition of [the] bond” and the violation “is not explained or excused.” “[E]ven when a defendant’s actions are not excusable, a trial court [nonetheless] has the discretion to determine whether to exonerate all or part of the bond” (citations omitted). Arizona courts enumerated several facts “that might bear on the court’s discretionary decision whether, and in what amount, to forfeit an appearance bond.” State v. Old W. Bonding Co., 203 Ariz. 468, ¶26, 56 P.3d 42, 49 (Ct. App. 2002). Those factors include:

(1) whether the defendant’s failure to appear due to incarceration arose from a crime committed before or after being released on bond; (2) the willfulness of the defendant’s violation of the appearance bond; (3) the surety’s effort and expense in locating and apprehending the defendant; (4) the costs, inconvenience, and prejudice suffered by the state as a result of the violation; (5) any intangible costs; (6) the public’s interest in ensuring a defendant’s appearance; and (7) any other mitigating or aggravating factors.

Id. However, a trial court must exercise its discretion reasonably and in furtherance of governing law.

On appeal, Surety argued that the trial court abused its discretion in calculating the $5,000 exoneration and by failing to consider the efforts of the fugitive-recovery agent and indemnitors and other relevant factors. Surety pointed out that the trial court, despite crediting the Surety’s fugitive-recovery agent’s testimony, simply disregarded the Surety’s efforts to apprehend Rivera. Moreover, Surety asserted that the trial court simply overlooked the following factors: that “the State suffered absolutely no ‘cost, inconvenience or prejudice’ whatsoever by Rivera’s absconding, capture and return” because those costs were borne by New Mexico local authorities and the U.S. Marshall’s Service; the costs claimed by the State were only “a few grand” for “additional time/costs in the Pima County jail;” the efforts by Bordeaux and the indemnitors to protect the public by locating Rivera; and the hardship to the indemnitors given the forfeiture of ninety-five percent of the bond.

Although the Court of Appeals found that the trial court had the discretion to forfeit all or part of the bond under Rule 7.6(c), the Court of Appeals nonetheless concluded that the trial court abused its discretion by not exercising its discretion reasonably. The Court of Appeals recognized that a trial court may consider evidence of “the costs, inconvenience, and prejudice suffered by the State,” however, it emphasized that such costs must be “as a result of the violation” (emphasis in original). In overturning the trial court’s forfeiture order and remanding the case back to the trial court for further proceedings, the Court of Appeals concluded that “there is no basis for finding the jail cost an additional expense incurred as a result of Rivera’s violation.” Rather, the State would have incurred the costs of jailing Rivera following his conviction regardless of his nonappearance.

This case decision offers sureties issuing bail bonds in the State of Arizona several important “take-aways.” First, sureties, their agents, and any outside fugitive-recovery services they employ need to be proactive in apprehending the defendant whose appearance the bond secures. Moreover, these parties should painstakingly document their efforts to apprehend the defendant and likewise record all costs related to their efforts. Maintaining meticulous records of this nature will ensure the surety has compelling evidence demonstrating the surety’s efforts and expense associated with locating and apprehending the defendant – critical evidence relevant to the third factor discussed above. Finally, the surety should always scrutinize the State’s claimed damages and ensure that the State incurred the alleged costs “as a result of the [defendant’s] violation.” The surety has a viable defense to the State’s claim if the surety can demonstrate that the State would have otherwise incurred the expense absent the violation.

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Patrick F. Welch focuses his practice in the areas of general and complex commercial litigation, construction litigation, and fidelity and surety litigation. Mr. Welch is licensed in the States of Arizona and Nevada, and the Commonwealth of Massachusetts. Based in Arizona, Mr. Welch regularly assists surety and fidelity clients with all facets of Arizona and Nevada claim investigations, litigation, trial, arbitration, mediation and appeals.

Contractor Payment Pitfalls: No Right to Payment for Work Performed Outside License Scope

By Patrick F. Welch

Contractors, owners and sureties issuing contractor license bonds in the State of Arizona should be aware of a new opinion recently issued by the Arizona Court of Appeals (Division One): Chavira v. Armor Designs of Delaware, Inc., 719 Ariz. Adv. Rep. 33. The opinion addresses the issue of whether a licensed contractor should be precluded from recovering monies due for work falling within the scope of the contractor’s license when the contractor likewise performed work falling outside the scope of the contractor’s license. 

The basic facts of the case are as follows: Plaintiff Marco Antonio Chavira (“Plaintiff”), a licensed and bonded electrical contractor registered with the Arizona Registrar of Contractors, entered into a contract with Armor Designs of Delaware, Inc. and Armor Designs, LLC (collectively “Armor”) pursuant to which Plaintiff agreed to disassemble equipment located at Armor’s Phoenix manufacturing plant. Armor paid Plaintiff for this work. Thereafter, Armor hired Plaintiff to reinstall the same equipment at its new manufacturing facility. Plaintiff performed the reinstallation work, but Armor refused to pay Plaintiff for any of the reinstallation work. Consequently, Plaintiff sued Armor alleging claims for breach of contract, quantum meruit, negligent representation, and bad faith. Following discovery, Armor moved for summary judgment, arguing that Arizona Revised Statutes (“A.R.S.”) section 32-1153 barred Plaintiff’s recovery because he had performed “significant work for which [he] had no license.” The crux of Armor’s argument was that the Plaintiff held a K-11 Electrical license, which “allows the scope of work permitted by the commercial L-11 Electrical and residential C-11 Electrical licenses, but Plaintiff performed work outside the scope of his license, thereby precluding any recovery. 

The Arizona Court of Appeals framed the issue on appeal as whether section 32-1153 barred Plaintiff from maintaining an action to recover for any payment for work he performed if some of the work fell outside the scope of his license. Section 32-1153 provides that:

No contractor as defined in section 32-1101 shall act as agent or commence or maintain any action in any court of the state for which collection of compensation for the performance of any act for which a license is required by this chapter without alleging and proving that the contracting party whose contract gives rise to the claim was a duly licensed contractor when the contract sued upon was entered into and when the alleged cause of action arose. 

The Arizona Court of Appeal interpreted section 32-1153 as prohibiting an unlicensed contractor from bringing an action to recover payment for an unlicensed act; however, it also noted that “we have also stated that the plain language of the status allowed a licensed contractor, or one who has substantially complied with the licensing requirements, to sue for payment for work performed under the license.” (citations omitted).  The court also recognized that “we have long held that if the contract value can be apportioned between licensed and unlicensed work, then each item of a contract will be treated as a separate unit.” (citations omitted). In vacating and remanding the trial court’s grant of summary judgment in favor of Armor, the Arizona Court of Appeals cited to a Hawaii Court of Appeals decision, Schultz v. Lujan, 948 P.2d 558 (Haw. Ct. App. 1997).  In that case, the Hawaii Court of Appeals interpreted a Hawaiian statute similar to A.R.S. section 32-1153 and held that a licensed contractor is entitled to bring a civil action to recover payment for licensed work he has done, but the contractor may not recover for any unlicensed work. Id. at 563. Following the reasoning of this case, the Arizona Court of Appeals held that Plaintiff can pursue his breach of contract claim against Armor for the value of the work that was completed under his license, but not the value of the work falling outside the scope of his license. The court remanded the case back to the trial court where the Plaintiff would have the opportunity to prove as a factual matter that the licensed work can be bifurcated from the unlicensed work, and determine the value of the licensed work.       

From the contractor’s perspective, this case is important because it emphasizes that contractors are only entitled to be paid for work falling within the scope of their license. Moreover, the case highlights the importance for contractors to itemize their bids/estimates/proposals/billings to ensure maximum recovery for licensed work in the event a dispute arises where the adverse party alleges the contractor performed work outside the scope of its license. From the owner’s perspective, the importance of the case is that an owner may refuse payment for unlicensed work performed by a contractor licensed for other construction categories. From the license bond surety’s perspective, this case reinforces the viability of a longstanding surety defense to a contractor license bond claim – work performed by a licensed contractor falling outside the scope of the contractor’s license is not covered by a contractor’s license bond. If an owner seeks to recover damages caused by a licensed contractor performing work falling outside the scope of the contractor’s license, a surety may properly deny the owner’s bond claim.

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Patrick F. Welch focuses his practice in the areas of general and complex commercial litigation, construction litigation, and fidelity and surety litigation. Mr. Welch is licensed in the States of Arizona and Nevada, and the Commonwealth of Massachusetts. Based in Arizona, Mr. Welch regularly assists surety and fidelity clients with all facets of Arizona and Nevada claim investigations, litigation, trial, arbitration, mediation and appeals.   

Do You Have An Exit Strategy From Your Business?

 

By: Garrett J. Olexa

Are you among the large percentage of the population nearing retirement? Have you considered how your family will be cared for in the event you become disabled or seriously ill and are unable to manage your business? What will happen to your family and your business if you die at an early age? These are the types of questions many business owners fail to consider until it is too late.

 

Business succession planning refers to the practice of developing a plan with corresponding agreements and estate planning documents to ensure that your business will be preserved according to your wishes. Succession plans vary from business to business, depending on a wide variety of facts and circumstances.

 

The following types of questions may serve as a starting point for developing a succession plan:

• Is it important to you that your business survive if you can no longer work or after your death?
• Are you counting on the business as a means of supplementing your retirement nest egg or as a continued source of revenue?
• Can your family run the business without you?  
• If a family member is capable of leading operations, has he or she been properly trained and given the necessary support, authority and resources to take control of the business? 
• If a family member will be taking the reins, has the transfer of your ownership interest been properly addressed in your Will or Trust and company documents? 

If your family is not capable of running the business without you, thought should be given to who could, and would want to, take over operations. If keeping the business going would require an outsider, consideration should be given to whether the business generates sufficient income to pay someone outside the family to run it. 

 

Another option, if you plan sufficiently far in advance of your retirement, is selling the business. Depending on the nature and structure of the business, some potential buyers will likely be willing to allow you to stay involved in the business as an employee or consultant and gradually transition yourself into retirement, thereby allowing you to continue receiving income by working in the business you know without having to start dipping into your retirement nest egg. While the sale of your business might present an attractive option as you approach retirement, it may not be a viable one should you experience an untimely illness, disability, or death. That is, if the business cannot successfully operate without you, it may become unmarketable once you are no longer capable of contributing. Even if you have someone to manage the business in your absence, if the customer relationships the business counts on were all developed and maintained by you, or your absence will cause a significant drop in revenues, the business may sell for substantially less than you expect. Thus, if the business will effectively shut down without your involvement, and cannot be sold, your succession plan will likely need to include, at a minimum, sufficient life insurance or other liquid funds to provide for your dependents.

 

If your business has multiple owners, the owners may seek to document what happens to your interest upon your death or disability. For example, the owners may enter into a buy-sell agreement, which mandates that the other owners will buy your interest upon your death or disability. Such plans are generally seen as mutually beneficial as they provide you with the peace of mind that your interest will in fact be purchased to provide for you or your dependents, and your fellow members get the benefit of knowing they will not end up in business with someone they do not wish to have as a business partner. Before entering a buy-sell agreement, some things that might need to be considered include:

• How will the departing members’ interest be valued (e.g. by appraisal, some multiple of annual earnings, etc.)?
• What specific events will trigger the sale of a member’s interest (e.g. member voluntarily leaving, member retiring, disability or death of a member, etc.)?
• Is the purchase mandatory (as opposed to in the form of an option)?
• Where will the funding for the purchase come from (e.g. does the company have life insurance policies on the members to ensure funds to buy-out the decedent’s interest upon his or her death) or what finance terms will apply?

Business owners may wish to work with their tax advisor to help transition ownership to the next generation or others in a manner that helps minimize the tax impact. Techniques, such as gifting ownership to children over a number of years while retaining voting control, have been helpful in this regard.

 

The foregoing are just a few of the many questions that will likely need to be considered as you begin to develop a business succession plan. Because each business and owner’s circumstances and objectives are unique, it is strongly recommended that you meet with a business attorney to assist in the development of a business succession plan that works for you, your business, and your family.

 

*Garrett Olexa is a member with the law firm of Jennings, Strouss & Salmon, PLC. He practices in the areas of estate planning, corporate law and litigation.  Mr. Olexa can be contacted at golexa@jsslaw.com or 623.878.2222.

 

Jennifer L. Brandon Appointed to the Technology Committee of the State Bar of Arizona

 

PHOENIX, Ariz. (September 1, 2015) – Jennings, Strouss & Salmon, P.L.C., a leading Phoenix-based law firm, is pleased to announce that Jennifer L. Brandon has been appointed to the Technology Committee of the State Bar of Arizona for a three-year term.

 

The Technology Committee of the State Bar of Arizona is a standing committee that was established for the purpose of addressing the challenges and opportunities arising from the increased use and advances in technology, and taking full advantage of these advancements in the legal profession.

 

“I’m very excited to be appointed to the Technology Committee of the State Bar of Arizona,” stated Brandon, Litigation Support Project Manager at Jennings, Strouss & Salmon. “I look forward to assisting the State Bar in addressing technology advancements in the legal field, and continuing to apply those principles at Jennings Strouss.”

 

Brandon provides paralegal and technology support for complex litigation matters. Her role includes providing support to the firm’s litigation efforts through the use of technology. Brandon is responsible for the design, implementation, and maintenance of litigation databases, electronic discovery planning, and development of policies and procedures related to discovery obligations. In addition, she assists with document review management, consulting between legal teams, and clients and preparation of production protocols between parties.

 

Brandon is an adjunct faculty member of Phoenix College and teaches Litigation Technology in the paralegal program. She is also an active member of the Phoenix Chapter of Women in eDiscovery. Brandon is a Certified Concordance Software Administrator and a LAW Pre-Discovery Certified Software Administrator.

 

About Jennings, Strouss & Salmon, P.L.C.
Jennings, Strouss & Salmon, P.L.C., has been providing legal counsel for over 70 years through its offices in Phoenix and Peoria, Arizona; and Washington, D.C. The firm's primary areas of practice include agribusiness; bankruptcy, reorganization and creditors’ rights; construction; corporate and securities; employee benefits and pensions; energy; family law and domestic relations; health care; intellectual property; labor and employment; legal ethics; litigation; professional liability defense; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit www.jsslaw.com and follow us on LinkedIn, Facebook and Twitter.

 

The firm’s affiliate, B3 Strategies, assists clients with lobbying and public policy strategy at the local, state, and federal levels. For more information please visit www.b3strategies.com.

 

~JSS~