In some circumstances, and often in the context of a loan, parties may enter into multiple agreements with one another. When there are multiple agreements between the same parties, one party may want to negotiate the inclusion of  “cross default” provisions in those agreements.  A cross default provision provides that a party’s default under one agreement triggers an automatic default of all of the other agreements between the parties. Banks or Lenders often include a cross default provision in their loan documents to protect their financial interests.  Once the cross default provision is invoked, the defaulting party is not likely to have many options for recourse.

In order to be effective, the cross default provision must be included in each of the agreements subject to the cross default. Eagle Ridge LLC v Albert Homes LLC, 2009 Mich App, LEXIS 2382 (November 17, 2009).  In the recent case of Eagle Ridge LLC v Albert Homes LLC, the Michigan Court of Appeals refused to enforce a cross default provision that was found in only one of two simultaneously signed agreements.

The Michigan Court of Appeals used basic contract principals to support its decision.  Quoting Randolph v Reisig, 272 Mich App 331 (2006), the Court found that “an unambiguous contractual provision is reflective of the parties’ intent as a matter of law, and if the language of the contract is unambiguous, we construe and enforce the contract as written.”  Therefore, because one of the agreements at issue did not contain a cross default provision, the Court concluded that the parties must not have intended that the agreement be subject to a cross default provision.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

Recently, our firm won two separate awards of attorney’s fees for two companies in lawsuits they were forced to file or defend.    In the first case, the statute allowed for attorney’s fees and costs to our client when the opposing bank refused to honor an irrevocable letter of credit.    Our second case involved the judge ruling that based on the statute and the Michigan Court Rules the other party’s complaint was so frivolous that sanctions, including attorney’s fees and costs were warranted.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

In the Michigan Court of Appeals case Bronco Oil v Citizens Bank (click here to download), the contract language, in essence, immunized the breaching party from having to pay the damages it allegedly caused because they occurred outside of a 12-month period before the lawsuit was filed. Even though the lawsuit was timely, the potential damages were lost because of when the lawsuit was filed.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

Under the Michigan Court Rules, there are only four grounds to vacate an arbitration award.  These focus on the fairness of the proceeding, rather than whether the arbitrator’s decision was correct or incorrect.  The arbitrator can be set aide only if:

(1)  The award was procured by corruption, fraud or other undue means;

(2)  There was evident partiality by an arbitrator appointed as a neutral, corruption of an arbitrator, or misconduct prejudicing a party’s rights;

(3)  The arbitrator exceed his or her powers; or

(4)  The arbitrator refused to postpone the hearing on a showing of sufficient cause, refused to hear evidence material to the controversy, or otherwise conduct the hearing to prejudice substantially a party’s rights.

If you are dissatisfied with the outcome of an arbitration, it is also very important to act promptly.  There is a very short time period to file a complaint in court to vacate an arbitration award.  Depending on the grounds for challenging the arbitration award, the complaint must be filed within 21 days or 91 days after the date of the arbitration award.  If the complaint is not timely filed, it is too late to challenge the arbitration award later.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm

Here is a scenario where a general release was used, which demonstrates the importance of reviewing the specific language used.   The example comes from the recent case of Levy v Ford Motor Company (Click here for a PDF of this decision).   Party A had a history of contracting with Party B for delivery of construction materials and services. In October 1998, an incident occurred involving a truck owned by Party A and a train owned by Party B. Each party maintained that the other was responsible. Party B issued a debit memorandum in 2001, and thereafter stopped paying invoices to offset its alleged losses from damage to its train.   In connection with other contracts, Party A sued Party B for payment for ready-mix concrete shipped after May 2004. The parties settled that case, and their agreement included a release that comprehensively waived any further claims Party A might have against Party B “from the beginning of time,” but “with the sole exception of any claim arising out of damage to the train equipment.

In 2007, Party A filed an action as a claim for payments due under invoices dating from “2001 and before” in connection with deliveries of materials to Party B.  Party A sought monetary contract damages plus an accounting.   However, the Court held that Party A had already released any and all claims it might have otherwise had against Party B arising from events prior to 2004, despite the fact that the claims were not related to the train accident. Because of the comprehensive language and nature of the release it had signed in the first settlement, Party A wound up releasing any and all claims it could have had against Party B, despite the fact the causes of action were completely different.

Always have an attorney review your settlement and release documents to ensure you are preserving valuable rights and not being taken advantage of in the settlement.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

Both the Michigan Rules of Evidence and the Federal Rules of Evidence recognize the vital importance of settlement discussions between two or more parties involved in active litigation.  The specific settlement rules recognize the need to afford protections to parties before they enter into settlement discussions.   The litigants will only arrive at a meaningful settlement if they are assured that they can speak freely without any offers, admissions, or other details being used against them at trial, should a settlement not be reached.

The relevant Michigan Rule precludes the admission at trial of any of the content of the settlement discussions, any amounts offered to settle the case, or any discussion of liability.  This protection allows the parties to speak freely without the fear of a jury learning of a settlement offer and possibly using it as a floor for its verdict.

Before commencing settlement discussions, it is important that your attorney inform the other party that you are undertaking settlement discussions pursuant to the Rules of Evidence and require all participants sign a document signifying their understanding of the purpose and inadmissibility of the discussions.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

]]> http://www.detroitbusinesslaw.com/2009/09/settlement-discussions-what-you-say-will-not-be-held-against-you/feed/ 0 http://www.detroitbusinesslaw.com/2009/08/the-impact-of-reicher-v-set-on-the-michigan-sales-representatives-commission-act/ http://www.detroitbusinesslaw.com/2009/08/the-impact-of-reicher-v-set-on-the-michigan-sales-representatives-commission-act/#comments Mon, 31 Aug 2009 15:02:22 +0000 Editor http://www.detroitbusinesslaw.com/?p=453 The Michigan Sales Representatives Commission Act (“SRCA”), MCLA 600.2961, (Click here to view) provides protection for sales representatives from the company he is selling for (“principal”).  The statute provides that representatives are to be paid what they are owed in a timely manner, and that intentional non-payment of commission by the principal will result in “an amount equal to 2 times the amount of commissions due” up to $100,000.00.  According to the statute, a sales representative cannot waive his or her rights under the SCRA by signing a contract.

A recent Michigan Court of Appeals ruling in the case Reicher v SET Enters, Inc (click here to view) decided that a settlement agreement between the representative and principal after the representative was terminated and had filed a lawsuit against the principal can negate the non-waiver rule.  In other words, when Reicher decided to settle his claims against the principal he signed away his rights to protection under the SCRA.  When the principal breached the settlement agreement, the statutory penalties under the SCRA did not apply.  Reicher was limited to the damages for breach of contract.

The non-waiver provision will still apply to a contract or agreement establishing or modifying the business relationship between the principal and the sales representative, but does not apply to post-termination agreements.

An example would be a pre-printed, non-negotiated commercial lease for an office photocopier. There is typically no room for negotiation other than the price. These agreements also typically contain a choice of forum clause wherein as a party to the lease you have agreed that any disagreements related to the lease will be litigated in the state where the leasing company is located. Should you or your company begin missing payments or have some other dispute with the leasing company, the leasing company would be allowed by the terms of the agreement to sue you in their home state, as far away as New York, Florida or California. You would be required to locate an attorney in that jurisdiction to defend your interests. You might also be required to travel there for a deposition of trial. If you ignore the lawsuit filed in the selected forum, a default judgment could be entered against you, and the Judgment then recognized and enforced by Michigan Courts because of the language in the agreement.

Before entering into an agreement, it is imperative that you review all the language and the fine print, including the choice of forum clause and know that should you have a dispute with the other party, you could be hauled into court in a different state. You may be able to negotiate to remove the forum selection clause from the contract, or simply choose another vendor.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm. Click here to view his professional resume.

Injunctive relief is an extraordinary remedy.    That is because most wrongs can be remedied by financial reparation.   However, as an example again, a 90 foot oak tree cannot be replaced once it is cut down.    The first step for a party seeking to stop an action would be to seek a preliminary injunction.   A preliminary injunction serves to preserve the status quo pending a final hearing, enabling the rights of the parties to be determined without injury to either party.

To determine whether this equitable relief should be granted, the issuing court must consider (1) the likelihood that the party seeking the injunction will prevail on the merits; (2) the danger that the party seeking the injunction will suffer irreparable harm if the injunction is not issued; (3) the risk that the party seeking the injunction would be harmed more by the absence of an injunction than the opposing party would be protected by issuance of the injunction; and (4) the harm to the public interest if the injunction is issued or not issued. All of these prerequisites must be met before a preliminary injunction may be granted.

The preliminary injunction is a mere stop gap, but not the final decision on the matter.  The preliminary injunction maintains the status quo until both sides can present evidence to the deciding court whether or not the subject action should be allowed to be undertaken.

The party seeking the injunction has the lofty burden of demonstrating why the opposing party should be prevented from undertaking its desired action.   This is an extraordinary remedy and issuance of an injunction is not a matter taken lightly by the courts.

It is advisable to contact us or another law firm to review the merits of your case and to advise you on your chances of success in seeking the remedy of injunction.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm. Click here to view his professional resume.

Under the Bullard Plawecki Employee Right to Know Act, employees are entitled to review their personnel records, make copies of those records, and file written statements clarifying or protesting any documents contained in their file. An employer’s use and disclosure of employee records are regulated by this Act as well.

The following are some of the important provisions of the Employee Right to Know Act that every employer should be aware of:

(1) Employers must make the personnel records of both current and former employees available to those employees upon written request, but not more than 2 times per year.

(2) Not all records are considered “personnel records” available for review by the employee.  Only records kept and used by an employer in determining an employer’s qualifications for employment, promotions, transfers, additional compensation, or disciplinary action must be available to employee for review.  Records that are not required to be open for review include, but are not limited to:  employee references, employee medical records if available to employee by other means, personal information regarding a third party which could be an invasion of privacy, and documents related to employer staffing plans.

(3) Employers may charge that employee for reasonable copying charges.

(4) If an employee disputes any of the information contained in his or her personnel file, the employee is entitled to submit a written statement explaining his or her position.  If either employer or employee knowingly put false information in the personnel file, legal action may be taken to remove such false information.

(5) An employer is prohibited from using in a judicial proceeding any personnel record information which was intentionally not included in the personnel record, but should have been as required by the Act.

(6) Any violation of the Employee Right to Know Act by an employer is grounds for a civil lawsuit.  A court may order the employer to comply with the statute and award an employee damages, including reasonable attorney’s fees and costs.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm. Click here to view her professional resume.