Kupelian Ormond & Magy, P.C.

KOM Obtains Summary Judgment Of Auto-related Death Insurance Coverage Matter

Anne Kupstas — Mon, 06 Feb 2012 17:11:11 +0000

Douglas M. Chapman recently obtained summary judgment from the Federal District Court for the Eastern District of Michigan in an insurance coverage matter for an insurance carrier client of Kupelian Ormond & Magy, P.C. The carrier’s insured operated a child care facility. One of the facility’s clients/patients, who was known to have a propensity for “eloping,” or running away from his caregivers, fell or jumped from a moving vehicle while it was being driven by the insured’s employee, and died from his resulting injuries. The decedent’s estate sued KOM’s client’s insured and the driver. On behalf of its client, KOM filed a suit against the decedent’s estate, the insured, and the insured’s driver, seeking a declaratory judgment that there was no coverage under the carrier’s commercial general liability policy for the auto-related death. Complicating the matter was the estate’s argument that the decedent’s death arose not out of the use of the excluded motor vehicle, but out of the insured’s covered child care facility operations. The District Court Judge granted KOM’s client summary judgment, agreeing that regardless of whether there was a concurrent covered cause of the decedent’s death, since the auto-related exclusion squarely applied, there was no coverage. Mr. Chapman represents insurance carrier clients in insurance coverage litigation and other related matters.

MATTHEW SCHLEGEL RECENTLY SPOKE AT ADR SEMINAR

Anne Kupstas — Tue, 31 Jan 2012 15:11:08 +0000

Matt Schlegel recently spoke at an advanced alternative dispute resolution seminar held at the Thomas M. Cooley Law School on January 26, 2012. Titled “Advanced Mediation Training: MED/ARB – The New Frontier in ADR,” the seminar presented a novel approach to dispute resolution incorporating both mediation and arbitration. It was sponsored by Professional Resolution Experts of Michigan, LLC (PREMi) and featured a keynote address by Doug Van Epps, Director of the Michigan Supreme Court’s Office of Dispute Resolution.

Carol Schley to Present at Human Resources Association

Anne Kupstas — Wed, 25 Jan 2012 15:19:59 +0000

On March 20, 2012, Carol G. Schley will be a presenter at the “Legal Affairs-Hot Topics” meeting of the Human Resources Association of Greater Detroit in Southfield, Michigan. Ms. Schley will speak on issues relating to the Fair Labor Standards Act and proper classification of workers as employees or independent contractors.

KOM Obtains Summary Disposition of Auto Insurance Coverage Matter

Douglas Chapman — Wed, 23 Nov 2011 17:29:29 +0000

Douglas M. Chapman recently obtained summary disposition from the Wayne County Circuit Court in an insurance coverage matter for an insurance carrier client of Kupelian Ormond & Magy, P.C. While driving a vehicle, the carrier’s insured allegedly struck and killed a man. The man’s estate sued the insured, obtained a $1,000,000.00 judgment with a covenant not to execute the judgment against the insured, and then sued KOM’s insurance carrier client. Mr. Chapman filed a motion for summary disposition on behalf of KOM’s client, seeking summary disposition that the client’s insurance policy did not cover the alleged loss because it only applied while the insured was driving his vehicle in the context of his employment, and the decedent’s death arose out of the insured’s use of his vehicle on his day off, while he was on a personal errand. After oral argument, the Court agreed and granted summary disposition to KOM’s client. Mr. Chapman represents insurance carrier clients in insurance coverage litigation and other related matters.

KOM Obtains Summary Disposition of First-Party Property Insurance Coverage Matter

Douglas Chapman — Wed, 23 Nov 2011 17:28:50 +0000

Douglas M. Chapman recently obtained summary disposition from the Oakland County Circuit Court in an insurance coverage matter for an insurance carrier client of Kupelian Ormond & Magy, P.C. KOM’s client’s insureds sued the client for over $1.3 million in damages on an alleged first-party theft loss. After thorough discovery, Mr. Chapman filed a motion for summary disposition on behalf of KOM’s client, seeking summary disposition that the client’s insurance policy did not cover the alleged loss by virtue of the failure to satisfy the policy’s coverage agreement, as well as the application of several exclusions. After oral argument, the Court agreed and granted summary disposition to KOM’s client, resulting in no recovery to the insureds. Mr. Chapman represents insurance carrier clients in insurance coverage litigation and other related matters.

KOM Prevails in Contract Action

Stephon Bagne — Tue, 01 Nov 2011 16:27:39 +0000

Stephon B. Bagne recently prevailed in the United States District Court, Eastern District of Michigan, by obtaining a ruling enforcing a $100,000 liquidated damages provision in a contract following a late payment. The District Court originally declined to award the $100,000, asserting that the defendants had substantially complied. Mr. Bagne convinced the Sixth Circuit Court of Appeals to reverse that ruling and obtained entry of judgment when the District Court disposed of the remaining defenses following remand. Mr. Bagne is a shareholder of KOM who specializes in complex contractual litigation.

KOM successfully obtained dismissal . . . .

Carol Schley — Fri, 14 Oct 2011 16:19:47 +0000

KOM successfully obtained dismissal of a client from a patent infringement lawsuit pending in a federal district court sitting in Michigan. KOM’s client is a small company that conducts no business in Michigan, but it licensed the patent at issue to another company that does conduct business in Michigan. On a motion to dismiss, KOM argued that the Michigan contacts of this other company could not be imputed to KOM’s client, and, therefore, the court had no jurisdiction over the client. The court agreed, dismissing the claims against the client on jurisdictional grounds. Peter Kupelian and Carol Schley represented the client in this matter.

KOM recently obtained dismissal . . . .

Carol Schley — Fri, 14 Oct 2011 16:18:05 +0000

KOM recently obtained dismissal of a lawsuit brought against its insurance company client by an insured. In the matter, the insured delayed over three years in reporting to the insurance company that there had been a release of petroleum at its property that needed to be cleaned up and reported to the State of Michigan. On a motion to dismiss the case on summary judgment, KOM argued to the court that the insured’s claim should be dismissed based upon policy language that required the insured to timely report claims to the insurance company. The court agreed and dismissed the lawsuit in its entirety. Peter Kupelian and Carol Schley represented the client in this matter.

Lease Guaranties, Security Interests & Letters of Credit:

Stephon Bagne — Tue, 27 Sep 2011 20:20:35 +0000

Lease Guaranties, Security Interests & Letters of Credit:

How Good Are They To The Landlord?*

*This material were presented by Stephon B. Bagne as a roundtable leader at the 2011 International Council of Shopping Centers’ Michigan Idea Exchange.

Lease Guaranties

Personal guaranties are the most common tool to secure performance of a lease.

While standard, multi-page forms are superior, a guaranty can be created by a simple sentence stating that “Guarantor absolutely, unconditionally and irrevocably guarantees the full and timely performance of all of tenant’s obligations pursuant to the lease.”

While a guaranty may create a contractual obligation for the guarantor to meet all of the tenant’s obligation under a lease, from a practical perspective most guarantors do not have the means to meet those obligations. Therefore, guaranties usually result in some sort of a compromised settlement. Guaranties are more effective when provided by both spouses, allowing marital assets to be targeted during collections. Personal guaranties have become less effective since the crash in values in the residential housing market because the risk that a bankruptcy filing would result in the sale of the guarantor’s home in order to distribute equity to creditors is no longer as realistic.

While a guarantor does not enjoy a possessory interest in the real estate, guarantors should be served with default notices and included as parties in eviction lawsuits that seek to obtain money judgments.

Security Interests

A security interest is the right to compel performance by creating a collateral interest in a specific property. A security interest is created by a contract. A security interest is perfected by filing paperwork that notifies the public of the secured party’s interest in the property. A security interest in real estate is a mortgage that is filed with the County Register of Deeds. A security interest in personal property is perfected by filing a UCC Financing Statement with the State of Michigan. To the extent that the personal property is affixed to real estate (such as a rooftop air conditioner unit or a stove’s hood vent), the UCC Financing Statement is also filed with the County Register of Deeds.

While it is not typical for landlords to obtain security interests in personal property, it is common. However, while commercial leases sometime provide landlords with security interests, landlords frequently fail to perfect those security interests by filing the necessary forms. If the security interest is not perfected when the lease is executed, it can be later perfected by filing the necessary paperwork, however, the security interest will be secondary to any new secured parties such as lenders who won the race to file the paperwork.

Landlords that provide assets for use in the tenant’s business (such as a liquor license or equipment left behind by a prior tenant) should always obtain a security interest in those assets.

Landlords will typically not be able to obtain a viable security interest to the extent that the tenant obtains a commercial loan to build out or operate its business because the bank will demand the first secured position.

Letters of Credit

A letter of credit is a promise by a third-party, generally a bank, that it will pay a certain amount to the landlord if the tenant defaults.

Obtaining a letter of credit is rare. A letter of credit will generally only be feasible for a large, creditworthy, national tenant with an extensive banking arrangement. This type of tenant generally only defaults in a bankruptcy situation where the value of the letter of credit may be deemed as an asset of the estate. In the current marketplace, few landlords will have the necessary leverage to compel such a tenant to provide a letter of credit. In order for a small tenant to obtain a letter of credit, it would likely have to deposit the amount of the letter of credit with the bank, which for the tenant would be the cashflow equivalent of paying the money as a security deposit.

Stephon B. Bagne, Esq. is a Shareholder with Kupelian Ormond & Magy, P.C. Mr. Bagne specializes in commercial and real estate litigation, with a focus upon lease enforcement and eminent domain. Mr. Bagne has represented numerous commercial landlords, is a frequent speaker and author about real estate law topics, and appears in courts throughout the State of Michigan. Mr. Bagne is a member of numerous professional organizations, including ICSC. Mr. Bagne graduated from the University of Michigan Law School and resides in West Bloomfield with his wife and three children

Your retail tenant has filed for bankruptcy – now what?

David Blau — Tue, 27 Sep 2011 19:12:21 +0000

Your Retail Tenant Has Filed for Bankruptcy – Now What?