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Connectiuct Business Litigation Blog
Commentary on lawsuits and legal issues impacting Connecticut businesses. Authored by experienced business litigation attorney, Kane Bennett of Aeton Law Partners, LLP.
Parol Evidence Rule Can Sting In Court
Parties to contracts frequently argue over contract terms and the intent behind certain provisions of a contract. However, if the matter goes to court, these arguments can become meaningless if the contract is clear because of the parol evidence rule. A recent appellate court case, Connecticut Bank and Trust Co. v. Munsill-Borden Mansion, LLC, serves to highlight how the rule could impact the evidence in a breach of contract case at trial in Connecticut. In the CT Bank and Trust case, the parties were arguing over whether an individual had personally guaranteed a promissory note. The individual’s attorney wanted to ask a witness questions concerning the intent behind signing the note. However, the trial judge sustained objections to all of the questions that strayed from the actual note. The reason cited was the parol evidence rule. In summary, the parol evidence rule prohibits the use of extrinsic evidence (off the contract) to vary or contradict the terms of an integrated (complete) contract. There are exceptions. Exceptions include evidence to explain ambiguity, prove a collateral oral agreement that does not vary the contract, add a missing term that does not set forth the complete agreement, or to show mistake or fraud. In this case, application of the rule barred all of the questions that were not related to the note itself. Therefore, any arguments over terms or intent were irrelevant. Simply put, the parties were confined to the contract itself. The take away here is to make sure any specific terms you
Old Judgments Can Come Back to Bite You – Hazards of Defaulting on Promissory Notes
A recent case from the Connecticut Supreme Court serves as a reminder that civil judgments are good for 20 or 25 years in Connecticut depending on how you seek to enforce the judgment. The decision was in the case of Investment Associates v. Summit Associates, et al. In this case, a debtor failed to pay on a promissory note and left a balance of about $272,000.00. The note holder sued in state court to collect on the note. The debtor defended the case but moved to another state. However, the plaintiff note holder ultimately prevailed obtaining a judgment in the outstanding amount. The plaintiff brought the lawsuit in 1991 and obtained judgment in 1994. The defendant left the state in 1992. 15 years after obtaining the judgment, the plaintiff moved to revive the old judgment in Connecticut. Under Connecticut General Statutes 52-598 (c), the judgment remained valid. The Court noted that the Connecticut legislature wanted to address situations where a defendant could avoid a Connecticut judgment by moving to a state that had a shorter time period for enforcing judgments. In this case, the defendant left to South Carolina which had a ten year statute. Many business owners believe that if they have no assets and no cash they are "judgment proof." This means that even if they lose a lawsuit, there will be no cash or assets available to pay the judgment. The old saying goes that you cannot get blood from a stone. However, this case serves
Trade Secret Theft on the Cloud: Concerns For Both Employers and Employees
Max Taves authored an article posted by Law Technology News entitled "Trade Secret Spats Center on Cloud." The article highlights the increasing difficulty employers face when trying to avoid theft of confidential information when employees have access to third party storage providers such as DropBox, Googe Docs, SugarSync, and SkyDrive. Third party data storage providers enable users to either locally sync or upload documents at work which can be accessed from another computer. I have posted on tips for employers to reduce the risk of this kind of theft. Essentially, to mitigate risks and have evidence of theft, businesses need a robust and frequently updated fraud management plan. What I also found blogworthy in this article was how use of cloud based document storage posses a risk for employees as well. One attorney in a high profile case pointed out that an employee’s use of DropBox, or similar provider, could generate the appearance that the employee may have stolen data even if they did not intend to do so. I have seen this happen several times and it can be a big problem. An employee may use DropBox to store personal information (family photos, resume, etc) but also mix in company documents to work from home. The employee may leave for another job and forget that he or she still has documents from the former employer. The employee could end up in a lawsuit because the employer may believe documents were stolen by use of DropBox. Having already used
Non-Compete Agreement Tips for Partners, Executives, and Employees
In this post, I continue the discussion about non-compete agreements in Connecticut. This time, I focus on the employee side. Here are 5 things to think about when leaving employment if you have a non-compete agreement. Do not believe water cooler experts. Many employees come to believe what they hear at the water cooler about non-compete agreements. The typical comments include: “Those things are thrown out of court,” “John Smith had one of those, and he beat it in court.” The reality is, some non-competes will be upheld in court in Connecticut, and others will not. There is no bright line test. Every case is unique and there are too many factors to cover in one blog post. Get help sooner rather than later. The biggest mistake employees make is failing to get an experienced attorney’s review of an employment contact BEFORE planning to leave. Examples of these agreements include non-competition agreement, non-solicitation agreement, or confidentiality agreement. I emphasize “experienced” because the law surrounding non-compete agreements and unfair competition is constantly changing. Develop an exit strategy. Leaving without a plan is not a good idea. Employees need a plan that includes understanding the parameters of the agreement and mitigating the risks of breaching it. I have seen clients lose sleep, jobs, and thousands of dollars because there was no plan in place. I will offer more on exit strategies in a later post, but some ideas include negotiation with your existing employer, finding holes in the contract, modifying employment
Supreme Court Offers Another Reminder on Personal Liability for Corporate Officers
Can an officer of a corporation face personal liability in a business transaction? The Connecticut Supreme Court clearly stated that personal liability exists for corporate officers in certain circumstances. The case is Coppola Construction Company, Inc. v. Hoffman Enterprises Limited Partnership. The sole issue on appeal was "whether a corporate principal or officer may be held personally liable for the tort of negligent misrepresentation in connection with statements made by that principal or officer that, under the apparent authority doctrine, also created binding contractual liabilities for the corporate entity." In the Hoffman case, the lower court had stricken a complaint alleging that the Defendant Jeffrey Hoffman was personally liable. However, the Appellate Court overruled the decision and the Supreme Court affirmed finding that the plaintiff’s complaint properly alleged personal liability against Hoffman. The decision included significant issues surrounding the doctrine of apparent authority, and pleading matters in the alternative in the complaint. However, for purposes of this post, the focus is confirming once again that officers of a corporation can be found personally liable for torts, such as misrepresentation and fraud. To properly allege an action for negligent misrepresentation, a plaintiff must allege that: the defendant made a misrepresentation of fact the defendant knew or should have known that is was false the plaintiff reasonably relied on the misrepresentation some pecuniary harm resulted to the plaintiff The Court in the Hoffman case went on to state that in Connecticut it is "black letter law that an officer of a corporation
Tips On How To Reduce The Risk Of Intellectual Property Theft
In my last post, I wrote about the risks facing businesses when there is a departing employee. It can be fairly argued that in the next 3 years your average business will have to deal with a disgruntled, departing employee. The employee will have had access to confidential information in digital form. Studies have shown that greater than 50% of disgruntled employees and 90% of IT employees will take something. So what can a business do to protect itself from theft of clients, confidential information, and trade secrets? Here are a few tips: 1.Strong Contracts. I often say that Legal Zoom = courtroom doom. Many folks go to online websites to get cheap, low cost non-compete or confidentiality agreements. There are circumstances where you can get a decent contract that will help your business from these online sites. However, too many times I have reviewed the low cost, canned contract of a client and found significant problems with the contract. If you want to have a contract that will have a better chance of standing up in court, you are best served by hiring an attorney well versed in these areas. Relying on a form contract from a website is not recommended. 2.Strong Policies. Any workplace policy should include strong electronic monitoring policies prominently posted in break rooms and in the employee handbook. Ideally, the policy will spell out that the company can and will monitor the company owned computers and all communications and information stored on them. You also
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Connecticut Business Litigation is the most well-read litigation blog in the state of Connecticut. Founded by Attorney Kane Bennett in 2009, a pioneer in Attorney Marketing in the state of connecticut