Kang Haggerty News

Real Estate Buyer Beware of Bulk Sales – Or You’ll be Paying for It

October 12, 2017 | Kang Haggerty LLC

What is a bulk sale clearance certificate, and how is a bulk sale clearance certificate related to a Pennsylvania real estate transaction? In Pennsylvania, a bulk sale clearance certificate must be obtained in all transactions involving the sale of fifty-one or more percent of the assets of a business, including real estate. Because it is common for property owners to create single purpose entities to own the real estate, bulk sale clearance certificates are required in many real estate transactions, since the real estate represents the sole asset (i.e., 100%) of the assets owned by such SPE. A bulk sale clearance certificate from the Pennsylvania Department of Revenue verifies that a particular entity satisfied all tax obligations due to the Commonwealth of Pennsylvania, including taxes, interest, penalties, fees, charges and any other liabilities up to and including the date of transfer.

Moreover, under 69 P.S. § 529, every corporation, joint-stock association, limited partnership or company organized under the Commonwealth of Pennsylvania or any other state that engages in business in the Commonwealth of Pennsylvania which sells in bulk fifty-one percent or more of any stock of goods, wares or merchandise of any kind, fixtures, machinery, equipment, buildings, or real estate, shall give the Department of Revenue ten days’ notice of the sale, prior to the completion of the transfer of such property.

To provide proper notice and comport with Pennsylvania law, the seller must file form REV-181, the Application for Tax Clearance Certificate, with the Pennsylvania Department of Revenue and the Pennsylvania Department of Labor and Industry ten days before the closing of the sale. A copy of the agreement of sale and preliminary settlement statement should be included with the Application for Tax Clearance Certificate. (Note, however, that the Department of Revenue often requests re-submission post-closing so that all closing information and interim tax returns through the date of closing may be submitted). In addition, all such entities must file all state tax reports with the Department of Revenue to the date of the proposed closing on the transfer of property and pay all taxes and unemployment compensation contributions due to the Commonwealth of Pennsylvania through the date of closing. If all state tax reports have been filed and if all state taxes and unemployment compensation contributions are paid up to the date of the proposed transfer, the State issues a clearance certificate to the seller, which is then provided to the buyer.

Pre-Act 170 Pennsylvania Limited Partnerships Not Protected by Implied Covenant of Good Faith and Fair Dealing

September 5, 2017 | Kang Haggerty LLC

In an opinion handed down on August 22^ndof this year, the Pennsylvania Supreme Court held that, unlike other contracts formed under Pennsylvania law, limited partnership agreements formed under the pre-Act 170 version of the Pennsylvania Revised Uniform Limited Partnership Act, do not contain the implied covenant of good faith and fair dealing.

The Pennsylvania legislature amended the state’s Revised Uniform Limited Partnership Act in late 2016 as a provision of Act 170, which altered the formation and operation of corporations, limited liability companies, limited partnerships, and other business forms. As part of its revisions to the PRULPA, Act 170 provided that a limited partnership agreement could not change or do away with the contractual obligation of both limited and general partners to discharge their duties under the agreement in accordance with the contractual obligation of good faith and fair dealing.

The case, Hanaway v. The Parkesburg Group, LP, involved a dispute among members of a limited partnership (Parkesburg) that had been formed to invest in and develop several parcels of real estate. The plaintiffs, who were among Parkesburg’s limited partners, sued the corporation’s general partner, alleging that he sold Parkesburg’s assets to a new partnership he had formed, so that the new partnership could develop the real estate in question without the plaintiffs.

Gregory H. Mathews Named to 2018 Best Lawyers in America List

August 31, 2017 | Kang Haggerty LLC

Gregory H. Mathews, Esquire Kang Haggerty LLC is pleased to announce that Gregory H. Mathews, Of Counsel, has been selected for inclusion in the 2018 edition of The Best Lawyers in America one of the most respected peer-review publications in the profession.

Mathews is named to the list for his distinguished contributions to the practice area of commercial litigation. Commercial litigation involves any type of dispute that can arise in the business context, including breach of contract cases, SEC and NASD claims, class actions, business torts, civil RICO claims, breach of fiduciary duty allegations, and shareholder issues. Successful commercial litigators, such as Mathews, are able to assess the merits of a dispute and scale either a prosecution or defense that fits the legal and business needs of their clients.

Best Lawyers was founded in 1983 and is published in 70 countries and all 50 states. Its methodology employs a sophisticated, conscientious, rational, and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services. The 24th edition of The Best Lawyers in America highlights the top 5% of practicing attorneys in the United States, based on more than 7.4 million evaluations, recognizing attorneys in 140 practice areas.

Docs and the Ties That Bind Them

August 24, 2017 | Kang Haggerty LLC

Restrictive covenants are contractual clauses that limit an employee’s post-employment activities for a specified length of time and geographic area. Their enforceability varies by state and by profession. For example, restrictive covenants are unenforceable in the legal profession but are enforceable in the medical profession. The American Medical Association, however, discourages restrictive covenants between physicians. Yet it deems them ethical unless they are excessive in geographic scope or duration, or fail to reasonably accommodate patients’ choice of physician.

The determination of whether a restrictive covenant is reasonable is a factual one that is assessed on a case-by-case basis: courts weigh the competing interests of the employee versus the employer, and typically the burden is on the employer to demonstrate that the restrictive covenant protects the employer’s interests without posing an undue hardship on the employee.

In Pennsylvania, restrictive covenants are enforceable if they are incident to an employment relationship between the parties, the restrictions imposed by the covenant are reasonably necessary for the protection of the employer, and the restrictions imposed are reasonably limited in duration and geographic extent. Hess v. Gebhard & Co. Inc., 808 A.2d 912 (Pa. 2002).

Legal Intelligencer: Henry Donner and David Dean on Practitioners’ Guide to Navigating New Mechanics’ Lien Law Amendments

August 23, 2017 | Henry J. Donner

In the August 21, 2017 edition of The Legal Intelligencer, Henry Donner, Of Counsel at Kang Haggerty writes on the Practitioners’ Guide to Navigating New Mechanics’ Lien Law Amendments.

By: Henry Donner Construction-300x180-1

Pennsylvania’s Mechanics Lien Law of 1963 was amended in late 2014 to require the commonwealth’s Department of General Services to create an internet-based State Construction Notices Directory. As required by the law, the directory went live on Dec. 31, 2016, providing a standardized, statewide, internet-based system for construction notices. This statutory scheme imposes new requirements on project owners, contractors, and subcontractors, compliance with which can drastically affect those parties’ rights under the Mechanics Lien Law. Practitioners representing any of the traditional parties in a construction matter should be sure to familiarize themselves with these new provisions, and advise their clients accordingly.

Legal Intelligencer: Henry Donner and David Dean on Practitioners’ Guide to Navigating New Mechanics’ Lien Law Amendments

August 23, 2017 | Kang Haggerty LLC

In the August 21, 2017 edition of The Legal Intelligencer, Henry Donner, Of Counsel at Kang Haggerty, and David Dean, an associate of the firm, write on the Practitioners’ Guide to Navigating New Mechanics’ Lien Law Amendments.

By: Henry Donner and David Dean

Pennsylvania’s Mechanics Lien Law of 1963 was amended in late 2014 to require the commonwealth’s Department of General Services to create an internet-based State Construction Notices Directory. As required by the law, the directory went live on Dec. 31, 2016, providing a standardized, statewide, internet-based system for construction notices. This statutory scheme imposes new requirements on project owners, contractors, and subcontractors, compliance with which can drastically affect those parties’ rights under the Mechanics Lien Law. Practitioners representing any of the traditional parties in a construction matter should be sure to familiarize themselves with these new provisions, and advise their clients accordingly.

Henry Donner Named to 2018 Best Lawyers in America List

August 17, 2017 | Kang Haggerty LLC

Donner-272x300 Kang Haggerty LLC is pleased to announce that Henry Donner, Of Counsel, has been selected for inclusion in The Best Lawyers in America 2018, one of the most respected peer-review publications in the profession.

Donner is once again named to the list for his well-regarded construction law practice.

Best Lawyers was founded in 1983 and is published in 70 countries and all 50 states. Its methodology employs a sophisticated, conscientious, rational, and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services. The 24th edition of The Best Lawyers in America highlights the top 5% of practicing attorneys in the United States, based on more than 7.4 million evaluations, recognizing attorneys in 140 practice areas.

Legal Intelligencer: Remote Working Programs: True Flexibility or Masked Rigidity?

August 2, 2017 | Kandis Kovalsky

by The YL Editorial Board

Legal Intelligencer: Edward T. Kang on Being Careful What You Say in Settlement Discussions

July 31, 2017 | Edward T. Kang

In the July 27, 2017 edition of The Legal Intelligencer, Kang Haggerty Managing Member Edward T. Kang writes on Being Careful What You Say in Settlement Discussions.

Be Careful What You Say in Settlement Discussions

By Edward T. Kang

Avvo, LegalZoom, Rocket Lawyer Products Prohibited in NJ

July 12, 2017 | Kang Haggerty LLC

Three New Jersey Supreme Court committees have recently prohibited three online services that allow clients and lawyers to interact for a small fee. Certain Avvo, LegalZoom, and Rocket Lawyer products have been deemed to be in violation of ethical standards in the state and are currently blacklisted. Moreover, Avvo is under fire for its improper fee-splitting.

In the Joint Opinion issued by the Advisory Committee on Professional Ethics, Committee on Attorney Advertising and Committee on the Unauthorized Practice of Law (ACPE Opinion 732, CAA Opinion 44, UPL Opinion 54), the committees state that “New Jersey lawyers may not participate in the Avvo legal service programs because the programs improperly require the lawyer to share a legal fee with a nonlawyer…”

On the other hand, it adds, “The Committees further find that LegalZoom and Rocket Lawyer appear to operate legal service plans through their websites but New Jersey lawyers may not participate in these plans because they are not registered with the Administrative Office of the Courts…” While these two services are permissible under RPC 7.3(e)(4), they are off limits due to the lack of registration.

Firm News

Be Careful What You Say in Settlement Discussions