FAQs

  1. Alternative Dispute Resolution
  2. Business Organization
  3. Employment Law
  4. Real Estate Law
  5. Shareholder Disputes

Alternative Dispute Resolution (ADR) – Frequently Asked Questions

Q: What is Alternative Dispute Resolution (ADR)?

A: ADR is a process offered by the local court system to help people resolve disputes without going to trial. By using ADR, you may not have to file a lawsuit, and if you do file a lawsuit, you may be able to avoid a trial. ADR is typically less formal, less expensive, and less time-consuming than a trial and may also give the parties more control over when and how their dispute is resolved.

Q: What is the court’s ADR policy?

A: It is the policy of the San Diego Superior Court to strongly support the use of ADR in all general civil cases. The court has long recognized the value of early case management intervention and the use of alternative dispute resolution options for amenable and eligible cases. The use of ADR will be discussed at all case management conferences.

Q: What types of ADR are available in civil cases?

A: The most commonly used ADR processes are mediation, arbitration, and settlement conferences.

Mediation

In mediation, an impartial person called a “mediator”, helps the parties try to reach a mutually acceptable resolution of the dispute. The mediator does not decide the dispute but helps the parties communicate so they can try to settle the dispute themselves. Mediation leaves control of the outcome with the parties. More Information.

Arbitration

In arbitration, a neutral person called an “arbitrator”, hears arguments and evidence from each side and then decides the outcome of the dispute. Arbitration is less formal than a trial, and the rules of evidence are often relaxed. Arbitration may be either “binding” or “nonbinding.”

Settlement Conferences

Settlement conferences may be either mandatory or voluntary. In both types of settlement conferences, the parties and their attorneys meet with a judge (or a temporary judge) to discuss possible settlement of their dispute. The judge does not make a decision in the case but assists the parties in evaluating the strengths and weaknesses of the case and in negotiating a settlement. Mandatory settlement conferences are often held close to the date a case is set for trial.

Q: How is the ADR process initiated?

A: The ADR process may be initiated by the parties at any time after all parties have appeared in the case, by filing a Stipulation to Use Alternative Dispute Resolution (ADR) form (CIV-359).

If the parties do not stipulate to use ADR, ADR will be discussed at the Case Management Conference. CMC is held approximately 150 after the case is filed with the court.

Q: How long does the ADR process take?

A: The time for an ADR process varies depending upon the complexity and type of the case. Most cases require only one meeting to come to a resolution, but some cases may require additional sessions. All of the ADR processes must be completed by a date set by the judge, usually within 90-120 days of the date on which the judge

Business Organization – Frequently Asked Questions

Q: Can I convert my existing sole proprietorship or partnership into an LLC or corporation?

A: Yes. Most states have a form that allows you to convert your business to an LLC. For states that do not have a conversion form, the business must file an application to become an LLC. Some states also require a partnership to run an ad in the newspaper announcing its dissolution. You must also remember to change all of your licenses and permits over to the name of your LLC. Contact a business lawyer for more advice.

Q: What is the difference between a C Corporation and an S Corporation?

A: C Corporations are taxed under sub-chapter C of the Internal Revenue Code (I.R.C.), while an S Corporation is taxed under subchapter S of the I.R.C. In an S Corporation, the income of the corporation is not taxed at the corporate level as in a C Corporation, but rather it passes through to the shareholders. All corporations generally start out as C Corporations, but shareholders can elect to switch to S Corporation status if the corporation meets certain requirements.

Q: What is “piercing the corporate veil?”

A: In some cases, courts have allowed plaintiffs to pursue the personal assets of directors, officers or shareholders of the corporation to satisfy a judgment against the corporation or debts and other liabilities of the corporation. Generally, shareholders or owners are not personally liable for a corporation’s actions; however, if the corporate veil is pierced, they can be held personally liable. Courts may allow plaintiffs to pierce the corporate veil where the corporation is really the “alter ego” of the owners and the corporation cannot be viewed as a separate entity. This is often found to be the case where the corporation disregarded corporate formalities or the shareholders’ and corporation’s assets are intermingled.

Q: What is a “registered agent?”

A: A registered agent provides a local address for the receipt of service of papers and for contact by the Secretary of State and other agencies. A corporation and LLC need registered agents because even though they are separate legal entities, they cannot receive paperwork, so they need someone to receive documents on their behalf. The registered agent forwards service receipts, tax information and other paperwork to the business.

Q: Do I need permission to conduct business in another state when I am already incorporated in my own state?

A: Yes. A foreign corporation wishing to do business in another state must qualify to do so. It is typically a simple process. Simply contact the Secretary of State for the state in which you wish to conduct business.

Q: What is the difference between general and limited partners?

A: General partners are subject to personal liability for the debts and obligations of the partnership. In addition, general partners are typically entitled to participate fully in the management of the partnership. Limited partners cannot generally exercise much control over the business and their liability is limited to their investment in the business.

Q: What is the difference between an S Corporation and a Limited Liability Company (LLC)?

A: The S Corporation and Limited Liability Company (LLC) both provide limited liability for all shareholders and flow-through tax treatment. However, there are numerous requirements that corporations must meet to qualify for S Corporation status that do not apply to LLCs. To qualify as an S Corporation, the corporation must be a domestic corporation with only one class of stock and with no more than 75 shareholders.

Q: What is a non-profit corporation?

A: A nonprofit corporation is a corporation that is carried out for a charitable, educational, religious, literary or scientific purpose. A non-profit corporation does not pay either state or federal taxes because the government deems the corporation’s actions to be for the betterment of society

Q: What is the difference between nonprofit and tax-exempt?

A: The term “nonprofit’ refers to the status of your organization or entity under California law.  The term “tax-exempt” specifically applies to tax exemption under US and California tax laws.

Employment Law – Frequently Asked Questions

Q.  Must an employer provide employment references?

A.  Employers are not under any obligation to provide references for former employees. Providing employment references may leave former employers open to legal liability from the former employee and the prospective employer.  Many employers now have policies to only provide basic employment verification information about an employee, such as the duration of employment, position title, salary and other basic information.

Q:My company only has 35 employees. Am I required to provide sexual harassment prevention training to my employees?

A.  After January 1, 2006, it became mandatory that employers with 50 or more employees provide at least two hours of sexual harassment training to its supervisory employees. Such training must be provided once every two years. The training and education must be presented by trainers or educators with knowledge and expertise in the prevention of harassment, discrimination, and retaliation. Although you only have 35 employees, sexual harassment training is always a good idea.  Proper training teaches the company’s supervisory employees to effectively deal with sexual harassment in the workplace and complaints.  Training may help limit your company’s liability should it ever be sued for sexual harassment.

Q.  What must an employer do if it receives a complaint of harassment?

A.  An employer who receives a complaint of harassment on the basis of sex, race, national origin, age, religion or disability has an obligation under federal and state law to take immediate steps to investigate the complaint and then take prompt, appropriate remedial action. In most cases, this means the employer has a duty to begin investigating the complaint within 24-48 hours.  Even if the employer believes the complaint is unjustified, the employer still has a duty to conduct a reasonable investigation in order to minimize the possibility of legal liability. Likewise, the employer may not fire or take other adverse employment action against the person accused of the harassment without first conducting an investigation. Employers who do so may face claims of wrongful termination, retaliation, defamation and/or reverse discrimination.

If after conducting the investigation the employer determines that some or all of an employee’s complaint is grounded in fact, the employer must take actions reasonably calculated to end the harassment. Such action could include disciplining the harasser and formally noting the discipline in his or her personnel file, requiring him or her to take training or firing the harasser.

Q. Must an employer perform formal performance reviews?

A. There is no legal requirement that employers perform formal performance reviews of employees, just as there is no general requirement that an employer have just cause to fire an employee. An employer may, however, be required by the terms of an employment contract, employee handbook or collective bargaining (union) agreement to review an employee annually, bi-annually or on some other basis. Even in situations where an employer is not required to conduct performance reviews, it is a good practice for employers to do so. It provides employers a means of evaluating employees, identifying coaching and/or training opportunities and setting uniform criteria for determining promotions and raises.

Q.  We are terminating an employee at the end of the week.  Do we have to pay them on their last day or can we wait until the next pay cycle ends?

A.  Yes, provide the terminated employee with a final check on their last day. Under California law, an employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.

Q.  My company hired a consultant and classified him as an independent contractor even though we require him to: (1) report for work Monday through Friday 9:00 a.m. to 5:00 p.m. ; (2) work at our office; (3) use the company’s tools, equipment and materials for completion of his work; (4) follow the company’s procedures in order to complete his work; (5) submit reports regarding his work; (6) meet weekly with his supervisor regarding his work; and (7) submit receipts to be reimbursed for expenses. Is this consultant properly classified as an independent contractor

A.  The actual determination of whether a worker is an employee or independent contractor depends upon a number of factors, all of which must be considered, and none of which is controlling. The most significant factor to be considered is whether the person to whom services are rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed.

Real Estate Law – Frequently Asked Question

Q. If I have purchased a home and found that something inside the home was faulty when I purchased it, is there anything I can do about it?

A. In most purchases, the buyer will be offered a warranty policy to cover certain losses incurred by that buyer. You should determine whether you were given or purchased a warranty policy at the time of the home purchase. Additionally, In California you have a right to inspect the home before you purchase it and the seller has an obligation to disclose any defects.  You may have a claim against the seller and your inspection company if they were negligent in discovering and/or disclosing anything materially wrong with the house. If not, you may need to speak to a San Diego real estate law attorney.

Q. I plan on purchasing a home in the next few months, what should I make sure of when I am purchasing a home?

A. While not always necessary, it is a great idea to consult a real estate attorney before purchasing a home. Regardless, there are several things you should make sure of before signing any contracts. Make sure that all property which is supposed to go with the home is included in the contract. This may include appliances or other extras you were promised. You also want to inspect the damage report and look at the surrounding area.

Q.  I am leasing space for my business.  What should I watch out for?

A.  Commercial leases are always a matter of negotiation.  It is strongly recommended that you utilize the services of a broker and/or real estate lawyer.  How a lease is written is crucial to the future of your business, your personal liability and your future plans for your company.

Q.  I am buying a commercial property.  Why do I need an attorney?

A. Purchasing a commercial property carries with it substantial profit and risk.  Today’s toxic tort laws and insurance laws make it very difficult to quantify your investment.  Also, how title is held and the risks of being taken advantage of are serious.  The cost to have a lawyer review and assist with negotiations is very little compare to the purchase price and over all risks involved.

Q.  I want to build my own house, what should I plan for?

A. Being your own general contractor is exciting and can save you lots of money in the long run.  However, making sure you have the right business structure, contracts for subs and understand the mechanics lien laws is important.  Hiring a lawyer with real estate experience in these matters can save you a lot in worry and expense.

Q.  I have a boundary dispute with my neighbor.  What should I do?

A. Boundary disputes and easements affect the ownership of your land. Sometimes issues with boundary disputes and existing or potential future easement claims can be worked through without too much difficulty. Sometimes, litigation is the only choice left to protect your property rights. If you do not act quickly, your property value may drop significantly and permanently.

Real Estate Law – Frequently Asked Question

San Diego shareholder disputes distract shareholders, executives, managers and the board of directors from the primary focus of profitable corporate operations. If you are involved in San Diego shareholder disputes or a derivative lawsuit you need the experienced and proven dispute resolution attorneys at the Watkins Firm. Ask about our unique approach to resolving shareholder disputes and the best strategies for resolving shareholder disputes in a timely and cost-efficient manner.

Here are some of the frequent shareholder disputes questions we encounter:

Q: I am having some difficulty obtaining information from my business partner. What are some common examples of shareholder disputes?

A: Disputes between shareholders arise for any number of reasons but it is not uncommon for the following issues to cause tension: breach of directors’ duties, company’s strategy & management, dividend policies, disparities between salaries, separate business interests, failure to provide financial, accounting and statutory information, exclusion from meetings, breaches of shareholders agreements/partnership deeds.

Q: What rights do I have if I disagree with other shareholders about decisions and strategy for the company?

A: An individual shareholder’s rights will generally depend on the terms of any shareholders agreement and the company’s articles of incorporation.

Q: How can I enforce my rights as a shareholder?

A: There are various options, including: Proposing a resolution at a general meeting which redresses the situation; asking the board of directors to take action in the company’s name against an individual director (because generally the shareholders cannot sue in the company’s name); suing the directors by means of a derivative action

Q: As a director, what should I do if I feel that the board is acting improperly?

A: It is essential to take action if you feel that the board is acting improperly. The most appropriate course will depend on the circumstances. Please contact a corporate attorney to discuss your options.

Q: What fiduciary duties do directors have?

A: There may be duties listed in the company’s articles or the director’s employment contract, but the most common fiduciary duties are: to act in good faith in the best interest of the company; to act for proper purposes; not to make secret profits; to avoid conflicts of interest

Q: What are the consequences for a director in breach of their fiduciary duties?

A: Typical remedies for breach of fiduciary duty include damages for loss of profit and recovery of profits earned by the director when acting in breach of duty. Alternatively, directors who act recklessly or carelessly may be responsible for any resultant loss to the other directors of a company and the shareholders, and damages may be recovered in a civil action for negligence.

How Can We HELP YOU?