Litigation

By: Daniel P. Dwyer

There is a joke often repeated in government contracting circles.  While considering some aspect of the work, someone will almost always say, “Remember – all of this work was done by the low bidder.”  This punchline is not exactly accurate: the general rule is that government contracting work is awarded to the lowest responsible bidder.  The purpose of this post is to address what this distinction means and why it is important to both government entities requesting bids and the contractors who submit them.

Decisions about which bidder is the low bidder are objective:  the bottom line prices of the bidders are compared and the lowest wins.  The government entity requesting bids has little discretion in making this determination.  However, a decision about whether the lowest bidder is also a responsible is not so objective.

The lowest responsible bidder is the bidder whose bid is lowest in dollars among the bids of those who are able to perform the contract promptly, faithfully, skillfully and according to plans.  The entity requesting the bids can base this decision on information elicited through pre-qualification, questionnaires included in the bid package, first-hand knowledge that it has of this bidder’s performance or, in some instances, post-bid investigation.  This aspect of the bid decision is subjective and requires the exercise of discretion by the awarding entity.

The question is, “How is this discretion to be exercised?”  On one hand, the government must maintain a “level playing field” for all bidders that does not allow any aspect of favoritism or personal preference.  On the other hand, the government must also get the best value and product for the taxpayer – not just the least expensive.  Although the law is not clear, some requirements can be extrapolated: 1) the government cannot waive any material defects; 2) when it awards a contract to a responsible bidder who is not the lowest, the government must be able to enunciate a clear reason for having done so, and; 3) where this determination is not the product of first-hand knowledge, investigation must be undertaken that gives rise to a substantial reason for not awarding the contract to the lowest bidder.

In conclusion, bidders and government officials alike should always be aware that they are not bound to the lowest number.  The government can, and is obligated to, assure that the bidder can perform.  These officials and bidders must also be aware, however, that this inquiry should be undertaken with care so as not to abuse their discretion.

If you would like more information about this topic or have any questions, please contact Dan Dwyer at ddwyer@utbf.com.

Daniel P. Dwyer

Dan Dwyer is an associate at Unruh, Turner, Burke and Frees, Dan practices in the areas of Pennsylvania Commercial Litigation, and Pennsylvania Governmental Law. The firm maintains law offices in Malvern, Phoenixville, and West Chester Pennsylvania which serve the Main Line, and many surrounding communities such as Devon, Exton, West Chester, Ardmore and others.

Watch John Fiorillo as explains the Uniformity Principle.

Owners of commercial and residential real estate should watch this informative video to learn more about the Uniformity Principle. Property values have decreased over the past few years. If you believe your property is assessed at a rate higher than its fair market value, contact John Fiorillo for information on how you might be able to reduce your property tax bill by filing a real estate tax appeal.

Attorney John Fiorillo is a partner in the firm of Unruh, Turner, Burke & Frees, PC., with offices located in West Chester, Malvern and Phoenixville, PA.

By: Litigation Department

Currently there are 25 states that have Hospital visitation laws in the form of relationship recognition laws (marriage, civil unions, domestic partnerships) or separate visitation statutes. Pennsylvania is the only state in the northeast that does not have hospital visitation laws that provide for automatic recognition of nontraditional relationships. That means that hospitals in Pennsylvania do not have to permit visitation of anyone that is not a patient’s immediate biological family or legally recognized spouse under the laws of the Commonwealth of Pennsylvania. This affects long term unwed heterosexual couples, gay and lesbian couples and all non-traditional families of every variety. See a map of those states providing such recognition.

On April 15, President Obama issued a memorandum directing the Department of Health and Human Services to adopt regulations requiring all hospitals receiving Medicaid and Medicare dollars to permit visitation by a designated visitor, without regard to sexual orientation or gender identity. These regulations are not yet in effect. When those regulations take effect most hospitals across the country, including most hospitals in Pennsylvania, will be required to establish non-bias visitation policies. It is important to realize that certain health care and estate planning documents are still necessary. It is extremely important to have documents in place to protect your loved ones, such as health care directives, powers of attorney, and wills. The National Center for Lesbian Rights has put together a general discussion of the importance of these documents.

Please contact our offices to discuss having these important documents drafted for you, if you reside in either Pennsylvania or New Jersey.

Watch Attorney John Fiorillo as he describes a Confession of Judgment.

Owners of commercial property and commercial lenders should watch this informative video that briefly describes a confession of judgment. PA businesses and property owners benefit from unique laws. Contact John Fiorillo for more information on state specific collection procedures and other laws that may apply to your business.

By: Daniel P. Dwyer

If you operate a business you might consider whether it meets the federal definition of a small business. Business concerns that meet the Small Business Administration’s (“SBA”) definition of a “Small Business” can qualify for preferential financing and award of federal government contracts. The purpose of this article is to briefly discuss what a Small Business is and the advantages of determining whether your business meets that definition.

There are many advantages to being a Small Business. If your business would sell its products to the federal government, there are certain set-asides and preferential rules for the award of federal contracts to small, disadvantaged or veteran-owned businesses. Also, there are many loan and financing programs available to Small Businesses. These include American Recovery Capital Loans (“ARC”) – interest-free loans for companies harmed by the recent recession, loans for small businesses involved in export, micro-loans of $35,000 and long-term fixed financing for modernizing or acquisition of fixed assets.

The relevant term, for purposes of the Small Business Act, is a “small business concern.” To be eligible for that Act’s benefits, the entity must be both a “business concern” and “small.” A business concern is, ” … a business entity organized for profit, with a place of business located in the United States, and which operated primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor. 13 CFR Sec. 121.105. This definition is very broad: it requires that a recipient of SBA assistance be a business located in the United States, that pays taxes to the United States and/or uses domestic products, materials or labor. This still leaves the question of what is “small.”

By: Daniel P. Dwyer

Previously, I blogged about the “standing” requirements that must be satisfied if a shareholder or member of a corporation or other entity, like an LLC, wants to sue its officers, director or managers for mis- or malfeasance. That blog described the requirement for court certification that a plaintiff in such a derivative action adequately represents all other shareholders or members. A related issue is how Pennsylvania’s courts apply the “business judgment rule” and how this interacts with Pennsylvania’s pleading requirements.

The business judgment rule limits courts in second-guessing corporate decisions. Like any such protection, it must be designed to protect others from abuse of the discretion it provides. The Pennsylvania Supreme Court, in Cuker v. Mikalauskas, 692 A.2d 1042, 1045 (Pa. 1997), indicated that a corporate officer will not be liable for the consequences of his or her decision if:

- It was a business decision, and;

- done in good faith, and;

- the corporate official had no personal interest in the outcome, and;

- he or she was informed about the decision to the extent they reasonably believed was appropriate under the circumstances, and;

- he or she rationally believed it to be in the best interests of the corporation.

One need only look at the qualifiers and modifiers in that paragraph to conclude that the protections of the business judgment rule can be very limited. This is particularly true when one considers Pennsylvania’s pleading and motion standards. Therefore, while the business judgment rule may protect a corporate officer from liability, it will not necessarily protect him or her from lawsuits.

Pennsylvania’s courts, while stricter than the federal courts, give a plaintiff a great deal of latitude when asserting claims. A plaintiff only has to plead facts sufficient to place a corporate defendant on notice of the claims against which he must defend. These facts can sometimes be pleaded “on information and belief” that is, the plaintiff’s personal belief about what may have occurred. Finally, there is a judicial preference in favor of rejecting initial challenges to claims; courts prefer to let the parties go through discovery to collect evidence before claims are dismissed. If a claim requires proof of many facts and subjective conditions, it is more likely to proceed to litigation.

In conclusion, although the business judgment rule may protect an officer or director from ultimate liability, it does not necessarily protect him or her from the time and cost of the litigation necessary to establish whether that rule’s protections apply. Even if a corporate officer or director acted in good faith without personal interest and with sufficient information, he or she could still have to pay significant legal fees.

What can business owners, entrepreneurs and lawyers do about this exposure? When forming a corporation, the founders should consider whether the entity should indemnify, that is compensate, the officer or director for legal fees and other litigation-related costs. They should also be aware of the provisions of Pennsylvania’s Business Corporation Law that address indemnification of corporate officers and directors: under some circumstances indemnification is mandatory; under other circumstances, it is prohibited. Finally, parties who serve in these capacities should know whether they are indemnified and the extent of that indemnification.

A subsequent blog will address the law of indemnification of corporate officers. If you have any questions about these topics, please contact Dan Dwyer.

Watch Attorney John Fiorillo as he addresses ways to reduce your property tax assessment and tax bills and the reasons that your assessment might change.

This is the first in a series of videos for residents of Chester County, Montgomery County and Delaware County, Pennsylvania who need to reduce their personal or business property tax assessments.

John Fiorillo is a partner of Unruh, Turner, Burke and Frees with offices located in West Chester, Malvern, and Phoenixville Pennsylvania.

By: Nancy J. Glidden

The old adage, “ignorance of the law is no excuse,” has been underscored in the context of debt collection practices in a recent decision issued by the United States Supreme Court. In Jerman v. Carlisle (2010 WL 1558977 U.S.), the Court held that the “bona fide error” defense to civil liability under the Fair Debt Collection Practices Act (“FDCPA”) has no application to mistakes of law. The decision resolves a split within the District Courts that have addressed the issue.

The mistake committed by the creditor’s attorney in Jerman, was relatively subtle. In a statutorily-required communication with the debtor, the attorney advised the debtor that the debt would be presumed valid unless the debtor disputed the debt in writing. The FDCPA, however, contains no such in writing requirement. It mattered not whether the addition of the in writing language was inadvertent or intentional - it was a mistake of law insofar as it constituted a misinterpretation of the statute by the creditor’s attorney.

In reaching its decision, the Court strictly construed the statute, and invited Congress to address whether the FDCPA should be amended to provide enhanced safeguards for creditors and their attorneys. Such action is unlikely to happen any time soon, however, so for the foreseeable future, attorneys representing creditors are advised to exercise the utmost caution, and closely scrutinize and understand all provisions of the FDCPA in order to avoid the prospect of liability, (with attorney’s fees and enhanced damages).

For more information contact Nancy Glidden.

By: Anthony T. Verwey

Read my recent blog about charter schools being subject to real estate taxes.

For more information, contact Anthony Verwey.

By: Christopher L. Turner

A residential landlord who seeks to evict a tenant from leased premises must follow certain steps and procedures outlined in the Pennsylvania Rules of Civil Procedure and comply with the terms of Pennsylvania’s Landlord and Tenant Act.  A landlord is not permitted to perform a self help eviction except against a trespasser in possession.  Thus, resort must be made to Pennsylvania Courts to secure possession of premises if a tenant refuses to vacate.

The quickest and most cost effective method for removing a tenant from residential real property requires a landlord to file a Landlord/Tenant Complaint in the applicable Magisterial District Court.  The complaint must be filed in the proper District Court and must be served upon the tenant in compliance with the rules of court.  Once service of the complaint is properly effectuated on a tenant, a hearing date is set before the Magisterial District Judge.

If the Landlord prevails before the Magisterial District Judge, a judgment for possession will be entered.  Thereafter, a Tenant has a limited amount of time to appeal the judgment to the Court of Common Pleas and if the Tenant elects to do so it must pay the monthly rent into court if the Tenant wishes to remain in possession during the pendency of the appeal.

The process for removing a Tenant from residential real property contains numerous procedural pitfalls that can further delay an already time consuming and expensive process.  As a result careful attention must be given to assure the eviction is effectuated in compliance with all applicable legal and procedural requirements.

For more information, contact Christopher Turner.