Archive for the ‘litigation’ Category

Business Law Update: Michigan Bill Would Prohibit Non-Disparagement Clauses with Consumers.

I’m not going to sugar coat it – it is a gray day in downtown Grand Rapids.

I had lunch with a friend today, who told me – he can’t stand it when in response to the question “how are you doing” someone gives a pat answer – “good”.



I agree.

I appreciate authenticity.

And today, is gray, and somewhat depressing and I am a little down.

Yesterday, I attended the funeral of a friend and fellow attorney who died suddenly. I am grieving and in prayer for Adam’s family, including his wife, two small children and his brother and parents.




Ok, enough authenticity, and on to the subject matter of this post…


I previously wrote about an interesting article published by the ABAJournal.

The article presents interesting questions that come up in business transactions:

when faced with entering a business relationship should you enter into a non-disclosure agreement? (NDA)

What about if the NDA contains a Non-Disparagement Clause?

What is Disparagement?

Michigan courts have held that “disparagement” is plain in its meaning. It is not ambiguous. Therefore, when signing a non-disparagement clause you can have some reasonable certainty in your conduct.

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)


Non-Disparagement Clauses in Contracts with Consumers


Recently the Federal government passed a law holding that such non-disparagement provisions in contracts are unenforceable under Federal law

California has had such a law in place since 2016.


It is one thing if two sophisticated business parties are negotiating a business relationship, but should consumers have specific protections concerning Non-Disparagement Clauses?


At least one Michigan lawmaker thinks so.

Michigan House Bill 5193

On October 31, 2017, HB 5193 was introduced to amend the Michigan Consumer Protection Act (“MCPA”).

“The MCPA provides protection to Michigan’s consumers by prohibiting various methods, acts, and practices in trade or commerce.” Slobin v. Henry Ford Health Care, 469 Mich. 211, 215; 666 NW2d 632 (2003).

The Amendment would prohibit anyone engaged in Trade or Commerce from including in a contract with a consumer for the sale of lease or sale of consumer goods:





Of note, under this Bill businesses would still be permitted to include provisions that protect its proprietary information.


I understand the intent of this provision. However, it hasn’t made any progress in committee. I will keep you posted on any development.



Questions?  Comments?


Twitter: @JeshuaTLauka


Lessons from Court: Real Estate Investors combating the Affordable Housing Crisis

February 1, 2018 Leave a comment

I took this photo this morning. Even when its cold outside, there is just something about the morning sun rising over Grand Rapids that gets me excited.



Wearing Multiple Hats.

Life is complicated when we wear multiple hats. I’ve written about the multiple hats I wear.

We all wear multiple hats. For example – I am a Christ Follower, a husband, a father, an attorney, a (recent) church elder, a volunteer, a mentor, etc…


The two roles that I find colliding most often are as follows:


Hat 1. I am an attorney representing business owners including real estate investors.

Hat 2. I am the past-board Chair at Mel Trotter Ministries – and am committed to ending homelessness, one life at a time.


Two Universes colliding

My two universes often collide and bring me right into the middle of a thick tension. That tension is highlighted by a scenario I often find myself in, such as the one a few days ago.


Recently I walked into the courthouse with a relatively simple task: obtain a Judgment for my client.


My client, real estate investor, recently purchased property that had an existing holdover tenant. This tenant had not paid any rent in months.


The complicating factor that I discovered when I met the tenant outside the courtroom:

the tenant was a single woman with young children, with no place to go.


These are the situations that law school doesn’t prepare you for.

How do I advise my client in this situation?


An Affordable Housing Crisis.

I just read an article today from Nick Manes at MIBiz on how in Grand Rapids there is still a Strong Demand for rental real estate.

This article is one of many constant reminders that it is hard to find housing in Grand Rapids, even if you can afford it.

The young lady I met at court, and others similarly situated, could very well find herself homeless.

I am thankful for places like Mel Trotter Ministries where in 2017 over 400 individuals found housing.



Three Examples of Real Estate Investors being part of the Solution.

I am thankful for those who are willing to work with tenants. In the case above, my client agreed to provide additional time for the tenant to find other housing.

See here for my article on the Eviction Prevention Program – a program implemented last month intended to address the affordable housing crisis in Grand Rapids.


Another client scenario comes to mind. This particular client is a well-to-do business owner with a big heart, and entered into the residential real estate rental industry truly to be part of the solution – to provide affordable housing to those in need without gouging those on a fixed budget – even though the market would allow my client to charge higher rent.

This is social entrepreneurship at its finest!

However, in this particular client’s case, my client was “too nice”. He was taken advantage of by a tenant.  In the end, I believe the Landlord’s generosity actually did a disservice to the Tenant by allowing the Tenant to stay months in the property without paying. Certainly the tenant wasn’t helping the landlord by failing to make any efforts to pay.

Many of my clients can’t afford not to receive regular rent. They rely on the rent to pay the mortgage.

This is why it is often said that the affordable housing crisis is complicated.


I also think of the private investor who decided last year to work with Mel Trotter Ministries to house and case manage homeless youth – to get them into their own stable housing. This investor knows that he could get more profit on this rental, but is willing to take less money in hopes of changing the lives of homeless male youths.



A Lesson from these 3 Real Estate Investors….

There are no easy answers here. But what I appreciate about all three of the investors I mentioned above, is that they were all committed to “do something” – maybe somewhat awkwardly at times, maybe with mixed results, but their hearts were in the right place and they all did something to be part of the solution to transforming lives out of homelessness. They were committed to making their community better.


Are we willing to step up and be part of the solution, in some capacity?

We can’t do everything, but we can all do something.


How are we working to build a better community?



Twitter: @JeshuaTLauka



Business Law Update: Concerning Current Politics and Non-Disparagement Clauses

January 9, 2018 Leave a comment

Today I read an interesting article published by the ABAJournal.

The ABAJournal article asks an interesting question (all politics aside):

“If Trump sues Bannon for violating a nondisclosure agreement, what are his damages?”

Again, all politics aside, the article presents interesting questions that comes up in business transactions: when faced with entering a business relationship should you enter into a non-disclosure agreement? (NDA)


The thought that comes to mind when I hear the word “Politics”

What if the NDA contains a non-disparagement clause? Can you even enforce it if breached? If so, what are your damages?

Going back to the ABAJournal Article, one legal scholar quoted in the ABAJournal article opined that such a lawsuit would be problematic, given damages are speculative (my paraphrase). University of Arizona law professor Jane Roberta Bambauer stated:

“It’s difficult for litigants to claim large damages when the nature of the award is that they expected to be less embarrassed (as opposed to NDA cases involving trade secrets and other financially valuable pieces of information that the protected party expected to exploit himself)”

Regardless of the damages argument, in general, such agreements are enforceable. That was the opinion of Yale Law Professor Stephen L. Carter who stated:


“We can put aside nondisparagement clauses buried in the boilerplate of consumer contracts, which companies sometimes try to use to prevent those who buy their products from posting negative reviews. Most courts have understandably held such clauses unenforceable,”…“But when non-disparagement clauses are included in employment contracts or separation agreements, they are enforced more or less routinely.”


Non-Disparagement Clauses…With a Penalty?

Would you sign a non-disparagement clause with a penalty attached to it in the event of breach?

A few years ago an interesting story emerged regarding a non-disparagement clause involving a settlement entered into by the City of Lansing.

As a lawyer, if I was approving my client’s signature on the City of Lansing Settlement agreement, I’d want to be sure that my client fully understood what constitutes “disparagement”


What is Disparagement?

Michigan courts have held that “disparagement” is plain in its meaning. It is not ambiguous. Therefore, when signing a non-disparagement clause you can have some reasonable certainty in your conduct.

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 the Court 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.

Disparagement clauses may be enforceable. Most often, I would presume they would at least serve the purpose of deterring a party from speaking disreputably after a settlement is signed. However a good question to ask before entering into the agreement; unless you have a stipulated damages provision, how will you calculate damages in the event of a breach?


Questions?  Comments?


Twitter: @JeshuaTLauka

Legal Update for Real Estate Investors: Fraud, Harassment, and a Bill to Penalize Falsely Representing Need for a Service Animal.

December 19, 2017 Leave a comment


A beautiful end to Tuesday.IMG_2014

Here’s a profound truth those in the real estate industry will readily acknowledge:

Owning and Managing Real Estate is uniquely challenging.


I hear it from my Property Owner/Manager clients. I experience it when I am involved in negotiating in landlord/tenant disputes.

If you own or manage investment real estate, you are involved in messy business.


I believe that is why, at least in West Michigan, there is an opportunity for good property management companies – and a handful of companies I work with locally do it really well.

DOJ Sues Landlord for Sexual Harassment Allegations

Some of the pitfalls property owners/managers have to watch out for are illustrated in a recent press release announce by the Department of Justice.

Yesterday the Department of Justice announced that it filed suit against Owners and Managers related to allegations of sexual harassment in Kansas properties.

According to the press release, the owner and manager:


sexually harassed female residents at the rental properties from at least 2010 to 2014.  According to the complaint, Thong Cao engaged in harassment that included, among other things, making unwelcome sexual advances and comments, engaging in unwanted sexual touching, and evicting tenants who refused to engage in sexual conduct with him.


Sexual harassment is a violation of several Federal and State laws.


Georgia Real Estate Investor Sentenced to 16 months in Prison

Today, the DOJ announced that a Georgia Real Estate Investor was sentenced to 16 months in Prison for bid rigging public foreclosure sales.

According to the Press Release:

The evidence at trial showed that Purdy and his co-conspirators agreed not to compete for residential real estate at foreclosure auctions in Forsyth County and defrauded lender banks and homeowners.  Among other methods, the conspirators held secret “second auctions” of properties, dividing among themselves the auction proceeds that should have gone to pay off debts against the properties and, in some cases, to homeowners.


In today’s real estate market, bidding is competitive. If you are asked to take part in anything like this at your local sheriff’s sale – DON’T DO IT.
Lying About Emotional Support Animals, a Crime?


Michigan Law requires a public accommodation to permit the use of a service animal by a person with a disability.

Among other things:

“A public accommodation shall not ask a person with a disability to remove a service animal from the premises due to allergies or fear of the animal. A public accommodation may only ask a person with a disability to remove his or her service animal from the premises if either of the following applies:

(a) The service animal is out of control and its handler does not take effective action to control it.

(b) The service animal is not housebroken” MCL 750.502c

Landlords and property owners should heed the warning of General Deputy Assistant Secretary Bryan Greene of the U.S. Department of Housing and Urban Development’s Fair Housing and Equal Opportunity.

“Many people with disabilities require the assistance of an animal to carry out major daily activities,” said  “Complaints alleging disability discrimination now account for the majority of the complaints HUD receives. HUD will continue to enforce the law and educate the public on the rights of people with disabilities in housing.”


However, a Michigan Senate bill proposed on November 28, 2017 would make it a crime to falsely represent the need for a service animal to a landlord. Violation would also give right to a Landlord to evict such tenant.


This is an interesting bill. I look forward to seeing if it gains any traction.



Two takeaways from this news headline:


1. It is worth being proactive and engaging legal counsel. 

Issues arise. When in doubt, e-mail or call your attorney.


2. Residential Real Estate Investment is highly regulated.

If you are a landlord leasing out “residential” property as opposed to purely commercial property (business tenant), you are under much more stringent regulations. You must comply with Federal laws, like the Fair Housing Act and state laws, like the Michigan Truth in Renting Act. Make sure you are operating lawfully.


Questions? Comments?


Twitter: @JeshuaTLauka

Legal Update for Commercial and Residential Property Managers, Investors: Winter is Here. Are you Prepared?

December 11, 2017 Leave a comment

The snow is coming down in Grand Rapids! I took this photo last week from my office – ice skating has officially started.



With the winter months – comes an issue for landlords, property managers, and real estate investors…

icy sidewalks and parking lots.

These types of conditions are a primary reason why investors hold real estate in LLCs.

Two recent Michigan court cases came out where tenants sued their landlords for injuries related to slip and falls on icy sidewalks/parking lots:

Schuster v River Oaks Garden Apartments

Ferguson v Lautrec LTD

The claims in both cases had to do with a Landlord’s statutory duty under Michigan Compiled Laws 554.139(1)(a) to keep the Property kept fit for its intended use.


In General:

A Difference Between Commercial and Residential Leases – FREEDOM OF CONTRACT

The above mentioned duty is one created by Michigan statute. It does not apply to Landlords/Property Managers or owners of commercial real estate with commercial tenants.

In the residential context, tenants have certain statutory rights, in addition to contractual. These rights provide extra protection from a landlord’s ability to evict the tenant and are found in such places as “Landlord Tenant Relationship Act” and “Truth in Renting Act”.

One such right of a tenant – the residential property must be kept fit for its intended use and in reasonable repair. These conditions must be met in order for a landlord to otherwise evict a breaching tenant. Stated otherwise, the covenant to pay rent is not an independent covenant to a landlord’s duty to keep the property fit for its intended use and in reasonable repair.

In a commercial context the courts’ mantra is “Freedom of Contract“. The Court will look at the contract that the parties’ agreed to, and, absent extraordinary circumstances, enforce it by its term. (therefore in  a commercial lease you might see language such as the following “rent is due with no right of offset, setoff, counterclaim…”) In such instance, the landlord is telling the tenant that tenant has no right to withhold rent just because landlord may have breached a duty under the lease.

The Courts have recognized that commercial landlords and tenants are “free to contract”


Going back to our Case Studies…

Two Cases of Icy Conditions – different results

Ferguson Case

Ferguson was a tenant who slipped and fell on the sidewalk outside of her apartment building. In court, she argued that defendant was  “liable for her injuries because it breached its duty to maintain the common area of the apartment, i.e., the sidewalk, in a condition fit for its intended use as required under MCL 554.139(1)(a).” Id. page 1.

The Court disagreed.

On appeal, the Court of Appeals affirmed the trial court.
MCL 554.139(1)(a) provides the following:

(1) In every lease or license of residential premises, the lessor or licensor
covenants: (a) That the premises and all common areas are fit for the use intended by the

Courts have held that “sidewalks . . . constitute ‘common areas’ under MCL 554.139(1)(a).”).

The question the Court asked was: what is “fit” mean in this context?

“Our Supreme Court defined “fit” as “adapted or suited; appropriate,” Allison v AEW Capital Mgt, LLP, 481 Mich 419, 429; 751 NW2d 8 (2008), quoting Random House Webster’s College Dictionary (1997) (quotation marks omitted), and a sidewalk’s intended purpose is for walking, Benton, 270 Mich App at 444.” Id. page 2-3

Defendant, therefore, has a duty to keep the sidewalk adapted or suited for walking.

The court reviewed the facts, as presented in the trial court and affirmed that “In this case, the sidewalk was not unfit simply because there was a patch of ice”. Id. 3



“According to plaintiff, [Schuster,] the fall occurred as she took her first steps onto the sidewalk surrounding the complex’s mailbox kiosk. As a result of her fall, plaintiff broke her ankle requiring surgical repair with hardware placement.” Id pg 1.

The Court dismissed her claim, finding that Schuster failed to present evidence that the sidewalk was not fit for its intended use.

On appeal, Defendant does not dispute that the sidewalk was intended for walking and specifically for access to the apartment complex mailboxes. However it argues that the sidewalk, even if ice covered,  was fit for its intended purpose.” Id. pg 3-4.

The Court, like in Ferguson, relied on the Michigan Supreme Court decision of Allison:

“In Allison v AEW Capital Mgt, LLP, 481 Mich 419; 751 NW2d 8 (2008), the Supreme
Court considered a landlord’s statutory duty regarding common areas, particularly as concerns natural accumulations of snow and ice. It held that “the natural accumulation of snow and ice is subject to the lessor’s duty established in MCL 554.139(1)(a)” to keep the premises and common areas “fit for the use intended by the parties.” Id. at 438.

The Court held that  the duty of the Landlord was to provide “reasonable access” to
pedestrians seeking to use it. Id. pg 4.

The Plaintiff, Schuster, claimed the sidewalk was “dangerous”.

The Court of appeals noted; “[t]here is substantial evidence that the conditions, as predicted, developed overnight and that by the time of plaintiff’s fall, they were severe.” Id page 3.

The  Defendant Apartment Complex claimed that the presence of snow/ice was merely “inconvenient”.

The Court held that such “genuine dispute” of fact must be presented to a judge or jury. The Court reversed the trial court and sent it back.


Another interesting argument – Defendant claimed that it had no “notice” of the icy conditions.

The Court held that “notice” was not a prerequisite to the landlord’s duty to keep the property in good condition.

“We initially note, as we did in our previous opinion in this case, that there do not appear to be any published decisions that establish that notice of the condition is required to establish a breach of the duty under MCL 554.139(1)(a).” Id. Page 5.


  • Whether or not the presence of ice or snow on sidewalks presents a breach of a Landlord’s duty to keep the property fit for its intended use is a “highly factual inquiry”.  It depends on the facts of each case – which is what Schuster and Ferguson demonstrate.


  • A Landlord likely cannot avoid its duty to keep the property fit for its intended use by claiming a “lack of notice” of the existence of an icy condition.


  • If you are a commercial landlord with a commercial tenant – FREEDOM OF CONTRACT.

Questions? Comments?


Twitter: @JeshuaTLauka

Grand Rapids Combats Affordable Housing Crisis – Eviction Prevention Program

November 21, 2017 1 comment


You know winter is approaching when Rosa Parks Circle begins to freeze over and the ice rink begins to form. See the photo I took from my office yesterday.

In fact, the Ice Rink officially opens on Friday!



Before we know it, downtown will look like a snow globe – see the photo, below, I took from last Christmas.IMG_1927
There is an Address Affordable Housing Crisis

As many of you know, Kent County, like much of the U.S. is experiencing a serious lack of Affordable Housing.

The City of Grand Rapids has made concerted efforts to address problem through an advisory board, which has come up with strategies for addressing the Affordable Housing Crisis




Kent County Eviction Prevention Program

Beginning January of 2018, the 61st District Court will begin a pilot program – the “Eviction Prevention Program” (EPP). Judges Faber and Distel are the initial judges presiding over the EPP.

The EPP was developed as a collaborative effort between the City of Grand Rapids, Salvation Army of West Michigan, The Kent County Court System, the Michigan Department of Human Services and with funding provided by Steelcase.


Purpose of the Eviction Prevention Program

The EPP is intended to keep those tenants in housing, who truly want to stay in their housing.

The program will not be appropriate for every tenant.

The EPP appears best suited for those on the margin of being homeless due to an emergency situation (as opposed to those tenants chronically behind in rent).

The EPP provides one-time rent assistance and would allow a Landlord to hold a possession and money judgment in abeyance, pending the Tenant’s payment of rent.

The program is, essentially,  intended as a one-time emergency for those on a fixed or low income, who are essentially faced with the difficult choice of either paying an outstanding medical bill, car repair bill, groceries, etc.., or pay their rent.


What Property Managers and Landlords need to know about this program:

Landlords – any tenants behind in rent which have been served a summons and complaint for eviction, beginning in January 2018, should be receiving information about the EPP along with the summons and complaint.

Tenants will know that this is a potential resource to keep them in housing.

What you need to know:

1. The program is entirely voluntary. Landlords can choose to opt out.

2. Not every tenant will qualify. A tenant needs to have income to make the next month’s rent payment.

3. The program is geared towards keeping tenants in housing. If a tenant wants out of your property, the program will likely not be the right fit.


Why I like this program.

This program provides an opportunity to keep people in housing who are on the verge of being homeless. The fact is, families are experiencing homelessness in Grand Rapids every day.

Practically speaking, the program works for tenants who have the potential to get caught up, who otherwise are good tenants.

The program is an opportunity for Landlords to get paid and to be part of the solution to the affordable housing crisis.

Housing is a community problem. It is encouraging to see the great collaboration between government, private sector, non-profit sector.




Twitter: @JeshuaTLauka

Real Estate Investors and Property Managers – Update on the “Bed Bug Bill”

October 31, 2017 1 comment

Today is Halloween so I thought would write on a topic that gives me the creeps…. bed bugs.



Infestations can be an issue that every property manager or owner of residential investment real estate may face.


One June 9th Michigan House Bill 4719 was introduced – by Representative Brandt Iden -himself a Developer and Property Manager in South West Michigan. check out the text here – the Bill would amend the Michigan statute governing landlord tenant relationships to include addressing the control of certain pests – including bed bugs.

Recent Update

There has been no noticeable progress, except that the House Fiscal Agency prepared its legislative analysis a few weeks back – you can check it out here

What the Bill seeks to do:

Impose certain duties on landlords regarding bed bugs:

1. Mandates specifically that the Landlord is to keep the rental space free from bed bugs and provide educational literature about bed bug infestations to new tenants.

2. Prohibits Landlords from renting out space that the landlord knows is infested with bedbugs

3. Provides specific requirements for a landlord to respond to a complaint of bed bugs:

  • within 7 days of receiving a complaint, Landlord shall order an inspection for bed bugs;
  • within 7 days of confirming infestation, Landlord shall begin control and schedule inspections of adjoining rental units.

4. Limits damages against Landlord for infestations unless caused by Landlord’s Negligence.

Impose certain duties on tenants regarding bed bugs:

1. Tenant shall inspect for bed bugs when first occupying the space;

2. Tenant shall not move “infested property” into a rental unit

3. Tenant shall notify Landlord within 2 days of notice of infestation.

4. Tenant responsible for damages due to bed bugs caused by Tenant, or guest.

The bill was referred to the Committee on Law and Justice.

Something that the legislative analysis highlights –

“Notwithstanding any other provision of the Landlord-Tenant Act, the landlord and tenant could agree in writing (by hard copy) or electronic mail how responsibility would be assigned for costs resulting from an infestation, including, but not limited to, costs of
control or treatment.”

This would provide some discretion among the parties to craft a resolution.

My thoughts:

Bedbug infestation is a problem. It can cause tenants problems, particularly in lower income housing. As reference, I would highly recommend reading Matthew Desmond’s book “Evicted” It is no secret that Michigan, particularly Kent County, is experiencing an Affordable Housing Crisis.  Further, unhappy tenants who withhold rent can cause landlord problems that end up in court.

This type of bill could provide clarity to landlords and tenants on their reciprocal duties and rights in such circumstances. It could also provide them flexibility to come up with a resolution to get rid of any infestations.

Questions? Comments?


Twitter: @JeshuaTLauka