Litigation of Business | Business of Litigation

New Office

My real office has a new home too. I am now at 4927 34th Avenue South, Minneapolis Minnesota 55417.I bought the place so it’s kinda cool.  6-8 months of renovation construction is almost over and I’ll post some pix soon. Maybe a timeline or before and after montage? Here’s a few shots for now . . .

20150820_MKT sign_0144 (2015_08_30 10_42_58 UTC)

My signs the one on top but my office is on the lower level. Not sure how much the tenant liked me moving their sign to the bottom . . .

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MKT

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Litigation of Business | Business of Litigation

New Blog Home

My blog is currently residing at http://www.mktlawblog.com. It’s not as active and somewhat more “markety” (ha, get it? Mark-ety!–Okay, Lame) but I’ll keep this one alive to perhaps post terrible jokes at again. Once again, that’s http://www.mktlawoffice.com. I told you it was more Markety. . . .

 

Mark

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Attorneys & Lawyers & Counselors

Welcome to the New(est) MKT Law Attorney!

I forgot to post about this when she actually started working here a couple/few months ago (or last year), but that’s just because she hit the ground running with a new case that was a bit high maintenance and began about the same day she started working here. But now, without further ado, welcome Andrea L. Nemmers, MKT Law’s new Associate Attorney practicing in the area of civil litigation at the firm!

Ms. Nemmers is a 2014 Graduate of William Mitchell College of Law with legal experience in the corporate and banking environments and was in house counsel before joining the firm at a commodities exchange.  Ms. Nemmers will be expanding her practice into litigation and assisting MKT Law as it transitions to exclusively practicing business litigation and continues to grow.

At MKT Law, Litigation is our Business.TM  

And we have a new attorney!

And here’s her picture (email Ms. Nemmers at aln@mktlawoffice.com or call 651-797-0997):

Andrea L. Nemmers, Esq.  

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Litigation of Business | Business of Litigation

Another Day, Another Forum Selection Clause, to Timbuktu if you need to sue

People rarely give a second thought to forum selection clauses when signing a contract. The odds always seem so remote with the clause hardly mentioned and tucked in at the very end. After all, what could possibly go wrong that would force you to go to Timbuktu just to sue. But sure enough, people always hate those same forum selection clauses once a dispute errupts and the forum selected ain’t their backyard. document-40600

A little over a year ago the U.S. Supreme Court decided Atlantic Marine Constr. Co., Inc. v. United States Dist. Court for the Western District of Texas, 134 S. Ct. 568 (2013). In Atlantic Marine, the Court’s 9-0 decision in essence blesses forum selection clauses that the parties apparently bargained for and agreed to by contract, presumably with the chance to negotiate over the clause so that it was suitable, acceptable or necessary to complete their deal. The Court succinctly stated, “if parties agreed to the venue provided in the forum-selection clause, the right of either party to challenge the venue later as inconvenient in one’s pursuit of litigation and/or convenience has been waived.” Id. Seems fair enough, it honors the right to contract and brings predictability to any future disputes.

If a company does business in many states, the desire to round up all the potential litigation and keep it on your home turf, using the same lawyers you always do that are applying your own state’s that they always do and compound with your ability to predict outcomes and costs due to your extensive experience with these familiarities, insisting on forum selection clauses is understandable. On the other hand, if this is just another $15,000.00 to $30,0000.00 bread-and-butter contract for a small local business, if the fecal matter hits the oscillating device and litigation is the only option, hiring a lawyer 1800 miles away and having to travel to the forum two or three times at least for the case, simply will not be cost effective. In most instances, with these two disparate parties it is easy to guess which one will have the bargaining heft to make sure the forum selection clause stays just the way they want it. Any bargaining parity will be absent. present So will the ability to negotiate a mutually acceptable and fair forum selection clause.

2dRWLtKThe Atlantic Marine decision involved a similar equality of bargaining power and a contract between a national general contractor with its chosen litigation base in Virginia versus a small Texas-based subcontractor with the contract project situs in Texas (and at Fort Hood–on federal property). After a full analysis, the Court concludes that, “When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties’ settled expectations. . . . In all but the most unusual cases, therefore, ‘the interest of justice’ is served by holding parties to their bargain.”

Of course forum selection clauses are found in all types of commercial contracts and are not limited to construction relmap-43775_1280ated contracts. In fact, almost half the states in the country have statutes precluding and invalidating the clauses in construction contracts for the improvement to real property if they require litigation outside the state’s borders. Most importantly for Minnesota-based businesses, the list includes MinnesotaSee also Arizona, California, Connecticut, Florida, Illinois, Indiana, Kansas, Louisiana, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, and Wisconsin.

Forum selection clauses can be powerful weapons in litigation and strong deterrents to litigation. They can save litigation costs and enhance predictability. Contrarily, forum selection clauses can be insurmountable barriers for smaller claims requiring litigation in a distant forum. The clauses may prevent justice from being cost effective.

At the end of ttimbaktuhe day, forum selection clauses are here to stay and since the Atlantic Marine case are much more certain to be upheld. This means it is more important than ever before to review those little clauses on the contract’s last page. If you can see a way it could be harmful down the road and prohibit exercising a remedy that may be necessary, raise them as issues and try to negotiate more favorable terms or conditions. If you don’t at least try you may have to pack your bags and head to Timbaktu if you need to sue.

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On Lines & Inner Nets, Publicly Recorded

Supreme Court, in Big Leap, Plans to Put Filings Online – NYTimes.com

“Information Wants To Be Free”

Stewart Brand circa 1984

WASHINGTON The Supreme Court will soon join other federal courts in making briefs and other filings available electronically, Chief Justice John G. Roberts Jr. announced Wednesday. The changes will come “as soon as 2016.” 

Chief Justice Roberts explained the court’s approach to technological change saying that judges had a special obligation to move more slowly than the rest of society.

SCOTUSI suppose it takes time to realize the benefits and then decide it is best to change and catch up with the rest of society, but the federal district courts have been using online electronic filing with public accessable court records online for over a decade. PACER (Public Access to Electronic Court Records) began in 1988 (library terminal access only) and was available on the World Wide Web in 2001. 

Although PACER is outdated and charges a ridiculous fee of .10 a page, Minnesota’s courts are still trapped somewhere in the 1980s with absolutely no online access to court filings available to the public. There is no electronic access to actual court filings available (as opposed to the currently available online records, which are limited to only court dockets via MNCIS or just the “index” or “Table of Contents” of a case’s filings–you can see something was filed but not  what that something actually is!) unless you go to a public terminal at a courthouse.

I have yet to hear a worthwhile reason that supports restricting access to public records to only courthouses rather than making them readily available to all via the internet (and for free-unlike PACER). Maybe it is to encourage people to visit their local courthouses on more than a only-when-legally-mandated basis?

The rest of the SCOTUS NY Times story can be read via this link Supreme Court, in Big Leap, Plans to Put Filings Online – NYTimes.com.

FOR MORE RECENT PUBLIC RECORDS NEWS SEE:

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Attorneys & Lawyers & Counselors, Fraudulently Fooled

Was law firm duped? ‘Lawyer’ practiced there a decade and won partnership; was she licensed?

Won’t Be Fooled Againhammer-1-1282167-m

Not too long ago, an almost exact situation occurred here in Minneapolis at a large law firm except I think the con was a fake litigator. There were big concerns about any attempts to challenge the cases she worked on as be invalid or subject to motions to reopen, challenge settlement agreements and vacate judgments by opposing counsel wanting to relitigate the cases. Seems almost unbelievable that you’d be able to get away with this at all, let alone for any length of time . . . Full story here: Was law firm duped? ‘Lawyer’ practiced there a decade and won partnership; was she licensed?.

MKT

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Attorneys & Lawyers & Counselors, Civilized Proceedings, On Lines & Inner Nets

Pointless E-mail Disclaimers | Disruptive Library Technology Jester

I am going to reveal my true inner-nerd here so please keep it on the down low, but this is pretty hilarious. It’s a librarian’s blog–no that’s not the funny part—wait—really. It’s a librarian’s blog post on stupid e-mail disclaimers! Any one who e-mails regally with lawyers, has seen so many of these you don’t even notice them anymore (real effective disclaimer) but this one sums up some of the more hilarious ones I’ve read in a while . . .or maybe it’s just the liberation commentary to each one that does it? Either way, I am thankful for humorous librarians this Turkey Day in the year Twenty Fourteen. Enjoy and thank a librarian everyday!

Looks like a librarian to me and its a Public Domain photo!

Looks like a librarian to me and its a Public Domain photo!

Pointless E-mail Disclaimers | Disruptive Library Technology Jester.

DISCLAIMER

I have posted a few times before about funny disclaimers.
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Civilized Proceedings, Minding My Own Business

Always Timley Pay Your Employees–and Taxes

Since the last post already gave away the end of the story, I thought I’d go back to the beginning and try to fill the blanks. As you may recall, I was describing a win I had recently that was somewhat surprising. My client had sued his foSp Page Bckgrdrmer employer and business partner and won via summary judgment. Really isn’t anything too unusual or exciting about that, except the way the judge crafted the relief in the Order exactly the way I wanted–and then some!

So, first I’ll let the court explain the basic facts for the employment claim (although my client wanted me to use the real names, they have been changed to protect the guilty):

EMPLOYMENT CLAIM 

Fisher was employed by Mountain Const. Inc. as the site superintendent for a restaurant Project from October 8, 2012 through February 5, 2013 at a rate of $1,750 per week. Fisher was not compensated for seven weeks and two days of work, for which Fischer is owed $12,950.00. Mountain Const. Inc. is liable for this debt as Fisher’s employer. Fisher also claims that Mountain Const. Inc.’s owner, TJ, should be held personally liable by piercing the corporate veil of Mountain Const. Inc.

Knowing that the company was defunct with no assets, and after hearing numerous threats of bankruptcy, I thought I would take a long shot and try to hold the owner personally liable for the unpaid wages. The main reason I tried was because of how often TJ kept throwing around the “B” word (Bankruptcy) throughout the case–including during his deposition–smugly. I knew it was less likely fUnited_States_Bankruptcy_Court_Sealor TJ to file bankruptcy personally, at least not until absolutely necessary. We proved TJ took money from the Project and used it personally to buy a house and flip it. It is much easier to buy real estate if you don’t have a bankruptcy on your credit report. 

After Fisher was fired, he provided the statutorily required written demand (Minn.Stat. § 181.13(a)) on his employer. After 24 hours passed, with his wages remaining unpaid, the statutory penalty of an extra day’s pay was added on for each day he went unpaid (up to 15 days). The Court also ordered the employer to pay for Fischer’s attorney’s fees and expenses (Minn.Stat. § 181.171). Piece of advice: Pay your employees on time in Minnesota.

Before and during the case, Fisher was accused of being the reason there was no profit from the Project and told he would never be paid. In essence, he was accused of being a traitor due to working with the General Contractor to finish the Project (TJ walked off the job); accused of being a forger for trying, unsuccessfully, to sign his own name to a lien waiver for work that was paid for; and a conspirator, for helping turn documents in so the Project could be closed out and everyone could be paid–even TJ and Mountain Const. Inc.!  For doing all that he was fired and told he didn’t deserve to be paid for ovepuzzler two weeks of work.

As the litigation progressed, we could tell we would not be getting any useful documents from TJ or Mountain Const. Inc. We decided to change course and serve subpoenas on the company’s credit union and see what we could uncover. My client had done some (a lot) of the bookkeeping for the Project but TJ said he had not completed a final accounting yet because he was broke. With the subpoenas, Fisher’s understanding of the Project’s finances and some help from the General Contractor, we were able to piece together a puzzle that only formed one picture when the pieces fit and locked together: TJ took all the money from the Project and the business’s bank accounts and kept it for himself.

Here’s what the Court did with that:

A. The Victoria-Elevator Test Favors Piercing the Corporate Veil 

In the usual case, an individual shareholder is not liable for the debts and obligations of the corporation. To

By Leaflet (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

By Leaflet (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)%5D, via Wikimedia Commons

determine the appropriateness of disregarding the corporate entity in this case, however, the Court applies a two-pronged test considering: (1) whether TJ has sufficiently established MCI as a separate entity and; (2) whether the failure to impose personal liability on TJ would work an injustice or be fundamentally unfair to Fisher. Victoria Elevator Co. of Minneapolis v. Meriden Grain Co., Inc., 283 N.W.2d 509, 512 (Minn. 1979). Here, “courts are concerned with reality and not form, with how the corporation operated and the individual defendant’s relationship to that operation.” Id. at 512 (citing DeWitt Truck Brokers, Inc. v. W. Ray Flemming

Fruit Co., 540 F.2d 681, 684-87 (4th Cir. 1976)). That can be determined by an analysis of the following factors: 

insufficient capitalization for purposes of corporate undertaking, failure to observe corporate formalities, nonpayment of dividends, insolvency of debtor corporation at time of transaction in question, siphoning of funds by dominant shareholder, nonfunctioning of other officers and directors, absence of corporate records, and existence of corporation as merely facade for individual dealings. 

Id. Not all but “a number of” these factors need to be present to satisfy the first prong of this test. 

The Court applies these factors to our case’s facts and here is the lesson that can be learned from this. If you want to flat-27287_150maintain the liability protection you gain from doing business as a corporation or a limited liability company (LLC), you need to follow corporate formalities, keep your business and personal finances separated and keep current and accurate records. And pay your employees, your taxes and don’t lie in a deposition.

In this case TJ did not treat MCI as a separate entity and failed to distinguish between property owned by him and property owned by the corporation. The Court has no evidence that TJ observed any of the corporate formalities necessary to distinguish MCI as an entity separate from himself. TJ was the sole shareholder of MCI. He admits that no taxes have been paid by the corporation and, according to him, he no longer possesses the corporation’s financial documents.

TJ claims that he did not pay himself a regular salary as CEO of MCI. He treated MCI’s bank account, however, as his personal account. Depo. at 42. He wrote checks from MCI’s account at the Credit Union and deposited ?them into his personal account at his Bank without recording transactions. The amounts of these transactions varied from $6,000 to $40,000. TJ also claims that he cannot remember why he transferred that money. Id.

*****[numerous self serving transactions deleted]****

TJ claims to not remember any of the above transactions or their purpose. Furthermore, the only records of the transactions were kept by the bank and credit union. The Court can only conclude that TJ was using MCI to support himself and his other businesses and investments. Based upon the evidence in this case, TJ did not distinguish between his own assets and those of MCI.

Under the first prong of the Victoria-Elevator test, TJ’s failure to observe corporate formalities, the absence of corporate records, and the evidence that the existence of the corporation is merely a facade for individual dealings, all support the piercing of MCI’s corporate veil.

Stay tuned. The next post will address the second prong’s analysis of the injustice and unfairness of allowing the corporate entity to shield the owner from liability. Now isn’t legal geeking fun! Oh yeah, and please pay your employees and taxes.

Thank you.

MKT

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Litigation of Business | Business of Litigation

Can’t Recall One Like This Before? Honestly, I Just Don’t Remember? Or Have Any Idea . . .

I got a nice win this week I really wasn’t expecting. I always try to keep my client’s expectations low, realistic, but low. I find I 20140607-032051-12051938.jpgcan meet or exceed their expectations that way and keep them happier.  In this business, you cannot over-promise just to get a case signed up and then never deliver what you promised. Well, I can’t. And this was a case that real low expectations were justified.

The Defendant and his construction company had previously been charged with very serious fraud in a licensing context and apparently agreed to a fine and forfeiture of a business license (I think maybe all business licenses for a real long time, like, forever). As usual, no one knew about this before doing business with him. Although it is public knowledge, it is not as if he has to wear a scarlet letter on his forehead. Now that I said that, I’m thinking maybe . . . naw, never never mind.

The guy was a classical narcissistic conman. Not the kind of conman that will build up your trust and confidence and then disappear with your life savings. The life savings you handed him yourself, voluntarily, a few minutes earlier believing he’d be right back with . . .whatever it was it sounded good at the time. Not the kind who can disorient you with charm and charisma and the next thing you know he borrowed your new car . . . a little while ago. Well, a while ago and is coming right back . . .of course he’s coming back .  . How long ago? Three weeks? Maybe founo conr or so . . .. damn it!

Those conmen I always have a touch of respect for as professionals. They are good at what they do. Some are so good they have it down to an art. But no. This guy we dealt with this week, he was the idiot kind of conman. Actually,calling him a “con man” is an insult to conmen everywhere.

The guy I’m talking about is the kind of conman that only fools himself forever. He believes his own BS. He cons some of the people for some of the time. But is caught and found out in the end. Nobody really believes him for very long because his greedy, true self shines through.

He can’t keep it hidden for long–the greed is too strong and stupid.  The greed-need won’t be ignored. Or avoided; or suppressed. For awhile. Never too long. The greedy-needy monster comes out and takes over and it is: All for me none for you. At any cost and without much subterfuge. No creative tricks, no sleight-of-hand or unbelievable story that just might be true because it is just too much to myiodABriEake up.

If a cat-burglar is akin to the professional conman above, then this guy is akin to the smash abroken-glass-1006530-snd grab burglar with an old truck he rams store windows with so he can grab a couple twelve packs while being recorded by surveillance video. The problem is he always rips a few people off before he is figured out. He always gets to drinks five or six beers before the cops show up after seeing his license plate on the surveillance video.

Back to reality, my client sued him for unpaid wages and for a promise he made to split the profits from a commercial construction project with him.The wages were a no brainer and after enough time and relentless accusations–he gave up. He stopped lying. He told the truth and admitted it. But he didn’t stop lying for long. He had a plan. He’ll through another lie that’s kinda true on top of it.  I’m sure he thought that would fool the lawyers and the Court. It didn’t.

At his deposition, it all came back. The game. The con. the lies. But he was stuck. He had already told the truth. The gawd awful truth. So what can he say now?Richard_Nixon_1969_inauguration

I don’t know. I have no idea. I really don’t know. I can’t recall. I don’t remember that.

In a deposition just over two hours long, he said a variation of no recollection a world-record worthy amount of times: Idea= 25 (as in “I have no”); know=73 (as in “I don’t); recall=54 (ditto); remember=23 (thought that would be more).

Anyway, I think the Judge read the deposition transcript or at least the court’s clerk did because what follows is the Order I got. It was a painful depo to conduct. It must have been worse to read how much this guy didn’t know. At one point he claimed he was broke and minutes later claimed he could not remember why or what he did with a withdrawal out of the company bank account in the tens of thousands of dollars–that was only about a year earlier!

More to come on the memorandum supporting the Order . . . I’ll explain paragraph two next time. I am not sure I have ever gotten more than I asked a Court for before? At least in a favorable way. . .

Order Granting Plaintiff’s Motion for Summary Judgment

1. Plaintiff’s motion for summary judgment as to his employment claim is GRANTED. Defendants are liable, jointly and severally, for Plaintiff’s unpaid wages in the amount of $12,950.00 plus a penalty of $5,250.00 under Minnesota Statute § 181.13.

2.Plaintiff’s motion for summary judgment as to his contract claim for half of the profits is GRANTED in part. Only Defendant T J is liable to Plaintiff for half of the profits from the project in the amount of $33,142.00.

3.Plaintiff is entitled to recover his costs, disbursements, witness fees, and attorney’s’ fees. Plaintiff’s counsel must submit information on his reasonable attorneys’ fees within 10 days of the date of this Order.

4.Defendants’ counterclaims for Tortious Interference and Breach of Fiduciary Duty are DISMISSED with prejudice.

5.The attached Memorandum is incorporated herein.

More to come . . . .(Including a real good reason to not mix business and pleasure)

MKT

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