Yes, The U.S. Immigration Laws Apply to the Real Estate Industry

Posted on December 29, 2009 by Brad Kaplan

The federal government recently announced several changes to U.S. immigration legislation. Two key topics involve increased enforcement efforts of the Immigration and Customs Enforcement (ICE) and changes in request for prevailing wage procedures. 

Preparing for an I-9 Audit or Inspection
Immigration and Customs Enforcement (ICE) has significantly increased its enforcement
efforts with respect to undocumented workers and Form I-9 recordkeeping. Employers must be prepared to quickly and effectively respond to an ICE-issued Notice of Inspection (NOI). ICE may review the employer’s files in as few as three days from the time the NOI is issued. Often enough, a prompt and complete response to the ICE office handling the investigation will end or significantly curtail their inquiry. In any event, a cooperative employer is far less likely to face fines or sanctioning. With that in mind, employers can prepare themselves for responding to a NOI by ensuring the availability of the following records:
  • Original Form I-9 (Employment Eligibility Verification Forms) and any attached documentation presented at the time of I-9 completion for at least the past three years;
  • Employee roster or payroll listing all persons employed for at least the past three years;
  • Monthly payroll reports for the past 12 months;
  • Copies of four most recent state quarterly tax reports;
  • Copies of IRS Form 941 Quarterly Tax Statements for the past 12 months;
  • Listing of any independent contractors and their dates of hire and termination for the past three years;
  • Copies of IRS Form 1099s for all independent contractors;
  • A current listing of all paid on-call individuals employed on a sporadic, irregular, or intermittent basis and who are not deemed to be an employee;
  • Copies of any Social Security Administration Employer Correction Requests (socalled “No-Match Letters”) for the past 12 months;
  • Copies of any U.S. CIS Form I-129 or I-140 (temporary or permanent worker) petitions and related Department of Labor (DOL) certificates for the past three years
  • Copies of the company’s articles of incorporation, business license and most recent annual report
  • Employer Identification Number (EIC) and Taxpayer Identification Number (TIN) documentation
  • If available, a copy of the company procedures or policies regarding Form I-9 completion
  • E-Verify Memorandum of Understanding (if participating in program)
  • Documentation related to any previous inspection by either ICE or the DOL
  • Documentation related to the use of temporary staffing agencies
Change in Request for Prevailing Wage Procedures
On December 4, 2009, the DOL announced its new procedures for obtaining a prevailing
wage determination (PWD) with respect to the H-1B, H-2, E-3 and PERM programs.
Beginning January 1, 2010, all requests for PWDs will go through the National Prevailing
Wage Helpdesk Center in Washington, D.C. This marks a change from the current
processes available to employers through either the State Workforce Agencies or Foreign
Labor Certification Data Center.
 
It is never too soon to review your internal I-9 compliance systems or create one and ascertain the
availability of the documentation listed above. 

 
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Ohio Lenders Precluded from Bringing Third Complaint on Same Note

Posted on May 11, 2009 by John Weber

 

In U.S. Bank National Association  v. Gullotta, 120 Ohio St 3d 399, the Ohio Supreme Court decided that multiple actions under the same note and mortgage are subject to the two-dismissal rule and res judicata preclusion. The decision could have far-reaching implications for lenders seeking to workout loans with troubled borrowers.   

The history of the case is important to understanding its impact. In June 2003, Giuseppe Gullotta entered into a note and mortgage with MILA, Inc., which assigned the note to U.S. Bank. In April 2004, U.S. Bank filed a foreclosure complaint for the total principal due on the note, plus interest from November 1, 2003. It voluntarily dismissed this complaint in June 2004. In September 2004, U.S. Bank filed a second identical complaint, except with interest running from December 1, 2003, which it also voluntarily dismissed in March 2005. In October 2005, U.S. Bank filed a third foreclosure complaint on Gullotta’s note and mortgage. After Gullotta filed a motion to dismiss, U.S. Bank amended its complaint to seek interest only from April 1, 2005 (the first missed payment date after its second dismissal).

Ohio Civil Procedure Rules state that “a notice of dismissal operates as an adjudication on the merits of any claim that the plaintiff has once dismissed in any court.” A second dismissal is with prejudice and res judicata preclusion takes effect. Under a res judicata analysis, any claim “arising out of the transaction or occurrence that was the subject matter of the previous action” is barred. 

The Court held that each missed payment under the same note and mortgage does not give rise to a new claim, and therefore U.S. Bank’s two earlier dismissals precluded a third action. It premised this holding on four critical facts: 1) the underlying note and mortgage never changed, 2) the bank accelerated the payment upon initial default and demanded the same principal payment in every complaint, 3) Gullotta never made another payment after his initial default, and 4) U.S. Bank never reinstated the loan. 

 

Here, the Court ruled that U.S. Bank’s third complaint arose from the same transaction or occurrence as its first two. It made a critical distinction between an installment loan payment and a loan post-acceleration. Under an installment contract, each missed payment constitutes a new claim, and thus is not subject to preclusion. If the contract contains an acceleration clause, however, a single breach is a breach of the entire agreement and the requirement to make installment payments “merge[s] into one obligation to pay the entire balance on the note.” Since every claim after acceleration would be based upon that one obligation, claims after a second voluntary dismissal are precluded. 

A third claim would not be barred if the claim were somehow different from the prior dismissed claims. For instance, if the note and mortgage had been significantly amended or the mortgage had been reinstated following an earlier default. The Court cited a string of decisions where differences in the underlying obligation permitted claims to proceed. 

The lower court was concerned that preventing subsequent claims by mortgagees would rid of any incentive for the mortgagee to negotiate with the mortgagor after filing its foreclosure complaint. The Court dispatched with this argument, however, by stating that if the mortgagee engaged in negotiations that led to altering the note and mortgage or reinstating the loan, any future claims would be permitted because they would arise from a different transaction. 

Mortgage holders should bear this decision in mind when pursuing foreclosure or other options against a defaulting borrower. A second voluntary dismissal of a foreclosure action, without a change in the underlying transaction, could bar any future recovery on the note and mortgage. Rather than simply allowing the borrower to begin making payments again, the loan should be reinstated, the terms of the note or mortgage should be amended, or an entirely new agreement should be drafted. As was noted at oral argument, the decision eliminates any incentive for a property owner to pay on a mortgage loan after a second voluntary dismissal.

 
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