Purpose Driven General Counsel

Business Law update: Michigan Senate to Take up “Pyramid Promotional Scheme Act”

It is a rainy day in Grand Rapids, today. I took this photo of Lyons Street – showing the Amway Grand Plaza and the Windquest Building.

Speaking of Amway and Windquest, the Michigan House passed a Bill that would benefit Amway’s direct sales business.

5.3.18

The Michigan legislature has been busy proposing some interesting laws that affect business. I posted a few days ago on the recent BCorp legislation.

The Legislature also apparently wants to clarify that direct selling companies like Amway are not within the definition of pyramid schemes.

The Michigan House recently passed four bills that would create a new Act known as the Pyramid Promotional Scheme Act.

Those Bills appear to address the question: what is a pyramid scheme v.s. what is a perfectly legal direct selling business.

Not surprising, the following companies were in support of the Bills:

Direct Selling Association
Amway
American Communications Network
Mary Kay, Inc.
Southwestern Advantage

According to an Article published by U.S. World News

“The new classification more obviously sets distinctions between pyramid schemes and traditional direct selling companies such as Amway, which testified in support of the bill. The legislation exempts operations that repurchase unsold inventory from participants at no less than 90 percent of the original cost.”

the Bills would create a new Act known as the Pyramid Promotional Scheme Act, amend the criminal code, as well as the Michigan Consumer Protection Act.

For more detailed information you can check out the House Fiscal Agency’s Analysis of these 4 bills.

According to the HFA this legislation is intended:

“to more clearly define a pyramid promotion scheme and provide for the attorney general to investigate and prosecute when violations are found”

Stiff Penalties

According to the new Act:

“Any person that promoted a pyramid promotional scheme would be guilty of a felony
punishable by imprisonment for not more than 7 years or a fine of not more than $10,000 (per violation), or both.”

With penalties this severe, it is understandable why certain companies would want to insure they are clearly on the right side of the law.

What’s Next.

Next week the State Senate Commerce Committee will be taking on these four bills.

The Meeting will be held on Wednesday, May 9 at 9:00 am in Lansing.

This could result in a fast track course for this new Act.

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

Michigan is Back Trending Towards Social Entrepreneurship: April 24, 2018 Benefit Corporation Legislation Proposed.

Good morning! Downtown Grand Rapids is starting to look and feel like spring. The trees are just starting to get their leaves – I can’t wait for West Michigan to become green once again.

Speaking of new life – the legislature has breathed new life in the possibility of benefit corporations (“Bcorps”) becoming a viable legal option to do business in the State of Michigan.

House Bills 5867, 5868 & 5869 were introduced last week, on April 24, 2018, that would allow BCorps to be formed under Michigan Law.

Back almost two years ago the legislature proposed similar legislation which died in committee. For a review of the Former BCorp Bills, the House Fiscal Agency issued a Fiscal Analysis, check it out here. The Analysis provides good background on what the legislation would do. This is helpful for those who are not overly familiar with BCorps in general.

The latest proposed Bcorp Legislation

The current Bcorp legislation has some different language than the 2016 proposed language. One difference is the definition of “general public benefit” to “specific public benefit” which would be defined under the new Bcorp law as:

“SPECIFIC PUBLIC BENEFIT” INCLUDES, BUT IS NOT LIMITED TO,
ANY OF THE FOLLOWING:
(i) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR
COMMUNITIES WITH BENEFICIAL PRODUCTS OR SERVICES.
(ii) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR
COMMUNITIES BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF
BUSINESS.

(iii) PRESERVING THE ENVIRONMENT.
(iv) IMPROVING HUMAN HEALTH.
(v) PROMOTING THE ARTS, SCIENCES, OR ADVANCEMENT OF KNOWLEDGE.
(vi) INCREASING THE FLOW OF CAPITAL TO ENTITIES THAT HAVE A
PUBLIC BENEFIT PURPOSE

I still need to perform a more detailed review of the legislation to see how it differs from the prior iteration; and also how it compares to what other states are doing.

Education on the “why” for BCorps.

Interested groups and local politicians have been educating the public on why BCorp laws would be a good thing for our state.

State Rep Hank Vaupe gave a discussion to a local chamber group on B-Corps two Septembers ago:

As Rep. Vaupe indicated “benefit corporations provide an opportunity for businesses to use the markets, rather than traditional charity giving, to advance their philanthropic missions.”

BCorp Certification is Trending in Michigan…

Over the last several years more and more local businesses have becoming Certified B Corps through BLabs. West Michigan has the most concentration of BCorp businesses in the State.

Check out a March article from Rapid Growth Media on the strong presence of Bcorps in West Michigan.

Headlines in Grand Rapids have brought attention to the need for businesses to ask the question: Am I working to build a better community?

B-Corp certification is one way (certainly not the only way) for businesses to hold themselves accountable to being a good community partner.

Why has it taken so long to get here?

Over the last several years Michigan legislators have introduced BCorp legislation – to no avail.

Check out this handout from Rep Barnett several years ago in support of the BCorp legislation he proposed in September 2010.

I found particularly interesting the very last section – it provides some comment on why some Michigan businesses may have been averse to the introduction of BCorp legislation. Feel free to read it and reach your own conclusions.

Trending Towards Social Entrepreneurship.

The trends all show that millennials and our up and coming workforce want to to be part of business as a force for good in our local community.

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

Real Estate Law Update for Investors and Lenders: Court of Appeals Holds “Admittedly Curious Practice” “Expungement Affidavit” is Not Permitted under Statute.

Happy Friday, all! I took this photo today – the sun is shining and it is starting to feel like spring.

4.20

In what was already a shocking day for a major lender, Wells Fargo, the Michigan Court of Appeals, in a case of binding precedent, invalidated an efficient tool lenders and investors routinely utilized to undo a foreclosure and revive a mortgage.

I just reviewed a published Court of Appeals decision that came out yesterday that will change the way investors, lenders, and mortgage holders set aside foreclosures.

The Case: Wilmington Savings Fund Society, et al. v Clare

The Facts are a bit complex, however they can be summarized as follows:

Defendant owned property in Hemlock, Michigan. The original lender held a mortgage on the Property; this mortgage was assigned numerous times. Id. page 2.

In 2010 lender’s assignee (“new lender”) foreclosed on the mortgage. After the redemption period expired, the new lender filed an action to evict the mortgagors/homeowners (“homeowners”).

After trial, the Court found in favor of the homeowners.

the court basically held that the new lender could not provide sufficient evidence that there was a proper chain of title passing on to new lender. Id.

In 2014 new lender’s servicer, Ocwen filed an “Affidavit of Expungement” – which stated that, among other things, the new lender:

“agrees to set aside the above Sheriff’s Deed, making it void and of no force or effect, thus reinstating and reviving the above mortgage and Note” Id.

Expungement Affidavit

The Expungement Affidavit has been a common tool used by lenders/mortgage holders who have foreclosed on mortgages to record an affidavit that would, in theory, and relying on MCL 565.41a, set aside the foreclosure sale, sheriff’s deed, and reinstate the underlying mortgage. See Id, page 6.

The Sixth Circuit Court of Appeals indicated that this is a “admittedly curious practice” other states with similar statutes have not interpreted the statute to allow the affidavit to be used in this way. Id. Citing Wuori v Wilmington Savings Fund Society, 666 Fed Appx 506, 510 (CA 2016).

The Court of Appeals agreed and held, as an issue of first impression:

“a Party cannot set aside a foreclosure sale simply through the unilateral filing of an expungement affidavit.” Wilmington, Page 5.

The Court analyzed the statute and held “the plain language of the statute does not include any indication that an affidavit may be used to create a condition. It necessarily follows that a party cannot unilaterally revoke a foreclosure sale by recording an affidavit that is itself the claimed condition.” Id. pg 6. (emphasis in the original).

Lesson

So, investors and lenders have one less tool at their disposal for what was an efficient method to clear up title if there was a problem with foreclosure. Since this case is binding precedent, lenders showed take note of this.

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

Real Estate Law Update: Evictions, Affordable Housing, Harassment provide an Opportunity for Investors to Shine Brightly.

I wrote my last post right before leaving for a week on the beautiful, warm beaches of Destin, Florida. We came back to snow. In Spring.

Michigan has experienced some awful weather in the last week. I hope today is the turning point. Most of the snow is melting, as you can see from today’s photo.

The headline of my post says it all:

Owning and Managing Real Estate is uniquely challenging.

I hear it from my Property Owner/Manager clients. I experience it when I am involved in negotiating in landlord/tenant disputes.

I see the affects of a lack of affordable housing on the most vulnerable in our population.

I see it when mentoring at a local school, or serving at Mel Trotter Ministries.

If you own or manage investment real estate, you are involved in messy business.

And there are many investors who are simply part of the problem.

DOJ Sues Landlord for Sexual Harassment Allegations

Just one week ago in a recent press release the Department of Justice, announced that it filed suit against Owners and Managers related to allegations of sexual harassment in New York..

According to the press release, the owner and manager:

since at least 1990, Douglas Waterbury has sexually harassed numerous women who have lived in or inquired about the defendants’ residential rental properties. The suit alleges that Waterbury’s conduct has included demanding or pressuring female tenants and potential tenants to engage in sex acts with him in order to obtain or keep rental housing; subjecting female tenants and potential tenants to unwelcome sexual contact and groping; offering to grant tangible housing benefits, such as reduced rent or deposit payments, in exchange for sex acts; refusing needed maintenance services or otherwise taking adverse housing actions against female tenants who refused his harassment; and making unwelcome sexual comments and advances. The conduct alleged in this complaint is egregious, ranging from demands to exchange sex for rent, to unwanted sexual encounters.

I believe that is why, at least in West Michigan, there is an opportunity for real estate investors to stand out. To shine.

“Evicted” – Lack of Affordable Housing

I have written many times about West Michigan’s Affordable Housing Crisis.

Last week the ABAJournal posted an article on extensive research performed by Matthew Desmond, author of “Evicted”

According to the research, evictions are much more prevalent than first believed. This is not surprising to me, given the lack of housing for the most vulnerable population in West Michigan.

As the ABAJournal article notes, the consequences of evictions are many:

“…Schools reroute buses to homeless shelters, job applicants have no answer when a form requires an address, and families who don’t have an address to receive renewal notices lose public lose food stamps and Medicaid benefits. Some people take years to recover, and the eviction remains on their records, causing problems when they look for future housing.”

Shining Brightly as part of the Solution.

West Michigan is attempting to address the Affordable Housing Crisis. This is a community wide problem that will require an entire community to come around it.

At the beginning of this year, Kent County implemented an “Eviction Prevention Program” – to keep vulnerable people in housing. You can learn more about that here.

Local non-profits and churches in partnership with Luis Palau Association are implementing One West Michigan intended to mobilize the community, churches and non-profits to come together to address those issues most pressing – this includes Affordable Housing.

Finally, as I’ve written before – I believe the Affordable Housing Crisis that we find ourselves in provides a unique opportunity for Real Estate Investors to be different.

To shine brightly.

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

www.dwlawpc.com

Business Law Update: When Can a Business Sue Another Business over its Corporate Status?

I (like much of West Michigan) am headed out the office and on vacation for my kids’ Spring Break. But before I go I wanted to share an interesting business law case that came out a few days ago.

Check out the March 27, 2018 case:

Michigan Radiology Society v OMIC, LLC et al

The first sentence of the opinion sums up the dispute:

“This case arises from plaintiff’s effort to prevent defendants from continuing the
operation of their business.”

Facts:

Plaintiff is a non-profit corp. Its owners are radiologists licensed to practice medicine in Michigan.
Defendant OMIC, LLC, is a for-profit LLC.
OMIC provides diagnostic imaging to the public and is solely owned and managed by defendant SusanSwider.
Defendant Susan Swider is not a licensed physician.
Plaintiff sued, claiming that defendants were in violation of:
- the Michigan Limited Liability Company Act (LLCA)
- the Business Corporation Act (BCA), and
- the Public Health Code (PHC)

Plaintiff sued asking for declaratory and injunctive relief.

Basically, Plaintiff claimed “You can’t do that! You need to be properly licensed!”

The case was dismissed by the Trial Court.

A reasonable question to ask is: Why?

Why was the case dismissed by the Trial Court?

Answer: Plaintiff was not a proper party to enforce a claimed violation under the statutes.

Plaintiff did not have “standing”.

Who has Standing to Bring a Claim?

The Court of Appeals cited the long standing law of our constitution:

“Our constitution requires that a plaintiff possess standing before a court
can exercise jurisdiction over that plaintiff’s claim. This constitutional standing
doctrine is longstanding and stems from the separation of powers in our
constitution. Because the constitution limits the judiciary to the exercise of
“judicial power,” Const 1963, art 6, § 1, the Legislature encroaches on the
separation of powers when it attempts to grant standing to litigants who do not
meet constitutional standing requirements.” Id page 3.

So in this case, Plaintiff sued Defendants saying they violated 3 statutes. The question presented was, did the Plaintiff have standing to sue Defendants under those statutes?

“Statutory standing…necessitates an inquiry into whether a statute
authorizes a plaintiff to sue at all.” Id. Page 3.

Basically, the Court held that the statutes above that the Plaintiff sued under (LLCA, BCA PHC), only allowed the Attorney General to sue to enforce a violation.

“[T]he Attorney General alone has the authority to challenge corporate status.” Id. Page 3, citing Miller v Allstate Ins Co, 481 Mich 601, 606-608; 751 NW2d 463 (2008)

Lesson:

If you are a business and believe another business is operating “illegally” it doesn’t mean you are the proper party to sue them.

Think about this another way: You are business and know of a business that is gouging a client of yours – does that give you the right to sue that business? Do you have standing to sue that business.

Something you should talk with your lawyer about…

For all of those traveling on Spring Break – safe travels!

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

Calling the Next Generation of Leaders.

Good morning and Happy Thursday! It is a beautiful morning in downtown Grand Rapids!

Yesterday was the annual meeting of the Trustees of Mel Trotter Ministries. It was one year ago that my term ended as Board Chair.

Last year I shared my r eflections on this experience.

One of my great joys during this time was seeing the launch of Mel Trotter Ministries 2020 Strategic Plan. Check it out to see some exciting things we see in the near future for MTM.

Detroit Nonprofit Day

Today, I was reading about an upcoming event called Detroit N on-Profit Day

This is a one day conference on Saturday April 14th devoted to preparing non-profits for financial and sustainable growth.

Social entrepreneurs and those in the non-profit community should consider this workshop. You can sign up here.

Reflecting on Detroit NonProfit Day and my experience at Mel Trotter as well as serving other nonprofits, got me thinking on nonprofit sustainability and prompted me to write this post.

This is an issue that all non-profits need to address:

how are non-profits going to stay viable in the future?

However, the issue I wanted to address in this post is sustainability in leadership.

My Call to Next Generation Leaders. We Need You.

I can appreciate the anxieties that many service-minded folks can experience when faced with volunteer/board service. Particularly the next generation/millennials.

Many feel inadequate and inexperienced.

I had a conversation recently with a friend – we serve on a committee together where the rest of the people around the table are successful influencers and leaders in the business community. My friend made the comment to me that “one of these things is not like the other.” He was pointing out the obvious – we, in both our minds, stuck out like a sore thumb because our relative young age.

Simply put, when you are younger and sitting around a table full of gray-haired folks who have achieved much more than you, it is easy to let insecurity or doubt slip in.

This insecurity can be a road block for many in putting themselves out there for service.

If that’s you – here’s my call to you:

What you are experiencing is normal.

But get over it.

Fight through the temptation to be passive. Be bold and reach out to the organization that fits your passions.

Don’t do it for yourself – do it for the cause that you care about.

Because whether the organization acknowledges it or not – they need you.

They need your perspective, and they need you to get involved to gain experience and develop institutional knowledge in how their nonprofit works.

You only learn the strengths and the gaps of an organization by spending time in that organization in active service.

Here’s a selfish plug for Mel Trotter Ministries – interested in learning more about ways to serve or connect with the leadership? Join me for lunch.

At Mel Trotter Ministries, we are always looking for volunteers. We need people who have a heart for the hungry, homeless and hurting in West Michigan. As we seek to end homelessness in West Michigan, one life at a time, it is a large task and we cannot do it alone.

This is my call to everyone, but particularly our next generation of leaders – millennials and beyond.

Ask yourself:

How can I serve?

Millennials – I’m reminded of the Bible – 1 Timothy 4:12 –

“Don’t let anyone look down on you because you are young, but set an example for the believers”

The fact remains – the millennial and younger generations are our future leaders.

Now is the perfect time to get plugged into one of the many opportunities to serve and lead.

Please take this as your personal invitation from me –

Take the initiative.

Get engaged.

Just show up.

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

Business Law Update: Michigan Bill Would Prohibit Non-Disparagement Clauses with Consumers.

I’m not going to sugar coat it – it is a gray day in downtown Grand Rapids.

I had lunch with a friend today, who told me – he can’t stand it when in response to the question “how are you doing” someone gives a pat answer – “good”.

I agree.

I appreciate authenticity.

And today, is gray, and somewhat depressing and I am a little down.

Yesterday, I attended the funeral of a friend and fellow attorney who died suddenly. I am grieving and in prayer for Adam’s family, including his wife, two small children and his brother and parents.

Ok, enough authenticity, and on to the subject matter of this post…

I previously wrote about an interesting article published by the ABAJournal.

The article presents interesting questions that come up in business transactions:

when faced with entering a business relationship should you enter into a non-disclosure agreement? (NDA)

What about if the NDA contains a Non-Disparagement Clause?

What is Disparagement?

Michigan courts have held that “disparagement” is plain in its meaning. It is not ambiguous. Therefore, when signing a non-disparagement clause you can have some reasonable certainty in your conduct.

Disparage – as you will see below – has a fairly common meaning

‘Disparagement’ is ‘a false and injurious statement that discredits or detracts from the reputation of another’s property, product, or business.’ Black’s Law Dictionary (7th ed. 1999).

stated another way:

(1) To speak of in a slighting or disrespectful way; belittle.

(2) To reduce esteem or rank.’ . . . American Heritage Dictionary (4th Ed. 2000)

Non-Disparagement Clauses in Contracts with Consumers

Recently the Federal government passed a law holding that such non-disparagement provisions in contracts are unenforceable under Federal law

California has had such a law in place since 2016.

It is one thing if two sophisticated business parties are negotiating a business relationship, but should consumers have specific protections concerning Non-Disparagement Clauses?

At least one Michigan lawmaker thinks so.

Michigan House Bill 5193

On October 31, 2017, HB 5193 was introduced to amend the Michigan Consumer Protection Act (“MCPA”).

“The MCPA provides protection to Michigan’s consumers by prohibiting various methods, acts, and practices in trade or commerce.” Slobin v. Henry Ford Health Care, 469 Mich. 211, 215; 666 NW2d 632 (2003).

The Amendment would prohibit anyone engaged in Trade or Commerce from including in a contract with a consumer for the sale of lease or sale of consumer goods:

“A PROVISION THAT WAIVES THE CONSUMER’S RIGHT TO MAKE A STATEMENT CONCERNING ANY OF THE
FOLLOWING:
(i) THE SELLER OR LESSOR.
(ii) EMPLOYEES OR AGENTS OF THE SELLER OR LESSOR.
(iii) THE CONSUMER GOODS OR SERVICES.

(B) THREATEN OR SEEK ENFORCEMENT OF A CONTRACT PROVISION PROHIBITED UNDER SUBDIVISION (A).

Of note, under this Bill businesses would still be permitted to include provisions that protect its proprietary information.

I understand the intent of this provision. However, it hasn’t made any progress in committee. I will keep you posted on any development.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

Twitter: @JeshuaTLauka

Business Law Update: Michigan LLCs Filing with LARA: Pardon the Delays and Thank you for your Patience.

Happy Thursday, all! I took this photo earlier today – the sun is out in downtown Grand Rapids, Michigan and people are enjoying the ice rink at Rosa Parks Circle.

Last week I posted about an update I received from the Michigan Department of Licensing and Regulatory Affairs (“LARA”) extending the deadline to file annual statements and reports for LLCs and PLLCs to March 1, 2018.

Annual Statements are Due on February 15th each year, “however, due to increased demand for pre-assigned Customer ID Number (CID) and PIN information, an automatic 14-day extension will be granted.”

In my post I also mentioned that I wasn’t surprised at the filing extension, given the fact that my experience with LARA lately has been frustrating to say the least. My clients have been experiencing serious delays in returned filings from LARA.

Today, I received an update from LARA’s Director Julia Dale, thanking me, and other system users for our patience in the delays that we have been experiencing.

In part, Director Dale acknowledged that:

“The Corporations Division serves more than 800,000 customers doing business in Michigan and reviews more than 240,000 documents and 640,000 annual reports each year…For the last two years…LARA worked diligently to bring the agency’s aging Corporations database into the modem era by completely replacing the outdated server-based technology with a new web-based system… The database was unstable, utilized unsupported technology and the fax-based filing system had become a burden for customers and staff.”

I am glad that my reasonable frustrations are being acknowledged by LARA. Thank you, Director Dale.

Many of my clients, (real estate investors, small business owners, entrepreneurs, etc..) rely on quick turn around for corporate filings. The fact that LARA’s e-filing system has not been reliable has been troubling for my clients – and therefore troubling to me.

I forewarn all clients who are looking for new entity filings that they should expect to experience delays.

If the particular filing is time sensitive, you have a deal closing soon and need an entity prepared ASAP, then you may want to consider paying extra to the State for expedited processing.

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Michigan Limited Liability Companies: LARA extends 2018 Annual Statement Filing Deadline to March 1. Stay in Good Standing and Maintain your Corporate Formalities.

It is the middle of the dreary season – February 15th. Not too long and I, like many folks in West Michigan with school-aged kids will be heading to Florida for Spring Break.

2017-04-09 21.33.41

This is a photo I took last year – sunnier days ahead.

Anyway, on to the point of this post:

Today I received an e-mail from The Michigan Department of Licensing and Regulatory Affairs(“LARA”) reminding that all annual statements and reports for LLCs and PLLCs are due March 1, 2018.

As a practical note, if you are experiencing delay in receiving filings from LARA – just know that LARA has recently transition to an electronic filing system – and disposing of the fax filing.

All things considered, I am not surprised at the extension, and it is good news.

Per LARA’s announcement:

“Annual statements and reports can be submitted online at www.michigan.gov/corpfileonline. The first step to submit annual statements and reports online is to login to the system with the entity’s CID and PIN. If you have forgotten the CID or PIN, please contact the Corporations Division at LARA-CSCL-CorpPIN@michigan.gov or call (517) 241-6470 to obtain that information. Please do not send multiple email requests for CID/PIN numbers, as this will slow processing time.”

For more information about LARA, please visit www.michigan.gov/lara

Consequences for Failing to File:

LARA also reminds that:

“Section 909(2) of the Michigan Limited Liability Company Act, 1993 PA 23, provides that if a domestic or foreign professional limited liability company does not file the annual report by February 15, then in addition to its liability for the fee, a $50.00 penalty is added to the fee.”

“Penalties will be assessed for 2018 annual reports received after March 1, 2018.”

Further LARA reports that, an LLC that “fails to file its annual statement/report or the filing fee is not paid for two years, the limited liability company will not be in good standing. The status of the limited liability company will be “active, but not in good standing.”

“A limited liability company that is not in good standing is not entitled to a certificate of good standing; its company name will be available for use by another entity, and no document will be filed on behalf of the company other than a certificate of restoration.”

Is your LLC in Good Standing?

Occasionally I will have a business client come in and I will ask – just to make sure – “is your business still in good standing?”

The common answer is “I think so.”

And of course, after I perform a quick internet check with the State of Michigan it is all too common that I discover that either the LLC is “not in good standing” or worse, the company has been dissolved automatically for failure to file annual statements.

A Word on Resident Agents:

My law firm is happy to provide our business clients with resident agent services. One of the benefits of an LLC is that it provides its owners a level of privacy protection.

You can check out a recent ABAJournal Article on how a Court is making Jared Kushner’s real estate partners disclose their identity.

Michigan law requires Limited Liability Companies to have appointed a Resident Agent.

MCL 450.4207(1)(b) requires an LLC to have a resident agent. A person, or business with a physical presence in the State of Michigan.

Michigan law does not require that an “owner” of the LLC be the resident agent.

“The resident agent appointed by a limited liability company is an agent of the company upon whom any process, notice, or demand required or permitted by law to be served upon the company may be served.” MCL 450.4207(1)(b).

Many of my real estate investment clients will utilize my law firm as resident agent when filing their articles of organization with the State of Michigan.

In Conclusion:

Business owners, if you get these annual statements from the State of Michigan, or from your attorney – do not disregard them! Maintain your Corporate Formalities.

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Business Law Basics: A 5 Million Dollar Comma

Today in downtown Grand Rapids is the “World of Winter Festival” where Downtown Grand Rapids, Inc. provides a “Snow Globe” experience. Very colorful. A lot of fun downtown.

Rosa Parks Circle, Grand Rapids, Michigan

Today I read an article posted by the ABAJournal that illustrates the profound impact on word and grammar usage in contracts and legislation.

As the ABAJournal reported:

“A dairy company in Maine has agreed to pay $5 million to its drivers after a federal appeals court last year found ambiguity in a state overtime law because it lacked an Oxford comma.”

The ABA Journal reported in its story last year Oxford comma issue benefits drivers in overtime case:

“FOR WANT OF A COMMA”

“Ambiguity caused by lack of a comma in a law on overtime pay has benefited Maine dairy delivery drivers.”

“The Boston-based 1st U.S. Circuit Court of Appeals pointed out the issue in the first sentence of its March 13 decision(PDF). ‘For want of a comma, we have this case,” the court said in an opinion by Judge David Barron.

“Because the statute was ambiguous, it should be interpreted in favor of the dairy workers who distribute milk but do not pack it, the appeals court found.”

As a result – a 5 Million Dollar Comma.

A SINGLE WORD CAN BE LEGALLY SIGNIFICANT TO SHIFT RISK

A few years back I wrote about how the words used in a contract dispute significantly impacted the rights and obligations in a business dispute, based upon the Michigan Supreme Court’s interpretation.

The Michigan Supreme Court made a distinction between the inclusion of the word “in” in a Title Company’s Closing Protection Letter in a prior case, and the “exclusion” of the word “in” in that instant case. In the Court’s determination:

“Although the distinction is slight—the only difference is the word “in”—the distinction is legally significant.”

Words Matter.

E-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka