Susan Maslow, a partner of the firm, has been named as a 2014 Power Players Awards finalist in the Attorney of the Year category by Philadelphia SmartCEO Magazine. With the Power Players Awards, SmartCEO recognizes the impact players that any CEO can count on to help them grow their business. This year’s finalists will be profiled in the September/October issue of SmartCEO magazine and celebrated at an awards ceremony in Philadelphia on September 11th. Awards will be presented to accountants, attorneys and bankers that have made an outstanding impact on their clients’ businesses.
Joanne Murray was a panelist at a Philadelphia Bar Association Small Business Committee/Pennsylvania Bar Institute program entitled “The Rise & Fall of Small Empires: Legal & Ethical issues Surrounding Closely-held Companies at Times of Formation & Distress”. Ms. Murray’s portion of the program focused on drafting owners’ agreements to minimize fallout in the event of founder disputes or break-ups.
Joanne Murray concentrates her practice in the areas of business law, business transactions, contracts, banking and finance. She is the Vice President (President-Elect) of the Bucks County Bar Association and is co-founder and past chair of its Business Law Section. Murray is also a member of the American Bar Association, Pennsylvania Bar Association, and Philadelphia Bar Association.
Full Tort v. Limited Tort Coverage: What is the real cost of limited tort?
Written by Bill MacMinn Deciding on an auto insurance plan, particularly after the rush of purchasing a new car, can be a deflating experience. There are many confusing choices to sort through the most significant of which is the option to select either full-tort or limited-tort coverage. While it’s certainly tempting to purchase the least costly option, savings at the front end can end up costing substantially more if you’re ever in an accident and hoping to recover more than your out-of-pocket medical costs.
The Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) is the statute that defines both full-tort and limited-tort coverage. Under the MVFRL, limited-tort coverage limits the rights of an insured to recover damages in a lawsuit. Unless a limited tort claimant suffers a “serious injury”, his or her recovery is quite limited and certainly not fully compensable for all of the consequences of an accident. “Serious injury” is as ambiguous as it sounds, and defined by the act as “death, serious impairment of bodily function, or permanent serious disfigurement.” 75 Pa.C.S. § 1702. While death and permanent serious disfigurement are relatively self-explanatory, whether the insured has suffered a “serious impairment of bodily function” is more often than not a question for the jury which is asked to evaluate the injuries suffered in terms of “the extent of the impairment, the length of time the impairment lasted, the treatment required to correct the impairment, and any other relevant factors.” Washington v. Baxter, 719 A.2d 733, 740 (Pa. 1988), Cadena v. Latch, 78 A.3d 636, 640 (Pa. Super. 2013). Unless the jury decides that the injuries sustained, using these criteria, are “a serious injury”, a limited tort claimant can only recover his or her unreimbursed out of pocket costs (referred to as “economic loss” in the statute). He or she will receive no compensation for pain and suffering, loss of life’s pleasures, or the “non-economic loss” which so often has the most significant impact on an accident victim.
Pennsylvania Supreme Court Lets Stand Blanket Prohibition on Discovery of Attorney-Expert Communications.
Written by Bill MacMinn
On April 29, 2014 an evenly divided Supreme Court let stand a Superior Court opinion which effectively creates a blanket prohibition on discovery of communications between an attorney and his or her expert. On November 23, 2011 the Superior Court handed down its opinion in Barrick vs. Holy Spirit Hospital, (32 A.3d 800). In that case, Carl Barrick brought suit against the hospital and its catering company, Sodexho, for injuries suffered when chair on which he was sitting collapsed beneath him in hospital cafeteria. Sodexho sought discovery directly from one of Mr. Barrick’s treating physicians, Dr. Greene, who was also designated as an expert witness to testify at trial. The medial records were produced, but Dr. Greene refused to produce “Certain records of this office that pertain to Mr. Barrick but were not created for treatment purposes….” These records included communication between Dr. Greene and Mr. Barrick’s attorney. Sodexho moved to enforce the subpoena which was granted by the trial court. An interlocutory appeal followed.
The Superior Court reversed. Its analysis focused on Pa.R.C.P. 4003.3 which protects from discovery counsel’s work product and 4003.5 which limits expert discovery. Discussing Rule 4003.5, the Superior Court reiterated the Supreme Courts’ interpretation of the rule in a prior case which held that, in Pennsylvania, expert discovery absent cause shown, is limited to the interrogatories described in Pa.R.C.P. 4003.5(a)(1) .
The Superior Court went on to hold that written communication between counsel and an expert witness retained by counsel is not discoverable as it is protected under the work-product doctrine of Pa.R.C.P. 4003.3. The only exception to this blanket prohibition arises where the party propounding the discovery can show that the communication itself is relevant.
Look Before You Leap Into That Business Relationship
Written by Thomas P. Donnelly
Business divorce, just like traditional matrimonial divorce, can occur for many reasons. Many times, business divorce is occasioned by underperformance and the need to separate an underperforming owner. However, the opposite circumstance, a business that has done well, can also spur desire for change in structure. Just like matrimonial divorce, business divorce can be a long, painful and expensive proposition. Consideration of trigger events for dissolution and setting an exit strategy before commencing the business venture can manage the expectations of the parties and facilitate transition when it becomes necessary. And it almost always does.
One of the primary considerations is trust. Consider the level of trust you place in a business partner on so many levels. Trust ranges from the basics of whether you can trust your partner not to have a hand in the cookie jar, to more esoteric questions of whether you can trust your partner to share your long term vision. All too often clients come to us with stories of unexplained payments for personal expenses which are only discovered by accident. What are the rights and obligations of the company and the business partners in such event? These rights should be spelled out in the agreement between the parties, otherwise the company, and the innocent shareholders, are left to argue common law claims and may be without a way to specifically extract the untrustworthy owner.
Trust goes deeper than the simple situation of defalcation (misuse of funds). Can you trust your business partner to have the same desire to grow your business and increase sales and performance metrics over an extended time? Business entities generally have perpetual existence. Can you trust that your partner will continue to make the requisite investments of time, energy and money that are necessary to bring the success you work so hard to achieve? If the agreements between the parties do not provide for a mechanism to remove that partner, or at least monetarily induce that partner to voluntarily separate, what strategy is available to accomplish the necessary change?
If extraction of a non performing owner is one side of the coin, the terms of voluntary separation are the other. Even in the absence of material differences between owners and managers, time and circumstance often require parties to go their separate ways. The terms of voluntary separation can be every bit as complex as forcible removal. Often, the most problematic inquiry is the right to be compensated in consideration of separation. Such terms of separation can vary based on valuation methodologies such as “market” or “book” values, timing of payments, reductions or additions to value based on subsequent conduct. In the absence of advance planning, the parties are almost certain to find dispute.
Post-employment obligations and fiduciary duties are also fertile ground for dispute. Corporate officers and directors have fiduciary obligations to the business. Partners, shareholders and members may have fiduciary obligations to each other. A departing shareholder may or may not be permitted to directly compete either during or after termination of the business relationship. Certainly, issues arise with respect to client/customer relationships and confidential information. More substantial issues may arise when the business develops a new technology or intellectual property which one party seeks to exploit in a different way. Agreements between the parties can address such possibilities and preserve rights by contract which might otherwise be ambiguous.
What if it all goes wrong? Again, business entities are generally established to have a perpetual existence, so termination must be accomplished by agreement or statutory procedure. What kind of consent is necessary to effectuate dissolution? Must all of the shareholders or members agree? Agreements can specify events and effect of dissolution including specific assignments in distribution of assets according to differing methodologies or factual circumstances. In circumstances where one party is opposed to liquidation or dissolution, the situation can become even more complex. Occasionally, only the appointment of a receiver can effectuate liquidation or dissolution; a generally unappealing circumstance as such an appointment necessitates the loss of control.
The questions posed and circumstances described above underline the importance of careful consideration prior to establishment of business entities. Such considerations during the business “engagement” and before business matrimony are necessary to prevent significant hardship when expectations are not managed. Advance planning though counsel can address many of the issues potentially faced by business owners and help the parties realize their expectations when circumstances change.
Lis pendens is a powerful tool which can be utilized in civil litigation pertaining to a claim against title to real estate. The filing of a lis pendens and recording that lis pendens against a parcel of property puts the world on notice that the owner may not have clear title, and thus, may be unable to convey same. A lis pendens effectively precludes transfer of the real property as any buyer must take subject to the cloud on title. Of course, a lis pendens must be supported by a writ of summons or a civil action complaint relating to real property.
Curiously, a lis pendens is not an available tool in an Orphans’ Court proceeding. Accordingly, a lis pendens cannot be utilized to place the world on notice of a claim against an administrator or executor where a transfer of property is made in connection with estate administration. Nor can it be used to place the world on notice of the claim relating to that transfer or a defect in their authority to effectuate same. Thus, the lis pendens is not an effective tool to preclude further transfer or encumbrance by mortgage or other debt instrument.
Although lis pendens is not available, the same purpose can be accomplished under the Orphans’ Court rules, provided a Petition for Citation has been filed with respect to the administrator’s activity. Pursuant to 20 Pa. Cons. Stat. §3359, any pleading in Orphans’ Court may be recorded in the Recorder of Deeds Office with reference to the property in question. While little case law is available to address the impact of such filing, the practical effect of providing notice of any existing claim to title may be satisfied.
Antheil Maslow and MacMinn is experienced in matters of estate administration and litigation pertaining to estate matters.
A Cautionary Tale for Commercial Lenders: Beware of Term Sheet & Commitment Letter Language
Written by Joanne Murray
Commercial lenders were left shuddering in the wake of a September 6, 2013 Pennsylvania Superior Court decision that affirmed a $3.6 million Bucks County jury verdict in favor of a local developer against an area bank. In County Line/New Britain Realty, LP v. Harleysville National Bank and Trust Company, the developer successfully argued that the term sheet provided to it by Harleysville was in fact a binding contract notwithstanding evidence of the parties’ intent to execute subsequent, more detailed agreements. The court also upheld the lower court ruling that Harleysville’s decision not to fund the loan described in the term sheet constituted a breach of contract. The court dismissed Harleysville’s claim that the term sheet did not contain the essential terms of a loan agreement (such as the closing date, how interest would be calculated, a repayment schedule, representations and warranties, and defaults and remedies) and therefore was not enforceable. The court held that the term sheet contained sufficient terms to create a binding contract, such as the identities of the borrower and lender, the principal amount of the loan, interest rates, the term, the manner of repayment, the names of the guarantors, and an identification of the collateral. The court acknowledged that the evidence showed that the parties intended to execute subsequent agreements but nevertheless held the term sheet to be binding.
Harleysville also argued that the developer did not meet all the loan conditions specified in the term sheet, so Harleysville was not required to fund the loan. Specifically, Harleysville asserted that two conditions were not met: (i) a satisfactory review by the lender of an “environmental assessment” of the parcels, and (ii) a satisfactory review by the lender of all specifications, engineer reports and government approvals. It argued that the trial court impermissibly allowed the jury to consider evidence regarding industry custom and practice, the course of dealing between the parties, and evidence of Harleysville’s motives in evaluating whether these loan conditions had been met. The Superior Court found that the term sheet did not articulate these conditions in sufficient detail and that it was appropriate for the jury to consider additional evidence in order to interpret the parties’ intent. This extrinsic evidence was particularly damning to Harleysville because it showed that Harleysville lost interest in making the loan shortly after the term sheet was issued, due in part to its desire to reduce the amount of commercial real estate loans in its portfolio and its precarious position as a result of the recent bankruptcy filing of its largest customer.
Antheil Maslow & MacMinn is Bucks County's Business Law Firm. To find out more about our practice and what we have to offer our business clients, please take a minute and watch our new firm overview video, and
Collecting On Your Contract From A Corporate Deadbeat
Written by Thomas P. Donnelly
By Thomas P. Donnelly, Esquire, Reprinted with permission from the March 27, 2014 issue of The Legal Intelligencer. (c)
2014 ALM Media Properties. Further duplication without permission is prohibited.
It happens all the time. A potential or existing client calls and advises they have been stiffed by a customer on a commercial contract. Often times, your client has provided goods or services to a client business only to be advised their client, the other named party to agreements in place, has ceased business operations. [As filing under Chapter 7 of the Bankruptcy Code does not result in a discharge of corporate obligations, a bankruptcy filing is generally not forthcoming.] There is no event which gives the client finality as to their loss. The client is left with only their suspicions that operations have commenced under a new corporate umbrella and whatever assets remained have simply been transferred out of the client’s reach.
While certainly not in an advantageous position, your client’s claims may not be dead. Under the right factual circumstance, recovery may still be had. Claims against successors, affiliated business entities, and corporate principals are fact specific and often necessitate pre complaint development through available public information or, potentially, through the issuance of a writ of summons. If sufficient information can be mined, causes of action for violation of the Uniform Fraudulent Transfers Act, successor liability under the de facto merger doctrine, unjust enrichment, and claims for piercing the corporate veil may have merit and be successfully pursued.
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