Category Archives: Business

The White House Proposes $1.5 Trillion Infrastructure Development Program

By on February 12, 2018

The White House recently released its “Legislative Outline for Rebuilding Infrastructure in America.” 

In the preamble to the outline, The White House requested that Congress act to implement the infrastructure program in short order through new legislation.  In broad strokes, the outline calls for new spending to stimulate $1.5 trillion dollars in infrastructure investments, from federal and state governments, agencies and localities, to address American infrastructure projects.

Should the program be implemented by Congress in any meaningful way, it would mean a boon for public construction projects and contractors.  Contractors would be wise to keep a careful eye on this proposed legislation as it develops.     


Airbnb Hosts Beware: City of Boston Proposes Regulations on Short Term Rental Industry

By on February 5, 2018

Boston Mayor, Marty Walsh, recently proposed a citywide ordinance that will, if adopted by City Council, subject short-term rentals – such as those advertised through the popular home-sharing website, Airbnb – to regulations and reporting requirements.

The proposed ordinance requires that all short-term-rentals register with the city and pay an annual fee based on a tiered rental classification system. The classification system additionally dictates how many days per year various properties may be rented and the maximum number of guests per night. The ordinance also imposes a room occupancy excise tax on all short-term rentals. Short-term-rentals that are noncompliant with city codes will be ineligible for registration. Further, beyond requiring individual owner/host compliance, the ordinance also places reporting requirements on the booking companies themselves. 

Specifically, the ordinance classifies three types of short-term rental units:

  1. Limited Share Units
  2. Home Share Units; and
  3. Investor Units

Limited Share Units are rentals that are the host’s primary residence such that the host is present through the duration of the short-term rental. Limited Share Units may be offered for short-term rent 365 days of the year and will be subject to an annual $25.00 registration fee.

Home Share Units are also rentals that are the host’s primary residence that may be offered for short-term rent 365 days of the year. The host, however, need not be present through the duration of the short-term rentals, so long as the number of days booked for rental when the host is not present does not exceed 90 (consecutive or nonconsecutive) per year. Home Share Units will be subject to an annual $100.00 registration fee.

Investor Units are rentals that are not the host’s primary residence. Investor Units may be offered for short-term rental for up to 90 days (consecutive or nonconsecutive) per year and will be subject to an annual $500.00 registration fee.

Boston residents who participate in the short-term-rental economy are well advised to understand, and keep an eye on, proposed changes in housing law as regulations begin to promulgate in response to a growing industry.

Understanding the Limitations of Chapter 93A: Pre-Litigation Attorneys’ Fees Not Recoverable

By on January 30, 2018

The Regulation of Business Practices for Consumer Protection Act, commonly referred to by its statutory chapter number, “Chapter 93A,” is a frequently utilized statute that provides individual consumers and businesses with a right to bring legal action and recover damages if they are harmed by an unfair business practice.  Under the statute, “unfair or deceptive acts or practices” or “unfair methods of competition” committed while conducting business in Massachusetts permit the harmed party to recover their actual damages, or a statutory minimum of $25 per offense (whichever is greater), and up to three times such damages for knowing and willful violations of the statute, plus an award for reasonable attorneys’ fees and the costs of the lawsuit.  Chapter 93A creates harsh penalties, with a wide-reaching scope, to deter unfair business acts, however, it does have limitations.

Previously, we explained the prohibition on Chapter 93A recovery with regard to a party’s decision to litigate a dispute, rather than settle with the opposing party.

A second limitation on recovery under Chapter 93A relates to the timing of when a party’s legal fees are incurred. Recently, the Suffolk County Superior Court considered the issue of whether pre-litigation attorneys’ fees are recoverable under Chapter 93A in Beninati, et al. v. Borghi, et al. The court awarded double damages to one of the plaintiffs under Chapter 93A. The defendants who were found liable under Chapter 93A then moved the court to reduce the attorneys’ fees award by $170,000 for fees incurred prior to the filing of the lawsuit, relating to “extensive settlement discussions.” The court agreed that pre-litigation fees are not recoverable under Chapter 93A, stating that it “is aware of no authority that permits the award of fees incurred before the litigation began and that do not bear directly on its preparation.”  Accordingly, the court excluded the pre-litigation attorneys’ fees from the award.

This case is just one example of the importance of understanding the process of litigating claims and the implications of dealing with an adverse party.  Depending on the circumstances of a dispute, it can be wise to initiate litigation sooner to ensure large portions of incurred attorneys’ fees are ultimately recoverable from the party causing the harm. To learn more about scope and application of Chapter 93A, contact an experienced Massachusetts litigation attorney.

Corporate Considerations: The Importance of Formal Dissolution

By on January 2, 2018

            As discussed in previous posts, the creation of a formal corporate entity and compliance with state prescribed formalities can offer business owners and members substantial protections from individual liability for business debts when acting by and through an entity. This compliance with formality can also offer substantial protections in the event the choice is made to close, or otherwise cease conducting business through, a formal entity.

            If the choice is made to dissolve an entity, members would be well advised to take the proper statutory steps in order to cease operations formally.  It is important to undertake the appropriate formalities in order to terminate the existence of the entity with State officially, and more importantly, to place the dissolved entity and any remaining assets (including final shareholder/member distributions) outside of the reach of third party claims. 

            The Massachusetts Business Corporations Act spells out all steps necessary to  dissolve a corporation formally.  Among other formalities, it is necessary to take a proper vote to initiate dissolution, file Articles of Dissolution with the Commonwealth, properly notice creditors and potential creditors of dissolution, and properly wind down corporate activity.  As previously noted, adherence to the prescribed steps is paramount to limiting future liabilities as they may relate to a dissolved corporation. If you have questions with regard to business formation and/or operations you should consult with a knowledgeable attorney to determine your best options. 

OSHA Injury Tracking Application Enforcement Delayed to December 15, 2017

By on December 8, 2017

The Occupational Safety and Health Administration (OSHA) recently extended, for the second time, the enforcement deadline for compliance with electronic reporting of injury and illness data through its Injury Tracking Application (ITA) until December 15, 2017.

The new rule took effect January 1, 2017, and required certain employers to submit injury and illness information electronically through the new tracking application.  The information required to be submitted to OSHA remains largely unchanged from the information already required to be kept under current regulations.  In other words, the primary difference is that it must be submitted through the ITA rather than through traditional methods.

In late November, the deadline was pushed back again to December 15, 2017.  Despite the second delay in enforcement it appears that the rule will eventually begin enforcement, even amid speculation that the rule might be scuttled entirely.  For the time being, construction employers should be prepared to submit their 300A and related forms electronically for years 2016 and forward electronically by December 15, 2017 to insure compliance with the new rule and avoid exposure to citations.

Corporate Considerations: Duties of LLC Members

By on November 10, 2017

            One of the first considerations to make when starting a business is whether to create a formal corporate entity.  The creation of a formal entity and compliance with state prescribed formalities can offer business owners and members substantial protections from individual liability for business debts when acting by and through an entity.  One particularly popular corporate form is the Limited Liability Company (LLC).  LLCs are governed by state law and, if established and maintained properly, LLCs can offer a flexible and relatively uncomplicated business form.

            While LLCs protect members from individual liability related to the claims of outside actors as against the LLC, members do owe certain duties in exchange for such protection.  In Massachusetts, as in other jurisdictions, members of corporate entities owe implicit duties of loyalty and care to the entity.  Unlike other jurisdictions, however, in Massachusetts heightened protection is given to shareholders in what are referred to as “close” corporations, or corporations where, there exists “(1) a small number of stockholders; (2) no ready market for the corporate stock; and (3) substantial majority stockholder participation in the management, direction and operations of the corporation.”  Donahue v. Rodd Electrotype Co. of New Eng., Inc., 328 N.E.2d 505, 511 (Mass. 1975).  Massachusetts views such entities as little more than incorporated partnerships, and thus, insists that shareholders in close corporations, “owe one another substantially the same fiduciary duty [loyalty and care] in the operation of the enterprise that partners owe to one another.” Brodie v. Jordan, 857 N.E.2d 1076, 1080 (Mass. 2006).

            Majority shareholders have been found to have violated their fiduciary duties toward minority shareholders in instances where, the “majority frustrates the minority’s reasonable expectations of benefit from their ownership of shares.” Id. Massachusetts refers to this tactic by a  majority as a “freeze out,” as it creates a dynamic where a disadvantaged minority party can be compelled  to come to inequitable terms with the majority party in order to leave the entity.  Thus, Massachussets provides additional protections to close corporations in an attempt to dissuade “freeze outs.” 

            While this heightened duty is explicitly applied to shareholders of close corporations, it is very likely that courts in Massachussets could apply the same to members of LLCs, where the definition of “close” corporation is easily applicable by analogy. Thus, members of LLCs need to be aware that they not only owe duties of loyalty and care to the entity itself, but may also owe the same to their contemporaries as well.  If you have questions with regard to business formation and/or operations you should consult with a knowledgeable attorney to determine your best options.

Online Business Defamation and Public Forum Websites — Part II

By on October 9, 2017

            Part I of this series on Online Business Defamation and Public Forum Websites briefly touched on Section 230 of the Communications Decency Act (“Section 230”), a federal law that limits whom businesses can hold legally responsible for defamatory postings.   As previously discussed, Courts have consistently interpreted Section 230 as providing close to blanket immunity to public forum websites where the content in question is generated by a third party.  Thus, as a practical matter, claims against the Googles, Yelps and Facebooks of the world face significant legal barriers and businesses are currently better served by focusing on claims against the actual author of the posted defamatory comments, rather than the forum on which the comments were published.

            Section 230 was codified as law in 1996, right as the modern Internet came into being. It has not faced significant alteration since, even though the Internet landscape of today bears little, if any, resemblance to the landscape of 1996.  In no uncertain terms, Section 230 states, “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”  It is that language that has afforded modern websites (and their affiliated companies) enormous legal protections- legal protections that many of those same websites  (and affiliated companies) have lobbied extensively to keep in place as they have allowed the companies to flourish and have fostered an Internet environment where free speech is clearly protected.

            Section 230, however, has recently come under intense public scrutiny due to its rigid application creating harsh legal realities and unintended consequences, specifically with regard to the cover Section 230 has provided websites that host user-generated content that promotes and facilitates illegal activity.  Public pressure is currently mounting in favor of lessening the protection Section 230 provides to such websites (and companies) and a hotly contested bill has been introduced in Congress that would accomplish just that.  Thus, there is real potential that the momentum exists to shift the Section 230 paradigm away from the historically stringent protections afforded to companies and websites and toward allowing some form of recourse against pubic forum websites for offending hosted-content.  Regardless of the merits of such potential shift, such reform stands to have a significant impact on the potential viability of future online defamation claims.  Accordingly, business owners are well-advised to monitor the changing landscape carefully.  Should you find your business interests harmed by false or misleading statements on the Internet, consult with an attorney concerning the potential rights and remedies available to you.

Do More:  Prevent Your Neighbor from Taking Your Land Through Adverse Possession

By on September 26, 2017

            Does your neighbor’s fence fall on your side of the property line?  Did that garage get built on your land?  If your neighbor encroaches on your land, you may be subject to losing that portion of your property by adverse possession. 

            Adverse possession is a common law doctrine through which ownership to property can be acquired by an unlawful possessor exercising possession for twenty years of adverse, continuous, exclusive and uninterrupted use of land such that the lawful landowner has notice that the possessor claims title to the property.

            This little-known legal doctrine frequently affects densely populated residential areas where neighbors come and go and property surveys are the exception to the rule.  Recently, the New Hampshire Supreme Court had occasion to review its adverse possession jurisprudence in the case of O’Malley v. Little.

            In that action, an adverse possessor permanently acquired title to a strip of real estate in Hampton Beach, in a densely packed area of valuable homes near the beach.  In 1993, the plaintiff installed a chain link fence between her lot and her neighbor’s lot.  As it turned out, the fence was installed across the property line on to the neighbor-defendant’s land.  After installing the fence, the adverse possessor-plaintiff frequently used the encroaching area for parking cars, gardening, and other ordinary uses incidental to ownership of land. 

            In 2010, new neighbors learned that the fence encroached on their land.  In response, they called the plaintiff and informed her that her fence encroached and needed to be removed.  The plaintiff refused to move the fence.  The defendant asserted that he took other action to demonstrate to the plaintiff where the property boundary existed and that the plaintiff’s fence encroached on his land.  Nothing else occurred until 2013, when the defendant emailed the plaintiff again and requested the fence be removed.  In correspondence, the defendant offered the plaintiff a license to use the encroaching area.  Again, the plaintiff refused.  Accordingly, the defendant threatened to take action to relocate fence if the plaintiff did not do so herself.  The defendant never took such action.

            In December of 2013, the plaintiff filed suit to “quiet title,” or officially take legal possession of the encroaching area inside the fence line.  In that suit, the defendant asserted that it “ousted” the plaintiff from possession of the disputed land, and thus terminated the adverse possession, through the repeated assertions of ownership from 2010 to 2013.  The court disagreed.

            Instead, the New Hampshire Supreme Court quieted title in the encroaching plaintiff, finding that “ousting” an encroaching adverse possessor effectively requires more than mere assertions of title.  Rather than asserting title, the original owner must take affirmative steps to put the adverse possessor on notice that the lawful owner intends to reassert control or dominion over the disputed area.  Having failed to take any such actions, the original owner lost legal title to the disputed area.

            While little-known and infrequently asserted, losing title by adverse possession is risk property owners should be aware of, particularly in densely settled areas where unlawful encroachment by neighbors presents a significant risk to property.  If you’re concerned that your neighbor encroached upon your land, do your homework.  Review your plot plan and deed.  Engage a surveyor if you’re unclear whether an encroachment occurred.  Then take steps to reassert control over the land encroached upon by your neighbor.  If you’ve found that your neighbor encroached on your land, do not let time pass you by.  Instead, contact an attorney to help preserve your rights in your land.        



Foreclosures, Commercial Leases and the “First in Time, First in Right Rule”

By on September 18, 2017

Imagine that your company rents space in a commercial building and just found out that your landlord stopped paying the mortgage.  The building is in foreclosure, your lease isn’t ending soon, and it doesn’t address a foreclosure.  What happens to your commercial lease if the building is sold in a foreclosure auction?

When a commercial property owner defaults on its mortgage and the lender forecloses, a tenant should determine whether its lease was entered into before the foreclosed mortgage was recorded, as tenants retain interests in leased property if a lease predates a foreclosed mortgage.  Generally, the “First in Time, First in Right Rule” recognizes agreements respecting real estate with effect given to the “first in time” agreement.  In other words, a prior recorded mortgage that predates a lease, will permit the mortgagee to foreclose on the property and terminate the tenant’s lease, irrespective of the otherwise enforceable agreement between the defaulting landlord and the tenant.  On the other hand, a lease that predates a recorded mortgage will remain in effect after foreclosure, so long as the lease itself contains no contrary provision.

While the “general rule in Massachusetts is that entry by a mortgagee in possession under a mortgage granted prior to execution of a lease ousts the tenant and terminates the lease,” the inquiry doesn’t end there.  Tenants subject to a mortgagee’s title should consider whether the mortgagee exercised rights as a landlord over the tenant subsequent to the original landlord’s default on the mortgage.  Foreclosing mortgagees may acquire and exercise the landlord’s interest under a lease through an assignment of leases and rents from the debtor and demanding rent from the lessee as the landlord.  Similarly, the mortgagee may exercise rights as landlord through an attornment provision contained in the lease or through a separate attornment agreement with the tenant.  Attornment provisions can be found commonly in commercial leases, and express the tenant’s agreement to recognize mortgagees and/or subsequent purchasers as successor landlords to the tenant.  In the event that a tenant attorns to the mortgagee or a subsequent purchaser as its new landlord, or the mortgagee exercises rights under an assignment of the lease, the tenant will remain in possession of the leased space.

Absent such an assignment or attornment, the foreclosing mortgagee may terminate subordinate leases under the doctrine of paramount title.  Once asserted, paramount title requires entry, the demand rent be paid and actual or constructive eviction.  In to terminate a lease effectively, mortgagees acting in a dual capacity as both a mortgagee and landlord, must be cautious to articulate specifically its intended role so as not to afford subordinate tenants unintended rights permitting such tenants the right to carry on in prior existing leases.

In the rare instance that a commercial mortgage is subordinated to a lease, a lease would not be extinguished upon foreclosure of such a mortgage.  Instead, the purchaser of the commercial property would take possession subject to the tenant’s tenancy, and require the tenant to attorn to the purchaser as its new landlord, develop a new lease or vacate the premises.  

If your commercial space is sold at foreclosure, all is not lost.  The terms of your lease, along with timing of its execution in relation to the foreclosed mortgage will govern your rights and remedies as a tenant.   While it’s always a better course of action to address this issue when negotiating your lease it’s likely that you’ll retain some rights as a tenant despite a foreclosure.   In order to determine and preserve your rights under a commercial lease conclusively upon notice of a foreclosure, it’s important to consult with an experienced real estate attorney promptly.

Recent Ruling Emphasizes the “Sacred” Procedure of a Jury Demand

By on September 11, 2017

     Parties to a summary process (eviction) proceeding in Massachusetts are afforded the right to a trial by jury. Article 15 of the Constitution for the Commonwealth of Massachusetts declares that “parties have a right to a trial by jury; and this method of procedure shall be held sacred,” which applies to court rules and procedures for summary process governed by Massachusetts Rules of Civil Procedure, Rule 8 of the Uniform Summary Process Rules, and Section 21 of Massachusetts General Laws Chapter 185C.

     Recently, the Massachusetts Appeals Court overturned a ruling from the Housing Court and reemphasized the “sacred” right to a jury trial.  In Tchad Cort v. Alver Majors, a residential tenant appealed from judgment awarding possession and money damages to the landlord. The landlord filed a summary process action, to which the tenant responded with an answer, counterclaims, and a jury trial demand. At trial, the judge asked both parties if they were prepared for trial and the tenant acknowledged that he was prepared to proceed. After the landlord presented her case, the tenant provided testimony and stated that he would “like a jury.” The judge determined that trial was already underway and thus the tenant waived his right to trial. The tenant and the judge debated the tenant’s misunderstanding regarding waiver and the tenant presented his case. Thereafter, judgment entered against the tenant.

     On appeal, the Appeals Court reversed the judgment, holding that a passive waiver of a jury demand, by proceeding with trial without a jury after demanding a jury, is not sufficient to waive a prior plead jury demand. Instead, an effective waiver of a jury demand requires at least an oral stipulation waiving the demand. The Appeals Court emphasized the responsibility assigned to trial court judges to affirmatively investigate, prior to commencement of trial, whether to proceed with or without a jury, rather than starting trial and waiting for a party to object to the absence of a jury.

     Self-represented litigants in all courts are held to the same standards as attorneys. As a result, it’s crucial to understand and apply the rules of court and constitutional protections relevant to each action. More often than not, self-represented litigants are ill prepared to do so. In order to navigate litigation efficiently and effectively, engaging an experienced attorney to guide litigation prevents costly errors resulting from the failure to understand available rights and remedies. If you are involved in, or are considering filing a summary process claim, you’re well-advised to contact an experienced landlord-tenant attorney to achieve the best outcome.