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Virginia Court Rulings Touch Real Estate Agent Liability

Recent rulings by the Supreme Court of Virginia may impact real estate agents’ potential liability.

First, the Supreme Court recently ruled that the Virginia Consumer Protection Act (“VCPA”) created a private cause of action distinct from common law fraud, and thus plaintiffs seeking treble damages against an agent under the VCPA need only meet the “preponderance of the evidence” standard to succeed on their claim.

What does that mean? In a typical fraud case, a plaintiff must prove each element of the claim by “clear and convincing evidence” – a high standard of proof in civil cases. A “preponderance of the evidence” is a much lower bar, and the standard typically applied in civil cases. It is generally understood to mean that “51%” of the evidence must support your claim. For context, compare that to the “beyond a reasonable doubt” standard applied in criminal cases.

Because of the high stakes in fraud cases, Virginia courts require a higher standard of proof. Not so under the VCPA.

In the case at hand, a homebuyer discovered that the home she purchased had flooded three times under the previous owner. That owner elected to make basic repairs, but did not waterproof the basement. The owner then denied any leaks or flooding, and the real estate agent helped conceal the damage. At trial, the court held plaintiff to the “clear and convincing” standard normally applied to fraud claims, and the jury ruled for the defendant agent on the VCPA claim.

In a unanimous decision, the Supreme Court reversed the defense verdict, ruling that the court applied the wrong standard of proof. Under the VCPA, plaintiff need only meet the lower “preponderance” standard.

In the second case, a Norfolk Circuit Court judge recently ruled that homebuyers may make a claim directly against a real estate agent for an alleged violation of the Virginia Real Estate Brokers Act, Virginia Code Ann. §§ 54.2100 et seq. (“VREBA”). Virginia courts have been split as to whether VREBA provides a private cause of action for breach of a statutory duty to disclose adverse facts to potential homebuyers. In this most recent case, Judge Mary Jane Hall ruled that a plaintiff making that claim may take it to trial.

In this case, a homebuyer purchased a Norfolk home after being told by her agent that the home had no flood-related issues. Three years later, during some renovations, the homebuyer claimed she discovered that wooden support beams in the basement had rotted due to flooding and termites, and the foundation had several large cracks caused by flooding. A year later she sued her agent, seller’s agent, and the brokerage for which each worked seeking the cost of repairs and punitive damages. The plaintiff claimed that the defendants failed to disclose the adverse facts regarding flooding in the basement in violation of the VREBA. The defendants’ counsel asked the court to dismiss that claim early in the case, arguing that VREBA provided recourse to an administrative agency, but did not create a private cause of action.

Judge Hall disagreed, citing § 54-2142.1 of the act. This section discusses the circumstances under which a broker would not be liable for providing false information, but ends with the statement “[t]his includes any regulatory action brought under the chapter and any civil action filed.” According to Judge Hall, this closing language indicates the VREBA may contain a private cause of action, so she did not dismiss that claim, and ruled that it will go to trial.

Judge Hall’s decision does not resolve this issue either way, but it is progress for proponents of the act. And, both cases are a reminder to real estate professionals of the high standards to which they are held.

Employee's Social Media Accounts Are off-Limits in Virginia

Effective July 1, 2015 Virginia Code § 40.1-28.7:5 prohibits employers from requiring that its current or prospective employees produce usernames or passwords granting access to the employee’s personal social media accounts.

The new statute defines a “social media account” as “a personal account with an electronic medium or service where users may create, share, or view user-generated content, including, without limitation, videos, photographs, blogs, podcasts, messages, emails, or website profiles or locations.”

The statute applies to social media accounts of both current and prospective employees, and prohibits an employer from requiring an employee to: (1) disclose the username and password to the employee's social media account(s); or (2) add a representative of the employer (fellow employee, supervisor, or administrator) to the list of contacts associated with the account.

The statute allows employers to request an employee disclose his or her username and password as part of the employers investigation into allegations of the employee’s violation of federal, state, or local laws or regulations or of the employer's written policies. If the employee consents, the employer may only use the username and password in that limited context.

The statute is clear, however, that an employer may not take action against, or threaten to discharge, discipline, or otherwise penalize a current employee, or refuse to hire a prospective employee, for refusing to supply their username or password.

While it is clear that requiring access to employees’ personal social media accounts is off limits, there are some exceptions. The new statute does not prohibit an employer from viewing information about a current or prospective employee that is publicly available. Employers may thus continue to monitor the public content of their employees’ social media accounts.

The new statute also does not apply to social media accounts: (1) opened by an employee at the request of an employer; (2) provided to an employee by an employer such as the employer’s email account or other software program owned or operated exclusively by an employer; (3) set up by an employee on behalf of an employer; or (4) set up by an employee to impersonate an employer through the use of the employer's name, logos, or trademarks. This language from the new statute provides employers the ability to monitor (and require access to) social media accounts set up and used as part of employment, and to protect itself against employees using its intellectual property without permission.

Prudent employers will review this new statute with their human resources personnel, supervisors, and managers to ensure compliance.

GarbiaPlocki, LLP’s Alternative Billing featured in Fairfax Chamber’s Doing Business

Doing Business, the Fairfax County Chamber of Commerce’ Member publication, featured an article by GarbiaPlocki partner Doug Plocki describing how savvy clients increasingly seek alternative billing arrangements to maximize their legal dollars.  The article discusses flat-fee billing and use of outside general counsel programs to provide consistent legal guidance to growing companies without the crushing legal bills associated with big firms and hourly billing.  Read the full article here.

GarbiaPlocki, LLP Announces Formation of NOVA Business Law Group

GarbiaPlocki, LLP proudly announces the formation of a full-service business law firm dedicated to serving corporate clients in every phase of their business operations.  The NOVA Business Law Group practice areas include Litigation, Business Formation and Corporate Governance, Commercial Transactions, Commercial and Residential Real Estate and Intellectual Property.  We also offer a full array of Immigration Law services to support growing companies.  Our talented professionals bring 25 years of big-firm experience to our clients, delivering the same high-quality services offered by the region’s most-prestigious firms at a fraction of the cost. Our lawyers are licensed in Virginia, Maryland and the District of Columbia, and bring a wealth of experience before the state and federal courts across the Greater Washington, DC area. We look forward to the opportunity to serve you.

GarbiaPlocki, LLP will continue to serve its core clients through its innovative Outside General Counsel program, providing consistent legal counsel, implementing and managing corporate governance policies, and managing compliance and risk-avoidance strategies to help companies grow and compete in a rigorous market.  We believe that all successful companies are well structured, and that long-term stability requires organization, efficiency, and preparation.  We help our clients maximize value of their legal budgets by putting in place policies and procedures derived from the most successful companies in the world, reflecting time-tested business principals.  Our goal is to promote and protect corporate growth.

GarbiaPlocki, LLP will continue to offer sophisticated clients full array of corporate services through our affiliation with the NOVA Business Law Group.
NOVA Business Law Group proudly offers the following services to our clients:

  • Commercial Litigation
  • Contract Drafting and Review
  • Business Entity Formation and Governance
  • Employment Disputes
  • Construction Litigation
  • Commercial Transactions
  • Eminent Domain and Condemnation
  • Intellectual Property
  • Commercial and Residential Real Estate
  • Immigration

You may visit the NOVA Business Law Group website by clicking here.

Strategic Use of Your Legal Dollars: Alternative Billing Arrangements

By: Douglas E. Plocki, Esq.

The past 5 years has seen a large shift from law firms’ most basic practice: hourly billing.  Big and small firms alike are increasingly offering alternative fee arrangements, such as flat-fee billing, due in part in the market’s response to ever-increasing billable-hour rates, and in part to savvy companies demanding more for their legal dollars.

The Wall Street Journal recently reported that billable hour rates for top-billing partners at the country’s biggest firms increased 4.9% last year to an average of nearly $890 per hour.  The local DC market features hourly partner rates routinely in the $500-600 range, with some firms charging in excess of $400 per hour even for associates.  Figures like those send legal bills through the roof.

Add to that the continuing need to tighten budgets and squeeze every possible ounce of value from legal dollars spent, and you can see why so many companies are going away from the traditional use of outside counsel and the billable hour.

Many companies insist on alternative billing arrangements to lock in their costs.  Even large corporations are insisting that their lawyers – some of the biggest firms in the country – offer flat-fee billing and even contingency fee arrangements to reduce legal bills.

In addition, companies are increasingly looking internally to fill their legal needs.  The Washington Post recently reported that businesses are relying less on outside counsel and more on internal resources, and that the percentage of companies using outside counsel for even specialty work like litigation, tax, mergers & acquisitions, and intellectual property have all decreased over the past 5 years.  Companies using in-house counsel instead of outside lawyers with high billable rates see significant cost-savings.

Small and mid-sized companies can gain those same benefits even if they do not have expansive in-house legal departments or really any inside lawyers at all, by outsourcing their general counsel needs.  So-called “Outside General Counsel” programs combine the benefit of in-house counsel with alternative billing arrangements such as flat-fee billing to maximize savings for growing companies.  The company contracts with a law firm to service its legal needs for a set monthly fee, typically well below the cost of a full-time staff lawyer.  That way, those companies receive the full benefit of an in-house general counsel while still taking advantage of flat fee billing arrangements, resulting in the same cost-savings large corporations see when they rely on their in-house staff instead of outside billable lawyers.   And, by contracting with a firm, the company can tap into several lawyers’ areas of expertise, rather than relying on a single employee to cover all of their legal needs, again maximizing value in their legal budget.

With more and more firms offering flat-fee arrangements, progressive companies are changing, and improving, the way they spend legal dollars at the same time they improve the quality of the legal services they receive.

GarbiaPlocki, LLP Featured in "Doing Business" Newsletter

GarbiaPlocki, LLP recently featured in the Fairfax County Chamber of Commerce “Doing Business” newsletter distributed widely among the Greater Washington D.C. business community. The article describes GarbiaPlocki’s new and innovative Outside General Counsel Program tailored to help small-to-mid-sized companies grow. The Fairfax County Chamber of Commerce has over 500 member companies with thousands of employees, and is widely regarded as Northern Virginia's premier business organization.

Click HERE to view the Article.


 

Cyber-Security and e-Discovery Program

GarbiaPlocki, LLP is pleased to announce it has added cyber-security, e-discovery, privacy compliance, and critical system infrastructure expertise to its Outside General Counsel Program.  Our expert, an active TS/SCI-cleared analyst, brings years of experience managing electronic and forensic discovery projects for major law firms across the country.  He also has served the Department of State performing cyber-threat analysis and detection projects.  Whether your company requires an overview of its current infrastructure and security status, needs to manage e-discovery projects, is required to meet HIPPA or other privacy standards, or just needs to understand whether it needs any of these, GarbiaPlocki is prepared to offer that expertise with no need to seek additional outside vendors.

Our Outside General Counsel clients are already benefiting from this practice.  Your company can as well, whether as part of our program, or independently on case-specific issues.  Our unique partnership with our expert allows us to offer these services at very competitive rates.  We pride ourselves on offering the excellent-quality legal services you would expect from a traditional big firm, but without traditional big-firm pricing.  Our new cyber and e-discovery services are no exception.

The following shows a few examples of the services we now offer our clients:

  • Manage and implement electronic discovery initiatives and case-specific projects.
  • Respond to subpoenas, federal inquiries and requests for production.
  • Forensically recover deleted, missing or corrupted client data.
  • Perform on-site data identification and collection.
  • Develop custom SQL database and modeling and reporting tools to review and manage large-record productions, and  analyze    for production lapses and anomalies
  • Create and manage evidence handling and tracking systems.
  • Manage litigation technology for case review.
  • Provide advice and implementation on data preservation, harvesting, processing and review.
  • Administer large scale threat detection databases and related information streams.
  • Administer Cloud-based analysis systems.
  • Advise companies on data-protection and privacy factors, and implement appropriate solutions (hardware and  software).
  • Conduct internal investigations, collect, analyze, and report on computer, PDA and mobile device usage and data  flow.
  • Provide encryption and data security advice and implementation for nation and international transfers.
  • Expertise in Encase, Forensic Toolkit, Concordance, Summation, Ringtail, Introspect, IPRO, OutIndex E-Discovery,  Law   5.0, Trident Wave, and Clearwell.
  • Database expertise managing SQL Servers Oracle 11g, Oracle Data Miner, MySQL, SAS, MS Exchange, MS Sharepoint, and  Lotus Domino Server.
  • Security & Encryption expertise using PGP, TrueCrypt, NMAP, SNORT, NetWitness, HBGary Responder, GFI Sandbox, I2  Analyst Notebook, and WireShark.

 

Cyber-Security and e-Discovery Practice Team

  • Douglas E. Plocki, Esq., Partner
  • Sam S. Garbia, Esq., Partner

 

Location

4151 Chain Bridge Road
Fairfax, VA 22030

 


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Our practice areas include the Outside General Counsel Program, and Cyber-Security and e-Discovery Programs to help our business clients identify and manage risk.

GarbiaPlocki, LLP is a law firm of dedicated professionals specializing in helping businesses grow. We offer corporate development, governance, and policy planning and implementation services to help companies build for the future, and commercial litigation services to protect that growth. Our lawyers are licensed in Virginia, Maryland and the District of Columbia. We look forward to the opportunity to serve you.