Month: October 2019

Vandeventer Black’s Summer Associate Returns for Employment

Written by Daniel Salmon on . Posted in Firm News.

Daniel Salmon, a recent J.D. graduate from the Washington University in St. Louis, has joined Vandeventer Black as an attorney in the firm’s Construction and Government Contracts Practice Group and will be assisting clients out of their Norfolk office. Salmon began his legal career as part of the firm’s Summer Associate Program in 2018.

“I am honored and excited to join Vandeventer Black not only for the professional experience that I am already gaining from the firm but also for the opportunity to be a part of the culture that the firm has created,” said Salmon.  “With respect to practical experience, the firm has hundreds of years of legal experience on hand, willing to mentor young associates.  In addition to professional development, I have gotten to know the people that make up the firm, outside of the work environment.  Vandeventer Black has a great mix of opportunities to do so, like planned social events, firm-sponsored community service events, and an informal weekly gathering of many of the firm’s attorneys.  Even during interviews, Vandeventer Black stood out to me because I felt that the firm was truly looking at me as a prospective long-term member of its community, rather than simply viewing me as another cog in the billable machine.”

During law school, Daniel completed the InSITE Fellowship, where he worked on several interdisciplinary teams that provided consulting services to early-stage start-up companies. Prior to attending law school, Salmon received his B.S. in Electrical Engineering from the University of Virginia.  Afterward, he spent four years with the Department of Defense as a civilian Systems Engineer, where he performed test engineer functions onboard U.S. Navy submarines and contributed to software development efforts to support non-propulsion electronic systems upgrades during shipyard availabilities. While with the DoD, Daniel completed his MBA at the College of William & Mary.

“Our firm is continuing to grow, and part of our growth strategy is providing up-and-coming lawyers the opportunity to formally join our firm as practicing attorneys once they pass the bar,” said Michael L. Sterling, Managing Partner. “The success of our Summer Associate program is evident by the significant number of our attorneys who began their legal careers at Vandeventer Black.”

Vandeventer Black has a strong emphasis on talent acquisition and expanding its already diverse legal services. The firm has recruited four new attorneys within the last two months to join their growing Business, Medical Malpractice, Commercial Real Estate, and now their Construction and Government Contracts Practice Groups.

Vandeventer Black’s James R. Harvey Receives Preeminent Peer Review Rating

Written by James R. Harvey on . Posted in Firm News.

Vandeventer Black attorney, James “Jim” R. Harvey, received the AV® Preeminent® Peer Review Rating™ from Martindale-Hubbell®, the legal profession’s most prestigious rating service. This is the highest possible rating for an attorney for both ethical standards and legal ability. The “AV” designation represents the pinnacle of professional excellence and achieved after an attorney has been reviewed and recommended by his/her peers, including members of the bar and the judiciary.

“I am humbled by the recognition provided by my peers and value the relationships I have in the community,” said Harvey.

Harvey is an award-winning attorney and a recipient of the Best Lawyers in America® for Construction Law, Virginia Super Lawyers by Thompson Reuters, Hampton Roads’ Top 40 Under 40 by Inside Business, Top Lawyers by Coastal Virginia Magazine, and the NPBA Walter E. Hoffman Community Service Award.

Harvey is a partner with Vandeventer Black and is located in their Norfolk office. He is a member of the firm’s Executive Board and has a wide range of experience in construction, surety, government contracts, land use, defective products, professional liability, and business disputes.

Harvey serves as the Chair of the Norfolk Board of Zoning Appeals, is the past-president of the Norfolk & Portsmouth Bar Association as well as its foundation, and a past chair of the Virginia Bar Association’s Construction and Public Contracts Section.  He also serves as legal counsel to the Tidewater District of the Associated General Contractors of Virginia and is active in numerous trade organizations in the construction industry.

YOUR SWAM CERTIFICATION IS AT RISK

Written by Michael L. Sterling on . Posted in Corporate & Business.

The Virginia Department of Small Business and Supplier Diversity (DSBSD) administers the small, women-owned and minority-owned (SWaM) business program. The DSBSD SWaM Certification Division reviews initial and recertification applications. DSBSD certification eligibility determinations are based on existing circumstances at the time of application. The criteria are in the Commonwealth of Virginia Administration Code regulations:

7VAC13-20-40. Eligible Small Business.
In general, a business may be certified as a small business if it meets the definition of small business provided in § 2.2-1604 of the Code of Virginia.

§ 2.2-1604. Definitions.
“Small business” means a business that is at least 51 percent independently owned and controlled by one or more individuals who are U.S. citizens or legal resident aliens and, together with affiliates, has 250 or fewer employees or average annual gross receipts of $10 million or less averaged over the previous three years. One or more of the individual owners shall control both the management and daily business operations of the small business.

7VAC13-20-110. Control
The applicant must show evidence that the women, minority, or individual owners have control of the business. The following factors will be examined in determining who controls an applicant’s business:

1. Governance.
a. The organizational and governing documents of an applicant (e.g., limited liability company operating agreements, partnership agreements, or articles of incorporation and bylaws) must not contain any provision that restricts the ability of the women, minority, or individual owners from exercising managerial control and operational authority of the business.

The DSBSD is scrutinizing company operating agreements, partnership agreements, articles of incorporation, and bylaws to assure that women and minority owners control the business. Even if a business was previously certified, the DSBSD might deny recertification based on its current more vigorous and technical review of the company documents that were previously approved. For example, provisions that require a non-woman or non-minority owner to be present for a quorum, or a supermajority vote might disqualify your company. Make sure to carefully review your documents before you apply.

A business whose application for certification has been denied may reapply for the same category of certification six months after the date on which the business receives the notice of denial. An applicant denied certification may apply for certification in any other category without delay if otherwise eligible. The applicant may request a waiver of the six-month reapplication period from the department director by submitting a written request for reconsideration and providing a reasonable basis for the waiver. However, these are rarely granted. For more information, please contact the authoring attorney.

Cyber Liability Insurance for Small to Medium Size Businesses – Are You Covered?

Written by Jonathan V. Gallo on . Posted in CyberSecurity & Data Privacy, Technology Roundup.

Today, it seems hardly a month passes without a report of another business falling victim to a data breach. Over the past few years, some of the largest and well-known companies such as Equifax, Target, Home Depot, TJ Maxx, Anthem, Sony Pictures, and Uber, have been affected by data breaches. These companies have experienced significant losses, totaling millions of dollars.

While larger companies may possess the resources to absorb these losses, many small to medium-sized businesses may be unable to recover from a data breach. Even a small data breach affecting only a few thousand records could expose a business to significant losses with devastating impact, and may even cause a business to close. According to a 2017 study by the Ponemon Institute, although the average cost per record lost or stolen decreased from $158 in 2016 to $141 in 2017, the average size of data breaches increased to more than 24,000 records with a global average cost of $3.62 million.

Recently, insurance companies have begun offering customers cyber liability policies specific to cyber risks, including those risks associated with data breaches. These policies can vary in terms of their coverages and exclusions. In general, these policies typically offer both first-party and third-party coverages.

These policies and their levels of coverage vary by insurer, so it is important to review any policy and its exclusions prior to purchase, to understand the potential limitations in coverage. Failure to do so can lead to uncertainty and can expose a business to coverage disputes, frequently at worst possible time – after a breach has already occurred.

For example, in P.F. Chang’s China Bistro v. Fed. Ins. Co., No. CV-15-01322-PHX-SMM, 2016 WL 3055111 (D. Ariz. May 2016), Chang’s sought reimbursement from Federal under its cyber liability policy for $1.9 million it paid in assessments to its payment card processing company, Bank of America Merchant Services (BAMS). The assessments were based on data breach in 2014 in which hackers obtained and posted on the Internet the credit card numbers of approximately 60,000 of Chang’s customers. Under its Master Services Agreement (MSA) with BAMS, Chang’s agreed to reimburse BAMS for any “fees,” “fines,” “penalties,” or “assessments” imposed by the credit card associations because of a breach.

In granting summary judgment in favor of Federal, the Court held that the cyber policy’s “Privacy Injury” coverage did not apply to BAMS’ claim for reimbursement from Chang’s because the records that were compromised were not BAMS’ records, but those of the issuing banks. The Court also held that the policy language also barred coverage for claims arising out of any liabilities or obligations assumed by Chang’s, including those assumed under any contract or agreement like the MSA between Chang’s and BAMS.

In a case still pending, Columbia Casualty Co. v. Cottage Health System No. 2:16-cv-03759 (C.D. Cal. Complaint Filed May 31, 2016), an insurer (Columbia) filed suit seeking to deny coverage under the cyber liability policy it issued to Cottage Health System (Cottage). Cottage, which operates a network of hospitals, suffered a data breach in 2013 in which the confidential electronic medical records of approximately 32,500 of its patients stored on its servers were made available to the public on the Internet.

Columbia argues, among other things, that coverage is barred based on the policy’s “Failure to Follow Minimum Required Practices” exclusion that precludes coverage for the “failure of an Insured to continuously implement the procedures and risk controls identified in the Insured’s application…” as well as the policy’s “Minimum Required Practices” condition which provides that, as a condition precedent to coverage, Cottage warranted that it would “maintain all risk controls” identified in its application. Columbia also claims that the policy should be rescinded because Cottage’s responses to its application contained misrepresentations and/or omissions of material fact upon which Columbia relied when issuing the policy.

Given the current state of cyber risk, cyber liability insurance is increasingly becoming an essential element in the overall risk management strategy for many businesses. However, the language used in these policies can be complex, and it may not be easy for businesses to identify and understand potential gaps in coverage. These cases highlight the importance for businesses to have a thorough understanding of their risk profile when applying for coverage as well as considering cyber liability policy limits and exclusions prior to purchasing cyber liability insurance.

Shopping Subcontractors After Using Bid That Resulted In Contract Award

Written by Daniel Salmon on . Posted in Government Contracts.

Can contractors “shop” bids after obtaining and using them to obtain contract awards?  Generally speaking, the answer is yes under Virginia law.  However, the law varies in other jurisdictions.  While this may not seem necessarily fair, jurisdictional views vary. For example, Virginia holds that bids are a means by which the prospective subcontractor (SC) and prospective general contractor (GC) agree to potentially agree upon a subcontract award, if the Owner makes an award to the GC.  However, other jurisdictions see it differently and allow the GC to hold the SC to the bidding process.

This means that, for practical purposes, if Virginia law applies, the GC can shop bids after being awarded a contract and SCs can reject prospective subcontracts, even if the SC’s bid was used by the GC in submitting the GC’s bid or proposal to the Owner.  Various efforts have been made to avoid this result, both by GCs and SCs.  Additionally, there are practical concerns for both sides in that bid shopping is generally disfavored and viewed as a sharp business practice as is refusing to honor a submitted bid – both with potentially significant long-term business consequences, even if there are no legal consequences.

Construction contracts typically undergo a tiered bidding process.  First, the Owner requests bids from GCs for the scope of the overall project.  Before submitting bids, the GC then seeks its own bids from SCs for different tasks.  The GC then submits its bid to the Owner, relying upon quotes received from the SCs.  While the GC is typically bound to the bid it submits to the Owner, the GC is not bound to the SC bids used in its proposal.  Thus, absent valid contractual prohibitions, the GC may seek alternatives to the SCs used in its winning proposal.  However, depending on jurisdiction, a SC may be bound to its bid, for at least long enough to allow the GC to accept the SC’s offer.

In Virginia, a GC’s detrimental reliance on a SC’s bid does not bind the SC, so long as the SC revokes the offer before the GC accepts.  When a party detrimentally relies on another’s promise, even without a valid contract, courts in some jurisdictions may hold the other party to said promise under a theory of promissory estoppel.  However, Virginia does not recognize this theory of promissory estoppel and generally requires the formation of a valid contract.  This is consistent with Virginia’s position on teaming agreements, wherein parties agree to negotiate in good faith, which are also treated as mere “agreements to agree” and not as valid contracts.  In short, as previously stated, GCs in Virginia are generally free to bid shop after a contract award.

Most states other than Virginia follow the Drennan doctrine on promissory estoppel when dealing with GC-SC bidding.  Drennan v. Star Paving was a 1957 California Supreme Court case that involved a GC bidding on a school construction project and a SC that mistakenly underestimated its bid for paving services.  The SC revoked its offer after the GC received the award, but before the GC could accept the SC’s offer.  Nonetheless, the court held in favor of the GC, stating that “it is only fair that [the GC] should have at least an opportunity to accept [the SC]’s bid after the general contract has been awarded to [the GC]” in reliance on the SC’s bid, but noted that “a [GC] is not free to delay acceptance after [it] has been awarded the general contract in the hope of getting a better price.”  Thus, in Drennan jurisdictions, the SC is typically liable for performance, but may be relieved of such liability if the GC attempts to bid shop, renegotiate, or unduly delay acceptance.

Despite the general Virginia law, GCs in Virginia may be able to mitigate the risk of a SC dishonoring its bid by including language that specifically provides for an acceptance period in the event of award or entering into an actual subcontract with all aspects negotiated pending the award.  You should consult your attorney for advice on specific bids and contract needs if you wish to more formally structure such relationships.

Shopping Subcontractors After Using Bid That Resulted In Contract Award

Written by Daniel Salmon on . Posted in Government Contracts.

Can contractors “shop” bids after obtaining and using them to obtain contract awards?  Generally speaking, the answer is yes under Virginia law.  However, the law varies in other jurisdictions.  While this may not seem necessarily fair, jurisdictional views vary. For example, Virginia holds that bids are a means by which the prospective subcontractor (SC) and prospective general contractor (GC) agree to potentially agree upon a subcontract award, if the Owner makes an award to the GC.  However, other jurisdictions see it differently and allow the GC to hold the SC to the bidding process.

This means that, for practical purposes, if Virginia law applies, the GC can shop bids after being awarded a contract and SCs can reject prospective subcontracts, even if the SC’s bid was used by the GC in submitting the GC’s bid or proposal to the Owner.  Various efforts have been made to avoid this result, both by GCs and SCs.  Additionally, there are practical concerns for both sides in that bid shopping is generally disfavored and viewed as a sharp business practice as is refusing to honor a submitted bid – both with potentially significant long-term business consequences, even if there are no legal consequences.

Construction contracts typically undergo a tiered bidding process.  First, the Owner requests bids from GCs for the scope of the overall project.  Before submitting bids, the GC then seeks its own bids from SCs for different tasks.  The GC then submits its bid to the Owner, relying upon quotes received from the SCs.  While the GC is typically bound to the bid it submits to the Owner, the GC is not bound to the SC bids used in its proposal.  Thus, absent valid contractual prohibitions, the GC may seek alternatives to the SCs used in its winning proposal.  However, depending on jurisdiction, a SC may be bound to its bid, for at least long enough to allow the GC to accept the SC’s offer.

In Virginia, a GC’s detrimental reliance on a SC’s bid does not bind the SC, so long as the SC revokes the offer before the GC accepts.  When a party detrimentally relies on another’s promise, even without a valid contract, courts in some jurisdictions may hold the other party to said promise under a theory of promissory estoppel.  However, Virginia does not recognize this theory of promissory estoppel and generally requires the formation of a valid contract.  This is consistent with Virginia’s position on teaming agreements, wherein parties agree to negotiate in good faith, which are also treated as mere “agreements to agree” and not as valid contracts.  In short, as previously stated, GCs in Virginia are generally free to bid shop after a contract award.

Most states other than Virginia follow the Drennan doctrine on promissory estoppel when dealing with GC-SC bidding.  Drennan v. Star Paving was a 1957 California Supreme Court case that involved a GC bidding on a school construction project and a SC that mistakenly underestimated its bid for paving services.  The SC revoked its offer after the GC received the award, but before the GC could accept the SC’s offer.  Nonetheless, the court held in favor of the GC, stating that “it is only fair that [the GC] should have at least an opportunity to accept [the SC]’s bid after the general contract has been awarded to [the GC]” in reliance on the SC’s bid, but noted that “a [GC] is not free to delay acceptance after [it] has been awarded the general contract in the hope of getting a better price.”  Thus, in Drennan jurisdictions, the SC is typically liable for performance, but may be relieved of such liability if the GC attempts to bid shop, renegotiate, or unduly delay acceptance.

Despite the general Virginia law, GCs in Virginia may be able to mitigate the risk of a SC dishonoring its bid by including language that specifically provides for an acceptance period in the event of award or entering into an actual subcontract with all aspects negotiated pending the award.  You should consult your attorney for advice on specific bids and contract needs if you wish to more formally structure such relationships.

MACS forum fall 2019 MACS forum fall 2019 MACS forum fall 2019 MACS forum fall 2019 MACS forum fall 2019

Vandeventer Black Gears Up for its 2nd Mid-Atlantic Capital Sources Forum in Norfolk

Written by Vandeventer Black LLP on . Posted in Firm News.

Last year, Vandeventer Black launched the Mid-Atlantic Capital Sources (MACS) Forum where over 100 business owners, investors, CEOs, CFOs, and other professionals gathered insights on the various types of capital sources available in the marketplace to growing companies. Due to the success of this event, the second edition will be taking place on November 6, 2019, from 8:30 am – 12:30 pm at the Slover Library in Downtown Norfolk.

The MACS Forum is a unique opportunity for business owners, private investors, and professionals to acquire valuable insight on topics such as the current business climate and financial environment, non-traditional lending, how and when to sell a company, utilizing equity wisely, valuation of a company, among others. Scheduled speakers include:

  • Anil Nair, Ph.D., Professor & Chair of the Department of Management, The Strome College of Business at Old Dominion University
  • Clint Minarik, Senior Vice President, Dollar Bank
  • Nicholas C. Zagotta, General Partner, Jackson Lending, L.P.
  • David R. Stephens, President & Founder, Legacy Business Advisors
  • David Siegel, CPA, Director, Transaction Advisory Services Group, Cherry Bekaert LLP
  • John Richards, Managing Director, Berkadia – a Berkshire Hathaway and Jefferies Financial Group Company
  • Scott Upton, Managing Director, ICG Capital Securities, LLC
  • Tracy Gregorio, Partner, G2 Ops, Inc.

Chris Topping of 504 Capital Corporation will act as Moderator. In addition, the Managing Partner of Vandeventer Black LLP, Michael L. Sterling, will be presenting the Vandeventer Black Award for Excellence in Business Strategy to Tracy Gregorio, recognizing her innovative business thinking and successful execution. The Forum is supported by Legacy Business Advisors, 504 Capital Corporation, Cherry Bekaert LLP, Strome College of Business at Old Dominion University, and Virginia Community Capital. For more information and to register, please visit macsforum.com.

About Vandeventer Black LLP

Vandeventer Black LLP is a dynamic business and litigation law firm established in 1883 that is dedicated to responsiveness and results while delivering internationally recognized legal solutions. Headquartered in the commercial gateway of Norfolk, Virginia, its accomplished attorneys assist clients from offices located in Virginia, North Carolina, and Germany.

About MACS Forum

The Mid-Atlantic Capital Sources Forum (MACS Forum) provides a venue for the much-needed dialogue between companies and capital sources about the great opportunities available in this region. Rather than a typical investor conference where companies give pitches, the Forum features speakers representing various capital sources. Originated by Vandeventer Black LLP, the MACS Forum provides leading information on how to find and use capital for growth, value creation, investment criteria, transaction structures, and investment climate.

 

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Is Denial of a Motion to File a Surreply Really a Denial if the Court Reads it Anyway?

Written by Dustin M. Paul on . Posted in Legal Alert, The EDVA Norfolk Blog.

Everyone likes to have the last word.  Indeed, often dubbed the “recency effect” there is scientific support that going last may increase persuasion.  But in ordinary motions practice in the EDVA, the movant both goes first and last.  Local Rule 7(f)(1) does allow the non-movant to request leave of court to file a surreply.

I often advise clients it is a request that should rarely be made before our judges.  And a recent order from Judge Miller reinforces that view as in Adams v. Applied Business Services, 2:18-cv-559 he denied the defendant’s request to file its surreply.

But, the opinion does reveal what I have often found confusing about the motion for leave process.  Judge Miller implicitly demonstrates that he has reviewed the proposed surreply—he both describes its contents and quotes from the surreply.  So although he denied the motion, he did read the brief.  On appeal of the underlying motion, perhaps, the contents of the surreply are not part of the record.  But if the Defendant’s goal was to focus the Court to a particular issue and reiterate its argument, the Defendant may have won the war even if it lost this particular battle.

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STATUTES, STATUES, AND MUNICIPAL CONSTITUTIONAL RIGHTS (Part 2)

Written by Dustin M. Paul on . Posted in Legal Alert, The EDVA Norfolk Blog.

We previously discussed the suit in the EDVA brought by the City of Norfolk against the Commonwealth of Virginia to try and remove the civil war monument in downtown Norfolk.  Service has been waived, and we can now expect responsive pleadings on October 22, 2019.  Then we will see whether the state challenges the right of a municipality to bring First and Fourteenth Amendment claims.

In the meantime, the City has amended the lawsuit and has a new theory based in the Virginia Constitution.  In a recently filed Amended Complaint, Count four now alleges that the Virginia Constitution prohibits any person from being granted any right in a public street longer than forty years.  The City contends that if the evidence shows the relevant monument is not owned by the city, that the perpetual right to keep the monument in the right of way would be unconstitutional.

It is unlikely that the Court would keep jurisdiction of this case to decide a purely state constitutional issue if the federal issues are dismissed.  So, it will be very interesting to see what responsive pleadings are filed by the Defendants.

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The Return of Corpus Linguistics

Written by Dustin M. Paul on . Posted in Legal Alert, The EDVA Norfolk Blog.

On a previous post on the blog, we discussed the increased judicial focus on “corpus linguistics,” the use of searchable databases to find specific examples of how a word is used at a given time.  The idea got additional appellate attention, again, at the instigation of Judge Thapar of the Sixth Circuit.

In Wright v. Spaulding, the Court considered a habeas petition and the right of prisoners to bring successive petitions.  But footnote 1 is what is of interest.  The Court’s opinion noted that the Court requested “the parties to file supplemental briefs on the original meaning of Article III’s case-or controversy requirement, specifically whether the corpus of Founding-era American English helped illuminate that meaning.”  Apparently, the additional briefing was not helpful: Judge Tharpar notes that after reviewing the supplemental briefing and two amicus briefs, “corpus linguistics turned out not to be the most helpful tool in the toolkit.

I predict we see a lot more reference to this interpretative technique.  Just in August and September, it has been referenced by the Supreme Court of Idaho (State v. Lantis, No. 46171, 2019 Ida. LEXIS 127, at *14 (Aug. 23, 2019)); the Supreme Court of Utah (Richards v. Cox, 2019 UT 57, ¶ 20 (Sup.Ct.)); and the Third Circuit (Caesars Entm’t Corp. v. Int’l Union of Operating Eng’rs Local 68 Pension Fund, 932 F.3d 91, 96 (3d Cir. 2019)).  Are you keeping up?

Thanks to Howard Bashman and his blog “How Appealing” for helping me keep up on these issues.

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