Category Archives: business

Gov’t insured student loans and bankruptcy

(Photo by Bigstock)

By MITCHELL B. WEITZMAN

One of the most significant debt obligations a person can incur, a government insured student loan, is generally non-dischargeable in bankruptcy. This applies to the borrowing student and any person co-signing or guaranteeing the loan. The sole exception is if the debtor can demonstrate “undue hardship” on the part of the debtor or his or her dependants, an extremely difficult standard to meet under federal law.

Relevant sections of the Bankruptcy Code provide, in part, that a debtor in bankruptcy will not obtain a discharge from any debt “(i) for an educational benefit overpayment or loan or made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or (iii) any other educational loan that is a qualified educational loan as defined in [the Internal Revenue Code], incurred by a debtor who is an individual.”

The rationale for non-dischargeability is to motivate lenders to make educational loans widely available for a college education, highly valued by society. As the court decision discussed below notes, student loan programs afford individuals in “all walks of life the opportunity to obtain an education” and that a “well-educated society is critical to our general welfare and prosperity.” Another decision put it this way: “[i]n return for giving aid to individuals who represent poor credit risks, [federal law] strips these individuals of the refuge of bankruptcy in all but extreme circumstances.” Several court decisions have addressed “undue hardship.”

In a case in which the debtor persuaded two lower courts that she was entitled to the undue hardship exception, the United States Court of Appeals for the Fourth Circuit reversed, holding that she failed to meet the following high standard, to show: (1) she cannot maintain a minimal standard of living and repay the loans, (2) additional circumstances exist that illustrate she will not be able to repay the loans for a substantial part of the repayment period, and (3) she attempted to repay the loans in good faith. In re Sandra Jane Frushour, 433 F.3d 393 (4th Cir. 2005), the Fourth Circuit noted that “undue hardship” means more than “inability to pay one’s debts.” In that case the debtor owed $12,148 in student loan debt, was in her 40s at the time of filing bankruptcy, had a seven-year-old child for whom she received no child support, changed jobs frequently, initially making between $18,000 and $20,000 per year, and then far less, $7,000 to $10,000 per year, when the tourism industry in which she worked experienced a sharp downturn following the events of Sept. 11, 2001. At the time of her bankruptcy, she earned gross income of $998 per month, drove a used Volvo with over 250,000 miles, and had only $200 to allocate to housing per month. Even under these difficult circumstances, the appeals court held that she was not entitled to a discharge because she refused to participate in a debt-consolidation program made available through a federal program that would have required her to pay 20 percent of the difference between her gross income and the federal poverty guidelines for her family size, preferring to obtain a complete “fresh start” with no remaining payment obligations.

These facts illustrate how difficult one’s circumstances must be in order to obtain a discharge for federally insured student loan debt.

The contents of this article are intended for general informational purposes only and should not be considered legal advice. This is part of a series of monthly articles by Jackson & Campbell on legal issues of interest to the LBGT community. Jackson & Campbell is a full-service law firm based in Washington and with offices in Maryland and Virginia. If you have any questions regarding this article, contact Mitchell B. Weitzman at 202-457-1695 mweitzman@jackscamp.com. If you have any questions regarding our firm, please contact Don Uttrich, who chairs our Diversity Committee, at 202-457-4266 or duttrich@jackscamp.com.

New Year: Time to jump in the card pool?

Is saving money one of your resolutions for the New Year? Then perhaps it is time to jump in the card pool by purchasing gift cards at a discount. Gift card exchange web sites such as Card Pool (www.cardpool.com), Plastic Jungle (www.plasticjungle.com), and ABC Gift Cards (www.abcgiftcards.com) sell discounted gift cards from hundreds of retailers. The wide variety includes home improvement (Home Depot, Lowes), drug (CVS, Rite Aid), electronic (Best Buy, Apple), big-box (Wal-Mart, Target), and department stores (JC Penney, Macy’s).

The websites pay up to 92 percent for unwanted or unused gift cards and then re-sell them at discounts ranging from 2 percent to 35 percent. There is no sales tax and shipping is free; electronic gift cards are also available. An abundant selection of cards is now available as they are cashed in after the holidays.

Some items to consider when purchasing discounted gift cards:

Only purchase cards from stores where you actually shop and that sell items you really need. Otherwise, you will end up with cards collecting dust and be in the same position as the person who sold them to the exchange web site.

Only purchase cards from web sites that sell cards with no fees and no expiration date.

Check out the guarantee program to determine the policy for returns and card value (read the fine print!). Cardpool guarantees the card will be valid at the merchant and to the dollar amount specified for up to 100 days from the date of purchase, up to a maximum of $1,000 per customer. Plastic Jungle offers a guarantee for 60 days from the date of purchase and up to a maximum of $1,000 per customer. ABC Gift Cards has a 45-day return policy for invalid cards or balance discrepancies.

Confirm the value of a card upon receipt by calling the 800 number on the card, entering the code on the retailer’s web site, and/or take it to the retailer.

Finally, to get a triple-bonus on top of your discount, use a credit card with a cash back or rewards program to purchase the gift cards, buy items that are on sale at the store, and use a coupon! Happy shopping and saving at all those post-holiday sales!

(This article is for informational purposes only and is not financial, legal or tax advice. Please consult with your adviser before making any decisions.)

David M. Taube, CFA, CFP is CEO & Chief Investment Officer of Kalorama Wealth Strategies, LLC, a fee-only investment advisory and financial planning firm in the District. Reach him at 202-550-7262 or dtaube@kaloramawealth.com.

Gray measures up on halting a regulatory folly

It was the proverbial bureaucratic hammer in search of a nail.

Until D.C. Mayor Vincent Gray found out about it.

Late last week and on the heels of Gray’s stated intention to make the District “the most business-friendly city in the country” and his formation of a task force to review city regulations ripe for reform, the mayor proved he had the mettle to immediately act on a sudden bump springing from the cobble on that lengthy road.

Any doubt that Gray was serious about these objectives, a hospitality industry source with knowledge of the situation has informed me, were quickly dispelled when the mayor ordered the “suspension” of a new business inspection program announced by the D.C. Department of Consumer and Regulatory Affairs (DCRA) when brought to his attention. DCRA spokesman Helder Gil has flatly denied this assertion, claiming that the decision to halt the inspections was made solely by agency director Nicholas Majett.

Majett had recently announced the nascent program in an information pamphlet so amateurishly produced and devoid of understandable content that it might have been a jokester’s spoof of city regulators gone wild. In it, Majett identified the agency’s undertaking of a new city inspection program to measure alcohol pour amounts at bars and restaurants.

DCRA had conducted only approximately 10 inspections at venues along the H Street, N.E., entertainment corridor, when word started to spread about the incipient undertaking.

In announcing the plan to inspect nearly 1,200 alcohol-licensed hospitality establishments, DCRA released a “Restaurant and Bar Owners Guide to Weights and Measures Inspections” purporting to detail “what types of materials will be inspected” and “in what manner.” Except that it didn’t.

Instead, illustrations of beer, wine and rocks glasses with corresponding liquid ounce measurements noted alongside each graphic were displayed. The numbers don’t correspond with the actual volume size of each drink vessel, but an allegedly required pour amount for each drink type.

The pamphlet declaratively specifies, for example, that the “District of Columbia requires a five-ounce pour for all glasses of wine.” Except that it doesn’t.

The D.C. Alcoholic Beverage Regulation Administration (ABRA) confirmed this week that there are no city regulations specifying the amount of alcohol that is required per serving for variable alcohol types.

In other words, in the absence of any legislation or rulemaking, DCRA concocted its own imaginary standards, stating that the city “has zero tolerance for incorrect pours” in their mythical world.

A reasonable person would be hard-pressed to comprehend any rationale for the program. DCRA claims to have received about a dozen complaints regarding “light alcohol pours” in the past year by unhappy, or perhaps just un-drunk, drinkers.

DCRA claims authority for this new inspection scheme based on the D.C. Regulation and Inspection of Weighing and Measuring Devices Amendment Act of 2004. The law authorizes inspection of mechanical weight and volume devices such as UPC scanners and grocery food scales, pharmaceutical scales and those used in dialysis clinics, compressed natural gas meters, gas station pump meters, vehicle weighing scales and the like.

The DCRA alcohol materials reference bar “jiggers” as a volume measurement device subject to inspection on a twice-yearly basis and $2,000 fine if unregistered, despite not being included on the “Device Registration Application” under any of 15 device classes.

Consumers know that it is extraordinarily rare for a bartender to utilize a shot jigger to measure poured liquor. Manual free-pours are the common industry practice. Customer loyalty and return patronage directly correlates to the “weight” of those pours.

Majett’s agency has sufficient critical device inspections to conduct with only four department inspectors without trolling through bars and restaurants to transfer water from jiggers into calibrated glass measurement beakers to determine if this standardized object is compliant, if even ever used. If not, DCRA has a skewed sense of agency priorities.

D.C.’s distinction as the nation’s perennial worst business environment is a hard-earned shame, indeed. So-called enforcement of fabricated standards by the city’s business regulatory agency is one good reason.

Nail, meet hammer. Rather, meet the thorn in the side of local businesses, Mayor Gray.

Mark Lee is a local small business manager and long-time community business advocate. Reach him at OurBusinessMatters@gmail.com.

Business: Family Medical Leave for gay couples?

hospital, hand, gay news, Washington Blade

(Photo courtesy bigstock)

Although two decades have passed since its enactment, the Family and Medical Leave Act (“FMLA”) continues to evolve through court decisions. The FMLA allows an eligible employee of a covered employer up to 12 weeks of unpaid, job-protected leave for specified family and medical reasons. In December 2012, the U.S. Supreme Court announced that it would consider whether the Defense of Marriage Act unlawfully denies benefits to gay and lesbian couples who are married in states that allow such unions. A Supreme Court decision nullifying DOMA could have wide-ranging impacts, including how the FMLA covers “caring for a spouse.”

The FMLA allows an eligible employee up to 12 weeks of job-protected leave to care for a spouse who suffers from a serious health condition. As a preliminary matter, the FMLA regulations provide that the term “spouse” is defined in terms of the applicable state law:

Spouse means a husband or wife as defined and recognized under state law for purposes of marriage in the state where the employee resides, including common law marriage in states where it is recognized.

This FMLA provision, however, has been limited by DOMA’s definition of “spouse” to mean only opposite-sex spouses. DOMA, clearly states that the word “marriage” means only a legal union between husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.

Recently, a federal court in Michigan rejected an employee’s claim involving the FMLA’s provision for “caring for a spouse.” In the case of Copeland v. Mid-Michigan Regional Med. Ctr., (E.D. Mich. Feb. 16, 2012), the plaintiff employee asserted a claim for violation of the FMLA by her employer for failing to provide leave, demoting her, and putting her on probation as a result of her absences to care for her terminally ill same-sex partner which ultimately resulted in her termination. The U.S. District Court for the Eastern District of Michigan found that plaintiff’s FMLA claim failed, as a matter of law, because the FMLA only provides leave for an employee to care for a “spouse,” which is defined in the regulations, as a husband or wife defined or recognized under state law for the purposes of marriage in the state where the employee resides.

The court rejected Copeland’s claim under the FMLA because in Michigan, same-sex marriages are not constitutionally recognized and common law marriages were abolished. The couple, thus, was not husband and wife as defined and recognized by state law, and the employee was not the sick partner’s “spouse” for purposes of the FMLA. The court also ruled against the employee with respect to her claim that the employer violated its internal FMLA policy because the employee handbook defines “family member” to include a domestic partner. The Copeland Court held that “[a]ny possible cause of action relating to violation of internal FMLA policy by virtue of defendant employer’s handbook definition of “family member” does not provide a basis for a statutory claim under the FMLA.

While the Copeland case was decided under Michigan law, given the current law in D.C. and the recent legalization of same-sex marriage in Maryland, the results may be different. On the other hand, Virginia, like Michigan, does not recognize same-sex marriage and as such, any result in Virginia would likely be the same. Employers as well as members of the LGBT community are anxiously awaiting further guidance from the Supreme Court in June 2013 regarding this issue. If the Supreme Court rules that DOMA violates the rights of same-sex couples who are legally married under the state laws where they reside, then an employee arguably—at least in states, such as D.C. and Maryland, where same-sex marriage is legal—may be entitled to request FMLA leave to care for a same-sex spouse. If the court rules that the state law references in the FMLA were modified by the subsequent DOMA statute, then same-sex spouses may not enjoy the same FMLA benefits as opposite-sex couples.

(The contents of this article are intended for general informational purposes only and should not be considered legal advice.)

This is a part of a series of monthly articles by Jackson & Campbell, P.C. on legal issues of interest to the LGBT community. Jackson & Campbell, P.C. is a full-service law firm based in Washington with offices in Maryland and Virginia. Those with questions regarding this article, please contact Michele Dearing at 202-457-1629 or mdearing@jackscamp.com. Those with questions regarding the firm should contact Don Uttrich, who chairs its Diversity Committee, at 202-457-4266 or duttrich@jackscamp.com.

Gay marriage one asset in state business growth

Marriage equality is good for business.

For that reason, entities of commerce — business associations and advocates, executive and management personnel, small and moderate-sized local enterprises and larger national and international corporations — have increasingly joined in supporting same-sex marriage. Large and growing numbers of businesses have promulgated internal policies respecting gay relationships and promote the same recognition by government.

As an anticipated slow slog to gain legal acceptance on a state-by-state basis evolves, business backing will prove essential to enlarging legalization beyond the current limited landscape.

Corporate business leaders have provided critical political support and significant sums of cash to fueling state marriage equality efforts and recent ballot box campaigns. Discounting the few proprietor outliers opposed on religious grounds, all types of businesses, particularly the largest corporations, are supportive of civil equality.

Broadening business engagement will be essential to both expanding success beyond a static inventory of predictable locales and creating a momentum-building base of jurisdictional wins to further advance accelerated and expanded adoption.

Despite a rapid transformation in public attitudes on the issue, legislative and electoral margins have typically been extremely narrow in the few states now offering marriage as an option for gay and lesbian couples. Even in Maryland, with its highly favorable constituency composition, only a small margin of votes provided a late-call referendum victory in November. Support from hundreds of businesses endorsing the “Yes on 6” campaign helped ensure victory.

The new normal for the national economy requires states to fiercely compete for enterprise location and the resulting economic and employment contribution. States increasingly battle one another to attract and retain businesses, making the corporate ability to accommodate all employees and solicit the best talent without restriction an important decision-making component.

Maryland Gov. Martin O’Malley is attempting to grow the state’s share of biomedical, science and technology companies in particular. This effort is designed to help offset the loss of jobs and investment in other business segments partly the result of a now emblematic and entrenched negative regulatory and tax environment.

These targeted growth industries require extension of what have become standard and necessary state government financial incentives to maintain competitive consideration over other locales. A differential on an employee civil liberty can be a deal-breaker in corporate determination, particularly for businesses employing younger and job-mobile talent. Not only do these employees demand that state law comport with corporate policy for their own protection or that of colleagues, they desire residence where full opportunity is available to all.

Competitiveness in the cutthroat world of business enticement on a state level is slowly enlarging to include “quality-of-equality” concerns. The common perception is that a jurisdiction offering a full range of civil citizenship rights also attracts desired cultural amenities offering a modern social lifestyle among like-minded contemporaries.

Even O’Malley’s own laborious path to endorsing gay marriage is symbolic of the evolution of this corporate requirement. The governor’s political competitiveness as a long-shot potential contender for the Democratic nomination for president in 2016 recommended that he shift gears on a proposed state policy he eventually backed. An advantage bestowed state governments hoping to remain competitive in the commercial arena mirrored his personal political calculations.

Unfortunately for Maryland’s business development and economic growth prospects, however, civil marriage equality alone simply won’t cut it. While removal of this single disincentive for a growing number of businesses is a positive step, until the state improves its overall treatment and taxation of businesses and entrepreneurs it will continue to remain less competitive among other regional and nationwide choices.

The Free State’s free-spending tendencies and anti-business obstacles will cause Maryland to lose out on corporate retention and acquisition absent improving overall conditions for commerce.

Neighboring Virginia, the top business-friendly spot in the region, illustrates that dichotomy. The commonwealth would be well advised from a strategic perspective to extend marriage equality to all residents.But until Maryland and D.C. revise government policies to enhance corporate success and improve consumer conditions, there is scant incentive for Virginia to do so while commanding dominance in marketplace competitiveness.

Bottom line, gay wedding bells and better business policies are a match made in heaven.

Mark Lee is a local small business manager and long-time community business advocate. Reach him at OurBusinessMatters@gmail.com.

Several factors contributed to Omega closing

Omega, gay bar, LGBT nightlife, gay news, Washington Blade

Omega in 2009 (Washington Blade file photo by Henry Linser)

A few more details emerged this week about the closing of long-time Dupont Circle-based gay bar Omega, although specifics of who purchased the property remain undisclosed.

Perry Morehouse, who started there as a bartender 35 years ago and was its general manager for about the last 20 years, said this week he doesn’t know specifics other than that “it was sold to two guys that are gonna make it their private residence.” As for the sudden closing, he said it was explained to him that the business, which opened as The Fraternity House on Sept. 1, 1976 according to Mark Meinke of Rainbow History Project, had to be dissolved and moved out by year’s end.

Morehouse concurs it is unfortunate that such a long-time staple of D.C. gay nightlife didn’t get to have a closing night party as other former D.C. gay bars and clubs have done, but said the decision was beyond his control.

“I wasn’t involved in the decision at all,” Morehouse said. “I think with the people involved, it had to be closed before the end of the year. It’s just a guess, but it may have been a tax issue, I’m not sure.”

Morehouse said the building/business had been for sale since May. It was located at the rear of 2122 P Street, NW, the address it used in its promotions, though the technical address was 2123 Twining Court, NW.

“We just always used that in our advertising and such because nobody knew where Twining Court was, but everybody knows P Street,” Morehouse said.

He also said owner Glen Thompson, a Delaware resident who also owned the nearby gay bar/club Apex (now closed) and former Rehoboth Beach, Del.,-based gay club Renegade, declined to answer questions about the business or why it was sold. Morehouse declined to comment on the degree to which Thompson was involved in the business.

Morehouse did, however, offer his own thoughts. He said business had been “a lot slower” in recent years.

“I attribute it to a couple things,” he told the Blade. “One, the gay demographic has moved farther east … it got to where it was hard to get people to cross over to the west side of the Circle. Second, we were mainly a cruise bar and in the advent of the internet, it really hurt some of that. Suddenly you can go online and pull up a thousand people in D.C., Maryland and Virginia all looking for a date. They all used to be at the bar.”

Morehouse said while certain specials — like their “shirtless men drink free” nights on Wednesdays — remained popular, it’s untenable to run such specials all the time.

“You can’t give the bar away every night,” he said. “People go where the specials are. We were popular on Wednesdays. Green Lantern had theirs on Thursdays. JR.’s is popular on Sunday afternoons. The bears go to bear happy hour, but most of them don’t go out other nights. It’s just the way things are with demographics now.”

He also said gay assimilation into mainstream society has taken a toll on traditional gay watering holes and hang-out spots.

“Twenty years ago, gay people went to gay bars to hang out with other gay people and I don’t think you have that as much anymore,” Morehouse said. “People used to go to Annie’s because you could be with your own kind. Now, five gay men can go have dinner together anywhere and not feel out of place. I’ve even seen two guys out on the dance floor at a straight bar and hardly anyone looks sideways, especially in D.C. People don’t feel uncomfortable out like they used to. They feel they can let their hair down just about anywhere now.”

According to D.C. property records, the Twining Court location was sold to Thompson in 2005 for $2 million. Morehouse confirmed that prior to that, the location was rented. Sales records have not yet been posted for the current transaction, but the property has a proposed 2013 value of $2.2 million. It’s registered as a historic carriage house in Washington, a point Morehouse said had little impact on their ability to use it as a bar. He said about 15 employees were on staff, not counting contract employees such as DJs.

“A lot of people worked there a long time,” he said. “We had a couple bartenders who were there 15 to 20 years, so there’s quite a few that had worked there quite awhile.”

Morehouse said the name was changed to Omega “probably 16 or 17 years ago” though the reason for the change was “something I honestly don’t know.”

Morehouse informed employees Dec. 26 of the closing. Its website initially remained live but now a blank black screen appears at omegadc.com.

Deacon Maccubbin, owner of now-closed gay bookstore Lambda Rising, said in an e-mail that “we’ll miss seeing Perry behind the upstairs bar.” He and partner James Bennett met there when it was The Fraternity House.

“So it’s held a fond spot in our memories for 35 years,” Maccubbin wrote.

Washington Blade staff writer Lou Chibbaro Jr. contributed to this report.

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