Archive for category: Written by Peter Gojcaj

You are here: Home / Written by Peter Gojcaj

Recent Legislation Provides Relief to Garnishee Defendants

May 29, 2015 / in

On April 15, 2015, Governor Snyder signed into legislation a new law that provides significant relief to garnishee defendants.  The new law requires judgment creditors to provide written notice to remind garnishee defendants that they are not in compliance before a default is entered against them.  Read More→

 

Protect Your Lien Rights Even During an Economic Boom

February 16, 2015 / in

Now that the auto industry is roaring, special tool builders and mold builders should not rest on blind confidence that they will get paid for their materials and services.  Michigan law provides added security to both special tool builders and mold builders that haven’t been paid for their materials and services.  Both the Michigan Special Tools Lien Act and the Molder’s Lien Act provide similar benefits so long as certain steps are taken.  Read More→

 

Legislature Addresses Court Funding after the Cunningham
Decision

January 9, 2015 / in

Recently, Governor Rick Snyder signed House Bill 5785, which amends MCL 769.1k and addresses court funding issues.  Amended MCL 769.1k now provides courts with ample authority to assess fines and costs against certain defendants who plead guilty, nolo contendere, or are found guilty by a court.  Evidently, this statute was amended by the Legislature in response to the Supreme Court’s People v Cunningham decision.  Read more→

 

Interview with Prominent Real Estate Broker, Viktor Gjonaj

October 2, 2014 / in Written by Peter Gojcaj

You may have seen his name posted on the ubiquitous black and yellow “Signature Associates” signs spread across southeast Michigan.  His name is Viktor Gjonaj; he is one of Signature Associates’ most proficient commercial real estate brokers.  He works with some of the largest fortune 500 companies in meeting their real estate needs.  Among other accolades he has received, he was nominated to Crain’s 30 under 30.  Below is his perspective on his success, the Great Recession, and the current commercial real estate market: Read more→

 

News From The Courtroom

April 10, 2012 / in

Commercial Insurance Benefits Rewarded

Mike Gibbons and Peter Gojcaj recently won a six figure judgment on behalf of a business client against its insurance company. The insurer refused to pay the benefit due after a loss covered by the client’s commercial liability insurance policy, requiring the client to pursue payment in court.

Unjust Enrichment Case Dismissed Before Trial

Keith Jablonski recently succeeded in having a case against a large manufacturing client dismissed by a Federal Court. The Plaintiff sought substantial damages, for which the Court ultimately found our client was not responsible.

Detroit Free Press – Guest Editorial
Comments by Beier Howlett attorney Joe Yamin, who represents clients in the firearms industry, were featured in the Detroit Free Press recently. Read full article here.

 

Trade Secrets Protected by Michigan Court of Appeals

April 10, 2012 / in

By Peter Gojcaj

In a decision reinforcing the strength of the Michigan Uniform Trade Secrets Act (MUTSA), the Michigan Court of Appeals recently upheld a trial court decision enjoining an individual for three years from being employed by his former employer’s competitor, despite the absence of a “non-compete” agreement.

Enacted in 1999, MUTSA gives trial courts authority to enjoin “actual or threatened misappropriation” of company trade secrets. The enjoined employee, according to the Michigan Court of Appeals, showed some “warning flags” that he would disclose certain trade secrets of his former employer.

As has become all too common, during the employee’s resignation, the employee had used his former employer’s computer to access many confidential computer files that the employee had no reason to access. Moreover, despite the employee knowing that a temporary restraining order (TRO) was issued, the employee claimed that “he did not think” that a certain USB drive that he copied his former employer’s files was covered by the TRO.

Worse, the employee copied his former employer’s form, replaced the letterhead with his new employer’s name, and sent it to a customer of his former employer.

Notably, the Michigan Court of Appeals cited PepsiCo v Redmond, 54 F3d 1262 (CA 7, 1995), a seminal Seventh Circuit case.  PepsiCo provides that a “plaintiff may prove a claim of trade secret misappropriation by demonstrating that defendant’s new employment will inevitably lead him to rely on the plaintiff’s trade secrets.”

Although the PepsiCo court indicated that “despite the lack of evidence” that the employee “used or planned to use any trade secrets” of his former employer’s, the Court opined that the employee demonstrated a lack of trustworthiness beyond his decision to work for a competitor.  This “lack of trustworthiness” was enough for the PepsiCo court to enjoin the employee for joining his new employer for a period of six months.

MUTSA defines a trade secret broadly as information, including a formula, pattern, compilation, program, device, method, technique, or process, that 1) derives independent economic value from not being generally known, and 2) is reasonably protected as confidential.   Under the Act, actual or threatened misappropriation may be enjoined.

To protect trade secrets or proprietary information in advance, companies should consider the use of a covenant not to compete. Under this contract provision, one party agrees not to pursue a similar profession or trade in competition against another party for a reasonable period of time. However, where a non-compete is not in place, there is ow precedent for imposing similar restrictions under MUTSA.

For more information on the Michigan Trade Secrets Act or non-compete clauses, email Peter Gojcaj, attorney with the Beier Howlett Business Practice Group.

 

Is Your Liability Waiver Unenforceable?

March 23, 2012 / in

Toss out the liability waivers and replace them with an increased insurance policy? According to a recent decision by the Michigan Supreme Court, the traditional pre-injury liability waiver, signed by parents to allow their child’s participation in a range of activities, will no longer hold up in court.

Although the liability waiver has long been the accepted release form for organization hosting activities from day camp to travel sports, on June 18, 2010, the Michigan Supreme Court held that a pre-injury waiver is unenforceable under Michigan’s common law.  The Court noted that a parent or guardian has no authority to bind his child by contract (absent special circumstances), and a parental pre-injury waiver is a contract.  Michigan’s common law rule is that a minor also lacks the capacity to contract for his or herself.  The court also held that it is clear a minor cannot empower an agent or attorney to act for him in Michigan.
The case, Woodman v Kera LLC, 2010 Mich LEXIS 1125, involved a five-year-old child who was injured after falling off an inflatable at a birthday party held in a Bounce facility.  Although the parents signed a waiver before the child engaged in the activity, they were able to successfully sue the facility for negligence after the injury.
Ramifications of this decision are expected to be far-reaching, as organizations of all types are left open to liability.  From school districts hosting field trips to soccer teams traveling to games, the hosting organization is no longer protected by a parent’s signature on the pre-injury waiver.
Although a 2009 Estates and Protected Individuals Code (EPIC) proposed parents be allowed to sign enforceable waivers, the code was adopted without this provision.  A child can be bound by a parent’s act when a statute grants that authority to a parent.  Legislation to modify the common law rule at issue was introduced into the Legislature on May 19, 2009 – HB 4970.  On March 10, 2010 the House Judiciary Committee reported the bill with a substitute and recommended that the House of Representatives adopt the statute.  The HB 4970 would add Section 5109 to the EPIC.  However, as of July 26, 2010 the statute has not been adopted.
Justice Young, in dicta, suggested that perhaps an alternative to the pre-injury liability waiver is a parental indemnity. However, the other Justices commented that such issue was not before the Court and would likely be held to directly contravene the compelling policy reasons that exist for the historic common law rule.  Furthermore, courts in a number of States have held that such indemnity agreements are unenforceable because they produce the same effect as parental pre-injury liability waivers.

Currently, with no clear solution to the liability issue at hand, organizations hosting activities for minors should consult with their attorneys and insurance providers to determine how best to protect themselves from claims of negligence, whether it be through additional safety measures or insurance coverage. Liability waivers should continue to be used in the interim to inform your clients of the risks involved in participation. Beier Howlett will keep you informed of any updates to the EPIC that would offer solid legal protection to your organization.

For more information, contact Victor Veprauskas at Beier Howlett, P.C. (248) 645-9400, or email vveprauskas@bhlaw.us.com.

The L3C

Michigan’s New Business Hybrid Offers Benefits of Non-Profit Status With Reduced Regulatory Structure

Michigan is one of only six states that currently offers a new, legal form of business entity: the low-profit limited liability company, or L3C. The new structure is gaining momentum nationwide, yet many have never heard of the advantages afforded by this hybrid between a non-profit and for-profit venture. The designation was created in Michigan in 2009 to help spur business and advance socially beneficial ventures.

Designed specifically to bridge the gap between for-profit and charitable sectors, the L3C is similar to a traditional limited liability corporation, or LLC.  However, its primary purpose is not to make a profit, but to achieve a socially beneficial objective.  (Though making a profit is allowed.)  The L3C must follow these requirements:

  1. The company must “significantly further the accomplishment of one or more charitable or educational purposes,” and would not have been formed but for its relationship to the accomplishment of such purpose(s);
  2. “No significant purpose of the company is the production of income or the appreciation of property” (though the company is permitted to earn a profit); and
  3. The company must not be organized “to accomplish any political or legislative purposes.”

Importantly, these three requirements closely mirror those of the IRS rules for “Program Related Investments,” making L3C businesses eligible to receive PRIs – a distinct advantage designed to spur economic growth.  However, L3C entities do not qualify as charities and therefore are not exempt from taxes, nor are investments in an L3C tax deductible, as they would be for a 501c3 non-profit.


The L3C legal structure is similar to the LLC in many ways:

  • The L3C offers a flexible ownership structure, wherein each member’s management responsibility and financial stake may vary according to individual needs.
  • The L3C’s members enjoy limited liability for the actions and debts of the company.
  • The L3C is classified as a “pass-through entity” for federal tax purposes, like a partnership or sole proprietorship, so no federal income tax is imposed on the L3C itself.

Of the many advantages an L3C offers, perhaps the most attractive is that it offers the operating efficiencies of a for-profit along with a reduced regulatory structure. As an LLC, it can bring together foundations, trusts, endowment funds, pension funds, individuals, corporations, other for-profits and government entities into an organization designed to achieve social objectives while also operating according to for-profit metrics. Importantly, a foundation or business owner retains ownership and management rights, as opposed to the board-managed, non-profit operating status requirements.

What types of businesses would best qualify as an L3C?  It may provide a new structure for museums, concert halls, recreational facilities and the hundreds of thousands of nonprofits that perform service for the government under contract.  It may possibly help the flagging newspaper industry as well, as the designation is tested under this arrangement.

What types of businesses would best qualify as an L3C? It may provide a new structure for museums, concert halls, recreational facilities and the hundreds of thousands of nonprofits that perform service for the government under contract. It may possibly help the flagging newspaper industry as well, as the designation is tested under this arrangement.

For more  information on the L3C designation, contact Peter Gojcaj at pgojcaj@bhlaw.us.com.

 

News From The Courtroom

March 23, 2012 / in

School Law

Peter Gojcaj and Michael Gibbons prevailed for their client, a public employer, in an arbitration claim filed by an employee asserting violations of an employment agreement.

Commercial Property

Keith Jablonski recently succeeded in obtaining a dismissal with prejudice of a lawsuit brought by a contractor against our client, a commercial property owner. The contractor had performed work for a tenant of our client. When the tenant neglected to pay for the work, the contractor unsuccessfully attempted to collect from the building owner.

 

Get Your Head Out Of The Clouds

March 22, 2012 / in


Apple recently announced that it would launch iCloud, the latest innovation in “cloud computing.” In reality, most people should be familiar with the meaning of “cloud computing” because most people have used this particular service. If you have a Gmail or Yahoo! e-mail account, or use facebook or other social networking sites, then you have been cloud computing.

Most computer users have certain files, data and software right in their computer. Cloud computing takes those files, data and software and places them in a “cloud” where they can be accessed anywhere. Thus, you would not have to go to your physical computer to access your files; you could access them anywhere you have Internet access. (Similar to your Gmail and Yahoo! email accounts.)

Business leaders are increasingly moving organizations to cloud computing to cut costs by outsourcing the management of IT infrastructure. However, companies need to be aware of the inherent risks associated with cloud computing.  Whether your IT department has made a choice to contract cloud services or not, your employees may unknowingly be subjecting internal documents to risk by using software or storing documents in cloud-based platforms.

Threats to data security include the ability of hackers to infiltrate cloud computing platforms and use cloud infrastructure to attack other machines, as well as insecure application programming interfaces (APIs) that can leave holes that lead to data leakage.

For companies engaged in cloud computing, the legal risks associated with it can be daunting.  Just a few of the many legal issues associated with cloud computing are:

  • Compliance with a plethora of state and federal privacy laws, such as ITAR, the Patriot Act, Stored Communications Act, HIPPA, Attorney-Client Communications, EAR and Trade Secret Protections;
  • Ambiguity as to which law governs the retention of information or which law governs a dispute between you and your client;
  • Implications of a client with information that is highly sensitive and regulated by ITAR, EAR or other Federal privacy laws;
  • Privacy and data security risks;
  • Data and network back-up risks;
  • Adequate insurance coverage for the risks of any breach of data, loss of data, and regulatory compliance;
  • Ambiguity in determining who has the burden of preserving discovery, emails and information when a client of a cloud computing provider gets sued;
  • Disaster recovery implications;
  • Compliance with subpoenas, search warrants and possible seizures.

A survey of more than 1,800 U.S.-based IT professionals found that 48% say the risks of cloud computing and software-as-a-service (SaaS) outweigh the benefits. The survey was conducted by Rolling Meadows, Ill.-based Information Systems Audit and Control Association (ISACA), the IT security governance organization that administers security certifications. (TechTarget, April 2010).

For more information on how to protect your company from the potential risks associated with cloud computing, contact Peter Gojcaj at pgojcaj@bhlaw.us.com or call (248) 645-9400.

 

Michigan Builders Trust Fund Act

March 22, 2012 / in Uncategorized


Evident throughout metro Detroit is the fact that the Great Recession has thoroughly impacted the local real estate and construction industry. Critics may argue that the real estate and construction industry, along with the subprime mortgage mess, was the impetus for the rest of the nation’s economic collapse. Irrespective of any cart-before-the-horse theory, it remains clear that the residential construction industry has been devastated.

As the economy began to crumble, subcontractors continued to provide labor and materials to real estate owners and developers. To date, many have never been paid for those materials and services. The Michigan Builders Trust Fund Act (MBTFA) attempts to remedy this wrong. The Act was created as a criminal statute but Michigan’s Supreme Court has ruled that it acts as a civil cause of action.

In its essence, the Michigan Builder’s Trust Fund Act prohibits the contractor or subcontractor’s use of monies received for a particular project for anything other than first paying laborers and suppliers on that project. Builders have a fiduciary obligation when they receive funds for a particular construction project.

Indeed, the Michigan Supreme Court has ruled that a reasonable inference of appropriation arises from the payment of construction funds to a contractor and the subsequent failure of the contractor to pay laborers, subcontractors, materialmen, or others entitled to payment. Because of this fiduciary duty and the implications of fraud, a debtor cannot discharge this type of debt under bankruptcy.

In fact, officers of corporations may be held individually liable when they personally cause their corporation to act unlawfully or when they participate in a tortious or criminal act, whether on behalf of themselves or the corporation. The focus on whether a contractor violates the Act is when the contractor receives payment for a construction project, then fails to pay his or her subcontractors.

The MBTFA indicates that an intent to defraud is evidenced simply by ‘the appropriation by a contractor…of any moneys paid to him for building operations before the payment by him of all moneys due or so to become due laborers, subcontractors, materialmen or others entitled to payment.’ The Michigan Court of Appeals has gone to the extent to indicate that “the general assertion that there was not enough money ‘to go around’ is not sufficient to rebut the presumption of misappropriation without more.”

“The difficulties posed by a downturn in the economy or poor business acumen do not excuse the MBTFA’s obligations in regard to accounting practices and ordering of payment.”

Peter Gojcaj is a partner with the Beier Howlett business law group.  He counsels clients in a wide variety of business contract issues, including construction matters.

For more information on how the Michigan Builder’s Trust Fund Act can work for you, contact the Business Practice Group at Beier Howlett. (248) 645-9400.

 The Business Practice Group at Beier Howlett

Beier Howlett is now on facebook and LinkedIn. For regular updates, news and information from the firm, we invite you to “Like” us on facebook and join our network on LinkedIn.

 

This publication is distributed with the understanding that Beier Howlett, P.C. is not rendering legal or other professional advice or opinions on specific facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.  Forward your comments, change of address, or additions to our mailing list at feedback@bhlaw.us.com.