Archive for July, 2016

Prince Died Without a Will. Business Owners: who are your advisors?

CNN just posted an update on the Prince Estate dispute: possible heirs narrowed down to six @CNN

A while back I posted about some lessons from Robin Williams’ Estate.

I wrote about Robin Williams’ Estate as “an example of the problems that can erupt after a loved one passes away – even if that loved one had a well thought out estate plan.”

In the case with Prince, it appears that he had absolutely no estate plan at all.

This is surprising given, as the ABAJournal put it Prince apparently “had a ‘revolving circle’ of lawyers and business advisers, according to the New York Times. He also handled many of his business affairs himself.”

I wonder where were the attorneys, accountants, financial advisers telling prince:put your affairs in order!

Maybe this happened. Maybe he had one or more lawyers over the years tell him, “by the way, Prince, you really need to prepare an estate plan so that your finances are in order when you die.”

Maybe estate planning was simply not important to him. According to the article Prince did not have a surviving spouse or parents… one can only speculate.

Prince is apparently survived by 5 siblings. It will be interesting to see if they can all agree on the estate administration or if there are any other apparent heirs that claim a part of the quarter of a billion dollar empire Prince left behind.

Two comments:

1. To business advisers: If we aren’t being proactive with our clients to push them to get their affairs in order, we are doing a disservice. This is especially true when we serve business owners or individuals whose finances might have a lot of moving parts.

2. To Business Owners: Who are your advisers? Maybe you are like Prince – you like to handle many of your business affairs yourself. That only works so well. You can’t be an expert in every area. Surround yourself with good counsel. You need advisers who can steer you in the right direction.


Twitter: @JeshuaTLauka

Community Development: The Tension Between Real Estate Entrepreneurship and Keeping Families In Affordable Housing.

July 25, 2016 1 comment

This morning I read a MIBiz article by Nick Manes titled:

Hungry investors seek Grand Rapids housing deals, rankling longtime residents

The article does a good job of addressing the “tension” that I wrote about in a previous post. New investment in downtown Grand Rapids is exciting. But, as Nick Manes puts it, the flip-side of this new development is the “concern that new investment would lead to displacement of long-time residents.

Nick, in his article, illustrates this tension as articulated through the  interviews of the many interested parties: developers, investors, homeowners, renters, and community stakeholders.

As I’ve mentioned in my prior article, as a business/real estate lawyer and Chairman of the Board at Mel Trotter Ministries – I see this tension. I often find myself advocating on both sides of this tension.

Because of these different “hats” I wear, I have had to ask myself – what do I do with this tension?

I am committed to embracing this tension.

I am committed to ask the question: “Am I working to build a better community?

Just like I ended my previous article on this subject, so I will end this one:

 We should encourage entrepreneurs to revitalize blighted property – we should do everything we can to place families in affordable housing.

Let’s embrace the tension.


Twitter: @JeshuaTLauka

Another West Michigan Business becomes a Certified B Corp

July 22, 2016 4 comments

Happy Friday!

Yesterday MIBiz reported on the latest West Michigan Business to obtain B -Corp Certification The Highland Group becomes certified B Corp.

I’ve previously posted on West Michigan’s Thriving Culture of Social Entrepreneurship

in Michigan, the biggest concentration of the B-Corp businesses are in the Grand Rapids area, where there are 11 — twice as many as in Metro Detroit

This list  of “B Certified” companies includes Cascade Engineering, The Image Shoppe, & 616 Development, among others.

Welcome to the club, Highland Group!

Recent headlines in Grand Rapids have brought attention to the need for businesses to ask the question: Am I working to build a better community?

B-Corp certification is one way (certainly not the only way) for businesses to hold themselves accountable to being a good community partner.


Twitter: @JeshuaTLauka

About Propaganda Doughnuts’ Closing and West Michigan Business. Working to Build a Better Community.

July 13, 2016 15 comments

A few days ago MLIVE posted about Propaganda Doughnuts’ closing on South Division in Downtown Grand Rapids.

I was a fan of Propaganda Doughnuts. Occasionally on Sundays after church my family would pick up some doughnuts and go to a park with some friends. I am sorry that I won’t be able to do that any more.

Polarizing Comments.

According to MLIVE, “Propaganda Doughnuts posted to Facebook – then apparently removed – an explanation for why it has closed after two years operating on South Division Avenue. A screen shot is being shared on social media:

‘It was too much to ask our customers to accept being harassed and approached by panhandlers. Customers were also having to walk past intoxicated and passed out people on the sidewalks and in the doorways.”This area is no longer acceptable for customers who just want to stop in and get some great doughnuts and coffee.'”

Kind of a polarizing statement. I understand why the post was apparently removed. You will find people who completely agree with the author’s sentiment, and others who don’t.

If anything, Propaganda Doughnuts’ departure from downtown Grand Rapids and its comment provide an opportunity to ask questions.

Personally, I think a relevant question businesses can ask in similar  circumstances was identified by Thomas J Curry of the OCC. Mr. Curry addressed a crowd talking about the great community development work going in in Detroit. He asked this question:

“Are you working to build a better community?”

Don’t hear me wrong – the Problems are Real.

Propaganda Doughnuts had a legitimate complaint. Homelessness, crime and poverty are realities in downtown Grand Rapids.

A few months ago for National Reentry week the US Attorney General issued a press release citing:

“Every year, more than 600,000 people return to our communities after serving time in federal and state prisons…another 11.4 million cycle though local jails.” 

For more information, check out the Department of Justice’s Fact Sheet issued in connection with its first ever National Reentry Week.

These real problems don’t always have readily visible solutions.  However, local businesses should pause and ask the question: “Am I working to build a better community?”

Business Doing Good. Social Entrepreneurship.

More and more businesses are finding their identity in doing good for their community. Michigan is gearing up to pass legislation to allow for the formation of Benefit Corporations.  B-Corps are for-profit businesses that are committed to social good.

A few weeks back I authored a post titled  West Michigan and its Thriving Culture of Social Entrepreneurship.

This list  of “B Certified” companies includes Cascade Engineering, The Image Shoppe, & 616 Development. These are West Michigan companies committed to creating a material positive impact on society and the environment.

Businesses asking the Question.

Many businesses are continually asking the question posed by Mr. Curry: “Am I working to build a better community?

These businesses are socially minded. Purpose Driven. Whether B-Certified or not. I think of Express Employment Professionals in Grand Rapids as one example.

In conclusion: a call to local business.

Local businesses – I encourage you to partner with local non-profits. Work together to build a better community.

If you aren’t familiar with the leaders in a particular organization, introduce yourself.

You don’t need an excuse to invite dialogue on some difficult issues affecting our community.

Connect with Mel Trotter Ministries – A standing invitation from me – join me for lunch.


Twitter: @JeshuaTLauka

Lesson for Businesses: “Words Matter.” Court of Appeals Reverses in favor of Bank of America.

July 8, 2016 2 comments

Words Matter.

Contracts are about risk allocation.

In a transaction, who bears what risk?

Back in April I posted on a recent Supreme Court case – Bank of America v First American Title, et. al.

If you recall, that case involved allegations of mortgage fraud perpetrated against BOA to the tune of millions of dollars.

About that Post…

One of the primary issues the Supreme Court was tasked to consider was the legal significance of the closing protection letter (CPL) signed by the Title Company conducting the closing.

Closing Protection Letters.

As the Supreme Court explained, A CPL “is a contract between the title company and the lender whereby the title insurance company agrees to indemnify the lender for any losses caused by the failure of the title agent to follow the lender’s closing instructions.” Id pg 37.

“[a] lender who also wants the title insurer to be responsible for the agent’s acts in connection with escrow closing activities and services must separately contract with the title insurer for such additional protection by entering into an ‘insured closing letter’ or ‘closing protection letter.” Id.

Its About Risk allocation.

Who should bear the risk of a lender’s losses for failure of a title agent to follow the lender’s closing instructions?

In BOA’s case, it was on the hook for a huge loss and wanted to point to the Title Company and say “you should have caught that fraud, you must indemnify me!”

Words Matter.

The Court made a distinction between the inclusion of the word “in” in the CPL in the prior case, and the “exclusion” of the word “in” in the instant case. In the Court’s determination:

“Although the distinction is slight—the only difference is the word “in”—the distinction is legally significant.” Id. page 43.

“[i]f the word ‘in’ is not included, as is the case here, the phrase ‘handling your funds or documents in connection with . . . closings’ simply defines or identifies the closing agent,effectively broadening the indemnification coverage to any acts of fraud or dishonesty by the closing agent related to a closing.” In light of this distinction, the fraud or dishonesty by Westminster or Patriot need not be tied to their handling of Bank of America’s funds or documents.” Bank of Am. v. First Am. Title Ins. at page *44 (Mich. Apr. 13, 2016)

Moving on to the Recent BOA Decision…

A few days ago the Michigan Court of Appeals came out with the a related decision in BOA v Fidelity. You can check out the full opinion of BOA v Fidelity National Title.

Similar circumstances as the BOA v FATC case. BOA had alleged mortgage fraud and Fidelity and its affiliates should indemnify BOA for its losses under the CPL.

Words Matter.

The Court of Appeals relied on the Supreme Court in reversing FNT.

In its decision, the Court cited the Supreme Court decision (profusely).

It relied on the Supreme Court’s determination of the CPL’s language (excluding the word “in” as discussed above).

The Court of Appeals reversed the Trial court’s decision in favor of the FNT. It held that  “there is evidence establishing a genuine issue of material fact concerning whether BOA suffered actual loss arising out of the fraud or dishonesty of FTC in handling BOA’s funds….”

Interestingly, the Court goes in great detail to analyze the evidence that supports the allegations of “fraud or dishonesty” against FNT.

Lesson (You get the theme):

Words matter! As the Supreme Court opined – one word can be “legally significant.” It could determine liability for millions of dollars…

In the recent BOA case BOA was on the hook for its losses, and all of FNT’s attorney fees. That judgment was vacated and sent back for trial, based upon the language of the CPL.




Twitter: @JeshuaTLauka