Source: http://www.stephanwright.com/blog
Timestamp: 2019-04-25 06:11:06+00:00

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Many contracts which require payment in exchange for performance, require that the payment be made by a date certain. One would assume that the failure to pay by the agreed date would result in a breach of contract. But, this isn’t always true as the parties in the recent case of Bull Market, Inc. v. Elrafei discovered.
In Bull Market, Mr. Elrafei agreed to buy a gas station from Bull Market. Elrafei promised to make his monthly payment by the 15th day of each month. If Elrafei failed to pay as promised, then Bull Market could declare him in breach and foreclose on the gas station.
From 2009 through late 2015, Elrafei paid, albeit on irregular dates roughly within 5 days both before and after the 15th day of each month. Bull Market accepted the irregular payments without complaint until August 2015, when Bull Market suddenly returned Elrafei’s August 18th payment with a letter declaring Elrafei in breach and demanding that Elrafei abandon the gas station. Eventually Bull Market sued and obtained an eviction.
Elrafei appealed and the Court of Appeals reversed, finding that over the course of time, the irregular payments by Elrafei, and the continued acceptance of same by Bull Market, resulted in a modification of the contract’s terms. Bull Market and Elrafei created a new contract regarding the, “monthly amount, the maturity date, and the day of the month when the payments are due.” In other words, unintentionally or not, the parties had an entirely new deal.
The Court did not discuss whether or not the written contract contained a “no waiver or modification” provision, which generally provides that the failure to enforce strict compliance of an obligation doesn’t result in a waiver of strict compliance or modification going forward. It seems that had the contract at issue contained such a clause, the result may have been different. In any event, understanding all the terms of a contract is crucial and it is equally crucial to consider what omitted provisions should be included as well.
As parents, when we take our children to the roller rink or jump park, we are often asked to sign a waiver in exchange for their participation. In many states, such a waiver may be enforceable. In Tennessee, however, the recent case of Blackwell v. Sky High Sports Nashville Operations, LLC, reinforced Tennessee’s prohibition against enforcing waivers for minors.
In Blackwell, Jacob Blackwell’s mother took him to a trampoline jump park in Nashville when Jacob was a minor. In order to permit Jacob to jump, Jacob’s mother signed a participation waiver, which attempted to do several things: 1) require any lawsuits to be solely brought in California, 2) waive any claims Jacob may have regarding future injuries, and 3) waive any claims Jacob’s parents may have.
In reaching this conclusion, the Court looked at Tennessee’s public policy regarding protecting the rights of minors and the fact that the Tennessee legislature has never taken steps, like some other states, to permit such waivers. The Court also reasoned that the public policy argument that youth recreational activities would disappear was not persuasive as Tennessee and other states in line with Tennessee have thriving recreation industries. In other words, the Court didn’t see any reason to change the status quo.
Tragedies happen too often. And, when tragedies do occur, it’s difficult not to place blame. Placing blame, however, does not always mean that someone is legally liable for the tragedy.
In the recent case of Sandra Wallis v. Brainerd Baptist Church, et al., a tragedy occurred. During a cycling class, the Plaintiff’s husband collapsed and ultimately died. The instructor and other responders immediately gave first aid. It appears that since a slight pulse was found, the responders chose not to use the onsite AED (defibrillator). The Plaintiff-Widow sued the church arguing that it was liable primarily because the AED was not used. The church denied liability and filed a claim against the company that sold it the AED, provided training, and agreed to maintain the church’s physician oversight program.
The very lengthy Tennessee Supreme Court decision addressed numerous legal and factual issues, which won’t all be discussed in this post. However, relevant to this post is the Court’s discussion about the legislature’s decision to adopt laws intend to increase the availability of AEDs. See Tenn. Code Ann. §§ 68-140-401. Although encouraging the use of AEDs, the laws, however, do not mandate their use if a business chooses to have one onsite. But, if a business chooses to have an AED, the business must satisfy Tenn. Code Ann. §§ 68-140-408 and the TN Dept. of Health requirements. These laws generally require certain training, maintenance, registration and program development before an AED may actually be used.
Of note to the Wallis case, is the law which generally statesthat if a business acquires an AED and complies with the law, the business “receives statutory immunity from civil liability for negligent acts or omissions arising from use of an AED, although this immunity does not extend to willful or wanton misconduct or gross negligence.” Wallis at p. 17.
In other words, the business having an onsite AED, which follows the training/registration laws, shouldn’t be liable for a tragic situation such as the one the Plaintiff went through.
Although, the Court didn’t dismiss the entire case due to the current way in which it was on appeal, it seems clear that businesses which choose to have, maintain, and properly use AEDs in emergency situations should not be liable under most tragic situations. As with any application of the law to a specific set of facts, businesses wishing to explore whether they are in compliance with the law should do so in conjunction with legal counsel.
— Michael Adler (@madler9000) November 14, 2016.
At first glance, this statement may be seen as funny or even sad. Some readers may focus on the apparent pettiness of the divorce clients and their fighting over every last crumb.
An entirely different lesson, however, can also be gleaned. In this case, the divorcing couple identified a problem: Don't train the parrot to say mean things about the other ex-spouse. Maybe this couple had a history of teaching the parrot to mock people that the couple didn't care for? Maybe they were concerned that once separated, their parrot would be used to verbally attack the other spouse? Whatever the reason was, the divorcing couple identified an issue and seemingly communicated it to Mr. Adler.
This tweet illustrates the importance of issue spotting – whether in business, a divorce, estate planning, or litigation. Mr. Adler used his best efforts to resolve one of his client's concerns: avoiding continuous post-divorce litigation over the parrot. Avoiding future issues is a noble pursuit and an integral part of the attorney-client relationship. For this divorcing couple's sake, I hope that the written compromise is indeed sufficient.
— Lady Lawya (@Parkerlawyer) September 15, 2016.
It will be interesting to see how all of this plays out. Does "Lady Lawya" have a case against Mr. Adler? Or, are there a slew of parrot divorce cases out there as a recent article questions?
In any event, the fundamental lesson doesn't change: Identify issues and be cognizant of addressing those issues in writing.
We recently examined the case of Aqua-Chem, Inc. v. D&H Machine Service, Inc. regarding the importance of written terms and conditions in contracts. This same case also illustrates the need to properly prove lost profit damages at trial.
As a reminder, Aqua-Chem owned large coolers that were to be installed on U.S. Navy destroyers. Aqua-Chem hired D&H to modify the coolers to fit the ships. However, D&H damaged the coolers. Aqua-Chem spent approximately $191,000 to replace the coolers, which the trial court awarded as damages. The court, however, refused to award Aqua-Chem lost profits.
Lost profits following a breach of contract can be extensive. In this case, Aqua-Chem consumed an additional 730 labor hours rebuilding the damaged coolers. Those labor hours could have gone to other projects and other customers, thus giving Aqua-Chem additional profit. At trial, an Aqua-Chem executive testified that its profit margin on each hour of labor was $25.96. Aqua-Chem argued that it was entitled to an additional lost profit award of $18,951.
The court, however, disagreed, finding that Aqua-Chem didn't prove its lost profit damages with "reasonable certainty". The court found that Aqua-Chem's testifying witness was unable to establish how its CFO came up with the calculation. As such, Aqua-Chem didn't meet its burden of presenting evidence that "provid[ed] a satisfactory basis for estimating what [its] probable earnings and expenses would have been had the wrongdoing not occurred."
Presentation of evidence at trial is crucial. If Aqua-Chem had presented underlying testimony supporting the $25.96/labor hour profit margin, then the court may have awarded the additional $18,951 in damages. However, because the trial presentation lacked the supporting data, Aqua-Chem wasn't made whole.
The importance of understanding written terms and conditions and having written contracts cannot be stressed enough. The recent case of Aqua-Chem, Inc. v. D&H Machine Service, Inc., highlights these points.
Aqua-Chem owned large coolers that were to be installed on U.S. Navy destroyers. Aqua-Chem needed the coolers machined, and subsequently hired D&H to perform the machining. D&H incorrectly machined the coolers, damaging them. Aqua-Chem had to replace the coolers at an additional cost of approximately $191,000. Aqua-Chem sued D&H and prevailed following a bench trial.
Prior to D&H machining the coolers, Aqua-Chem sent purchase orders to D&H which specifically stated, among other conditions, that: 1) the written purchase orders controlled over all other documents and oral statements, and 2) performing the machining services constituted acceptance of the purchase orders in their entirety. D&H never signed the purchase orders, but did machine the coolers and returned them to Aqua-Chem.
D&H argued that it orally rejected the purchase orders and thus, did not perform the machining subject to the unilaterally imposed written terms and conditions. The Court rejected this argument finding that the purchase orders explicitly provided that performance of the job was acceptance of the terms and conditions as written. Any modification of those terms must have been in writing and before the job was performed.
D&H lost and the judgment awarding Aqua-Chem full replacement cooler costs was upheld on appeal. Additionally, D&H was ordered to pay Aqua-Chem's attorneys' fees.
This case highlights the importance of reading and understanding all the terms and conditions of a contract before performance. And, further, if certain terms are not desired, then those terms must be addressed in writing before performance is done.
In Tennessee, like many other states, a non-Tennessee company must obtain a Tennessee certificate of authority if it wishes to maintain lawsuits within the State of Tennessee. Curiously, the recent case of Sharper Impressions Painting, Co., et al. v. Dean Yoder interpreted this statute as meaning that the non-authorized out of state company may file its lawsuit in Tennessee, however, once filed, it may not continue to prosecute the lawsuit. In other words, the Court didn't penalize the non-compliant company, which cured its omission mid-suit.
In Sharper Impressions Painting, Co., an Ohio company employed Dean Yoder who was fired for embezzlement. After termination, Mr. Yoder started his own competing painting business, which violated his Sharper Impressions non-compete agreement. Sharper Impressions sued Mr. Yoder in Tennessee where he was operating his business. Mr. Yoder filed a motion to dismiss arguing that the Ohio company could not sue him since it didn't have a Tennessee issued certificate of authority. The trial court agreed and dismissed the suit notwithstanding the fact that Sharper Impressions obtained the certificate during the pending litigation.
The Court of Appeals reversed, holding that T.C.A. §48-25-102's use of the word "maintain" merely meat that the non-authorized out of state company could not continue to prosecute the suit. It could however, commence the suit, and further, once the defect was cured, the Ohio company could then continue to litigate. Accordingly, the court reversed the dismissal.
Although this case essentially found "no harm, no foul", best practices for out of state companies doing business in Tennessee include obtaining the certificate of authority at the outset. Up front compliance is certainly a more prudent economic decision as it avoids not only the statutory imposed late filing penalties to obtain the certificate, but also obviates litigating ancillary issues.
Getting paid money you’re owed is a challenge to many businesses and individuals alike. When a customer refuses to pay, a lawsuit may be filed. If the lawsuit concludes favorably, the client obtains a judgment, which is often when the real work begins. In other words, the client must now collect on the judgment.
Tennessee, like most jurisdictions, allows judgment creditors to record their judgments turning them into judgment liens. Once a judgment lien is recorded, that lien takes priority over later recorded liens and unrecorded judgments. In other words, the recorded judgment lien sets the client’s place in line which can preclude others from “line cutting”.
The timing of when the judgment is obtained and when the judgment lien is recorded is crucial. The recent case of Hitachi Capital America Corp., v. Community Trust & Banking Co., et al., highlights this.
Simply put in Hitachi, three creditors were all owed money from the same debtor. Each creditor separately sued the debtor and each creditor obtained a judgment, and then later recorded its lien. Creditor One sued earliest, but filed its lien second. Creditor Two sued second, but filed its lien first. Creditor Three sued last, and filed its lien last, but made the argument that it was actually second in line, because of a technical issue pertaining to Creditor One’s judgment lien.
The Court ultimately disagreed with Creditor Three and the priority remained: Creditor Two, Creditor One, and then Creditor Three. Although the technical issue caused Creditor One to spend more on litigation against Creditor Three than it needed to, it still prevailed. Another interesting aspect of this case, is that Creditor One actually could have been first because it filed suit first and obtained its judgment first. For some reason though, it didn’t record its lien until one week after Creditor Two. So, technically correct, prompt, and timely filing are always crucial, but especially so when trying to get paid on a past due bill.
Yesterday, I experienced a first as a trial lawyer. After I won a jury trial on my motion for directed verdict, the pro se litigant's sister placed a curse upon me, prompting me to over-enthusiastically address the indignities of such an offence. Her uttered incantation aside, I find myself reflecting on some lessons learned about the case.
In short, the case was a simple car crash. The Plaintiff claimed a host of physical and mental injuries all attributed to my now deceased driver/client. Unfortunately for the Plaintiff, she burned through two highly competent attorneys and opted to try her luck on her own, proceeding pro se. More unfortunately for the Plaintiff, she neglected to 1) offer any admissible evidence at trial, 2) offer any medical testimony linking up her injuries to the crash, or 3) offer any evidence or testimony regarding her claimed medical bills. So, after we picked a jury, made opening statements, and the Plaintiff testified, I moved for directed verdict (i.e. to dismiss the lawsuit on legal grounds as the Plaintiff failed to prove the essential elements of her claim.) Although the trial ended favorably for me, the Plaintiff will likely file an appeal, and I may be cursed.
First, don't upset someone who freely casts curse-filled spells. Second, don't burn through competent counsel – they tend to know how to present a case to a jury. Third, if you do burn through competent counsel, hire another one. Trying a case to a jury requires some attention to detail, such as knowing the rules of evidence. Finally, follow the rules of civil procedure and the local rules so the court doesn't exclude witnesses and evidence on technical grounds.
An interesting case arose out of the Middle District of Tennessee, which explored the overlapping claims involving an employer suing some of its former employees for trade secret misappropriation, breach of the duty of good faith and loyalty, and civil conspiracy. In Ram Tool & Supply Company, Inc. v. HD Supply Construction LTD., et al., the court allowed the common law claims of breach of duty of good faith/loyalty and civil conspiracy to survive the former employees' motion for summary judgment, notwithstanding the preemption of factually similar claims by the Tennessee Uniform Trade Secrets Act.
The facts appear quite colorful. Briefly, two businesses (Ram Tool & Supply and White Cap Construction Supply) compete in the construction tools and materials distribution industry. Ram Tool had a sales team in Nashville. White Cap didn't, but planned on opening one. Ram Tool alleged that over a period of about six months, White Cap targeted Ram Tool's Nashville manager, who agreed to move over to White Cap. While still employed with Ram Tool, the Nashville manager heavily recruited other Ram Tool employees; negotiated the hiring of Ram Tool employees for White Cap, while the manager was still on the Ram Tool payroll; and identified himself as the White Cap branch manager on White Cap letterhead while still employed by Ram Tool. To add insult to injury, on his last day of employment with Ram Tool, the Nashville manager received an order at Ram Tool, which he promptly forwarded to his new White Cap team calling it the "first order".
None of the Ram Tool employees were bound by any non-compete agreements or non-solicitation agreements. Rather, the claims against them were brought under common law theories that apply to all employees.
The court did not reach the merits of the dispute or opine on fault as the matter must still be tried to conclusion. Instead, the case dealt with the legal ruling of whether the Tennessee Uniform Trade Secrets Act precluded all of the common law claims, as is often the result. The court said no – the common law claims (i.e. breach of duty of loyalty, etc.) survived as the facts supporting those claims did not involve any alleged trade secret theft. In other words, the former Nashville manager and others, have quite the uphill battle to tread as they attempt to defeat of multiple claims being levied against them.
Situations involving employee dishonesty and switching over to competitors, both with and without non-compete agreements, often result in contentious litigation. And, as shown by this case, require a solid understanding of the interplay of the various overlapping claims.
What happens when your attorney fails to show up for trial because he's suspended from practicing law? Oh, and the suspended lawyer apparently never bothered to tell you that he wasn't going to be there or that he was suspended? A woman in Lawrence County, Tennessee recently found out – albeit fairly late in the process.
In Tidwell v. Burkes, two sisters sued each other over whether a real property deed was forged or not. Both sisters had legal representation who participated in the case for about 1 ½ years. Sister A's lawyer, however, was suspended from practicing law at some point before trial (we don't know why). The now suspended lawyer never told his client that he was suspended or that trial was set for September.
What does the trial court do on the day of trial? It moves on and makes Sister A try her case with no lawyer!
Sister A testified that her lawyer never told her about the trial and that she didn't learn about the suspension until that same morning. She pleaded with the court that she wasn't prepared. The trial court didn't seem concerned with this, finding that because her now suspended lawyer had notice, she did too, and that the court would accommodate the out of state witnesses over her.
Obviously, Sister A lost, but she hired new counsel who appealed. The court of appeals reversed the trial court, finding that Sister A should have been granted a continuance to hire a new lawyer and that it was error for the trial court to make her try the case.
It will be interesting to see how the case ends up now that both sides appear to have counsel, who aren't suspended, and who likely will show up for the new trial. What's the takeaway? Hire an attorney who you trust and with whom you can communicate effectively.

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