Archive for March, 2011

I’m still not on Facebook…am I being left behind?

This blog entry was written by one of our associates, who does not have a Facebook account.  I don’t want you to be confused since this blog entry will appear on… Facebook.  He is not very technology savvy… but he was able to peck this blog entry out with his two index fingers on a qwerty keyboard.

I first realized I had a problem when I saw the Sorkin-Fincher collaboration “The Social Network.”  I was actually surprised that the movie centered around a great story and compelling characters, and not the revolutionary technology itself.  And I realized why it didn’t – Facebook had become so integrated in most people’s lives that the digital connection to friends and family was just another one of life’s mediums to relate to ones fellow man.  As one may expect, many of the jokes and references went over my head.  My sister had to explain much of the verbiage, and I think I missed major plot points just trying to figure out that poking or tagging were not criminal offenses.  You see, I am not on Facebook.

It’s partly because I don’t grasp the benefits, and partly because I don’t feel like “catching up” with so many friends of Christmas past.   Facebook is also the wild west full of miscreants and pedophiles.  Can my computer get hacked through my Facebook?  Can my identity be stolen?  Every day I read news about Facebook – at least for their part they do seem to be policing themselves. ran a story that Facebook is actively booting users under fourteen years old. This certainly is an improvement.  So what is really left to be afraid of?  Am I foregoing valuable marketing opportunities to avoid a few awkward conversations?  Is Facebook one day going to be like email – only grandparents will be afraid to use it?  Am I missing out on a hybridized cultural-technology revolution?  It looks like that might be the case.

The Sacramento Business Journal reported that, despite the LinkedIn’s and the Twitter’s of the world, Facebook still commands the lion’s share of the social media universe. Such statistics further corroborate the fear that not getting on this bus will leave me behind.  I do not think many would argue that LinkedIn provides a more professional experience and Twitter offers a more instant, portable communication in the smart-phone world we live in.  But Facebook seems to cover all bases.  It keeps college friends in touch, keeps grandma well supplied with new pictures, it keeps marketers aware of the needs of their  target audience, and, as of late, keeps revolutions informed,  well organized, and inspired.  Is Facebook to be given credit of galvanizing the young minds of an entire section of the world?  Who knows.  But it’s at least enough to tell me I better get on board, or I might not hear about the revolution.


The author is a an associate at the at Radoslovich | Krogh, PC Attorneys law firm.


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Looking For A Business Loan?

As many of you know it is next to impossible to obtain a loan from a bank for your business.  Put simply banks are not lending money right now.  However, there is one lending institution in the Sacramento area that is providing business loans, SAFE Credit Union.  SAFE Credit Union began lending to business beginning in 2007.  It is focusing on lending to businesses with $10 million or less in annual revenue.  Thus, if you are a small business in need of a cash injection, you may want to explore your options with SAFE Credit Union.  Mark Anderson of the Sacramento Business Journal wrote a nice article on SAFE Credit Union’s lending practices.  I suggest that you check it out.  You can reach it here.

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The Kings’ Move: Is It Imminent… Or Is A Negotiation Ploy

Being that I am going to the Kings’ game tonight (or should I say a “Warriors game” since I am a closet Warriors fan), I thought I would write about all things Sacramento Kings.  As you may know, the Kings have recently indicated that they may be moving to Anaheim, California as the Sacramento region has not constructed a new arena for the Kings.  Kelly Johnson, a writer for the Sacramento Business Journal wrote an excellent article detailing the potential economic impact that would occur if the Kings moved to Anaheim.  You can read Ms. Johnson’s article here.

As I understand it, the Kings do not have an agreement with Anaheim.  As such, my thoughts are that the Kings are not moving… until they have an actual agreement in place.  Thus, the Kings’ overtures to leave for Anaheim can be one of two things.  First, it can be imminent, meaning that the Kings are in the process of negotiating an agreement with the City of Anaheim.  Or it can be a simple negotiation ploy.  Owners of sports franchises often use the threat of moving to obtain leverage over there existing home cities in hopes that the home city will build a new area or stadium.  Most notably, the San Francisco Giants nearly moved to St. Petersburg, Florida, before a new ownership group came in and privately financed a stadium.  Look what happened there… a World Series and a growing economy in San Francisco’s China Basin District.

I am not saying that the Kings are using the purported move here as leverage.  But I am hoping they are… And I am not even a Kings fan.  However, I am a resident of the Sacramento area and I believe that our economy is better with the Kings here as a contributing member of our community.

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Walking Out Might Come With Consequences…

In Sacramento Superior Court, Mather Development Partners IV LP (“Mather”) recently filed a substantial lawsuit against Edfund, Inc., a California nonprofit benefit corporation, for an alleged breach of a ten year commercial lease agreement.  According to the Complaint, not only did Edfund enter into the lease agreement, Mather custom-built the building specifically for Edfund. Mather alleges several causes of action against Edfund, and a variety of other defendants, for negligent misrepresentation, breach of fiduciary duty, and breach of contract, among other actions.  Mather seeks injunctive relief and upwards of $40 million in damages.

Apparently, the facility, which is 177,000 square feet, required Mather to obtain in excess of $30 million in financing, in addition to the costs of tenant improvements which were subsequently requested.   As of the date of filing, $40 million was still due in outstanding rental payments for the remainder of the lease term.

While this suit raises a variety of legal issues, at its core is a very common phenomenon occurring in the commercial real estate context.  Businesses are walking out on commercial leases with the philosophy that if they don’t have the money to make their rental payments, the landlord cannot come after them if they just walk out.  Businesses often think winding down their corporation, or bankrupting out of their debts, will solve the problem.  However, these days, with guaranties and a variety of other security tools used by landlords, walking out on commercial leases isn’t as easy as it used to be.  Landlords are having an increasingly difficult time finding tenants for commercial properties and courts are tending to award damages for future rental payments due on the abandoned lease agreements.

Having represented commercial landlords and tenants in a variety of disputes such as this, we can tell you it is important to obtain counsel when entering into commercial lease agreements and when dealing with obligations during the tenancy.  It is clear here that the parties to this dispute either got in over their heads, did not do their homework, or both.  Businesses, both on the landlord side and the tenant side, need to ensure their specific interests are protected by the written terms of these commercial agreements, and when a problem arises, businesses need to pick up the phone and call an attorney…because as seen in Mather’s lawsuit, walking out might come with consequences.

The Sacramento Business Journal wrote a good article on this subject.  You can read it here.

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Charlie Sheen And The Morality Clause

The Charlie Sheen situation is a classic train wreck.  Nobody can turn away and everyone is waiting for what Charlie Sheen is going to do next.  Well, we may as well pile on and rubberneck a little bit as well.

While everyone is wondering what Sheen is thinking… I wonder what Warner Brothers was thinking when they executed the Personal Services Contract with Sheen.  I think it is fine that Warner Brothers hired Sheen and paid him $2 million an episode because he is an entertaining actor.  However, knowing Sheen’s history with drugs, alcohol and hookers, Warner Brothers should have insisted on a more stringent “morality clause”.  Given that Warner Brothers fired Sheen they better hope that its “morality clause holds up or has another provision that allows them to terminate Sheen

I understand that the “morality clause” in Sheen’s contract reads as follows:

“If Producer in its reasonable but good faith opinion believes Performer has committed an act which constitutes a felony offense involving moral turpitude under federal, state or local laws, or is indicted or convicted of any such offense, Producer shall have the right to delete the billing provided for in this Agreement from any broadcast or other uses which are thereafter made of the episode(s) in which Performer appears. In addition, to the extent such event interferes with Performer’s ability to fully and completely render all material services required hereunder or Producer’s ability to fully exploit the Series, Producer shall have the right to treat such act as a default under the applicable provisions hereof.”

This is a pretty weak “morality clause” as Warner Brothers must prove that they had a (1) reasonable and good faith opinion that (2) Sheen committed an act which constitutes a felony (3) involving moral turpitude.  Sheen definitely conducted himself in a disrespectful, bizarre and unprofessional manner over the past few weeks.  Moreover, I am sure Sheen’s conduct embarrassed Warner Brothers to no end.  However none of that constitutes a felony of moral turpitude.

You may ask, what about the drug use, prostitutes and allegations of domestic violence?  That has to be felonious behavior of moral turpitude.  Sure, it may well be an act of moral turpitude.  But my question, and I am willing to bet Sheen’s lawyers’ question, why didn’t you fire Sheen when he allegedly engaged in those acts.  Sheen’s conduct has been in the tabloids for years now, especially since his bitter divorce from Denise Richards… much of it involving drugs, prostitutes and violence.  However, Warner Brothers turned the other way and pretended that it never happened.  It wasn’t until Sheen began bad mouthing his employers at Warner Brothers that Warner Brothers took action and terminated his employment.  Consequently, you can expect Sheen’s lawyers to argue that Warner Brothers waived its right to terminate Sheen’s contract based on those allegations.

Nevertheless, Warner Brother may still have other grounds to terminate Sheen.  However, I cannot discuss all of them, because I do not have a copy of the contract.  I only have this one little snippet that I pulled from the internet.

In any event, Warner Brothers could have positioned itself better if it created a more stringent moralities clause.  Hindsight being 20/20, I suggest that Warner Brothers would be in a better position if the “moralities clause” looked like this:

“If Producer, in his or her, sole and unfettered discretion, determines that Performer committed any act or did anything which might tend to bring Performer into public disrepute, contempt, scandal, or ridicule, or which might tend to reflect unfavorably on the Network, any sponsor of a program, any such sponsor’s advertising agency, any stations broadcasting or scheduled to broadcast a program, or any licensee of the Network, or to injure the success of any use of the Series or any program, Producer shall have the right to delete the billing provided for in this Agreement from any broadcast or other uses which are thereafter made of the episode(s) in which Performer appears.  In addition, to the extent such event interferes with Performer’s ability to fully and completely render all material services required hereunder or Producer’s ability to fully exploit the Series, Producer shall have the right to treat such act as a default under the applicable provisions hereof.”

As you can see, under this type of “morality clause”, Warner Brothers would have no problem terminating Sheen’s contract as Sheen definitely brought about scandal and ridicule upon himself and Warner Brothers.  Further, Warner Brothers would not need to prove the additional fact that they believed that Sheen  committed a felony.

It is the duty of a transactional attorney to put their client in the best position for litigation in the event that there is a dispute between two contracting parties.  It is not always possible to foresee every potential dispute.  However, when you are entering into a contract with Charlie Sheen, you know that you have a potential ticking time bomb.  As a result, you need to make sure your contract accounts for potential eccentric behavior.  It is clear that Warner Brothers did not put themselves in the best position for litigation when this contract was entered.

Need help drafting your “morality clause”?

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The NFL And Classic Battles For Leverage In A Negotiation

As a football fan and as a lawyer I am fascinated by the on-going labor negotiations in the NFL.  The negotiations have proved to be a classic case of each side fighting for leverage over the other side.  For example, the owners sought leverage by extending television agreements so that the payments from the broadcast companies would continue through a lockout… thus, theoretically the owners would be able to outlast the players in any protracted lockout.  The players however combated this leverage through litigation, arguing that the “lockout insurance” violated the collective bargaining agreement.  Ultimately, the judge sided with the players and determined that the owners violated the CBA.  Poof, there went a chunk of owners’ leverage in these negotiations.

Now the players’ are seeking negotiation through the threat of decertification of the players’ union.  Thus, the owners would be required to deal directly with each player.  However, the real risk for the owners involved with decertification is violating anti-trust laws as competitors are not supposed to join together for a collective good.

Interestingly, the owners and players’ union continue to work toward a negotiated resolution.  I suspect that each side is conducting their cost/benefit analysis as well as reviewing their BATNA (Best Alternative To A Negotiated Resolution).  Thus, the owners must determine how bad is the deal that the players are proposing compared to a lack of revenue during a lockout and potential lawsuit.  The players are conducting the same analysis… if they cannot reach a deal, how long can they go without a paycheck.

The players reportedly threatened to bring suit to decertify the players’ union and up until now their lead lawyer, Jeffrey Kessler, was part of the negotiation.  Mike Florio of speculates that Kessler was “benched” by the union, so that the owners and the players’ union could work out a labor agreement. You can read Mike Florio’s post here.

However, I look at this another way… the players’ union is angling for even more leverage over the owners.  Your lead trial attorney is not necessary for a labor negotiation.  In fact, your lead trial attorney may be of more use to you preparing for trial.  If I am the union, I have Kessler sit out the negotiation and start preparing the matter for trial.  Then, at the negotiations, I inform the owners that trial counsel is getting ready for litigation… just to add a little bit more pressure to the owners.

Ultimately, I believe the best way to obtain a favorable negotiated resolution is to be prepared for trial.  Ultimately, in litigation, you are going to settle a case or go to trial… you may as well be as prepared as possible in the event the case does not settle.

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Restrict This!…CC&Rs and What They Mean to a Homeowner

Covenants, conditions, and restrictions are a common part of our every day lives.  CC&Rs exist in residential areas, commercial business complexes, and industrial centers, and they govern our use of property.  Some people view CC&Rs as important tools in maintaining community esthetics, privacy, and property values.  Others view CC&Rs as unconstitutional restrictions on our right to property.  Regardless, any homeowner who lives with CC&Rs should understand the powerful impact they can have on our property and our lives.

What are CC&Rs? CC&Rs are the governing documents that dictate how a homeowners’ association operates and what rules the homeowners — and their tenants and guests — must obey.  Generally, CC&Rs control the esthetics of homes and commercial buildings.  Can you imagine your neighbor creating a pig farm on his .2 acre lot?  Or installing a cellular tower in his backyard?  Or what about the neighbor who wants to install a tree-house with a view into your master bedroom?  Consequently, CC&Rs are often drafted to prevent the cultivation of farm animals in a residential neighborhood and to impose height and color restrictions on structures within the neighborhood.

In addition, many CC&Rs create a homeowners association (“HOA”) or an architectural control committee (“ACC”).  These are different bodies with different functions.  Both HOAs and ACCs are usually controlled by property owners within the subdivision or complex.  Generally, the HOA is responsible for enforcing the CC&Rs.  On the other hand, the ACC is formed to ensure that lot owners can construct new structures, while maintaining the esthetics of the community.

Can CC&Rs be Changed? The answer to this question is “yes.”  The procedure for changing the rules should be explained in the CC&Rs.  In essence, CC&Rs can be changed much like any contract can be changed.  Unfortunately, changing existing rules is rarely easy, as a majority vote of the HOA or, in some cases, a super-majority, is often required.

While most rules are easy to accept, some may strike a nerve. Common problem rules include those relating to pets, parking spaces, recreational facilities, and subleasing.  If you run into a problem with the rules, it will likely require you to exert your political influence to convince your neighbors to change the rules.  That being said, some CC&Rs contain rules which are unenforceable or illegal, and in those cases it may be necessary to get legal help.

How Can CC&Rs be Enforced? CC&RS are legally enforceable by the HOA or any resident of the community.  Consequently, if you violate the CC&Rs, either the HOA or another homeowner can seek to penalize you.  Penalties might include fines, forced compliance, a lawsuit, the misery of being at odds with your neighbors, and emotional distress.  As such it is very important for you to read the rules thoroughly before you buy an association-governed property.

Ultimately, lawsuits surrounding CC&Rs are never fun as they can be expensive and taxing on the entire community.  As such, it is very important for you to read your CC&Rs, especially because in a lawsuit it is no defense that you failed to read the CC&Rs. You may even want to point them out to a neighbor… It could help to prevent a future fight.