Importance of Depositions in Business Litigation

Importance of Depositions in Business Litigation

Most organizations find themselves in litigation at some point in the life of the business. Maybe a disgruntled former employee brought a claim, or you had to go after a customer who didn’t pay—or a supplier who didn’t deliver. Maybe a contract went wrong, or a real estate deal turned sideways. Maybe you needed to enforce a non-compete or you hired someone under a non-compete and got drug into that dispute. Whatever the reason, most businesses will find their names in court documents on occasion. When that happens, you hire attorneys to advise you and to represent your interests in the courtroom. Every case is different, and every client has unique motivations, but most of the time, the instructions to the lawyer are something along the lines of: “Get this thing over quickly, cheaply, favorably, and with as little disruption to the business as possible.”

The work of a business litigator is to partner with the client in achieving those aims as the dispute travels through its various stations along the journey to resolution. Often, an important stop on the way involves depositions. Readers of this blog probably know what a deposition is, either through personal experience or from memories of Bill Clinton. But for the uninitiated or those who may have forgotten, a deposition is a when an attorney questions a witness under oath as part of the pre-trial fact-gathering process. It generally takes place in an attorney’s conference room and often lasts several hours. I tell clients a rough average is 4 hours, but I’ve sat through depositions twice that long, and I’ve also seen quick depositions that take less than an hour. I’ve never met a witness who enjoys being deposed. Even expert witnesses who do it regularly dislike depositions. But they are a critical part of the litigation process. Understanding a little more about their purpose and function may help prepare your business for its next litigated dispute.

First, if you or someone else in your organization is going to be deposed, it will be costly. The witness needs to prepare well before the deposition itself. The day of the deposition is likely to be long. And you will be paying an attorney to advise, assist, and advocate for you throughout the process. You will also be losing productivity while the company’s witness tends to these matters instead of running the business. Whole books have been written about the art of preparing for a deposition. I won’t repeat those strategies here, but you should lean on your attorney for guidance in this important area.

Second, depositions may be unavoidable. Parties to a lawsuit generally have a right to investigate facts relevant to the lawsuit, including questioning knowledgeable witnesses. You would not want anyone limiting your rights in that regard, and it is generally hard to limit the other party’s rights, too. But that’s not to say your opponent has an unlimited ability to question anyone it likes. The law says that any discovery process must be “proportional to the needs of the case.” And a strong body of law protects “apex employees,” such as corporate executives, from being deposed when they were not personally involved in the matters covered by the lawsuit. A good business litigator may also be able to negotiate other ways of limiting or delaying the burden of depositions.

Third, depositions have an outsized position in the mind of many attorneys. A lot of statistics are available on the so-called “vanishing” civil trial, but in general, an average civil case stands around a 95% (or greater) chance of being resolved without a trial. The reasons for this have been debated elsewhere, but one consequence is that many lawyers treat the opponent’s deposition as the showcase event in a lawsuit. If you are paying a lawyer to take a deposition on your behalf, you should instruct him or her to guard against this selfish tendency. And if someone in your organization is going to be questioned by an opposing lawyer, you should be prepared that this force may be at work.

Finally, there is no denying that depositions are powerful. When a witness is “locked in” to a certain line of testimony, that narrative will control the rest of the lawsuit. Likewise, when a party is forced to explain his or her position under the stress of adverse questioning, everyone gets a good sense of the strengths and weaknesses of that position. Deposing key witnesses is almost always essential in the rare cases that go to trial, and it is often necessary to facilitate a settlement or a key pre-trial motion in other cases.

Considering all this, nearly everything about depositions runs counter to the goals most clients pursue of resolving their litigation quickly, inexpensively, and without disrupting the business. But clients also want to resolve the dispute favorably. Finding the right balance of when and how depositions fit into these objectives is something your business litigator should be discussing with you. Make sure you are comfortable with the advice you receive on that score and that your organization is read when depositions need to be taken or defended.

Michael J. Hays, Business Counsel & Partner, Tuesley Hall Konopa, LLP

Author: Michael J. Hays is a civil litigation attorney and Partner at Tuesley Hall Konopa, LLP. His practice areas include civil litigation, employment law, business counsel, and contract review. Michael is licensed to practice in Indiana and Michigan.

You can contact Michael by calling 574.232.3538 or by email mhays@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Are Land Contracts Ever a Good Idea?

Are Land Contracts Ever a Good Idea?

Land Contracts so often lead to trouble for either the buyer or the seller. Is it ever a good idea to use one to transfer real estate?

Yes. With the right circumstances and a fair document, a land contract (sometimes called a “contract for deed”) can be a great way to transfer real estate when traditional financing is not available.

More often, we hear about terrible results from land contracts. Unscrupulous sellers can use them to trap low-income buyers who make a down payment, invest thousands of dollars for basic repairs, but miss one or two payments and then have everything taken away – evicted as if they had been a tenant. Or sellers complain that they thought they had sold the house only to find the buyer stopped making payments and they have to get a lawyer involved to regain possession.

Land contracts work best when (a) the house is in good shape, to begin with; (b) the buyer has good credit and can afford to purchase and maintain the home, but (c) the purchase price of the home is too low to support a traditional mortgage loan. In South Bend, we have a large number of homes that sell for less than $50,000. In many cases, banks and other mortgage lenders will not finance home sales in this range because federal regulations limit the fees they can charge to a small percentage of the loan amount, making a $40,000 loan (the loan amount after 20% down on a $50,000 house) simply unprofitable for the bank. Most of these homes are bought and sold on land contract.

Under good conditions – with a home in good shape and a buyer with good credit – a land contract can work well if it’s written fairly for both the seller and the buyer. Unfortunately, many of these deals are done with forms downloaded for free from the internet – most of which are poorly written or are one-sided (usually in favor of the seller).

When a lawyer reviews a land contract, he or she is usually looking to see how the contract handles a few key issues:

  • Property Identity: Is it clear which legal parcel is being sold and what its boundaries are? It’s easy to check the public GIS records to make sure that what the County thinks the property boundaries are matches what the parties think is being sold. (Also good to check whether there might be any obvious boundary disputes with neighboring properties).
  • Term: Over how many months will the seller finance the transaction? Is there a simple-to-understand schedule of payments?
  • Interest Rate: Is the interest rate fair?  When you check the calculations, is the actual interest rate paid the same as the interest rate listed in the contract?
  • Disclosures or Warranties:  Has the seller disclosed all defects that the seller knows about? Is the seller making any warranties about the condition of the home or major systems (e.g. plumbing, electrical, HVAC, roof)?
  • Control: Does the buyer have full control over the property, except to allow the seller the right to inspect the property from time to time upon reasonable notice?
  • Recording: Do the parties plan to have the land contract (or a summary) recorded? The buyer wants this both to give notice to the world of their interest and also to enable them to claim a homestead exemption.
  • Mortgage Right: The seller should retain the right to mortgage the property during the term of the contract, so long as the balance of the mortgage loan never exceeds the balance due on the contract.
  • Forfeiture: Have the parties agreed at what point the seller has made enough payments that they have “a substantial interest” in the property such that a default would lead to foreclosure rather than forfeiture? It’s better to pick a dollar figure – usually around 30% of the purchase price.

Finally, when someone is buying a home on a land contract, it’s always a good idea to have a basic title search done on the property before signing the contract. For around $150, a title company will comb through public records to (a) confirm that the party selling the home actually owns it and (b) reveal whether any other parties have liens on the property. It would obviously be a waste of time and money for a buyer to make years of payments only to later learn that the seller can’t transfer clean title.

James (Jay) M. Lewis, Certified Mediator, Trial Lawyer, Partner, Tuesley Hall Konopa,LLP

Author: Partner, James (Jay) M. Lewis, is a business and civil litigation attorney at Tuesley Hall Konopa, LLP. Jay counsels business clients on employment-related matters. He is also a certified mediator and is licensed to practice in Indiana and Michigan.

You can contact Jay by calling 574.232.3538 or by email jlewis@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Real ID Act

Real ID Act

Go to your wallet and pull out our Indiana driver’s license. Does it have a star in the upper right-hand corner? If not, then it may be time to take a trip to the BMV (Bureau of Motor Vehicles) to get a “Real ID.”

The Real ID Act passed in Indiana in 2010 but has been on the books at the federal level since 2005. Eric Feldman, Hoosiers will soon need Real ID to fly, August 18, 2017, https://www.wishtv.com/top-video/hoosiers-will-soon-need-real-id-to-fly/1063744787 (last accessed October 2, 2018). A Real ID is now required “for everyone applying for a new Indiana credential (driver’s license, learner’s permit, or identification card.).” Real ID Overview, Bureau of Motor Vehicles, https://www.in.gov/bmv/2577.htm (last accessed October 2, 2018). Indiana residents who are simply renewing, amending, or replacing their driver’s license may apply for a “non-compliant credential, but are encouraged to obtain a Real ID-compliant credential.” Real IDs will become important in the next few years, as beginning October 1, 2020, “a Real ID-compliant driver’s license, permit, or identification card will be required to board commercial airplanes,” take the Amtrak train, “or enter certain federal facilities” without a Homeland Security-approved document. Real ID Overview, Bureau of Motor Vehicles, https://www.in.gov/bmv/2577.htm (last accessed October 2, 2018); Eric Feldman, Hoosiers will soon need Real ID to fly, August 18, 2017, https://www.wishtv.com/top-video/hoosiers-will-soon-need-real-id-to-fly/1063744787 (last accessed October 2, 2018).

Applying for a Real ID is a relatively straightforward process, provided you have the appropriate documents and have never changed your name. I obtained a Real ID in under ten minutes without realizing what it even was. But for those who may be known by a name different than that on their birth certificate or passport, the process can be tricky.

The Indiana BMV website details the information you must bring with you to obtain a Real ID. If your legal name matches your identity document, then you must bring an unexpired U.S. Passport, U.S. Passport Card, or Birth Certificate to establish your identity and your lawful status. You must also present one original document with your current legal name and Social Security number to establish your Social Security number. Additionally, you must present two original documents with your name and Indiana residential address to establish Indiana residency. https://www.in.gov/bmv/2777.htm.

If your legal name does not match your driver’s license or identity card, then you must bring all of the documents identified above as well as proof of your name change. This could be your marriage license, divorce decree, certified amended birth certificate showing the change of gender, or court order granting a name change. If your legal name has changed multiple times since your last driver’s license or ID card was issued, then you must bring proof of every single name change.

Elizabeth (Libby) A. Klesmith, Litigator, Business Counsel, Tuesley Hall Konopa, LLP

Author: Elizabeth (Libby) A. Klesmith is a civil litigation and business attorney at Tuesley Hall Konopa, LLP. Her practice areas include real estate, insurance defense, and trademark law. She is licensed to practice in Indiana and Michigan

You can contact Libby by calling 574.232.3538 or email eklesmith@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Will Arbitration Sweep the Nation?

Will Arbitration Sweep the Nation?

You may have heard that just last month, the United States Supreme Court ruled employers can enforce binding arbitration agreements with their employees—even if the agreements waive all rights to participate in class action lawsuits. The case is called Epic Systems Corp. v. Lewis.

For employment law, this is a big deal. Just hours after the Supreme Court decision was announced, one national law firm posted information on its website offering to help clients prepare binding arbitration agreements. But is it a big deal for your business?  Should local employers change their policies or practices?

It depends. The Epic case was actually a combined decision dealing with three different cases. All three involved claims for overtime compensation under the Fair Labor Standards Act. All three also involved large-scale employers with hundreds of employees in the same job classification. For those companies, the risk of a class action was high. One or two claims surrounding overtime issues can be handled quietly. But if a complaining employee can orchestrate a class action involving hundreds (or more) current and past employees, that’s a different kind of problem. Business owners often complain about the costs of litigation. But class action litigation is on a completely different plane. The costs and risks are enormous. In some circumstances, a class action can force a company into bankruptcy.

So for Epic Systems and the other employers involved in that case, it made sense to hold their employees to an agreement compelling arbitration and waiving the right to a class action—and to fight the issue all the way to the Supreme Court. You should consult with your own legal, business, and financial advisors to determine if it makes sense for you. When you do, you may wish to think about arbitration agreements more broadly. Even if you believe the risk of a class action is low or claims for overtime compensation unlikely, the Epic Systems case is the latest in a trend favoring arbitration. The specific arbitration agreement used by Epic Systems Corporation did not cover workplace discrimination or harassment claims, but it might have. Knowing the federal courts take a strong pro-arbitration stance, you might want to consider requiring all employees enter into agreements requiring them to arbitrate all claims. Arbitration proponents argue it is faster, less costly, and more efficient than litigation. They also tout the confidentiality of the process. All those benefits could be yours, providing you with a mechanism to keep any employment dispute out of the courts.

But all rewards come with risks, and arbitration has its complications, too. For example, there is almost no opportunity to appeal an arbitrator’s decision.  Also, experience shows the costs of arbitration can, in some cases, run higher than courtroom litigation. Further, some observers complain that arbitrators often make “split the baby” decisions, rather than ruling in favor of one party or the other.

On top of all that, if you want to use arbitration to resolve employment disputes, you’ve got to have a binding arbitration agreement in place. Most of your at-will employees likely do not have a contract of any type.  You will want to structure any arbitration agreement in ways that do not change the at-will status.  And the law requires some other specific contract provisions if an employee is waiving statutory rights.  Although courts have been very favorable to arbitration agreements in recent years, that does not mean an employee won’t fight the issue. If you have to fight in court about the validity of the agreement before you even get to fighting about the underlying employment issue, then you have definitely missed out on the promise of prompt and inexpensive resolution.

Also, the law on this subject may change. Late last year, Senators Gillibrand and Graham introduced a bi-partisan bill called the Ending Forced Arbitration of Sexual Harassment Act of 2017. Early this year, the attorneys general of all 50 states, the District of Columbia, and the five U.S. territories sent a letter to Congress in support of the law. This may or may not become law, and if it does, there may be more to discuss about the differences between “forced” and “voluntary” arbitration.  But there is broad support across the political spectrum for combating sexual harassment. Many believe the confidentiality of an arbitration process is unsuitable for these types of claims. In fact, when it comes to confidentiality, you may have missed the so-called Weinstein provision in the recent tax law that prohibits employers from deducting legal expenses incurred as part of a sexual harassment case if the case is resolved through a confidential settlement.

Of course, differences between sexual harassment and other types of employment claims represent just one of the many factors to consider in evaluating the merits of an arbitration agreement for your employees. The courts will generally allow these kinds of agreements. But employers have to think carefully about when or whether to use them. Only time will tell if the Epic Systems case prompts a wave of arbitration agreements across the country.

Call 574.232.3538, if you’d like to make an appointment to discuss the merits of an arbitration agreement for your employees.

Michael J. Hays, Business Counsel & Partner, Tuesley Hall Konopa, LLP

Author: Michael J. Hays is a civil litigation attorney and Partner at Tuesley Hall Konopa, LLP. His practice areas include civil litigation, employment law, business counsel, and contract review. Michael is licensed to practice in Indiana and Michigan.

You can contact Michael by calling 574.232.3538 or by email mhays@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Is Commercial Court a Better Place to Resolve Your Dispute?

Is Commercial Court a Better Place to Resolve Your Dispute?

This summer, Indiana created a new court system designed for business disputes. The Indiana Commercial Courts are now “open for business.” Indiana is the 23rd state to create special business courts over the last 20 years or so. Our neighbors Illinois, Ohio, and Michigan already have similar courts.

The idea is to have business disputes handled by a small number of judges who are both (a) focused on business issues, rather than juggling a variety of family law or criminal law matters, and (b) using special rules and procedures designed to speed up the resolution of each case.

Commercial Court judges are encouraged to be very active and involved in managing deadlines, keeping close tabs on the progress of discovery (the exchange of facts), and making themselves available on short notice for hearings to keep things moving along.  Judges are also encouraged to engage outside experts to serve, if the parties agree, like “Masters” for a particular case. Commercial Court Masters can handle day-to-day issues that may arise regarding discovery, accounting, computer discovery, or other technical issues.

What kinds of disputes qualify for Commercial Court? Only cases that were filed after June 1, 2016, involve businesses or business owners on both sides and involve a contract dispute, non-compete agreement, trade secrets, sales transaction, franchise agreement, ownership/control of a business, or similar business disputes.

The primary goal is to speed things up. Studies confirm what every business manager knows: the longer a case drags on, the more is spent in legal fees. Given that most business disputes are ultimately settled at mediation or through negotiation, the idea is to get there faster. If you speed up discovery, decision-makers on both sides can more quickly understand all of the facts and then evaluate and resolve the case.

One feature that may help the speed and quality of decisions is a special budget earmarked to hire four new law clerks to assist the six Commercial Court judges. Adding this research support should help the judges rule more quickly and accurately on motions.

At least for now, this whole process is voluntary. Both parties have to agree to have a case handled by Commercial Court.  Otherwise, it will just proceed through the standard state-court assignment and case-handling.

Which leads to the question: Should you agree to move your new business case to Commercial Court? Our law firm is encouraging our business clients to do so, or at least give it serious thought. Most of our litigation attorneys are licensed in both Indiana and Michigan, and we have had some favorable experiences with Michigan’s similar Business Court process. In our experience, cases do move more quickly in Business Court.

Not every Indiana business case is suited for Commercial Court. But you should talk with your lawyer about it. The decision could lead to a better result in your case, and you might save both time and money.

For more information about Indiana’s Commercial Courts, visit the Indiana Judicial Center’s site: http://www.in.gov/judiciary/center/2944.htm

James (Jay) M. Lewis, Certified Mediator, Trial Lawyer, Partner, Tuesley Hall Konopa,LLP

Author: Partner, James (Jay) M. Lewis, is a business and civil litigation attorney at Tuesley Hall Konopa, LLP. Jay counsels business clients on employment-related matters. He is also a certified mediator and is licensed to practice in Indiana and Michigan.

You can contact Jay by calling 574.232.3538 or by email jlewis@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

What’s the Statute of Limitations?

What’s the Statute of Limitations?

Lawyers are often asked how much time a client has to file a claim or how much longer the client has to wait before a threatened lawsuit goes stale. That seems like a simple question, but as so often happens in the law, appearances can be deceiving.

In Indiana, most injury claims must be brought in two years; certain contract claims can be filed up to ten years later, and most warranty-related claims have a four-year statute of limitations. But sometimes Indiana law does not apply. (Michigan has similar, but slightly different, time periods). Claims involving government entities usually have special rules. And sometimes the Indiana rule applies but does not tell you the whole story. For example, an employment-related claim under Indiana law must be filed within two years, but many federal employment claims must be pursued with the Equal Employment Opportunity Commissions within 300 days, and in some cases, even shorter periods apply. And all of these different rules have exceptions.

I was reminded of this complexity hiding beneath the surface of statutes of limitations when I read about a case decided in the Indiana Court of Appeals this summer. In Whitlock v. Steel Dynamics, Inc., the court ruled on the type of evidence necessary to prove the “disability” exception to the statute of limitations. A man who was struck by a crane did not file suit until eight days after the two-year statute of limitations had run. He argued he was “disabled” because of the injury and should be entitled to a longer time period. His wife and mother-in-law both provided affidavits supporting his argument. The trial court was not convinced, and it dismissed his case. The Court of Appeals agreed, explaining that the “conclusory opinions” of his family were not enough to take the case to trial. Mr. Whitlock sought further review from the Indiana Supreme Court, which declined to hear his case this September.

When you read the entire case—including details about Whitlock’s capabilities right after the accident—this seems like the right result. But it was not obvious. One judge dissented, arguing that a jury should have to decide whether or not Whitlock was disabled. And in fact, the Whitlock decision could be read as conflicting with recent Indiana Supreme Court authorities commenting on the importance of the jury system and warning judges about when it is proper to summarily decide cases. The Whitlock ruling very likely has implications in other areas of law beyond just statutes of limitation, especially now that the state Supreme Court has declined to review the decision. And just think about this in practical terms. The accident, in that case, occurred in April 2011, but there was no definitive answer on how to apply the statute of limitations until four-and-a-half years later when the Indiana Supreme Court decided (and after both sides spent a lot on legal fees).

I suspect the parties going into the Whitlock case did not realize it would be so complicated to find a definitive answer. At Tuesley Hall Konopa, we work to stay abreast of these nuances and intricacies so that we can provide our clients with the advice they need. Sometimes, that means we can’t give you a simple answer to what seems like a simple question. Anyone with a search engine can look up a statute of limitations. But the next time you need to know how a legal time limit affects your rights, make sure you consult with an attorney who will take the time to analyze all the circumstances.

Michael J. Hays, Business Counsel & Partner, Tuesley Hall Konopa, LLP

Author: Michael J. Hays is a civil litigation attorney and Partner at Tuesley Hall Konopa, LLP. His practice areas include civil litigation, employment law, business counsel, and contract review. Michael is licensed to practice in Indiana and Michigan.

You can contact Michael by calling 574.232.3538 or by email mhays@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.