Here are some typical questions we get asked:
Q: Long ago my father started a concrete business. The business became very successful before he died 10 years ago. My mother died before my father and the business was left to my 2 brothers and I. There is limited bank debt we have all personally guaranteed for the business. However we have done nothing but fight over the management of the business since dad’s death. I want out and I want the business sold and the proceeds used to pay off the debts with the remaining proceeds divided and distributed equally three ways. My brothers do not want to sell and would rather continue operating a business and not pay me off or agree to a release me of any liability. Currently our interests are worth about $5.6 million each after payment of debts. For the next 3 years each of our children will begin college and I will not have the money to pay for it after year 2 unless I can recover my interest in the business. What can I do?
- A. First, try to come to an agreement for you to sell your interest to your brothers. This sale can typically be financed using the business as collateral and the remaining owners make short term installments payments from the business. Tax issues may give rise to a sale to the business and a redemption of your stock (corporation) or membership interest (LLC). Try to utilize the bank the company has an existing relationship with. It may be easier for you to obtain a release from the bank debt. Under these facts this is not likely.
- Try to come to an agreement with one of the brothers to buy you out and take over your liability. The bank will release you because it wants only individual company owners liable for the bank debt, not outsiders. The hope is that one of the brothers who wants the business will step up and purchase the business. This is also not likely to occur.
- If you cannot make a deal and depending on what restrictions may exist in the bylaws, existing Shareholder Agreements or the Operating Agreements, you may have success by filing a lawsuit to force the brothers or the company to buy you out. Of course this option will likely have unacceptable, long term consequences to the family relationship.
- The Bank may be willing to loan you money for college expenses on a line of credit secured by your home while you work on selling your business interest.
You should retain an attorney. Collection attorneys usually work on a contingent basis charging between 25%-50%. They will also advance court costs and process server fees (usually at least $130.00) which are paid back first when money is recovered ahead of the attorney fees and client proceeds.
You can file a small claim on your own in the district court where the defendant resides or is doing business. Attorneys cannot be involved in a small claim. The current maximum jurisdiction for small claims is $5,500 so if you are willing to give up $4000.00 you can file a small claim. However the defendant always has a right to an attorney if they so elect so their attorney can “remove” a small claim to the regular civil docket and have an attorney.
Whether a judgment is obtained in your favor in small claims or in the district court, collecting your money is often the difficult part. There are 2 basic ways to collect: garnishment and execution. Good Luck!
Q: Jimmy Crack Corn, was hired as an engineer by Super Widget Corporation to design the latest and greatest widget. Super is a small but highly innovative company relying heavily upon its R&D department to actively develop, design and apply for patents and then license the patents to manufacturing firms. In order to protect its intellectual property before Jimmy started work Super required that he sign a nonsolicitation agreement, confidentiality agreement, and a noncompete agreement. Jimmy happily signed these agreements but after 1 ½ years he decided that he was miserable and resigned to work with a couple friends developing computer apps for Apple products. What is your advice to Jimmy?
First, the agreements signed by Jimmy are commonplace, particularly for those individuals involved in the creation of intellectual property and, though the restrictions are narrowly interpreted, so long as they are reasonable as to space and time, these agreements are generally enforced.
In this case, under the facts there is no claim that Jimmy attempted to recruit any Super employees. Therefore there is no claim that he violated the non-solicitation agreement. Likewise there is no claim that Jimmy disclosed confidences and secrets which he gained knowledge of during his employment with Super. Therefore there is no evidence that Jimmy violated the confidentiality agreement. Lastly the claim by Super is that Jimmy is engaged in competition with Super by virtue was of his participation as an owner – employee with the app company. Jimmy’s involvement in the creation of computer apps for Apple is completely different from his prior employment designing widgets. Therefore neither Jimmy nor the app company is engaged in competition with Super. If they did compete it would violate the noncompete agreement. However we never reached the question of whether or not the 2 year period preventing X’s employment in a competitive industry with the widget business after termination because there is no violation to begin with.
Q: I am the legal guardian and conservator for my brother who was severely injured in an auto accident in 2009 and has been wheelchair bound since. Last year I arranged with a builder to construct a barrier free- home for my brother and I. The Probate court approved the transaction. We signed the building/sale agreement and I paid all of the payments due from each of our accounts. The agreement was in writing except the plan changes to the building plans were not initialed by the builder and therefore technically “not signed”. As the home neared completion it became obvious that the barrier-free accommodations were not getting completed. I met with the builder’s representative on numerous occasions who repeatedly assured me that the requested changes would be completed but they were not. There came a point in time when the builder stated the home was completed. I received a demand to close by the builder and I went into a panic. I think I am stuck with a house my brother cannot live in. What can I do?
First, record an Affidavit and Claim of Interest with the Register of Deeds for the County in which the property is located. This Affidavit should have a copy of the building/purchase agreement attached to it. This action is to prevent the builder from selling the home to another without having notice of your claim and leaving you with no security to obtain repayment for what you have paid. The builder can sell the home out from under you and this would be the result.
Next, attempt to negotiate a favorable settlement. Remember the weakness in your case is that the entire agreement includes the building plans and specs and the changes are not signed or initialed by the builder. There is a lack of proof that the barrier free accomodations are part of the agreement. Therefore proving the builder breached the agreement because of damages due to failure on the part of the builder to construct the changes may not be recoverable. However this was the reason you filed suit in the first place.
If an attempt at settlement does not lead to a satisfactory result, then sue for breach of contract and file and record a lis pendens with a Register of Deeds to give notice that the property is the subject of a lawsuit. One way the deficiency in your case might be overcome is you have paid all or nearly all of the amount due. The court can determine that based upon the doctrine of part- performance, and reliable circumstances surrounding the revisions to the building plans and specifications, you may get around the requirement that these changes must be signed by the builder and in writing. Good Luck
Surprisingly this is not an unusual problem. Assuming the terms and conditions of the purchase agreement are complete and clear a court may require the seller to transfer the property to you according to the terms of the contract and award damages to you to the extent required to put you and the seller in the same financial position as if the sale had occurred when it was agreed to occur.
Q: Recently my Father died after a long illness. My sister has taken care of his financial affairs for over 10 years as a Power of Attorney and was listed as a signer on his checking account to pay his bills. She is now claiming that she owns the all the money in the bank account which is very substantial. His will states that everything is to be split between his 4 children equally and names my sister as the personal representative. What can I do?
In this circumstance it is important to act quickly to prevent the money from being spent by your sister. A petition should be filed in the Probate court in the County where your father resided. At that time you can make a request to the judge for an order to prevent any spending or closure of the account. If your request is not granted without a hearing request that the court consider an expedited hearing to decide if the order you want should be granted based upon evidence at a hearing. After that you should ask for a hearing to determine who the money belongs to. There are many factors to consider but most importantly it must be determined what your father intended would happen with the money in the account upon his death. Although there is a Michigan law that presumes the money in the account would belong to your sister the fact that she had the power of attorney may overcome that general rule.
Q: My daughter Jillian and her friend were walking home from school when they let themselves through the fence gate to a neighbor's back yard to pet Hercules, a pure-bread pitbull. As she approached the dog she was attacked and mauled. She was lucky to escape with her life and now has horrific scars and other emotional problems requiring counseling weekly. What can we do.
First, retain an attorney. Do not try to handle your daughter’s claim yourself. The owners of Hercules will likely have homeowner’s Insurance company from which you can recover damages. The lawyer handling the claim should have far more knowledgeable than you regarding what to do and when to do it on behalf of Jillian. Also your emotions are heavily involved and it would be very difficult for you to effectively advocate on Jillian’s behalf. Your daughter’s claim is serious and requires handling by a professional. The damages are so significant that it is unlikely the Insurance company will not deal with you fairly in trying to reach a resolution. If it is determined that she provoked the dog she may not be able to recover anything. Any settlement proposal the Insurance company will consider would probably be insufficient and often insulting considering what has happened. Accordingly this case will probably require a lawsuit to ultimately end up with anything “fair”.
Q: I am a 56-year-old man employed for 22 years as a plumber. Recently I was in an auto accident injuring his left ankle, left knee and low back. I have had surgery on my ankle and knee and will likely face a laminectomy and fusion on my lower back. According to my doctors it is unlikely I will ever be able to perform my duties again as a plumber. What benefits am I entitled to?
First you should immediately report your accident to your insurance company and complete an Application for No-Fault Benefits. Your insurance company will provide this form to you to complete and return to them. They have 30 days to complete their investigation. You will be seeking personal injury protection benefits from your insurance company (first party). These benefits will include wage loss (85%) of your average daily wage before taxes up to a maximum of $5,452/month after October 1, 2016 for a maximum of three years, ordinary and necessary medical care for injuries related to the accident, substituted services completed by another because you cannot perform the services for yourself for up to $20/day and if appropriate, vocational rehabilitation benefits to assist you in getting back to work even if it is not the job you previously performed.
If you are an uninsured passenger or pedestrian, the insurance company of a driver, owner of the vehicle may become the responsible insurance carrier. If there is no insurance then an insurance company is appointed by the Assigned Claims Facility appointed to administer your claim from a fund paid into by the insurance companies. You have one year from the date of accident or date of denial to sue on this claim in whole or in part. It may also qualify for Social Security disability, disability pension from your lawyer or the plumbers union.
If you have suffered a serious impairment of a bodily function or disfigurement and if the auto accident caused someone other than yourself, you may make a claim against that person would disturb a third party claim. You must sue within three years of the date of accident.
As between a limited liability company (LLC), a subchapter S corporation, and what is known as a “C” corporation, this small group should prefer an LLC. There are many similarities such as corporate shareholders versus limited liability company members; bylaws for corporation and an operating agreement for a limited liability company are likewise comparable. A single, important difference is that with an LLC the creditors of an individual are limited in their ability to force payment of the debt from the assets of the LLC. A creditor of a member is limited only to distributions which that member would be entitled to receive to satisfy the debt. Whereas with a corporation a creditor can seize the stock of the shareholder and sell it to pay the shareholder debt resulting in the ownership of the corporation by unknown and uninvolved persons which is very undesirable.
Q: XYZ Building Company purchased 10 lumber packages from Twig Lumber Company to build ten homes in a subdivision lots it owns. The homes are built and sold before Twig can file liens against the properties. Joe Scammer, the owner of XYZ never pays the $300,000 owed for the lumber and XYZ Building Company files for bankruptcy. How can Twig get paid?
Since Joe Scammer managed the money of XYZ and had a right to determine whether or not Twig was paid from the sale of each home for the lumber packages. In construction law the builder is a trustee holding the money for subcontractors, labor and those who provide materials for the construction. If Scammer does not pay not only is XYZ liable for the debt which avoids bankruptcy but Scammer becomes personally liable. Normally Twig can file a construction lien on each property to recover for the lumber within 90 days after the materials are delivered but did not do so here in a timely fashion and lost this right.
The good news is a lawsuit may be filed in the bankruptcy court against Scammer and XYZ building for each lumber package and a judgment may be obtained against XYZ and Scammer and the debt will not be extinguished in bankruptcy. Him him him