Volume 1, Issue 2: February 2008

In This Issue:

K&G welcomes Brad A. Compston to its Litigation practice. Brad has ten years of experience representing corporations and individuals in all types of business and general civil litigation. Brad is a graduate of the Boston University School of Law. Welcome, Brad!

Litigation
Avoid ambiguity in compensation agreements

Several recent cases involving the Massachusetts Wage Act highlight the importance to employers of using clear, written and consistently applied compensation plans. As the cases make clear, the failure to do so can have serious financial repercussions. In a 2007 decision, Okerman v. VA Software Corp., the Appeals Court held that the Wage Act applies to the payment of commissions to professionals earning a “healthy salary,” and was not limited to employees compensated solely through commissions. The court allowed a claim that periodic, retroactive changes to an employee’s commission plan violated the Wage Act. This decision reversed the position taken by several lower courts and confirmed applicability of the Wage Act to all employees.

In another recent decision, Lampert v. CTC Communications Corp., an employee received a judgment for unpaid commissions from a large sale he had completed. The employer argued that, given the size of the sale and the negotiated volume pricing that Family Law was required for the sale, a “Special Pricing” section of the employee’s sales commission plan was applicable to the sale. While the employee argued that the provision was ambiguous, the employer argued that he should have inquired to determine the term’s meaning.

Rejecting the employer’s argument, the court noted that any ambiguous language in a written contract must be construed against the party that wrote the contract and entered summary judgment for the employee. Since the Wage Act also provides for a mandatory award of treble damages and attorney’s fees to an employee who prevails in a claim for unpaid wages, the economic cost to the defendant for its poorly drafted commission plan was likely quite significant.

These cases illustrate the serious consequences a poorly drafted compensation agreement can have on a company’s bottom line. Employers must use vigilance to ensure that their employment contracts are clear and unambiguous. Feel free to contact Brad Compston with any questions about compensation agreements.

Brad A. Compston ext.225

Family Law
Before saying, "I do," plan for "I don't."

People consider Prenuptial Agreements for a number of different reasons; for example, because the marriage is not their first and they therefore seek to simplify matters in the event of a future divorce, or to ensure that property brought to the marriage will not be subject to a division of marital assets should the marriage dissolve. A properly drafted Prenuptial will accomplish all of those goals.
A good Prenuptial Agreement:

Of course, a Prenuptial is always subject to mutual revocation, and an estate plan drafted after marriage, or even in contemplation of marriage, will prevail over a Prenuptial.

In short, Prenuptials are good in that they allow for pre-marital planning and protect property brought into a marriage. One problem is that Prenuptials do not eliminate all uncertainty. Regardless of how carefully drafted a Prenuptial may be, in the event of a divorce, courts have the discretion to determine whether a Prenuptial was fair and reasonable at the time of execution, and whether it remains so. Also keep in mind that not all blushing brides and nervous grooms relish the idea of a Prenuptial, and often view them not as a smart financial planning device, but as an indication of mistrust.

Karen K. Greenberg ext.235

Corporate Law
Hidden hang-ups of pre-printed forms

In real estate transactions, you must be diligent in every document you sign. Konowitz & Greenberg recently settled a lawsuit in which the buyer signed a pre-printed Contract to Purchase form for a piece of commercial real estate. The contract identified the property and set forth a purchase price and sale date. The contract also required the parties to enter into a mutually acceptable purchase and sale agreement. The Contract to Purchase was accepted and signed by the seller. Prior to signing a purchase and sale agreement, the seller notified the buyer that they were no longer interested in selling the property, forcing the buyer to file suit to enjoin the seller from selling the property to anyone else and obtain an order forcing the seller to complete the sale. The law in this area is clear. One cannot simply include language in an offer to purchase stating that the offer is subject to a purchase and sale agreement, particularly when other language in the document suggests that the parties intend an offer to be binding, and have confidence that, if no purchase and sale agreement is signed, then the deal is off. The landmark case in this area is McCarthy v. Tobin. While now eleven years old, the lessons of that case bear emphasis. Among those lessons is Real Estate that a party should consult an attorney prior to signing any form.
Other lessons include:

Often, all of the facts and circumstances involved in a sale are unknown at the offer stage, making it difficult to provide for all contingencies. It is this uncertainty that makes it imperative that an offer leaves both parties room to negotiate these issues later or even to cancel a deal entirely. Preparing a good Contract to Purchase can be complex and time consuming. However, the clear lesson in these cases is that no matter how expensive preparing a proper offer to purchase may seem, the cost will pale compared to the costs—in time and money—of prosecuting or defending a poorly drafted document.

Steven S. Konowitz ext.236

Real Estate
Compliance tips for condo owners and associations

Many condominium associations are all too familiar with the phenomenon of the one condominium owner who refuses to comply with association rules and regulations, particularly common area maintenance fees and the like. There is, however, legal recourse in such situations.

Ownership of a condominium unit is a hybrid form of interest in real estate, entitling the owner to both “exclusive” ownership of his or her unit and an undivided interest in the common areas. “Central to the concept of condominium ownership is the principle that each owner, in exchange for the benefits of association with other owners, must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property.” Noble v. Murphy, 34 Mass. App. Ct. 452 at 456.

A unit owner is personally liable for the condominium fees they are required to pay. If they fail to make these payments, they are in violation not only of condominium rules but also state law. Mass. Gen. Laws Chapter 183A, § 6 outlines the steps an Association must take to address violations of association rules concerning the payment of fees. First, the association must send the delinquent owner a letter demanding payment of overdue fees and may also assess certain costs incurred as a result of the delinquency. If the owner still fails to respond, then the first mortgagee on the owner’s unit may be informed of the delinquency. Finally, the association may file suit to recover unpaid fees, and may even seek to foreclose on the property to recover the debt. Feel free to contact Mia Rosenblatt Tinkjian with any questions about the enforcement of condominium rules and regulations.

Mia Rosenblatt Tinkjian ext.226

Estate & Trust
10 things estate planning can do for you

1. Provide for your immediate family.
2. Provide for other relatives who need help and guidance.
3. Get your property to beneficiaries quickly.
4. Plan for incapacity.
5. Minimize expenses.
6. Choose executors/trustees for your estate.
7. Ease the strain on your family.
8. Help a favorite cause.
9. Reduce taxes on your estate.
10. Make sure your business goes on smoothly.

Feel free to contact Arlene Kasarjian with any questions about estate planning and/or trust administration.

Arlene L. Kasarjian ext.228

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