“Limited Liability – Use It or Lose It.” by Nick Booth

 

So your small business is starting to take off, and you’ve decided to take the next step and register your business as a Limited Liability Company (“LLC”) or other limited liability entity.  Congratulations!  This is obviously a big step for you and your business, and symbolizes a significant milestone that you have reached.  However, as an owner of a limited liability entity, it’s important that you understand what it means to have “limited liability” and how to ensure that your business maintains that status.

One of the primary purposes of granting businesses limited liability status is to encourage and provide some space for those businesses to innovate and take risks.  After all, you’re putting in a great deal of your own hard work and money to get your business off the ground, which in turn provides opportunities and benefits for you and those that you serve and employ, and the overarching policy of our national framework is to encourage, and not deter, the creation of those opportunities.  In order to do that, the limited liability entity provides a legal degree of separation between you and the business to protect you personally from liability in the event that your business becomes exposed.  For example, if a party sued your limited liability business for a tort (e.g., an injury that occurred on the business’s premises), then that party’s available recovery would be limited only to the assets of the business, and not you personally.

Your business’s limited liability status, however, does not necessarily mean that you can use it as a vehicle to shield your assets from creditors.  To the contrary, courts in Georgia will disregard your business’s limited liability status, and hold you personally liable, if it finds that you were commingling the business’s finances with your own personal finances, your business failed to adhere to corporate formalities, you failed to adequately capitalize your business, or you otherwise used your business to perpetrate fraud and/or injustice.  This is what’s typically referred to as “piercing the corporate veil” or “alter-ego liability.”

  1. Commingling Assets – Courts in Georgia are permitted to pierce the corporate veil of a limited liability business if it finds that the individual owners of the business “commingled their property, business, or their personal affairs with that of the corporations, or that of the corporations with their own.” Farmers Warehouse of Pelham v. Collins, 220 Ga. 141, 149-150 (1964); see also Cobra 4 Enterprises v. Powell-Newman, 336 Ga. App. 609, 613 (2016); Ishak v. Lanier Contractor’s Supply Co., 254 Ga. App. 237 (2002). A primary example of commingling is when a person utilizes a single bank account for themself and their business.  In order to maintain your limited liability status, it is important that you keep the finances of your business separate from your own finances.  That means that any money flowing out of the business to you must come out through the proper channels (e., as a salary payment or draw of income).
  2. Adherence to Corporate Formalities – Georgia law requires that businesses adhere to certain formalities in carrying out their operations. Some of these formalities include [1] maintaining a registered office and registered agent in Georgia (for LLC’s, see OCGA § 14-11-209); [2] filing an annual registration with the Secretary of State (for LLC’s, see OCGA § 14-11-1103); [3] holding annual meetings and maintaining corporate minutes (not technically required for LLCs but highly encouraged and often contained in the LLC’s organizational documents; see also OCGA § 14-11-310); and [4] maintaining corporate records (for LLC’s, see OCGA § 14-11-313).  If Georgia courts find a gross failure to adhere to required corporate formalities, such finding will authorize them to pierce the corporate veil of a limited liability business. See Christopher v. Sinyard, 313 Ga. App. 866, 867-869 (2012).
  3. Failure to Adequately Capitalize Business – Businesses in Georgia are required to maintain adequate capital in order to satisfy their debts. However, merely being underfunded will not provide grounds to pierce the corporate veil.  “[F]or undercapitalization of a corporation to justify piercing the corporate veil, it must be coupled with evidence of an intent at the time of the capitalization to improperly avoid future debts of the corporation.” Hickman v. Hyzer, 261 Ga. 38, 39-40 (1991).  This does not mean that the directors of an adequately capitalized business that later becomes insolvent without ill-intent is free from potential liability; those directors are “bound to manage the remaining assets for the benefit of [the business’s] creditors.” Ware v. Rankin, 97 Ga. App. 837 (1958).  Bottom line – it’s best to always have enough money in your business’s bank account to pay the bills that you have or anticipate becoming due in the near future.
  4. Fraud/Injustice – As a final umbrella rule to alter-ego liability, Georgia Courts are permitted to pierce the corporate veil where the business has “overextended its privileges in the use of the corporate entity to defeat justice, to perpetrate fraud, or to evade statutory, contractual, or tort responsibility.” G & E Constr. v. Rubicon Constr., 357 Ga. App. 55, 58 (2020); see also Kissun v. Humana, Inc., 267 Ga. 419, 421 (1997). Violation of the above-three rules would necessarily include a violation of this rule, but Georgia Courts have allowed this rule to remain open-ended in the event that some other bad faith abuse of the corporate form is discovered. See G & E Constr., 357 Ga. App. at 59-60.  This catchall rule is intended to solidify the policy that limited liability businesses in Georgia cannot abuse their limited liability status, and owners of such businesses must remain cognizant in their personal and business dealings of potential pitfalls that can arise under this rule.

In sum, limited liability status, when utilized in the proper manner, is an excellent corporate form that can encourage innovation and risk-taking and lead to market improvements that benefit both businesses and consumers.  However, it is important for business owners to take the necessary steps to preserve their limited liability status in order to ensure that such protections don’t end up working against them.  Consulting with knowledgeable legal and financial professionals can often help businesses safely operate within the bounds of the law and maximize their potential for the good of the business and its potential clients, employees, and customers.

“Post-Divorce: When Can Alimony be Modified?” by Susan Heikkila

Alimony awards are court-ordered payments from one spouse to the other based on the financial needs and circumstances of both parties. But under what conditions can this payment be modified or changed?

Either party can file an action with the court requesting a modification of alimony. The party seeking a modification of alimony must prove one of the following:

  1. A substantial change in the financial status of either party (O.C.G.A. § 19-6-18.); or
  2. The party receiving alimony is openly and continuously cohabitating with a third party in a sexual or romantic relationship (O.C.G.A. § 19-6-19).

If you are considering filing an alimony modification action, it is important that the you can provide evidence to support your request, for example, evidence of the change in income or financial status or evidence of the romantic cohabitation as required by O.C.G.A. 19-6-19.

In order to prove a party is cohabitating with a third party in a sexual or romantic relationship (commonly known as the “live in lover” law), the paying spouse must show that the receiving spouse is both living with a third party and engaging in a sexual relationship with that third party. This includes proving the receiving spouse actually resides with the third-party, by living at such residence open and continuously (receiving mail, paying utilities, on the lease, etc.), and is engaging in a sexual or romantic relationship with the third-party.

Examples of a change in financial status includes the paying spouse losing a job, a significant, an involuntary reduction in income, or the receiving spouse securing a job with significantly higher pay than at the time of divorce. In order to prove a substantial change in financial status, you may need to show records of your involuntary loss of employment, bank statements, tax filings, or be able to obtain records from the other party showing they are in a substantially better position financially than at the time of the divorce (pay stubs, bank statements, tax filings, etc.).

When considering a modification of alimony, the judge should consider every relevant fact which has an effect on whether the required changes discussed above have truly occurred. Gallant v. Gallant, 223 Ga. 397 (1967). For instance, if you are showing a reduction in pay or loss of employment, the judge would need to consider the circumstances of these conditions, and whether they happened on an involuntary basis.

Additionally, because the relevant statutory law concerning the modification of alimony allows alimony to be modified based on a change in the income and financial status of either spouse, the financial status of the recipient spouse may be taken into account as well to determine if a modification of alimony is necessary. See O.C.G.A. §19-6-19.

Remember that alimony awards are court-ordered payments, so it’s important to pay exactly as the order directs, even if you think you qualify for a modification. Failure to pay alimony can result in a finding of contempt, fines, penalties, liens on property, or jail.

If you believe you qualify for a modification of alimony based on any of the above, it’s important to consult with an attorney before exercising self-help or getting behind on these payments.

Justin O’Dell, Leslie O’Neal & Alyssa Blanchard Named to the 2019 Georgia Super Lawyers and Rising Stars list.

We are pleased to announce that Justin O’Dell, a partner at O’Dell & O’Neal, P.C. has been selected to the 2019 Georgia Super Lawyers list. This is an exclusive list, recognizing no more than five percent of attorneys in the state.

Leslie O’Neal, partner at O’Dell & O’Neal, P.C. and Alyssa Blanchard, attorney at O’Dell & O’Neal, P.C. have been selected to the 2019 Georgia Rising Stars list. The Rising Stars list recognizes no more than 2.5 percent of attorneys in each state.

Super Lawyers, part of Thomson Reuters, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Attorneys are selected from more than 70 practice areas and all firm sizes, assuring a credible and relevant annual list.

The annual selections are made using a patented multi phase process that includes:
• Peer nominations
• Independent research by Super Lawyers
• Evaluations from a highly credentialed panel of attorneys

The objective of Super Lawyers is to create a credible, comprehensive and diverse listing of exceptional attorneys to be used as a resource for both referring attorneys and consumers seeking legal counsel. The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country, as well as the Minnesota Super
Lawyers Digital Magazine. Please join us in congratulating Jane Smith on her selection.

For more information about Super Lawyers, go to SuperLawyers.com

“SHARE THE ROAD! Drivers and Cyclists Must Work Together to Stay Safe” by Nick Booth
On Tuesday, October 9, 2018, WSB-TV Atlanta released astonishing video footage showing an alleged road rage incident in Cobb County where a driver pulled in front of a cyclist on the road and then abruptly “brake checked” him, causing the cyclist to forcibly crash into the back of the driver’s truck, breaking his neck and sustaining serious injuries. The driver then fled the scene, leaving the cyclist unconscious in the road.
Such incidents involving negligence and road rage committed by drivers against cyclists are all too common, though they are preventable. New concepts of urban planning involving the implementation of experimental infrastructure like roundabouts and partitioned bike lines have shown great promise in their ability to reduce traffic congestion and make travel safer for vehicles and pedestrians alike. In fact, many cities throughout Georgia have embraced the presence of bicycles as a means to solve such problems as well as to provide a boon to local businesses. However, there are still many places in the state which are not so accommodating to cyclists. While Georgia may not boast the infrastructure of a town like Copenhagen along all of its roads, bikers in Georgia still have been accorded clearly defined legal rights, and such rights must be acknowledged and respected by drivers on the road.
In Georgia, like in most states, a bicycle is legally considered a vehicle. This means that, except for persons ages 12 years or younger, bicycles are not allowed to be ridden on a sidewalk, and cyclists must share the roadway with automobiles. Georgia has laws in place which specifically address how cyclists and drivers are supposed to behave on the road together. For instance, when overtaking and passing a bicycle, drivers are to leave a “safe distance,” defined as not less than three feet, between them and the bicycle when feasible. (Footnote for drivers: if passing a bicycle while maintaining a safe distance is not feasible, it is likely best to be patient and maintain the cyclist’s pace until it becomes so.)
Moreover, the Georgia legislature has passed laws which address instances of road rage and criminalizes aggressive and/or reckless driving. In the case of the driver in the WSB video, his conduct could potentially subject him to liability for these offenses, and afford the cyclist with a cause of action against him for battery, pain and suffering, and a host of other counts.
It is important for both drivers and cyclists alike to know their rights, and to be cautious while out on the roads. Cyclists should wear a helmet on the road at all times, equip their bikes with proper lighting and reflective tape, and, if possible, keep a camera with you so that you can keep documentation of everything, like the cyclist in this case did. But most importantly, cyclists and drivers alike should remember to constantly be vigilant of their surroundings, be courteous to others, and share the road!
“I’m Named As The Executor In A Will But I Do Not Want To Serve” by Leslee Hungerford

Administering the estate of a loved one can be a daunting and time-consuming task. Additionally, acting as Executor of an estate subjects the individual serving to various duties and liabilities. If you have been named as the executor in a last will and testament you are not automatically required to serve or even probate the estate. However, it is important to note that if you are in possession of the Last Will and Testament, you are required to file the will with the probate court of proper jurisdiction. (See, O.C.G.A. §53-5-5 – “A person having possession of a will shall file it with reasonable promptness with the probate court of the county having jurisdiction.”) If the Last Will and Testament is offered for probate (either in solemn form or common form) and you are the named Executor, you may file a renunciation of your right to serve as the Executor. The renunciation must be in writing, state your intent to renounce your right to serve, and be notarized. To learn more about the probate process and your rights as the named Executor, please contact O’Dell & O’Neal.

O’Dell & O’Neal’s own Justin O’Dell presents oral argument before the US Federal Court of Appeals for the Eleventh Circuit

Justin O’Dell appeared before the Federal 11th Circuit Court of Appeals on October 4, 2008 for an oral argument in the matter of Antonio Duscio, et al v. Al Hill, et al, United States Court of Appeals for the Eleventh Circuit, Case No. 17-13651-F. O’Dell & O’Neal is currently representing investors who have been defrauded in a Ponzi scheme related to the sale of life settlement policies and securities.

The appeal stems from an Order of the District Court approving the Receiver’s Motion to Approve Claims Process and Plan of Distribution by the United States District Court for the Northern District of Georgia. The Order approving the claims process and distribution plan was entered in a receivership proceeding ancillary to a Securities and Exchange Commission (“SEC”) action brought against Defendants for matters involving fraud and investment schemes, including Defendants’ business of selling interests in specific life insurance policies. Our clients are investor/victims in that scheme and claimants to the fund. The distribution plan sets forth a plan for the final distribution of Receivership assets, including the determination of investors alleged fictitious profits and proposal for the sale and assignment of certain life insurance policies owned by the investors. The determination of the ownership of our clients’ and other Direct Investor’s property rights and the decision that our clients and other investors would be required to pay back certain “fictitious payments” or be required to turn over their policy was made prior to any notice or opportunity to be heard and present meritorious defenses. The appeals centers around the lack of due process provided to our clients and other investors and their ability to have their claims heard.
To listen to Justin O’Dell’s oral argument, click here.
“Thinking of an Appeal? Think Carefully!” By Nick Booth

In almost every case that reaches a judge, one side will leave the courtroom unhappy with the outcome.  While this is often not due to any wrongdoing on the judge or attorneys’ end, sometimes a judgment is handed down that fails to consider key evidence or relies on faulty legal precedent.  In such cases, an appeal may be an appropriate option to consider.  However, there are numerous different types of appeals depending on the nature of the case and judgment entered, and each comes rife with its own set of procedural “traps for the unwary” that can keep your appeal from moving forward. The timeline for filing an appeal starts the moment the judgment is filed, and it is extremely important for the appealing party to understand the type of appeal that they are dealing with, and have a comprehensive grasp of the appellate rules to follow to ensure that their appeal is not dismissed for failure to follow the proper procedures.

“I Can’t Find The Will! What To Do If The Will Is Lost” by Leslee Hungerford

Many times, the original will of a decedent cannot be located. However, an estate can still be probated even in the absence of the original will. In Georgia, if a will cannot be found there is a presumption that it was revoked by the testator (the individual who executed the will). This presumption may be overcome and a copy of the original will can be admitted to probate. Overcoming the presumption of revocation may be achieved by showing that the will was destroyed or lost after the testator died. The individual offering the copy of the Will may offer circumstantial or direct evidence to rebut the presumption that the will was revoked. Testimony from individuals who witnessed the execution of the original will are most helpful in this endeavor.

 

 

 

 

“Grandparent’s Rights to Visitation” by Alyssa Blanchard

O.C.G.A. §19-7-3 governs visitation for family members.  Family members in this statute is defined as grandparents, great-grandparents, or siblings. O.C.G.A. §19-7-3(a)(1).  As a grandparent, you have the legal right to exercise visitation with your grandchild.  Grandparents can file an original action seeking visitation or intervene in a pending action where the issue of custody, divorce of the parent(s), termination of parental rights, visitation or adoption is before the court. O.C.G.A. §19-7-3(b)(1)(B).

As a grandparent, the court may grant you visitation if it finds by clear and convincing evidence that the health and welfare of your grandchild would be harmed unless you are granted visitation and if the best interests of your grandchild would be served by such visitation. O.C.G.A §19-7-3(c)(1).  When considering whether the health and welfare of your grandchild would be harmed, the court shall consider and may find that harm to your grandchild will likely result when prior to bringing an action for visitation, your grandchild lived with you for six months or more, you provided financial support for the basic needs of your grandchild for at least one year, you had an established pattern of regular visitation or child care with your grandchild or “any other circumstance exists indicating that emotional or physical harm would be reasonably likely to result if such visitation is not granted.” Id.

There is a rebuttable presumption that if you had a preexisting relationship with your grandchild, he may suffer emotional injury that is harmful to his health if your grandchild is denied any contact with you or is not provided some minimal opportunity for contact with you. O.C.G.A §19-7-3(c)(3).

For some grandparents, exercising visitation with their grandchild is not as simple as calling to make arrangements with a parent.  If you are among the many grandparents who are being denied access to their grandchildren contact an attorney today to learn more about your specific rights to visitation with your grandchild.

Starting My Legal Career. By Nick Booth

I grew up in East Cobb, graduating from Pope High School, and then made my way to Athens, Georgia, where I attended the University of Georgia. After realizing that four years spent in Athens simply would not cut it, I enrolled in the University of Georgia School of Law. Athens and UGA will always hold a special place in my heart, but I am so excited and grateful to be able to return to Marietta to pursue my legal career.

Being the first into my family to pursue a legal career, I had no idea of what to expect, from taking the LSAT, to going through law school, and now actually engaging in the practice of law. Fortunately, I had some fantastic professionals who work in the legal field to mentor me along the way. I believe that, no matter what profession one pursues, it is crucial that they do their best to surround themselves with people who can help them, and build and foster relationships with those people. The wisdom and advice that my mentors provided to me was invaluable, and I still lean on them for support and mentorship to this day.

After passing the bar exam and being sworn in, in order to become fully licensed to practice law in the state of Georgia, new lawyers must complete what is called the Transition Into Law Practice Program (TILPP). This program requires new lawyers to partner with a mentor who can guide you through the practice of law by giving you the opportunity to gain experience with both legal and community work that would be expected of a lawyer. Such activities include introduction to the legal community and the community at large, introduction to law office management, working with clients, advocacy experience, closing and transactional work, the obligation of attorneys to others, and negotiations. TILPP is a great program for new lawyers because it provides them with the opportunity to gain practical experience that many students may not have received in law school, and ultimately results in producing better attorneys for the citizens of Georgia and beyond.

I have always wanted to use my tools and talents to help others, and I have come to realize that attorneys are uniquely situated to assist people in some of their most dire times of need. As one of my professors and mentors in law school once told me: “Law school is about the law, law practice is about people.” I am appreciative of the opportunity to work at O’Dell & O’Neal, because of their commitment to this principle, and I hope to continue to grow and learn from the excellent attorneys who work here.