Archive for December, 2016

A Lawyer’s Year-End Reflections.

December 29, 2016 Leave a comment

img_1338-002It is the end of 2016. I am having “big picture” thoughts as the year ends.

I have a pretty nice “big picture” view out of my office window.

Out of my office window from the 12th floor of 99 Monroe overlooks many ice skaters at Rosa Parks’ Circle in downtown Grand Rapids.

It is certainly a fun time of the year: my kids love Christmas break – being home from school, getting presents, visiting with family.

But right now I can’t help but feel a sense of heaviness in my heart.

My grandmother passed away last week. Traveling home to Saginaw to see her in her last days and attend the funeral was challenging.

The reality is that this time of year is hard for many people, for many reasons.

This week I was reminded specifically of this hard reality when I attended a court hearing for a real estate investor client. FYI, to any real estate owner or manager, a recent unpublished court of appeals case that you might want to check out: Anderson v Chaundy. This case provides a good example of what not to do when evicting a tenant.

If you want to feel depressed, just show up at any local courthouse for the landlord/tenant docket.

Invariably, you will see among those present, individuals whose spirits are down – for all sorts of reasons.

I was in the courtroom this particular day and couldn’t help but notice the hopelessness in the eyes of a particular individual being evicted for non-payment of rent. I also noticed the distinct smell of alcohol on this person, at 9 in the morning.

This person did not dispute that they owed rent. The result? This person would be ordered out of their apartment in ten days.

I’m not ashamed to say that as the current Chairman of the Board of Mel Trotter Ministries, I care very deeply about the homeless, hurting, and hungry.

Walking out of the courtroom, my “Mel Trotter” hat keeps my mind going…

What is going to become of this person?

Maybe they end up sleeping in their car, maybe under a bridge.

Hopefully this person ends up receiving help – to meet them where they are at. Places like Mel Trotter Ministries, that will take in families and individuals to care for them – provide them time to get into affordable housing.

An encouraging statistic – since January 2016, MTM has placed 217 families & individuals into permanent homes.

I’m not trying to bring anyone down during a festive time of year – but as this year ends I wanted to bring two “big picture” realities to the forefront:

  1. The Holiday Season aside, there remains great injustice in this world.
  2. There is great hope.

There are families and individuals that are truly hurting this holiday season.

There are people who have lost loved ones; lost homes. People who are victims of injustice.

The good news is that we can all do something to offer hope to the hopeless.

You can volunteer or provide a year end gift to support organizations locally, like Mel Trotter MinistriesKalamazoo Gospel MissionKids Food Basket, Volunteers in ServiceWestwood Christian ServicesHQ Grand Rapids, Goodwill Industries of Greater Grand Rapids, or globally, like International Justice MissionCompassion International, and many more.

I hope you will join me in this Christmas season and send out gifts and prayers to make an impact in the lives of those hurting.

Business Law Update: You have Terms and Conditions, but are they CONSPICUOUS?

December 16, 2016 Leave a comment

Business Owners – ask yourself:

When selling or buying, what are in my company’s Terms and Conditions?

You can check out some of my prior posts on Terms and Conditions. “TnCs” are important to review closely. TnCs “allocate risk” among the two parties to the contract. In some instances, even if one party never reads the TnCs.

Recent Case…

On November 29th, a Court of Appeals case was issued stemming from a product sold by a business to a customer. The case: John French Jr. v Ben’s Super Center

This case involved “the sale of a defective outdoor wood furnace”


“On May 21, 2011, after meeting with defendant’s salesman, Todd Kaatz, and having a fairly lengthy discussion with him regarding purchasing an outdoor wood furnace for his home, plaintiff purchased an outdoor wood furnace, (“Optimizer 250″) from Ben’s Supercenter for $12,000.00.” Id. at pg 1.

Defendant delivered the Optimizer 250 to plaintiff’s property and plaintiff installed it.

Sometime around Christmas of 2011, after plaintiff had been using the furnace for about three weeks, he began to have trouble with its performance and contacted Kaatz for help.

“Kaatz…came to plaintiff’s property and inspected the furnace, but they were unable to determine why the furnace was operating inefficiently.”

After several years of attempting to work with the manufacturer and “retrofit” to make the furnace work, Plaintiff sued Defendant.

Plaintiff raised about of claims, variations of “breach warranties”.

Among other things, Plaintiff claimed that Defendant had breached an “implied warranty of merchantability.”

Essentially, it is implied in a sale of goods that what the buyer is getting, he or she will be able to use for the purpose it is generally intended to be used for.

Michigan law allows a business to exclude such warranties.

So the question is: did this business properly exclude any such warranties?

Answer: No.

Under MCL 440.2316 if a business is going to exclude such warranty, it must do so in CONSPICUOUS LANGUAGE. According to the statute, conspicuous “means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it.” Id. pg 4.

In this case, the business pointed not to any of its own terms and conditions, but to the manufacturer’s handbook, which had one line that stated: “No other warranty is expressed or implied.” Id. Pg 5.

As the Court noted – this was not conspicuous language.

The Court upheld the verdict in favor of Plaintiff.

Take Away on Terms and Conditions

  1. Read the Terms and Conditions

Enough said.

2. Implement Terms and Conditions

I recommend business clients to always include a Terms and Conditions page that is either attached to the back of their physical Purchase Orders, or is included in their Website and incorporated by reference. The Terms and Conditions will, essentially, allocate risk and liability, on such items like:

  • warranties (what is the provider guaranteeing and what isn’t it?) As emphasized by the French case – disclaimers need to be CONSPICUOUSLY IDENTIFIED.
  • payment terms (when and how is payment accepted? Late fees?)
  • remedies (what is your recourse in the event the goods aren’t what the buyer expected? Are your damages limited to a refund, or can you get related damages as well? Can attorney fees be covered?
  • Venue – (where can you bring your dispute? An arbitrator? Who pays the fees? Is the location of the arbitration specified?

3. Enforce Terms and Conditions

And of course, its important that a business enforces its terms. I have had clients who have been sued before and forgot of their advantageous language in their terms and conditions. If a business is sued and it waits too long in the litigation before raising its right to arbitration, the court very well might consider the business to have “waived its right” to arbitration. Although, “Waiver of a contractual right to arbitrate is disfavored” by the Courts. Best v Park W Galleries, Inc, No. 305317, 2013 WL 4766678 (Mich Ct App September 5, 2013), app den 495 Mich 979 (2014).



Twitter: @JeshuaTLauka

Real Estate Law Update: A Discussion on Laches

December 14, 2016 Leave a comment


A few years back I wrote a post about the legal doctrine of Laches and how laches relates to real estate disputes.  

Since then, I consistently get a lot of hits on that post – and a lot of searches for “laches in real estate.


I don’t know. Maybe because its an unfamiliar term, unless you went to law school (even then).

Maybe because it is a valid defense to some real estate related lawsuits. (which it is if you read my previous post).

An October 2016 Michigan court of appeals decision came out on the subject, so I thought I would write about it.

The case:   Charter Township of Lyons v James E. Petty, et al. (unpublished) No. 327686 (Oct. 13, 2016).

But first, as a recap…

The Equitable Doctrine of Laches:

“Laches is an equitable tool used to remedy the inconvenience resulting from the plaintiff’s delay in asserting a legal right that was practicable to assert.” Public Health Dept v. Rivergate Manor, 452 Mich. 495, 507; 550 NW2d 515 (1996).

As such, “when considering whether a plaintiff is chargeable with laches, [a court] must afford attention to prejudice occasioned by the delay.” Lothian, 414 Mich. at 168. It is the prejudice occasioned by the delay that justifies the application of laches.Dunn v. Minnema, 323 Mich. 687, 696; 36 NW2d 182 (1949) .

Therefore in deciding on the issue of Laches, a Court will ask two questions:

1. was there a delay in bringing the claim and, if so,

2. did it prejudice the Defendant?

Question: Why is laches relevant to real estate disputes?

Answer: Because many real estate claims are based in “equity” as opposed to “law”-  e.g. –an injunction, specific performance, action for quiet title…



Recent Case Discussing Laches: Charter Township of Lyon v Petty, et al.

The Lyons case emphasizes “what type of harm (or prejudice) is a party required to show in order to succeed in a laches defense.”


This case was highlight by the Michigan Small Business Association (“SBAM”), since it clarified certain restrictions of small businesses operated on residential lands.

As SBAM reported:

“Two families that operated small businesses out of their homes have to cease their activity on their land because it violated Lyon Township’s zoning ordinance, which had designated the land “residential agricultural.”


However, for our purposes, the Pettys, who were operating their businesses on the property, argued that the township’s “decades-long pattern of ignoring their zoning violations, and the investments they made in their business as a result, precluded the township from taking enforcement action…” Id. pg 4.

The Pettys claimed Laches as one of several defenses to the Township’s enforcement of its ordinance.

The Court went through the legal analysis for laches and noted:

“Prejudice is a mandatory element.” and

“The prejudice necessary to establish a laches or estoppel defense cannot be a de minimis harm…” but “…property owners must establish ‘a financial loss…so great as practically to destroy or greatly to decrease the value of the..premises…” Id. pg 5.



When utilizing a defense of Laches in real estate disputes, showing merely the passage of time is not sufficient.

Showing the presence of harm due to the passage of time is not sufficient.

Significant harm must be shown.



Twitter: @JeshuaTLauka






Pitfalls for Business Owners: Recent Court Case on Piercing the Corporate Veil.

December 8, 2016 Leave a comment

Rosa Parks Circle in Downtown Grand Rapids, getting ready for Christmas.

We are heading towards the end of the year – I love the Christmas season!

One thing that comes to mind for local business owners going into the New Year – make sure that your legal documents and procedures are in proper order.

As every business owner should know, one of the main purposes in creating a business entity is, generally, to limit an owner’s personal liability from the obligations of the company.

Unfortunately, liability is not limited in all cases.


Generally though, proper creation of a business entity results in the following:


Owners are not personally liable for the debts of the company.


A November 22nd  Court of Appeals decision highlights some of the pitfalls that could result in a business owner suffering from personal liability.

Check out Joelle 98 LLC v Stone Central, LLC

Law: Piercing the Corporate Veil
 In general, a corporation is treated as an entity that is completely separate from its stockholders. Foodland Distrib v. Al–Naimi, 220 Mich.App 453, 456; 559 NW2d 379 (1996).
That separation may be ignored, however, “where there is a unity of interest of the stockholders and the corporation and where the stockholders have used the corporate structure in an attempt to avoid legal obligations.” Id.
“Piercing the corporate veil requires the following elements:
(1) the corporate entity is a mere instrumentality of another individual or entity,
(2) the corporate entity was used to commit a wrong or fraud, and
(3) there was an unjust injury or loss to the plaintiff.”Lakeview Commons, 290 Mich.App at 510.
Joelle 98 LLC v Stone Central, LLC and its owner Najib Atisha involved a dispute over payments made under a land contract for commercial property.
Joelle 98 LLC claimed that Stone Central, and its sole member owner, Atisha, were both liable for monies owed to Joelle 98 LLC.
After trial, the Trial Court made the following ruling:
“I find that Mr. Atisha is using his corporations interchangeably and not keeping them as separate entities depending on what he’s trying to do. There really is no reasonable explanation as to why if [Atisha Land] purchased [the property] why Stone Central, LLC would have it as its only asset. Nor is there any reasonable explanation that Stone Central, LLC’s only asset [the property] why would the payments be made to [Atisha Land]. He’s obviously treating these separate entity corporations as if they were one. Moreover, there’s a problem with doing that and this case is a good example of it. Because when you do something like that, when Stone Central, LLC should have received the excess funds that were paid by [Joel Cars], the money should be there to repay Joel [Cars]. However, the money’s not there because Mr. Atisha made this decision to comingle funds among his LLC’s. Accordingly, I find from both of those reasons that the corporate veil should be pierced, that Mr. Atisha should be responsible also on the breach of contract action.” (emphasis added.) Joelle 98, LLC Id. at page 5.
The Court of Appeals affirmed the Trial Court’s decision.  It found, among other things, the defendant “had multiple corporate entities…and he used these entities as his instrumentalities…he co-mingled the assets of the entities…” Id. Pg 7. Further, the Court found that Defendant used his corporate structure simply to to commit a wrong – avoiding to refund the payments to Plaintiff. Id.
Business owners need to take care in forming as well as maintaining their business in order to keep their personal liability protection.
Don’t take actions, like commingling your personal and business funds, that could jeopardize your protection.
Twitter: @JeshuaTLauka

Legislative Update and Non-Disparagement Clauses in Contracts

December 5, 2016 Leave a comment

Today, I read an article published in the ABAJournal titled: In bid to protect online reviews, Congress OKs bill banning gag clauses in consumer contracts 

According to the ABAJournal:

“Congress has passed a bipartisan bill that aims to protect negative online reviews by banning nondisparagement clauses in nonnegotiable consumer contracts.”

It appears that this legislation is intended to protect consumers (as opposed to business-to-business).

I have previously delved into the topic of non-disparagement clauses.

1. Non-Disparagement Clauses in Settlement Agreements.

Often times as part of a confidential settlement agreement, the parties to a dispute will agree not to “disparage” each other.

Disparage – as you will see below – has a fairly common meaning.

‘Disparagement’ is ‘a false and injurious statement that discredits or detracts from the reputation of another’s property, product, or business.’ Black’s Law Dictionary (7th ed. 1999).

stated another way:

(1) To speak of in a slighting or disrespectful way; belittle. (2) To reduce esteem or rank.’ . . . American Heritage Dictionary (4th Ed. 2000)

2. Michigan Case Law Concerning “Non-Disparagement Agreements”

Rarely have I ever seen a non-disparagement clause become an issue. In fact, a review of Michigan case law supports this – I found only a handful of cases in Michigan where the parties litigated over one party’s alleged “disparagement” after a settlement agreement was entered.

One such case was the 2011 case of Sohal v. Mich. State Univ. Bd. of Trs. & Davoren Chick M.D., 2011 Mich. App. LEXIS 915, *12-14, 2011 WL 1879728 (Mich. Ct. App. May 17, 2011).

There, Plaintiff,  a participant in MSU’s internal medicine residency program, entered into a “resignation and settlement agreement” with MSU under disputed circumstances. The Agreement contained a “non-disparagement clause”.

Plaintiff sued and argued that Defendants breached the non-disparagement clause, entitling him to “rescind” the Agreement (and therefore sue under all of the laws that he would have otherwise waived).

One of Plaintiff’s arguments was: “the word “non-disparagement” is ambiguous. (If you’ve read my previous post you can understand why this argument does not win the day.)

The Court was not convinced. It held:

“the term “disparage” in the non-disparagement clause is not ambiguous. While plaintiff attempts to ascribe several “reasonable” meanings to the term “disparage,” and thus the non-disparagement clause, the term fairly admits of but one interpretation.” Citing Meagher v Wayne State Univ, 222 Mich App 700, 722; 565 NW2d 401 (1997).

As the Court noted, “Other state courts have determined that the term “disparage” in non-disparagement clauses of settlement agreements are unambiguous.” (citations omitted).

In closing – non-disparagement clauses are standard clauses (but not universally used). Courts have consistently held that “Disparage” is a plainly understood term. It isn’t an ambiguous term.




Twitter: @JeshuaTLauka


Special Purpose National Bank Charters for #Fintech Companies

December 2, 2016 Leave a comment

Today, Thomas J. Curry, Comptroller of the Currency gave remarks at Georgetown Law School about Special Purpose National Bank Charters for Fintech Companies. You can read the remarks here.

Mr. Curry announced that the Comptroller of the Currency (OCC) would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

Mr. Curry had this to say, in part:

“Over the past year, no topic in banking and finance has drawn more interest than innovative financial technology, and for good reason. The number of fintech companies in the United States and United Kingdom has ballooned to more than 4,000, and in just five years investment in this sector has grown from $1.8 billion to $24 billion worldwide.

“The OCC published a paper discussing the issues and conditions that the agency will consider in granting special purpose national bank charters.” You can check that paper out here


Categories: banking, fintech, Uncategorized