What Does It Mean To Retire - a/k/a The Dangers Of Imprecise Contracts

Defining, or redefining, “retirement” is not just a topic of commercials for annuities or RVs. It is a question so meaningful that the Court of Appeals has recently issued an opinion in which a central issue was the definition of the word.

The ubiquitous Google provides a good starting point for an analysis. A Google search for definitions of the meaning of retirement quickly yielded 14 different results. These definitions share some common themes, but they also have some very distinct differences.

This illustrates the problem of using, but not defining, the word “retirement” as part of a contract. As with any legal issue, where a contract leaves a term undefined there is an opening for a dispute that may need the intervention of the courts for resolution.

In an unpublished opinion in the matter of Nardi v. Satellite Servs., Inc., the Court of Appeals took on the issue of defining retirement. As a matter of background, the plaintiff was a former employee of the defendant. As part of an employment agreement, plaintiff was entitled to certain rights if his employment ended by virtue of “retirement.” The plaintiff left the defendant and went to work for another company, he alleged that he had “retired” and was entitled to certain benefits as defined by the contract. The defendants disagreed, alleging that “retirement” meant that the plaintiff was required to stop working in any occupation. In this matter, the Court of Appeals agreed with the plaintiff:

Resolution of this issue turns on the meaning of the word “retirement,” which is not defined in the contract. Defendants argue that “retirement” means that plaintiff was required to stop working in any occupation. However, the word “retirement” means “removal or withdrawal from an office or active service.” Random House Webster’s College Dictionary (1997). As noted by the trial court, however, today Americans often continue working in some capacity after they have begun drawing retirement benefits from a previous employer. See Derr v Murphy Motor Freight Lines, 452 Mich 375, 391 n 6 (Mallett, J.); 550 NW2d 759, amended 453 Mich 1204 (1996). Therefore, the modern understanding of the word “retirement” is an employee’s withdrawal from a particular “office” to collect vested benefits that have accrued to the employee, usually from years of faithful service. The contract’s other provisions support this definition of the word “retirement.”

Keep in mind that this is an unpublished opinion, so it is not binding as a matter of legal precedent, but it is informative on this issue. Moreover, it illustrates the problem that can occur when a contract does not expressly define a key term.

In the employment arena, or with regard to succession planning (such as buy-sell agreements and shareholder agreements), I suggest you take the opportunity to review your agreements. Is the word “retirement” used without definition? Are other key terms undefined?

What other practical advice can you take away? Spending the time with a qualified attorney to carefully draft significant documents may add to the up-front expense of a project. But the additional cost of litigation that can be the direct result from a dispute based on an imprecise contract will far outweigh the benefits of any slight cost savings from trying to cut corners when creating the agreements that will affect you and your business for years to come.

Remembering Our Heroes This Memorial Day

With Memorial Day approaching, my blog will be silent for a few days.

Now I take great liberty with the freedom the blog affords me. This post has nothing to do with the law, it is purely personal. As we honor our nation's heroes, I also honor my personal hero - my brother, Adam Miller, who died far too soon in 1999.

An exceptional student, a visionary as a business-man and web developer, a tenacious and gifted journalist, a true Michigan Man and a brother without equal he is dearly missed by many every day.

You may have noticed a link on the right side of my blog to a memorial fund established in his honor. To learn more about the fund or to make a contribution please click here. Below is an excerpt from the website which gives but a brief overview into his extraordinary life.

Though diagnosed at the age of seven with Neurofibromastosis type 2, Adam neither knew nor accepted boundaries or limitations. While the disease gradually robbed him of his hearing and vision and impaired his mobility, it left his brilliant mind untouched and spirit undaunted. Adam believed it was important on both a personal and professional level, to be actively engaged in life-to have achievability. And achieve he did!

At the University of Michigan, Adam earned numerous academic and journalistic awards. He was a member of several Honor Societies including Phi Beta Kappa, Golden Key Society and Kappa Tau Alpha (Journalism Honor Society). He received the John Rich Award for Journalism Excellence and was twice honored with the prestigious Columbia Gold Circle Award for Journalism for his work on the Michigan Daily. Adam spent four years as a sports writer for The Daily, where he also served as Night Editor, Senior Editor for Sports and as a byline columnist, writing "Miller's Crossing" his senior year.

During his undergraduate years at Michigan, he authored several articles on masculinity and disability. He and his co-author Professor Tom Gerschick are considered national authorities on the issue of the effects of physical disabilities on masculine identities. Their articles appear in many books and magazines, as well as sociological journals and textbooks. Adam was active in the University's Hearing-Impaired Students Organization and helped to maintain the Barrier-Free Computer-Users Group as well. He believed that it was vital for people with disabilities to communicate with and support one another. To further that end, he created and maintained the web site for the NF2 Crew, an international group of people affected by his disease. Because NF2 is such a rare disease, Adam believed it was vital for The Crew to provide a forum where information, treatment options, medical developments and personal support could be obtained. After earning his Masters in Journalism from the University in 1996, Adam concentrated his efforts on computer-assisted reporting. As Founder and President of WebCrossings. Ltd, Adam developed and maintained a variety of award-winning web sites for clients ranging from WDIV-TV4 to Michigan Ear Institute. He served as the Technology writer for HOUR Detroit magazine and was a frequent free-lance contributor to the Ann Arbor News. He was also passionate and devoted fan of the Michigan Wolverines and proud to be a True Blue MICHIGAN MAN.

I don't worry about the meaning of life - I can't handle the big stuff.

What concerns me is the meaning IN life - day by day, hour by hour, while I'm doing whatever it is that I do. What counts is not what I do, but that I DO IT at all?

Adam S. Miller passed away in 1999.

Business Litigation Is Not A DIY Matter

The Internet can be a great resource and with all the available information it is tempting to think about trying new endeavors without professional assistance. Just make sure to cross off "appearing in court on behalf of a corporation" as one of those activities.

An article on allbusiness.com asks "should you hire an attorney?" Do it yourselfers rejoice? Not so fast. The first sentence of the article is already leading to a road for trouble:

The only time you should always be represented by an attorney is when you appear in a criminal matter.

STOP! This statement is far too simplistic. Most notably, in Michigan, a corporation (as well as varoius other entities) may not appear in court without representation of a licensed attorney.

Longstanding Michigan law is that non-attorneys who violate this rule are engaged in the unauthorized practice of law. An ethics article from the Michigan Bar, which arose from the context of a landlord-tenant dispute where one the parties was not an individual, plainly spells out the law:

Lay officers, directors, partners and employees of corporate or partnership entities may not represent the entity in court proceedings or sign court documents without engaging in the unauthorized practice of law.

But that is not all, oh no, that is not all.

Michigan lawyers confronted with a non-lawyer appearing in court for a corporation or partnership have an ethical duty to bring the fact to the attention of the tribunal. Informal ethics opinion RI-10.

Likewise, Michigan judges are also under an ethical duty to prevent the unauthorized practice of law.

A separate ethics opinion reaches the same result in the context of a corporation or partnership which is involved in court proceedings relating to criminal matters or in response to ordinance violations:

We find no pertinent difference between the handling of civil matters and the handling of criminal matters by a layman representative of either a corporation or a partnership.

A layman appearing for a corporation or a partnership in response to an alleged violation of an ordinance is engaged in the unauthorized practice of law.

These ethics opinion are all in line with the Michigan Court of Appeals opinion in Peters Production, Inc. v Densick Broadcasting Company which held that a non-lawyer officer or shareholder may not appear in court on behalf of the corporation:

An individual may appear in propria persona; a corporation, however, can appear only by attorney regardless of whether it is interested in its own corporate capacity or in a fiduciary capacity.

Besides the practical reasons to work with an attorney, such as an attorney's specialized knowledge of the substantive law and the procedural rules, in some cases you must work with an attorney in order to avoid the potential consequences of engaging in the unauthorized practice of law.

Have questions about the boundaries of what is permissible by a non-attorney without running afoul of the law? You can start with the source by viewing the statutes MCL 600.916 and MCL 450.681, or, better yet, post a comment or e-mail me to continue the discussion.

Blogging About Litigants Blogging

This is a blog post about litigants using blogs and websites.

I know, the whole ironic, self-conscious thing is so 1990s, but this topic was too good to pass up.

The Wall Street Journal Law Blog has an oh-so-interesting discussion about the recent trend of litigants using blogs and websites as part of ongoing courtroom, and the attendant public relations, battles.

Progress and time march on, so this trend is likely here to stay, if not increase in popularity. But is it a good thing? As an attorney, and a part-time/novice blogger, I say "aye" - with a caveat, of course.

A blog or a website is merely a tool. As an attorney, or as someone who is not a member of the bar but who is caught up in the litigation process, why wouldn't you want more tools at your disposal? Whether and how to use those tools is up to you.

Information is easier to disburse then ever. Youtube anyone? Whether there is any merit to the content is another question.

Back to the litigation blogs. One question that is most interesting to yours truly is whether an increase in the usage of such devices will empower Davids or will it simply further empower Goliaths.

In concept, a website or blog can be cheaply established and easily maintained, and thus may be a way to level the playing field and allow those of less means to essentially wage an otherwise costly PR battle. Is it not foreseeable, though, that once all parties agree to engage via the same medium that the party that has access to more assets will have an advantage? Possible, but a relatively primitive blog may still be a more than sufficient device when placed in the hands of an effective communicator with a meaningful message.

Bottom lining it - on balance, I like the idea. It's creative, and it will be interesting to see where it takes us.

Lawyers and non-lawyers alike please chime in on this one. What's your take?

Who's Next In Line? Hopefully Many

Let's review - the time to work on a succession plan is now, not after the death or disability of a business owner. The key, though, is not just putting a plan on paper, but crafting a plan that will meet the practical challenges of arranging for an orderly and effective transfer of ownership and management.

In other words, make sure your buy-sell agreement will work.

To that end, Barry S. Cain, managing director for the Family Business Center at the accounting and consulting firm Blackman Kallick, has recently posted a fine article that focuses on the need for diversity in succession planning.

The key to the long-term success of your business lies in a word widely used in business today, although usually in a different context: diversity. Because the future is full of uncertainty, it’s extremely risky to pin all your hopes on one successor, even if a relative is waiting in the wings. The future of your business will be best assured if you have choices ... and good ones, at that.

Some of the key ideas covered in the article by Mr. Cain include:

• The need to have options for the next generation of leaders for the business. Choosing only one successor is very risky. If that individual is not ready when the time comes, either due to changes over time in the needs of the business or because of changes in the professional or family life of the successor, then the succession plan for the business is in peril.

• Mr. Cain also suggests that the next generation of leaders for the business need not come from within the family bloodline. This idea is obviously directly aimed at family businesses, but the idea of looking outside the organization can also be well-applied to most closely held companies.

One other important related topic that is not addressed in the article is the need to maintain appropriate financing arrangements for the buy-sell agreement, through sufficient life and disability insurance or otherwise. Don't let your succession plan fail because there are not sufficient assets to pay for the transfer of ownership to move the plan forward.

Special thanks to author Paul Brown and his New York Times small business tool kit for bringing the article by Mr. Cain to my attention.

This Is A Communication To Consumer Debtors and Debt Collectors

Kudos to Michigan attorney Gary Nitzkin for a very interesting addition to his excellent Michigan Collection Law Blog in which he comments on a recent Court of Appeals for the Fourth Circuit decision (Sayyed v Wolpoff and Abramson) addressing the extent to which the FDCPA applies to attorneys during litigaiton.

If you are still reading this posting it is likely that you are either a collection attorney or you are a debtor who is doing research on the FDCPA. In either event, you have made the right choice as we are about to get to the practical part of this posting.

That the FDCPA applies to attorneys is not new. But, as Mr. Nitzkin does a fine job of highlighting, this matter involved a somewhat novel angle, as well as some carefully crafted, but ultimately rejected, defenses.

Herewith the novel angle: the allegedly violative statements were contained in the pleadings. The consumer debtor alleged that the debt collector was over-reaching in their requested relief, to which the debt collector asserted numerous defenses, including common law immunity from statements in pleadings. The court, siding with the debtor, opined that "common law immunities cannot trump the Act's clear application to the litigating activities of attorneys...".

Herewith the novel angle - part II: the debt collector attorney was unsuccessful in persuading the court that the pleadings were exempt from the FDCPA because they were transmitted to the attorney for the debtor, not directly to the consumer. The court was quite clear in striking down this argument, stating "[t]hus, plainly, the FDCPA covers communications to a debtor's attorney."

Bottom line please? True commercial litigators need not be concerned. The FDCPA has not been extended to cover collections beyond consumer debtors. But for collection attorneys, this opinion needs to be heeded as a warning that the requirements of the FDCPA should be seen as ongoing throughout the course of litigation and will even be applied to "indirect communications" to the debtor via the debtor's attorney. And for any consumer debtors reading this posting, keep in mind that a debt collecting attorney must respect your rights under the FDCPA during litigation.

Don't Let Direct Marketers Follow You To Your Grave

Commercial mail that continues to be addressed to someone who has died can be a source of ongoing difficulty for those who continue to receive the unwanted mail.

Put an end to the problem by registering the deceased person’s information online on the Direct Marketing Association’s Deceased Do Not Contact List, or write to the DMA at P.O. Box 1270, Carmel, MY 10512. Be sure to include the name, date of death, your name, your relationship to the decedent and contact information. There is a $1.00 fee to register on the list.