Following the Florida Supreme Court opinion in Shaun Olmstead, et al., v. Federal Trade Commission, issued on June 24, 2010, the Florida Legislature amended Fla. Stat. Section 608.433 to clarify the case law in connection with charging order remedies in the context of an LLC.  Fla. Stat. Section 608.433 now confirms that a charging order is the sole and exclusive remedy for any personal creditor of a member owning an interest in a multi-member LLC.  A charging order is a lien on a member’s interest in an LLC which directs that if a distribution is made from the LLC, such distribution must be distributed to the creditor of the member.  However, if no distributions are made, the creditor with the charging order receives nothing.

In the case of a single-member LLC, the judgment creditor of the owner of the LLC is not limited to a charging order, and may petition the Court to foreclose on the owner’s membership interest in the LLC.  If the creditor is successful, the Court may order the sale of the owner’s membership interest, and the purchaser at the foreclosure sale would obtain the member’s entire ownership interest in the LLC.  By virtue of the sale, the purchaser would become the sole member of the LLC, and the existing owner would cease to be a member.

Unlike a handful of other states that provide broad protection against foreclosure sale of all LLC member interests (regardless of the ownership structure), the protections in Florida do not extend to single-member LLCs.  Because of the risk of a judicial foreclosure in the case of a single-member LLC, business owners utilizing LLCs should almost always consider multi-member status as an option.

An LLC will generally be considered a multi-member LLC as long as there are two or more members.  There are several options for converting a single-member LLC into a multi-member LLC.  For example, you may add a family member, trust, or other business entity as a minority member of the LLC.  In adding a new member, you should carefully consider whether a sale, gift or the issuance of an additional membership interests is the best option.  Once the additional member has been added, the LLC will be required to file a separate federal income tax return, and must elect to be taxed either as a partnership, C-Corporation or S-Corporation.  Depending on the assets and liabilities of the LLC, partnership tax status may be preferable.  If you have any questions about the tax status of the LLC, you should consult with your tax advisor.

Published in the Wall Street Journal online, April 27, 2012: Stunned Home Buyers find The Bidding Wars are Back

While Proposals for Settlement are not uncommonly used tools in litigation, the McGregor case focused on the unique circumstance presented when a case is filed against both a negligent driver and that driver’s employer, but a Proposal for Settlement is made only to the driver.  The Plaintiff in McGregor made such a proposal in  the amount of $200,000 to Valerie Molnar, the CCC driver, but preserved in that Proposal, all claims for CCC’s vicarious liability arising from the alleged negligent driving of Molnar.  The offer was not accepted by Molnar  and the jury returned a verdict resulting in a net judgment of $876,190.42 in favor of the Plaintiff.  After the trial, CCC opposed the Plaintiff’s Motion for Attorneys’ Fees, and the lower Court rejected the Plaintiff’s claim, finding the Proposal was not made in” good faith.”  The reasons the lower court gave were that the offer was not intended to conclude the litigation because the claims against CCC would remain even if the offer were accepted and that Molnar’s failure to accept the offer caused no additional delay or cost.

The Second District Court of Appeal disagreed with the lower court and found the fact that acceptance of the offer would not conclude litigation against CCC to be irrelevant.  The McGregor Court also found that the offer which if accepted, would provide additional funds to pursue the ongoing litigation against CCC to be a valid strategic reason behind an offer to settle.  Finally, the Court found the fact that Molnar’s failure to accept the offer caused no additional delay or litigation costs to be an insufficient basis on its own to deny the Plaintiff’s right to recover fees.

Attorneys handling cases involving claims arising from an employees negligent conduct, whether or not the case relates to the negligent operation of a motor vehicle,  should be aware of the Mcgregor holding.  In accordance with that holding, the decision makers on behalf of the Defense receiving  a Proposal for Settlement directed only at a Defendant employee will find themselves in a difficult situation.  Accepting the Proposal will do nothing to limit the vicarious liability of the Defendant employer and will provide  funds to the Plaintiff without ending the litigation.  Rejecting the Proposal, on the other hand, may result in a large fee award at the end of the case.  In addition, such a Proposal has significant ethical implications to Defense attorneys representing both the Defendant employer and the Defendant employee which is often the case. Such an attorney may find himself or herself being asked to render advice as to whether a Proposal directed to just the employee should be accepted.  In certain situations, acceptance of that Proposal would clearly be in the best interest of the employee, but not necessarily in the interest of the employer.

The new law, which is expected to be signed by Governor Scott who advocated for it, is an attempt to curb the aggressive PIP billing practices by requiring, among other things, treatment within fourteen days of an accident.  If the initial treatment does occur within that time frame, the new law will also limit the follow up care to $2,500.00 if the initial care was not  an  “Emergency Medical Condition.”  Massage and Acupuncture will be specifically excluded from reimbursement.

While the Bill may provide some relief from the aggressive practices of some PIP Clinics, it may unfairly limit coverage to honest Floridians who wait more than two weeks to seek treatment hoping that their symptoms will resolve.  Legitimate chiropractors and physicians may also be hurt as they will no longer be able to seek reimbursement for their services, or will have  that reimbursement limited in many cases.  Meanwhile, the advertising PIP Clinics will not go away quietly, so  expect to see attempts to circumvent the limitations by  altered advertising strategies creating a sense of urgency in the minds of accident victims.

While the ultimate impact of the Bill, as well as its unintended consequences, will take some time to determine, many believe a better solution lies in abandoning the PIP system altogether, and replacing it with mandatory bodily injury insurance as has virtually every other state in the Country.  This would allow for those injured  to recover for medical treatment only when someone else caused the accident.

The FMLA is most often invoked in the case of an employee with a qualifying illness who requests leave at a time when the employee is already eligible for FMLA leave.  But what about the non-eligible employee who requests FMLA leave, but the leave time would not begin until after the employee becomes eligible?  Until recently, the federal courts that govern Florida had not addressed this issue.  However, in other cases the Courts have limited the FMLA’s protection to eligible employees.  For example, in a case involving child birth the Court held that an employee who requests maternity leave to begin a few days before she was eligible was not protected under the FMLA.  The Court left open the question of whether the FMLA protects a pre-eligibility request for post-eligibility maternity leave.

In a unanimous decision, the Eleventh Circuit Court of Appeals held that the FMLA protected an employee who was not eligible for FMLA leave at the time she made the request, but all of the leave she requested would not begin until she was eligible.  This opinion has important ramifications for employers because it expands the class of employees who are theoretically covered by the FMLA.  Before this decision, employers did not necessarily need to consider the FMLA when addressing leave requests from employees were not yet FMLA eligible.  This decision requires otherwise.  From now on, the employer will need to consider the employee’s FMLA’s eligibility status in connection with the requested dates of leave.  If a non-eligible employee asks for leave to begin before the employee is eligible, the FMLA does not apply.  If, however, a non-eligible employee requests leave to begin after a point in time when the employee is covered, then leave must be granted.

The Court’s decision is titled Preda v. Brookdale Senior Living Communities, Inc.

Gould Cooksey Fennell, P.A, with six attorneys holding the prestigious AV rating from Martindale-Hubbell are part of a select group recognized for exceptional legal abilities and professional ethical standards.

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