A recent decision from the Superior Court of Massachusetts in MIM Mass Convertible Note v. MIM Management, LLC reminded me of other posts I have written warning that a seemingly clear choice of law provision is not always clear enough.
In MIM Mass Convertible Note, the parties had a business relationship memorialized by a promissory note and Loan Agreement, paragraph 23 of which stated that “The laws of [South Carolina] shall govern in the interpretation, enforcement, and all other aspects of the obligations and duties created under this Agreement and all other instruments referred to in this Agreement.” Sounds pretty clear and all-encompassing, right…?
The relationship between the parties eventually soured, and the plaintiff filed suit. The defendant answered, and filed counterclaims, including a counterclaim for deceptive and unfair conduct in violation of Massachusetts General Laws Chapter. 93A.
The plaintiff moved to dismiss the Chapter 93A counterclaim, arguing that the choice of law provision in the Loan Agreement limited claims to those available under South Carolina law, and Chapter 93A was a Massachusetts statute. In addressing that motion, the Superior Court emphasized that the choice of law provision in the Loan Agreement was self-limiting and only … Keep reading
Over the years, I have written a number of blog posts dealing with forum selection clauses, often in disputes where a party who wanted to enforce those provisions was not able to do so. While in-house counsel may view a forum selection clause as a boilerplate provision (and that is not necessarily inappropriate), it is critical that such a boilerplate provision be drafted properly. As the First Circuit’s recent decision in Bautista Cayman Asset Co. v. Fountainebleu Plaza, 2021 WL 2154778, confirms, failing to do so can lead to a forum selection clause being of little or no value.
In March of 2017, Bautista Cayman Asset Company brought a collection action against Fountainebleu Plaza, S.E. and others in the Federal District Court for the District of Puerto Rico. While Bautista eventually was awarded summary judgment on its claim, the defendants appealed, arguing that the Federal District Court had no subject matter jurisdiction, because the parties’ contract had a forum selection clause stating:
In the event of any litigation that arises in connection with this contract, with the Loan, or with the other documents connected hereto, the parties submit to the jurisdiction of the General Court of Justice
… Keep reading
When Jeremy Hernandez, a California resident, went to work for Oxford Global Resources, a Massachusetts company, in 2013, he signed a non-competition agreement. In 2016, Hernandez resigned from Oxford and, apparently unbeknownst to Oxford, began working for one of its competitors. Several months later, Oxford received an anonymous tip that Hernandez had taken Oxford’s confidential, client information and was using it to solicit customers for his new employer. Shortly thereafter, Oxford sued Hernandez in the Superior Court in Massachusetts based on a forum selection clause stating:
All suits, proceedings and other actions relating to, arising out of or in connection with this Agreement will be submitted to the in personam jurisdiction of … the courts of the Commonwealth of Massachusetts …. Venue for all such suits, proceedings and other actions will be in Massachusetts. Employee hereby waives any claims against or objections to such in personam jurisdiction and venue. [Emphasis added]
Notwithstanding the foregoing language, Hernandez moved to dismiss Oxford’s complaint on the grounds of forum non conveniens and the Superior Court allowed that motion. Oxford appealed, and the Supreme Judicial Court of Massachusetts took the case on its own initiative (by-passing the Appeals Court). Surprisingly, the SJC … Keep reading
As I discussed in a 2015 blog post, the language in a forum selection clause is critical if you want to ensure that potential litigation takes place on your “home court.” Indeed, as the defendants in Genis v. Campbell recently learned, having a less than all-encompassing and precise forum selection clause can lead to unintended results.
Alfred Genis is a Massachusetts resident and a diamond laboratory scientist. In 2013, Genis met Martin Campbell, who, along with his brother, David, owned Pure Crystal, a company involved in growing laboratory diamonds. In October of that year, the three individuals executed what would later be referred to as the “October 2013 Agreement.” That Agreement indicated that Genis would be granted 25% equity in Pure Crystal and also would receive equity in two new companies to be formed. In that same month, the Campbell brothers formed the first of those companies, Kimberlite Applied Science, LLC, and Genis executed an “Employment Agreement” and a “License Agreement” with Kimberlite.
By 2017, the relationship between Genis and the Campbells had broken down, and Genis filed suit in Massachusetts Superior Court, alleging that his intellectual property had been misappropriated and that he had not been granted … Keep reading
As most attorneys know, a privileged communication only can be waived by the client, and when the client is an individual, it is obvious who controls that ability to waive. Things become murkier, however, when the client is a company. While controlling the privilege generally resides with the board of directors and/or those controlling the business entity, who can access privileged communications when a former senior manager becomes adverse to the company is far less clear.
Until the end of 2016, John Mooney was the CEO of Pri-Med LLC, and John Wheelock was its senior vice president in charge of sales. Mooney and Wheelock also each owned 5% equity in Pri-Med and were entitled to have that equity repurchased at the appraised value of the company as of December 31, 2016. When the buy-out time arrived, however, Mooney and Wheelock claimed that the company and various individuals took steps to depress Pri-Med’s value so as to decrease the amount they would be paid.
Litigation ensued, and one of the items requested during discovery was communications amongst the defendants concerning Pri-Med’s 2015 and 2016 valuation. The defendants refused to produce those communications, however, claiming that they were protected from disclosure … Keep reading
When two parties reside and/or conduct business in different states, any agreement between them almost always has a choice of law provision. Typically, such a clause is as simple as: “The Parties agree that this Contract shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts.” As the Superior Court held earlier this month in Oxford Global Resources, LLC v. Hernandez, however, such simple and straight-forward language is no guaranty that a court will abide by it.
Oxford is a Delaware corporation and claims to have its principal place of business in Beverly, Massachusetts. Jeremy Hernandez is a California resident and was hired by Oxford to work in the company’s California office. As part of the hiring process, Hernandez was required to sign Oxford’s Protective Covenants Agreement, which included (i) non-compete and non-solicitation covenants; and (ii) a provision stating that the Agreement was governed by Massachusetts law.
Oxford later brought suit against Hernandez, alleging that he breached the Agreement by using information regarding Oxford’s customers to solicit them on behalf of a competitor. Hernandez countered by moving to dismiss, and, in that connection, he argued that the Court should construe the Agreement in … Keep reading
A couple of words here or there in a contract can make a huge difference, particularly when those words relate to what happens if there is a breach or some other dispute between the parties. This is something that the parties in Family Endowment Partners, L.P. v. Sutow recently learned – to the tune of millions of dollars.… Keep reading
Not spelling out in your agreements, even in informal agreements, where disputes can be resolved and what law will govern them can lead to some unhappy results. That is exactly the position that United Excel Corporation and its president, Ky Hornbaker, now find themselves.… Keep reading
While no in-house attorney drafting a business contract wants to focus on being in litigation with her business partner, as I discussed in a 2013 blog post, thinking like a litigator at the drafting stage is critical in order to avoid potential surprises. A good example of this comes in the context of crafting a forum selection clause that truly achieves your objectives.… Keep reading
Two weeks ago, I participated on a panel for a webinar on liquidated damages with three other panelists from New Jersey, Florida and Texas. In preparing with the other panelists, I was surprised to learn that while there are many common threads running through the law of liquidated damages across the country, there also are some startling differences depending upon which jurisdiction’s law controls.… Keep reading