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The Pivotal Law Blog

Welcome to Our New Associate Attorney: McKean J. Evans

Posted Tuesday, August 8, 2017 by Christopher L. Thayer

Alternative TextWe are very pleased to announce that McKean J. Evans has joined Pivotal Law Group as an associate attorney. McKean has recently moved to Seattle from Pittsburgh, Pennsylvania with his fiancé, a native of the Pacific Northwest. He is excited about moving to Seattle and, as an avid backpacker, is eager to explore the Washington wilderness.

McKean brings five years’ experience litigating complex cases before state and federal judges nationwide, in diverse matters ranging from insurance to employee benefits to real estate appraisal fraud.

Some of McKean’s recent cases include: Recovering a six-figure settlement for an insurance policyholder whose insurer refused to pay benefits due under the policy; Representing women sales agents who claimed they were underpaid because of their gender; and obtaining cash payments for retired workers whose former employer terminated their retirement benefits.

At Pivotal Law Group, McKean will focus his practice on litigation protecting the rights of small businesses and their owners, individuals injured in accidents, owners of insurance policies, and employees.

McKean can be reached at MEvans@PivotalLawGroup.com, or through his direct line at (206) 805-1493.

McKean is admitted to practice law in the State of Pennsylvania; his admission to practice law in Washington is pending.
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The Case of the Incredible Shrinking Airline Seat

Posted Wednesday, August 2, 2017 by Christopher L. Thayer

Federal Appeals Court Criticizes Disappearing Airline Legroom in “the Case of the Incredible Shrinking Airline Seat”

The U.S. Court of Appeals in Washington, D.C. recently ruled on a case involving one of air travelers’ traditional complaints: the gradual shrinking of aircraft seating space. In Flyers Rights Education Fund, Inc. v. Federal Aviation Administration, which the court dubbed “the Case of the Incredible Shrinking Airline Seat,” the court addressed claims that shrinking aircraft seats and reduced legroom threatened passengers’ safety.

The plaintiff, Flyers Rights Education Fund, Inc., (“Flyers Rights”) became concerned that gradual reductions in aircraft seating space threatened passenger safety. Flyers Rights asked the Federal Aviation Administration (“FAA”) to create rules governing the size of aircraft seats to protect passenger safety by, for instance, ensuring passengers can quickly escape their seats in an emergency.

The FAA declined to adopt rules governing passenger space on aircraft seats, claiming that the issue did not affect passenger safety. Flyers Rights filed a lawsuit in federal court claiming that federal law – the Administrative Procedure Act – required the FAA to have adequate evidence for its refusal to pass rules governing aircraft seat space. Flyers Rights asked a federal court to order the FAA to reconsider its decision.

The U.S. Court of Appeals sided with Flyers Rights. The court observed that the FAA’s mission includes providing minimum safety standards for aircraft consistent with “the duty of an air carrier to provide service with the highest possible degree of safety in the public interest.” Flyers Rights’ petition to the FAA included evidence that airline seat space had shrunk considerably over the last several decades while the average American passenger grew larger. The FAA denied Flyers’ Rights’ petition because the FAA found the aircraft seat space issue “d[id] not raise an immediate safety or security concern.” But the FAA cited no studies or other evidence supporting its conclusion.

The court agreed with Flyers’ Rights that the FAA “failed to provide a plausible evidentiary basis for concluding that decreased seat sizes combined with increased passenger sizes have no effect on emergency egress.” The Court decided that Flyers Rights identified a reasonable safety concern backed up by evidence, and that the evidence the FAA relied on in denying Flyers Rights’ petition did not adequately address the issue. Among other things, the FAA relied on studies that never tested whether seat size was a safety issue, then reasoned that seat size could not be a safety issue because its studies never tested for it. The court found the FAA’s reasoning “blinks reality.”

Accordingly, the court sent the case back to the FAA to give a “properly reasoned” response to Flyers Rights’ concern about shrinking aircraft seats.

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Case Law Update: Successor Liability for a Law Firm

Posted Wednesday, July 26, 2017 by Christopher L. Thayer

The Washington State Court of Appeals (Division I) recently found the owner of a law firm operating as a sole proprietorship liable for debts incurred by his predecessor Limited Liability Company in Columbia Bank v. Invicta Law Group and Mark Jordan, (No. 73915-8-I)(2017).

In 1999, Jordan formed Invicta Law Group, PLLC (“PLLC”) and was the sole member and manager. In February 2012, the PLLC borrowed $165,000 from Columbia Bank. The PLLC executed several loan documents including a commercial promissory note (note), loan agreement, and security agreement. Jordan signed all three loan documents as manager of the PLLC. Jordan also signed the loan agreement individually as guarantor.

On September 30, 2013, Jordan (personally) filed for voluntary Chapter 7 bankruptcy. On January 2, 2014, the bankruptcy court discharged Jordan’s personal guaranty on the loan agreement. On the same day he filed for bankruptcy, Jordan also ceased operating as the PLLC. The PLLC did not file for bankruptcy. When Jordan filed for personal bankruptcy, the PLLC also stopped making payments on the loan to Columbia Bank.

The day after filing bankruptcy, Jordan began operating a law practice as a sole proprietorship under the name Mark V. Jordan. Jordan owned, operated and controlled the sole proprietorship.

Jordan continued his individual law practice, using the same name, website, signage, telephone number, offices, insurance, employees, equipment, and representing the same clients. Jordan continued to use the full name Invicta Law Group, PLLC in new client engagement letters for nearly 6 months. Jordan also continued under the same contracts as the PLLC including office lease agreement, subtenant agreements, existing client agreements (did not have clients sign new agreements), and malpractice insurance. Jordan continued representing the same clients the PLLC had represented at the time the PLLC ceased operation. No clients left the PLLC due to its change in legal structure. Indeed, Jordan did not tell the clients until months later.

Columbia Bank sued Jordan on a claim of successor liability. The trial court awarded judgment against Jordan in favor of Columbia Bank, which, including attorney’s fees and costs, exceeded $400,000. Jordan appealed. The Court of Appeals noted:

Washington follows the general rule that “a corporation purchasing the assets of another corporation does not become liable for the debts and liabilities of the selling corporation.” Cambridge Townhomes. LLC v. Pacific Star Roofing, Inc., 166 Wn.2d 475, 481-82, 209 P.3d 863 (2009). The rationale for this rule is a “bona fide purchaser who gives adequate consideration and who lacks notice of prior claims against the property acquires no liability for those claims.” Hall v. Armstrong Cork. Inc., 103 Wn.2d 258, 262, 692 P.2d 787 (1984)). There are, however, exceptions to this general rule. A successor may be held liable for the debts of a predecessor, where:

(1) there is an express or implied agreement for the purchaser to assume liability; “(2) the purchase is a de facto merger or consolidation; (3) the purchaser is a mere continuation of the seller; or (4) the transfer of assets is for the fraudulent purpose of escaping liability.

Cambridge, 166 Wn.2d at 482 (quoting Hall, 103 Wn.2d at 262).

The trial court found Jordan liable under the “mere continuation” exception to the general rule. Washington courts rely on several factors to determine whether a successor business is a mere continuation of a seller. These include: (1) a common identity between the officers, directors, and stockholders of the selling and purchasing companies, and (2) the sufficiency of the consideration running to the seller corporation in light of the assets being sold.

The objective of the court when considering these factors is to determine whether the “purchaser represents merely a new hat for the seller.” Cambridge, 166 Wn.2d at 482. The particular form of the business entity is not determinative. Therefore, for the first factor, where a sole proprietorship is involved, while there can be no continuation of officers, directors, or shareholders, the court will consider “the continuity of individuals in control of the business as satisfying this factor.” Cambridge, 166 Wn.2d at 482-83.

The Court further reasoned:

[T]he evidence of the “mere continuation” between the PLLC and Jordan’s sole proprietorship goes beyond that identified as sufficient in Cambridge. Here, the sole proprietorship: (1) operated at the same location as the PLLC, it had the same offices, space, signage, telephone number, and address, (2) operated under the same lease as the PLLC, and between September 30, 2013, and February 2015 continued to hold itself out to the landlord as the PLLC, (3) used the same office equipment, furniture, and inventory, (4) used the same contact information as the PLLC including the same phone number, e-mail address, fax number, letterhead, and website, (5) used the same employees, (6) held itself out to its current and new subtenants as the PLLC including entering a new sublease agreement on October 31, 2013, under the name of the PLLC, and … held itself out to its malpractice insurance carrier as the PLLC for over a year….

The Court likely felt compelled to find Jordan personally liable under a theory of successor liability based upon the unique facts of this case. Most significantly, Jordan’s sole proprietorship did not pay anything for the “assets” it acquired from the PLLC. If Jordan had paid any reasonable sum for the assets acquired (known as “consideration” in this context), we believe it is likely a court would have had a hard time finding him liable under a theory of successor liability – even under these fairly egregious facts. If you have questions about successor liability (and how to avoid it or prove it), please feel free to contact Chris Thayer at 206-805-1494 or at CThayer@PivotalLawGroup.com.

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Case Law Update: Does falling out of your car constitute a “Motor Vehicle Accident”?

Posted Friday, July 21, 2017 by Christopher L. Thayer

In a recent unpublished decision by the Court of Appeals (Division III), Ramm v. Farmers Insurance Company (No. 34542-4), the court addressed whether or not a person who falls partially out of a vehicle while parked and is injured is entitled to Personal Injury Protection (“PIP”) benefits under their insurance policy.

In Ramm, Mr. Ramm was driving with his son in Spokane when he began to feel nauseous. Believing he was going to be sick, Mr. Ramm turned his vehicle to a side street and pulled over toward the side of the road. The vehicle was placed in park but the keys remained in the ignition with the engine running. Mr. Ramm then unbuckled his seatbelt and leaned out the driver’s door to vomit onto the road. But he passed out and fell forward onto the pavement, striking his head and suffering significant injuries. After falling and while still unconscious, Mr. Ramm began bleeding profusely. His head and upper body fell outside the vehicle but his legs and feet remained inside near the pedals for the accelerator and brakes. Mr. Ramm’s son drove his father to the emergency room.

The Ramms accumulated medical bills in excess of $10,000 for treatment of Mr. Ramm’s injuries. Mr. Ramm submitted a PIP claim under his personal automobile policy with Farmers. The insurance policy agreement provides Farmers “will provide the benefits described [in the policy] for bodily injury to each Insured person caused by a motor vehicle accident.”

Farmers declined coverage. Farmers contended a motor vehicle accident only occurs “when the covered motor vehicle is being operated as a motor vehicle” and “a motor vehicle is not being operated as a motor vehicle when parked,” relying on Tyrrell v. Farmers Ins. Co., 140 Wn 2nd 129, 994 P.2d 833 (2000). Farmers argued Mr. Ramm sustained his injuries by falling from a parked vehicle, the events leading to those injuries could not be considered a motor vehicle accident and he was not entitled to PIP coverage. Ramms filed suit to compel coverage and the trial court sided with Farmers Insurance – dismissing their suit.

The Court of Appeals noted “[w]e have held the term motor vehicle accident unambiguously refers to an incident where one or more vehicles come in forceful contact with another vehicle or a person, causing physical injury.” Citing to the Tyrrell decision, the Court of Appeals stated:

[A] motor vehicle accident occurs when a motor vehicle is being operated as a motor vehicle… A motor vehicle is being operated as a motor vehicle when it is being driven or when it is stopped while being driven. For example, if a tree limb were to fall on the motor vehicle while a person was driving or had stopped while driving, that would constitute a ’motor vehicle accident.’ On the other hand, a motor vehicle is not being operated as a motor vehicle when parked.

The Court of Appeals affirmed the trial court’s dismissal. It should be noted this decision is “unpublished” (a bit of a misnomer), which means it has no precedential value. It may also be appealed to the Washington Supreme Court. However, it is illustrative of how another court might likely rule under these unusual circumstances. This decision is a reminder that insurance is a contract, not a “right” and your benefits are defined in the contract – your policy of insurance.

If you have any questions about a motor vehicle accident or related insurance coverage issues, feel free to contact Pivotal attorney Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com.

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Washington becomes fifth state to mandate paid family leave

Posted Thursday, July 6, 2017 by Pivotal Law Group

Family LeaveOn Wednesday, Governor Jay Inslee signed into law a measure promising to cover workers’ income when taking time off for the birth of a child. Washington will become the fifth state to offer such protections.

Washington’s new law, which takes effect in 2020, is among the most generous of the five states’ laws. It covers 12 weeks of guaranteed pay, plus two more for complicated pregnancies, and it allows low-wage workers to collect at least 90 percent of their weekly income.

“This is a revolutionary bill,” said Kristin Rowe-Finkbeiner, executive director of the advocacy group MomsRising, whose 40,000 Washington members spent a decade working for its passage. Late last month, the bill passed the state Senate 37-12 and the House 65-29.

While other states have appended family-leave laws to existing statutes covering temporary disability, Washington’s is the first to be built from scratch.

“It’s a real tip-of-the-arrow bill, a model that is going to break down the walls for other states. In that sense, this is a victory for families across America,” Rowe-Finkbeiner said.

Click here for a link to the full article or see the link below:


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