By David A. Zobel
Parties to contracts, such as banks or contractors, have often been covered by what is known as the “commercial frustration doctrine.” The doctrine can excuse a party to a contract from his or her performance when a happening, unforeseen by the contracting parties, destroys or nearly destroys the contract’s purpose or the value of such performance – provided the parties did not cause the happening and were unable to avoid its consequences.
However, as seen in a recent Missouri case in which a party attempted to assert the doctrine and avoid payment on a promissory note by claiming the “Great Recession” was an “unforeseen happening,” the doctrine may not be applicable to merely encountering financial difficulties (even if significant).
In Carpenters’ District Council of Greater St. Louis and Vicinity v. Commercial Woodworking & Contracting, Inc., et al, the United States District Court for the Eastern District of Missouri held that the recession was not the type of unanticipated, unforeseen event which qualified for a commercial frustration defense. 2012 WL 1025203 (E.D. Mo. Mar. 26, 2012).
Between April 26, 2004 and May 21, 2007, the Carpenters’ District Council of Greater St. Louis and Vicinity (“Carpenters Union”) made three loans to Commercial Woodworking & Contracting, Inc. and several individuals related to the corporation (“Commercial Woodworking”). The terms of the loan and its repayment were set forth in three promissory notes. Commercial Woodworking failed to repay upon the promissory notes. The Carpenters Union brought suit against Commercial Woodworking for repayment of the amounts remaining on the notes. Continue reading »
01/21/13 9:47 AM
Business Law, Litigation | Comments Off |
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Missouri Court Holds Great Recession Not Sufficient Basis for Commercial Frustration Defense
By David A. Zobel
An Illinois appellate court recently upheld a two-year, non-solicitation activity covenant and one-year anti-raiding covenant between a tax preparation service and its employee, despite the employee’s seasonal employment of just three months. Zabaneh Franchises, LLC v. Walker, 972 N.E. 2d 344 (Ill. App. 2012).
In July of 2010, Zabaneh Franchises, LLC, an income tax preparation service based in Quincy, Ill., purchased an existing H&R Block, Inc. franchise. The sale included an assignment of employment agreements with H&R Block’s employees, including that with Terri Walker. Walker had signed an employment agreement in November 2009, as she did annually beginning in 2003. Pursuant to this agreement, Walker agreed to work during the 2010 “tax season,” from January 2 through April 15, 2010. Walker completed this tax season employment without incident.
In February 2011, Zabaneh filed suit against Walker alleging that within a few months of leaving Zabaneh in April 2010, Walker started her own tax preparation business, solicited clients, and hired employees of H&R Block in violation of her employment agreement. Zabaneh’s complaint sought a temporary restraining order against Walker to bar her from engaging further in such activities. The trial court found Walker’s employment agreement to constitute a “contract of adhesion” (a “take it or leave it” imbalanced agreement favoring one party) and denied Zabaneh’s request for a temporary restraining order. The case was subsequently dismissed with prejudice.
On appeal, the appellate court was asked to consider whether Walker’s employment agreement was reasonable and enforceable. In doing so, the court noted that the Illinois Supreme Court had recently addressed the proper standard for analyzing the enforceability of restricted covenants in an employment agreement in Reliable Fire Equipment Co. v. Arredondo, 965 N.E.2d 393 (Ill. 2012). Continue reading »
11/28/12 10:15 AM
Business Law, Emerging Business, Employment Law, Litigation | Comments Off |
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Two-year, Non-solicitation Activity Covenant Upheld in Illinois for Seasonal Tax Employee
By David A. Zobel
The day before Missouri’s new cell phone tracking law was to take effect, Bolivar resident Mary Hopwood filed a lawsuit in the U.S. District Court for the Western District of Missouri seeking to have the new law declared unconstitutional. As I recently discussed, the new law requires phone companies to cooperate with police by tracking cell phone signals of 911 callers and/or by tracking a cell phone’s location when there is a danger of death or serious physical injury.
Hopwood’s lawsuit seeks to declare the new law as unconstitutional, alleging that it violates the Supremacy Clause of the United States Constitution. The Supremacy Clause prohibits states from enacting state statutes that conflict with federal law. Hopwood claims the Missouri law conflicts with several federal statutes, collectively known as the Electronic Communications Privacy Act. The ECPA governs the disclosure of the information stored by communications companies.
According to the lawsuit, one of the alleged conflicts involves Missouri’s elimination of phone companies’ discretion in responding to and possible denial of frivolous requests by law enforcement. Another conflict concerns the law’s complete denial of civil causes of action against the companies for wrongfully disclosing information. Federal law currently provides phone companies such discretion and provides for the possibility of civil relief against the companies for various wrongful actions. Continue reading »
10/3/12 9:21 AM
Litigation | Comments Off |
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Lawsuit Challenges Missouri Cell Phone Tracking Law
By David A. Zobel
As recently reported by the New York Times, across America demands by law enforcement agencies for cell phone records and data are skyrocketing. In fact, records released by the top five cell phone carriers indicated that 1.3 million requests for cell phone location/tracking and other data were granted to law enforcement agencies in 2011 alone.
Originally utilized only by federal agents, much of the recent increase has resulted from smaller and local law enforcement agencies utilizing such requests in their regular law enforcement practices. As with almost all technological advances, the technology of modern cell phones and capabilities of tracking same have outpaced governmental regulation, which has allowed many law enforcement agencies to utilize this practice with little to no legislative or judicial oversight. Recently, as the practice has grown and attracted more attention, advocates on both sides of the issue have brought this issue into public debate.
Civil liberties advocates argue the increased usage of cellular surveillance and tracking raises certain constitutional questions as the legal standards for obtaining this cell phone data are generally lower and less clear than the traditional standards applied in circumstances where law enforcement attempts to wiretap or monitor traditional phone lines and conversations. Advocates are concerned these lower and less clear standards invite troublesome discretion and surreptitious usage amongst law enforcement agencies.
Additionally, privacy advocates have expressed concern in the fact that modern cell phones can provide incredibly detailed pictures of the user’s life, including information related to the user’s health, political affiliations, finances and other sensitive data. Continue reading »
08/15/12 8:59 AM
Uncategorized | Comments Off |
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Legislative Update: Gov. Nixon Signs Cell Phone Tracking Bill
By David A. Zobel
Within the past few months more and more news outlets have reported stories of employers asking job applicants for their Facebook login information. While many applicants understandably feel uncomfortable with the idea of their potential employer delving through their private lives, applicants are typically not in the position to decline.
This new trend has sparked an inevitable inquiry: is it legal? At this time, the answer is uncertain. Like many issues arising from the fast-paced and ever-changing world of the Internet and social media, the law has not caught up with the question. There does not appear to be a statute, regulation or court decision directly on point – either at the federal or state level. Consequently, experts on both sides of the issue have begun considering and arguing whether any statutes, regulations, or court decisions indirectly apply to the issue.
Missouri statute does not appear to directly prohibit such a practice; however, this does not mean it is wise for employers to engage in it. The reason has little to do with the actual practice of asking for the login information, but rather concerns what may be potentially discovered by such practice. No, I am not referring to finding rants about past employers or photos of bad decisions and misdemeanors. Employers should be concerned about finding family or pregnancy photos, photos of the applicant in the hospital, and/or religious views.
Continue reading »
04/23/12 11:56 AM
Business Law, Digital Media, Emerging Business, Employment Law, Litigation, Manufacturing and Distribution | Comments Off |
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The Facebook Folly: Why Browsing an Applicant’s Facebook Profile Could Present Problems for Missouri Employers
By David A. Zobel
Part of a monthly multi-part series of discussions aimed at explaining legal and financial considerations for young professionals as they establish and develop their careers, relationships and lives.
The decision to purchase a home may be one of the biggest financial decisions you will ever make. Chances are, you will be looking at two or three times your annual income in debt, a small forest’s worth of paperwork, and a host of terms and phrases you may not be familiar with. Unfortunately, a misstep or two in your purchase can have serious ramifications on both your home and your investment. This discussion sets forth several legal considerations to keep in mind before you sign the contract.
How Should I Take Title to the Property?
This choice can be pretty easy when you are single – you purchase it and title yourself as the sole owner. The property is yours (subject to the mortgage) and you are free to sell it as you please or have it pass pursuant to estate plan.
However, if you are married or purchase the property with a friend or investor, you will need to title the property differently and different titles may be more appropriate for different marital and financial relationships. For example, a joint tenancy with right of survivorship may be ideal for family situations in which an older family member wants the property to automatically pass to a younger sibling upon death. A tenancy by the entirety, reserved for married couples, can prevent one of the spouse’s individual creditors from reaching the property. Where business partners are purchasing a property, it may be wise to hold title as tenants in common which would allow either partner to freely sell his/her interest in the property without the permission of the partner.
The Basement Is Dry, The Roof Does Not Leak: Seller Representations
Most states require the seller to disclose to you “material” facts which may affect your decision to buy the property. What is “material” may vary from state to state, but typical items for disclosure and warranty address termite or water damage as well as issues relating to appliances, the roof, and sewage systems. Should the seller misrepresent the extent of a known problem or fail to disclose something known to them, you may have a cause of action against the seller for any damages caused thereby. It is important to note, however, that the seller’s disclosure typically only covers known issues. For this reason, it is still strongly suggested that you obtain your own independent property inspection.
Continue reading »
02/2/12 9:15 AM
Real Estate | Comments Off |
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Buying a House? A Quick Look at Legal Issues You Should Consider
By David A. Zobel
Part of a monthly multi-part series of discussions aimed at explaining legal and financial considerations for young professionals as they establish and develop their careers, relationships and lives.
The state where you reside shapes and defines what marriage is and what it means for you and your fiancée through its laws and licensing requirements. Because these laws and requirements govern very intimate aspects of our lives, they can be emotionally and financially significant. This discussion sets forth several legal considerations to keep in mind as you travel towards the big day.
Living Together Before Marriage
On December 14, 2011, the Pew Research Center released a report concluding that the number of young adults waiting to get married is on the rise. The study also concluded that cohabitation has risen to its highest level in decades. Cohabitation has its benefits; however, it can also have drawbacks.
In the state of Missouri, simply living together does not affect any property either of you own. Upon break up, you are each entitled to your own property. The situation becomes more complicated when you begin purchasing real estate or personal property together or if you pay off each other’s financial obligations. Depending upon the circumstances, a court may require one party to compensate the other. Paying for your share of the fifty dollar rug you purchased together is one thing, but what about your share of that car? Or the house?
Plan on moving to another state? In some states, merely living together can have great implications. Depending on where you live, who you live with, and how you present yourself, you might find it interesting that in the eyes of the state, you might already be characterized as married. Known as a “common-law marriage” and contracted in a handful of states, this type of marriage carries with it the same rights, responsibilities and obligations of a traditional marriage, including those in divorce.
Who Gets the Ring?
You’re a huge Cardinals fan. You find out she has been hiding from you that she is a dyed-in-the-wool Cubs fan and don’t think you can ever forgive her. The engagement is off. Now what? What about that ring you saved for months to buy her?
Continue reading »
01/10/12 10:14 AM
Family Law | Comments Off |
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Considerations Before Popping the Question: What the Law Has to Say and What You Should Know
By David A. Zobel
Part of a monthly multi-part series of discussions aimed at explaining legal and financial considerations for young professionals as they establish and develop their careers, relationships and lives
It’s probably a safe bet that most people in their twenties and thirties have not given much thought to estate planning. Short of a first child or a friend asking if you want life insurance, planning for what will happen when you die probably hasn’t come up and why should it? You’ve got youth and health on your side. Moreover, you probably don’t have a lot of assets at this point.
So why is it important? I asked estate planning attorney Misty Watson to help explain. According to Watson,
“Planning for the future encompasses much more than where your property goes upon your death. Estate planning can also cover who handles your finances if you are out of town, who makes medical decisions for you in the event you become incapacitated, and who becomes your guardian if a court declares you incompetent.”
With these thoughts in mind, you may want to reflect upon the following considerations:
What Happens to My Assets?
You have more than you think you have. Even if you don’t own a home or a wall safe full of bullion, you still have assets and they need to be distributed somehow and to someone. Consider the following examples: bank accounts, savings accounts, stock, bonds, 401ks, IRAs, other retirement accounts, automobiles, clothes, art, appliances, and furniture. Chances are you have at least one of these things and more than likely you have a few. Maybe you’d like your friend to get your watch or a fund be set aside for your nephew’s college fund. Estate planning assists in sorting out who gets what and when.
What Happens to My Children?
If you have children and are single, chances are you may have spoken with someone about taking care of your children in the event you pass. However, without any sort of document proving these intentions, how will the State know what to do? If you are married with children, your spouse will take on the responsibility, but what if you die at the same time? Or get divorced? Your children’s future should be your decision and not left up to the State or a court system.
Continue reading »
12/12/11 9:32 AM
Estate Planning, Family Law, Probate, Trusts | Comment (1) |
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Estate Planning for Young Professionals: Why Considering Your Death is Important Even at this Age
