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Archive for May, 2014

Good News for Michigan Start-Up Businesses: Michigan’s New Crowdfunding Law

Happy Friday, all!

 

I am a frequent guest blogger with  Grand Rapids Area Professionals For Excellence. I typically write about business law issues affecting entrepreneurs and small/closely held businesses in Michigan.

 

Yesterday I wrote an article about Crowdfunding – particularly Michigan’s new law exempting crowdfunding from securities registration in Michigan.

 

This could be a useful tool for start-ups,  but it comes with some disclosure requirements that might mean crowdfunding is not right for every business.

You can check out my article here

 

Lastly, congrats to those businesses who are already pioneering crowdfunding in Michigan, – MIBiz had a great article yesterday about a local West Michigan Business Pilot Malt House, LLC and its CEO Erik May. You can check that article out here.

 

 

Have a great weekend!

 

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

Categories: Uncategorized

New Legal Challenge for Legal Zoom?

 

 

Just a click of the mouse, answer a few questions and BAM! You are your own lawyer.

 

The ABAJournal reported today about a new hurdle for LegalZoom – you can see that article here.

 

 

As reported in the article, “LegalZoom offers online, self-help legal documents in all 50 states and has faced a number of legal challenges along the way. Besides North Carolina, the company still faces challenges in Arkansas and Alabama [related to allegations of unauthorized practice of law].”

 

In a prior article, I wrote about a recent win for LegalZoom in South Carolina. As the ABAJournal reports it, it looks like LegalZoom isn’t having as much luck right across the border in North Carolina.

 

 

 

What’s the Big Deal With Legal Zoom?

 

The argument is apparently being made by LegalZoom, that the services offered are similar to Turbo Tax – there is a logic tree that brings you to different questions based upon your answers.

 

Don’t hear me wrong – some of these documents might work for some consumers.  However, one of the glaring problems is this – you don’t know what you don’t know.

 

For example, when I meet with clients starting up a business partnership of some sort, invariably, they will come to the meeting prepared with questions – they did their homework. This is a good thing. It shows they have thoroughly thought through their business plan.

 

However, invariably, questions will come up that they did not anticipate.

 

Sometimes clients feel bad that they didn’t anticipate these questions. My response – don’t feel bad, you don’t know what you don’t know.

 

As lawyers, we see when things go as planned for our clients.  We also see the worst case scenarios. We rely on these insights into the law and facts in order to steer around potential pitfalls in our business planning and document drafting with our clients.

 

How about you? Have you experienced successes or failures using prepared universal legal forms?

 

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

 

 

Categories: Uncategorized

Michigan Banks: Encouraging Report Out of The Office of Comptroller of the Currency

The Office of the Comptroller of the Currency  reported yesterday that the financial condition of community national banks and federal savings associations  in its nine-state Central District improved in 2013 as banks focused on strengthening risk management systems to help boost their performance.

 

You can see the OCC’s report here

 

OCC Director commented on the encouraging news:

The renewed emphasis by OCC-supervised institutions on their people, policies, and processes has quite clearly contributed to these encouraging trends,” said OCC District Deputy Comptroller Bert Otto.

 

Michigan Banks

 

Michigan is home to 24 employees and two OCC offices, one in Detroit and one in Iron Mountain. The OCC supervises 24 Michigan banks with assets totaling $6.3 billion.

 

According to the report Michigan banks should encouraging performances, including:

 

• Ratings for OCC-supervised community banks slightly improved in 2013, with 75 percent assigned a composite rating of 1 or 2.
• Problem bank levels have fallen 40 percent since their 2008 peak. Remaining problem banks in Michigan are either stable or improving.
• Credit risk continues to be the primary concern, with more than one-half of the banks rated as high, or moderate and increasing, in this area. Asset quality metrics reflect greater challenges for Michigan’s OCC-supervised banks than the district average. Though the metrics have improved in the last year, they continue to lag the district average.
• While the net interest margin slipped at Michigan banks supervised by the OCC in 2013, it compares well to the rest of the district. However, profitability overall was hampered by higher overhead expenses and risk in credit portfolios.
• Capitalization is good at OCC-supervised Michigan banks, and higher than district averages. Asset growth in 2013 was limited.
• MRAs in Michigan banks increased in 2013, though they remain relatively low. Credit risk management and operational risk were among the issues cited most often.

 

 

Questions? Comments?

Email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

 

 

Categories: Uncategorized

Michigan Businesses: New Bill to Limit Employer Liability for Hiring Convicts with Certificate of Employability

House Bill 5217 would give incentives to Michigan businesses for hiring convicted felons back into the work force. Today the Senate Judiciary recommended that HB 5217 be given immediate effect.

 

As background…

 

There are a number of great companies who reach out to support putting Michiganders with certain barriers to work.  Goodwill Industries of Greater Grand Rapids does a fantastic job of equipping this demographic and putting them into long term employment.

Some West Michigan companies who do a great job of reaching out to hire those with employment barriers are Proos Manufacturing and Fabricating lead by CEO Amy Proos and Cascade Engineering lead by CEO Fred Keller. Others include Lacks Enterprises and Kentwood Office Furniture to name a few.

 

HB 5217

This new law would seemingly reward such companies for their good work, by limiting their liability for such actions as “negligent supervision of employees” or other claims for person or property damage claims.

You can check out the text of the bill here

 

Hopefully, this new law would also give incentive to other great companies through out Michigan to hire employees who are otherwise qualified but their only barrier is a felony conviction.

 

 

 

Questions? Comments?

Email me: Jeshua@dwlawpc.com

 

 

Categories: Uncategorized

Mortgage Holders, Investors, and Agents: New Case Law Definitively States No Standing After Redemption Period?

A case decided April 10th may cut off any claims of wrongful foreclosure by a homeowner after the expiration of redemption period.

 

The Case is Glenna Bryan v JP Morgan Chase,Docket No. 313279 (April 10, 2014, Mich Ct App)

 

There, the Court of Appeals noted that:

 

Defendant argues that plaintiffs lacked standing to bring this action because the statutory redemptive period had expired and plaintiff made no effort to redeem the property. We agree.

 

 

I. Michigan Redemption Statute

 

Pursuant to MCL 600.3240, after a sheriff’s sale is completed, a mortgagor may redeem the property by paying the requisite amount within the applicable prescribed time limit, which here was six months.

Unless the premises described in such deed shall be redeemed within the time limited for such redemption as hereinafter provided, such deed shall thereupon become operative, and shall vest in the grantee therein named, his heirs or assigns, all the right, title, and interest which the mortgagor had at the time of the execution of the mortgage, or at any time thereafter….” MCL 600.3236.

 

If a mortgagor fails to avail himself of the right of redemption “all plaintiffs’ rights in and to the property [are] extinguished.” Piotrowski v. State Land Ofice Bd, 302 Mich. 179, 187; 4 NW2d 514 (1942).

 

 

II. What about Exceptions for Fraud or Extreme Irregularity?

 

 

Arguments have been made by foreclosed on property owners after expiration of redemption that the sale should be set aside for extreme irregularities or fraud, citingKim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 115, 825 N.W.2d 329, 337 (2012) reh’g denied, 493 Mich. 962, 828 N.W.2d 678 (2013)The Michigan Supreme Court has held that a foreclosure may be set aside for fraud or extreme irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside.”

 

The Bryan Court did not find this argument possible after redemption has expired.

 

 

III. Bryan Cites a String of Cases – holding a mortgagor lacks standing after redemption expires.

 

“We have reached this conclusion in a number of unpublished cases and, while unpublished cases are not precedentially binding, we find the analysis and reasoning in each of the following cases to be compelling…Accordingly, we adopt their reasoning as our own. See Overton v. MERS, unpublished opinion of the Court of Appeals, issued May 28, 2009 (Docket No. 284950) (“The law in Michigan does not allow an equitable extension of the period to redeem from a statutory foreclosure sale in connection with a mortgage foreclosed by advertisement and posting of notice in the absence of a clear showing of fraud or irregularity … Once the redemption period expired, all of plaintiff’s rights in and title to the property were extinguished.”);

 

Hardwick v. HSBC Bank USA, unpublished opinion per curiam of the Court of Appeals, issued July 23, 2013 (Docket No. 310191) (“Plaintiffs lost all interest in the subject property when the redemption period expired…. Moreover, it does not matter that plaintiffs actually filed this action one week before the redemption period ended. The filing of this action was insufficient to toll the redemption period….Once the redemption period expired, all plaintiffs’ rights in the subject property were extinguished.”);

 

BAC Home Loans Servicing, LP v. Lundin, unpublished opinion per curiam of the Court of Appeals, issued May 23, 2013 (Docket No. 309048) (“[O]nce the redemption period expired, [plaintiff’s] rights in and to the property were extinguished….Because [plaintiff] had no interest in the subject matter of the controversy [by virtue of MCL 600.3236], he lacked standing to assert his claims challenging the foreclosure sale.”);

 

Awad v. Gen Motors Acceptance Corp, unpublished opinion per curiam of the Court of Appeals, issued April 24, 2012 (Docket No. 302692) (“Although she filed suit before expiration of the redemption period, [plaintiff] made no attempt to stay or otherwise challenge the foreclosure and redemption sale. Upon the expiration of the redemption period, all of [plaintiff’s] rights in and title to the property were extinguished, and she no longer had a legal cause of action to establish standing.”).

The Court concluded by stating plainly:

“We hold that by failing to redeem the property within the applicable time, plaintiff lost standing to bring her claim.”

IV. Takeaway

 

Could this case be the end of any wrongful foreclosure lawsuit brought by property owners at or near the end of redemption period?

 

If I am lender/investor’s counsel I cite this case and argue that exact point.

 

Questions? Comments?

 

Email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

Categories: Uncategorized

Businesses: Consider Limitation Clauses in Your Contracts

A few days ago the ABAJournal posted an article about a lawsuit that has been 13 years in the making – Allstate agents signed a “right-to-sue waiver” – are they precluded from filing a lawsuit now? See the article here

 

A few thoughts after reading that article:

 

Do you use standard contracts in your business?

you might want to include limitation clauses in your contracts

 

Presented with business contracts to sign?

read them before signing.

 

 

 

As a general point, under Michigan law, these broad releases are generally enforceable.

 

I. Release of Liability in Michigan

 

Under Michigan law, such releases are, in general, valid.

 

According to Brooks v Holmes, 163 Mich. App 143, 145 (1987): A release is only valid if “it is fairly and knowingly made…

 

 

II. The Exceptions

There are a few exceptions to the validity of a release: A release is invalid if

(1) the releasor was acting under duress (e.g. signing a contract with a gun pointed to your head),

(2) there was misrepresentation as to the nature of the release agreement, or

(3) there was fraudulent or overreaching conduct to secure the release. Brooks v Holmes, 163 Mich App 143, 145; 413 NW2d 688, 689 (1987).

 

Further, it can always be argued that if the release wasn’t drafted clearly enough, an ambiguity should be found in favor of the non-drafting party. “It is an elementary rule of construction of contracts that in case of doubt, a contract is to be strictly construed against the party by whose agent it was drafted.” Shay v Aldrich, 487 Mich 648, 672 (2010). .

 

In the All-State case, these Agents may have been legitimately damaged, but if they signed the Agreements, it is an uphill battle to invalidate these releases.

These arguments that the release is invalid are left to the Allstate agents, to make.

 

Regardless, if you are representing All-State, it was a good idea to include these releases in your Agreements!

 

Another clause you might want to consider

 

III. Limitations of Damages

In General, just like the release clauses, inserting a clause in your contract to “limit your damages” are enforceable.

 

 

“[I]t is not contrary to the public policy of Michigan for a party to contract against liability for that party’s own ordinary negligence.” (Emphasis added). Slater v. Hometeam Inspection Serv, 260989, 2005 WL 1842843 (Mich. Ct. App. Aug. 4, 2005) citing Starks v. Solomon, unpublished opinion per curiam of the Court of Appeals, issued March 30, 2001 (Docket No. 220989).

 

However, they won’t limit all types of damages.

 

IV. The Exceptions

 

However, Michigan Courts will not apply contractual limitations on damages when gross negligence or fraud is present.

 

“Because fraud is intentional misconduct and gross negligence its functional equivalent, if bona fide issues of fraud or gross negligence exist, then applying the contractual limitation on liability to insulate defendants from such claims would be contrary to public policy.” (Emphasis added). Slater, supra citing Klann v. Hess Cartage Co, 50 Mich.App 703, 709; 214 NW2d 63 (1973).

 

V. Take away:

As always, be careful when you sign a legally binding document. The law rightfully presumes that you have read the document and are agreeing to be bound to its terms. Only in limited circumstances will a court invalidate clauses where you limit your rights.

 

Conversely, businesses including such limitation provisions is a wise idea to limit your liability. Make sure you have your lawyer review any standard agreements you are using.

 

Questions? Comments?

 

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

 

 

 

 

Categories: Uncategorized