by John J. Tollefsen | Sep 19, 2014 | Blog, Contracts, Contracts WA, Real Estate WA
Washington State Law – Principles of Contract Interpretation Viking Bank v. Firgrove Commons 3, LLC, 2014 Wash. App. LEXIS 2277 (Division II, Wash. Ct. App.Sept. 16, 2014) Decision: 140916-II-Viking-Bank-v-Firgrove The court refused to imply a promise to pay management fees into the triple net provision of a commercial lease. These facts are unusual because standard commercial leases specifically list management fees in the description of costs passed on to tenants. This case is useful for the following statement of the principles of contract interpretation applicable to Washington State: “The primary objective in contract interpretation is to ascertain the mutual intent of the parties at the time they executed the contract. Int’l Marine Underwriters v. ABCD Marine, LLC, 179 Wn.2d 274, 282, 313 P.3d 395 (2013). Washington follows the “objective manifestation theory” of contract interpretation, under which the focus is on the reasonable meaning of the contract language to determine the parties’ intent. Hearst Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). “We generally give words in a contract their ordinary, usual, and popular meaning unless the entirety of the agreement clearly demonstrates a contrary intent.” Hearst, 154 Wn.2d at 504. And we view the contract as a whole, interpreting particular language in the context of other contract provisions. See Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 669-70, 15 P.3d 115 (2000). “To assist in determining the meaning of contract language, we also apply the “context rule” adopted in Berg, 115 Wn.2d at 666-69. This rule allows examination of the context surrounding a contract’s execution, including the consideration of extrinsic evidence...
by Justin Tollefsen | Oct 10, 2013 | Blog, Nondisclosure Agreements, Tax Issues US
In a previous post I wrote about some of the ways in which a good attorney advisor can help a startup avoid some of the common mistakes made by early stage companies when contemplating formation. In this article, I address some of the additional IP and tax pitfalls that founders should keep cognizant of amidst the excitement of getting their new venture off the ground. Assignment and Ownership of IP Assignment and ownership of a company’s core IP from the pre-formation stages through funding and eventual exit are part and parcel of the nuanced advice provided by an experienced attorney. IP assignments must be clear and correct between the parties. Although the founders are focused on the success of their idea at the outset, if things go sideways it needs to be clear what the company owns and what the individual founders own. Does the founder’s agreement assign to the company all related IP from before incorporation as well as after incorporation? Is there a technical founder who wishes to retain rights to his personally developed IP until some specified event (e.g., funding) occurs? Founders agreements must contain clear and unambiguous terms in order to establish a chain of ownership for all of the company’s IP early on. This will be important later on to potential funders, partners and acquirors. In situations where founders remain employed in other companies or have recently left a company, any IP ownership provisions in their current or previous employment agreements should be scrutinized. Don’t just assume that the individual owns all of the IP that they’ve create outside of work hours—make sure that...
by Justin Tollefsen | Sep 27, 2013 | Business Law, Contracts, Nondisclosure Agreements
I participated in a session yesterday on IP protection for technology companies that presented a wealth of good advice on certain provisions of Nondisclosure Agreements (NDAs) to which founders and IP owners should pay close attention. These agreements are sometimes confusing to the uninitiated, and often drafted in a manner that heavily favors the side producing the document. Knowing what to look for when an NDA is pushed across the table (or the electrons arrive at your inbox) is of utmost importance when discussing technology with a potential partner. Of course, some partners (such as VCs) will generally refuse to enter into NDAs at all. Often times these people talk to so many companies about their ideas in the course of a business day that there is simply no practical way for them to avoid running afoul of the provisions of an NDA. At the opposite end of the spectrum are mutual NDAs, where the terms apply (generally equally) to both sides. Mutual NDAs are far less likely to contain one-sided provisions. A unilateral NDA, however, presents the opportunity for one side to fine tune the language to benefit themselves (as either the recipient or discloser of confidential information), and may contain some tricky clauses for which every startup founder should watch out. I outline a few of these in this post. Residual Information Clauses One clause to be keenly aware of is what is known as a “residuals” or “residual information” clause. These are often structured to permit the recipient to freely use any information that is retained in his or her unaided memory (i.e., anything that they...
by John J. Tollefsen | Feb 22, 2012 | Blog, Civil Litigation, Civil Litigation WA, Contracts
Recovery for Misrepresentations Causing Pecuniary Harm The Restatement (Second) of Torts identifies four causes of action that can be used to recover for misrepresentations causing monetary harm. The distinctions between the four theories are nuanced and are not uniformly applied by state courts. What follows is a simplified summary of some of the major differences between the four remedies. Both Fraud and Innocent Misrepresentation use scienter as an element of their causes of action. Restitution and Negligent Misrepresentation do not. Breach of warranty is also available under contract law and is subject to contract law defenses. (E.g. Restatement (Second) of Contracts (St. Paul, MN: American Law Institute Publishers, 1981), §§ 304, 306). It is outside the scope article which deals with tort and near tort remedies. In cases involving the sale of goods under Article 2 of the Uniform Commercial Code, most fact patterns actionable under the tort of Innocent Misrepresentation would also be actionable under the Code on the theory of breach of warranty. Unlike Innocent Misrepresentation, the measure of damages for breach of warranty includes compensation for benefit of the bargain and for consequential losses. Innocent Misrepresentation has the advantage of not being subject to Code defenses such as the parol evidence rule. 1) Restitution After the merger of courts of law and equity in most jurisdictions, some courts applied the equitable rescission remedy at law allowing a party to seek rescission of a transaction on the ground of misrepresentation, even an innocent misrepresentation.1Rescission is similarly granted for mutual mistake. See Restatement of Restitution, §§ 6, 8. The usual precondition for Restitution is the return of what...
by John J. Tollefsen | Apr 25, 2009 | Blog, Contracts, Washingon State
Associated Petroleum Products, Inc. v. Northwest Cascade, Inc., — P.3d —-, 2009 WL 824433 (Wash.App. Div. 2 Mar 31, 2009) (NO. 36834-0-II) “Account Stated” is one of the common counts of English common law. It arose in the same time period when courts thought caveat emptor made good sense. It was okay to trick someone into overpaying or buying bad merchandise because it was the obligation of the buyer to inspect before paying. Similarly, Accounted Stated assumed that a failure to carefully inspect the invoice of the seller made the buyer responsible for all charges. This may have made sense in days of snail mail but is hardly reasonable when invoices are delivered by email. The trial court applied the common law. Division Two struggled to bring Account Stated into the 21st century. It held that a party to an ongoing terminable at will contract must give reasonable notice of any contract change to the other party. Reasonable notice is notice “‘fairly to be expected or required under the particular circumstances.’” Change in a billing do not as a matter of law give reasonable notice. An account stated is “‘a manifestation of assent by debtor and creditor to a stated sum as an accurate computation of an amount due the creditor.’”“ Sunnyside Valley Irrigation Dist. v. Roza Irrigation Dist., 124 Wn.2d 312, 315, 877 P.2d 1283 (1994) (quoting 2 Restatement (Second) of Contracts § 282(1), at 386 (1981)). There must be some form of assent to the account, although that assent may be implied from the circumstances and acts of the parties. An account stated is an admission of...
by John J. Tollefsen | Mar 29, 2009 | Blog, Civil Litigation, Contracts, Fraud, General Common Law
Major law firm was caught churning legal fees probably to make mandatory minimum billable hours. ‘Churn that bill, baby!’ email surfaces in fee dispute with DLA Piper Posted Mar 25, 2013 3:54 PM CDT By Martha Neil It all began with a corporate bankruptcy case. Retained by energy entrepreneur Adam H. Victor in April 2010 to prepare the Chapter 11 filing for one of his companies, DLA Piper ran up a hefty bill. And when Victor refused to pay it, the law firm sued him for $675,000. Victor defended aggressively, not only filing a counterclaim over what he alleged was a “sweeping practice of overbilling” on the megafirm’s part but discovering some 250,000 pages of documents, according to the DealBook page of the New York Times. Among the documents were copies of email in which lawyers, a number of whom no longer work for DLA Piper, lightheartedly discuss the rapidly growing bill for Victor’s company, Project Orange Associates, which operated a Syracuse, N.Y., power plant, the article recounts. The emails are included in a copy of an affidavit filed Thursday in the Manhattan Supreme Court case, to which a link is provided by the New York Times (reg. req.). “I hear we are already 200k over our estimate—that’s Team DLA Piper!” wrote then-DLA Piper partner Erich P. Eisenegger in one email. After another lawyer responded, noting that an attorney colleague, whose first name is Vince, had been added to the group working on the bankruptcy matter, then-DLA Piper attorney Christopher Thomson added his thoughts: “Now Vince has random people working full time on random research projects in standard ‘churn...
