Androvett Legal Media Blog

Struggling Economy Bringing Increase in Commercial Lease Disputes

Fri, 03 Sep 2010 13:57:29 -0500

Commercial landlords are turning up the heat in financial disputes with tenants as the tight economy places an even greater premium on available capital. As a result, many of the disagreements and misunderstandings between landlords and tenants are now ending up in courtrooms.

In Dallas, Goodyear Tire & Rubber Co. is facing a federal lawsuit filed by the owners of a shopping center who claim the automotive repair giant released toxic chemicals at a leased space used as a service center. The owners of the Montfort Square Shopping Center say Goodyear should be responsible for the costs to clean up the site. The Goodyear service center was in operation for 25 years before closing in 2008, and the property owners say they were left with a piece of land tainted by petroleum hydrocarbons, metals, chlorinated solvents and other toxic substances.

Commercial litigation specialist Michael Hurst from Dallas Gruber Hurst Johansen & Hail tells the Dallas Business Journal in a recent article that landlords increasingly are battling both the bad economy and their own tenants at the same time.

Youre seeing a lot more aggressiveness from landlords as it relates to recovering monies from tenants, and youre also seeing landlords having a tougher time mitigating or covering their damages by filling their lease space up with a replacement tenant, Hurst tells the publication.

While most landlord/tenant disputes center on unpaid rent, many property owners are focusing on collateral claims like the environmental damage allegations in the Goodyear case. Environmental attorney Cindy Bishop from Gardere Wynne Sewell in Dallas tells the newspaper that disputes over environmental contamination at auto repair facilities are relatively common, but typically are worked out between the parties before a lawsuit is filed.

With the economic turnaround still on its way, we may see even more lawsuits than settlements when it comes to commercial landlords and their tenants.

Dodd-Frank Postpartum: Conflict/Transparency Concerns For Energy Companies Working With Foreign Governments

Thu, 02 Sep 2010 14:33:06 -0500

The recently passed financial reform bill contains a transparency provision with disclosure requirements that could place energy companies in a considerable bind. In an effort to reduce the possibility of corruption, the late addition to the Dodd-Frank Act requires all SEC-registered corporations to disclose how much they pay foreign governments for oil, gas and mineral rights.

Many foreign governments mandate that the terms of these agreements be kept confidential, so forcing the disclosure of this information could cause these companies to violate the terms of their contracts, says Andrew Derman, leader of the International Energy Practice Group at Thompson & Knight. According to environmental organization EarthRights International, which supported the provision, the requirement will cover the majority of the top 15 international oil and gas companies as ranked by Fortune magazine based on total revenues. Together, these listed companies accounted for more than $2.2 trillion dollars in revenues and close to $200 billion in profits. While some contracts with foreign governments contain exceptions that allow the disclosure of certain confidential information, its unclear how the SEC may interpret the limits of that disclosure, Derman says.

The SEC is now moving forward with a rulemaking and a public comment period before the requirements take effect; a process that could take up to a year. Once disclosure rules are in place, covered companies would begin disclosures in their annual reports on an ongoing basis.

The question facing women lawyers: money or balance?

Tue, 31 Aug 2010 15:30:36 -0500

So, is the biggest problem facing women lawyers the fact that they earn, on average, tens of thousands of dollars less than their male colleagues, or is it that their work hours are so brutal that they leave the profession? Both are serious problems, writes Dallas lawyer Kathleen Wu in this weeks Texas Lawyer, and one of the best ways to address both of them is for firms to get serious about offering flex-time.

I realize the disconnect: How will women ever close the pay gap if firms offer flextime policies, which allow women to downshift their careers temporarily and thereby get paid less but have more time off? The answer is simple: Because one of the main reasons the pay gap exists lack of diversity on compensation committees won't ever get resolved if women keep leaving the profession before they're senior enough to get on to those committees.

According to a recent study released by the Project for Attorney Retention, "New Millennium, Same Glass Ceiling? The Impact of Law Firm Compensation Systems on Women," women partners earn dramatically less than their male counterparts, with equity partners averaging $66,000 less and income partners averaging $25,000 less.

While some of the disparity was attributed to origination credit policies (which gives the originating attorney a larger share of the fees earned by a particular client), one of the main reasons cited for the pay gap was a lack of women on compensation committees. More than half of the firms surveyed by PAR have one or no women on the compensation committee.

But if firms allow women to downshift and work more manageable hours, those lawyers stay on track. They maintain their contacts, they stay on top of the law and they don't disappear into the void that so many women find themselves in when they step off the treadmill altogether. Yes, lawyers need to address the pay gap. It's enraging and should be remedied. But the legal profession can't do that by putting work-life policies on the back-burner. Only by keeping women in the work force even if it's not at 100 percent will there be enough of us in a position to make sure the rest of us are paid what we're worth.

Auditor of failed Parkcentral hedge fund now facing fraud lawsuit

Mon, 30 Aug 2010 16:11:47 -0500

After seeing their $16 million investment in a Plano, Texas-based hedge fund vaporize in less than 90 days, stunned investors turned to Houstons Ahmad, Zavitsanos & Anaipakos for answers.

Last week, Ahmad, Zavitsanos & Anaipakos lawyers Demetrios Anaipakos and Amir H. Alavi sued Ernst & Young for its role in the spectacular implosion of the Parkcentral Global hedge fund. The lawsuit claims that Ernst & Young falsely represented that it had fairly audited Parkcentral Global and failed in its watchdog role to warn relying investors of the risk of fraud and noncompliance by management, among other things.

The lawsuit focuses on two funds sold by Planos Parkcentral Global and was filed on behalf of Houston financial consultant Gus H. Comiskey and four Tucson, Ariz.-based entities, including the Thomas R. Brown Family Private Foundation. The now-defunct Parkcentral Global was operated by affiliates of billionaire and former presidential candidate H. Ross Perot before closing its doors after the bottom fell out of the securities market and credit froze in November 2008, losing more than $2.6 billion in a matter of days.

Earlier this month, Brown Investment Management, L.P., one of the plaintiffs in this suit against Ernst & Young, won a Delaware Supreme Court ruling that requires Parkcentral Global to disclose its former investors. Those investors could be added to the new Houston lawsuit. Our clients were told that an investment in Parkcentral was designed to preserve capital, Mr. Anaipakos says. Instead, they lost every penny in record time. E&Y was supposed to be auditing Parkcentral, but the audited financial statements never once warned Parkcentrals investors of their impending doom.

In the TruTV studio: Barry Sorrels talks courtroom xs and os of the Javon Walker trial

Fri, 27 Aug 2010 16:02:11 -0500

Not only has Dallas defense attorney Barry Sorrels slugged it out in more than 300 state and federal trials on both sides of the aisle. The Ivy League gridiron star with the syrupy Texas drawl has over the years become a sought-after legal analyst at the local and national level. Earlier this month, Barry was in the TruTVs New York studios to discuss the days testimony in the Javon Walker robbery and kidnapping trial.

Century 21 franchisees win round, proceed to class-action status against Cendant

Thu, 26 Aug 2010 13:52:03 -0500

For eight long years, a group of Century 21 franchisees has soldiered on in litigation against Century 21 owner Cendant (now known as Realogy) over the proper use of more than $40 million in annual contributions to a trust for the benefit of franchisees and the withholding of services required in the franchise agreements. These individual Century 21 real estate offices point to franchise agreements that require revenue from a so-called National Advertising Fund to be used for marketing for the benefit of Century 21 franchisees. According to court documents, Cendant has instead diverted the funds for its own benefit and the benefit of Century 21s competitors, including Coldwell Banker and ERA, both wholly owned by Cendant.

Newly released court transcripts indicate that Century 21 real estate franchisees might have clear cause to recoup some of their money via a class-action lawsuit against Cendant, which bought Century 21 back in 1995. In an August 17 ruling from the bench, New Jersey Superior Court Judge Robert Brennan indicated that the Century 21 franchises have an interest in ensuring that Cendant abides by the franchise agreement.

Importantly, the Plaintiffs in this case do not seek to change the franchise agreement, they simply want Cendant to abide by the terms of the agreement and to deliver the full panoply of benefits that it undertook to supply. No former franchisee has disavowed this goal.

Brennan added that the lawyers at Zwerling, Schachter & Zwerling LLP argued successfully for a class-action suit because they proved that all Century 21 franchisees were impacted by Cendants actions. The sheer number of potential plaintiffs more than 1,000 also helped qualify the matter for class-action status, he said.

Before its over, the class-action suit could include more than 4,000 individuals who held Century 21 franchises between 1995 and 2002.

"Class certification is a difficult hurdle to overcome," plaintiffs attorney Robert S. Schachter of Zwerling Schachter & Zwerling LLP told Law360. "You have to show why and how it's necessary, which we did. The judge found that we overcame that burden."

In 1995, former Century 21 CEO Richard J. Loughlin told the Orange County Register that Cendants purchase would have little impact on Century 21. The newspaper also quoted one franchisee saying that she hoped the purchase might mean more money to promulgate more sales.

But the lawsuit, which was filed in 2002, contends the opposite happened: that following the purchase, Cendant started using money from the National Advertising Fund to promote its other holdings, which included Century 21 competitors Coldwell Banker and ERA. Cendant also cut the Century 21 support staff from about 5,000 workers to fewer than 300 and trimmed Century 21s salesperson training and recruiting programs as well, the suit maintains. At the time of the purchase, Cendant was known as Hospitality Franchise Systems Inc.

Important ruling in Arab Bank terrorism funding case part of spiritual journey for Dallas attorney Mark Werbner

Wed, 25 Aug 2010 11:11:59 -0500

A recent ruling by U.S. District Court Judge Nina Gershon might be a major break in the case against Arab Bank, which plaintiffs claim is funding global terrorism. But to Dallas lawyer Mark Werbner, its one more step in an extended spiritual journey.

Werbner, co-founder of Sayles Werbner, is one of the lawyers representing plaintiffs in claims that Arab Bank has helped fund Hamas and other terrorist organizations in their attacks. About 200 plaintiffs including 50 U.S. families have signed on to the suit, which seeks $1 billion in damages from the bank.

D Magazine detailed how the case became a personal quest for Werbner: Werbner shifted from secular lawyer to Zionist activist in 1984, when he and his wife took a trip abroad with a group of Dallas Jews. Visiting Auschwitz, they saw the shower rooms where Jews were gassed; the ovens where their remains were burned; the shoes, eyeglasses, and luggage left behind. For Werbner, it was all suddenly much more than the history books. And from these camps, the group traveled to Israel.

This juxtaposition"coming from the ashes of the crematorium to the steps of the parliament in Israel," says Cheryl Pollmanwas transformative. After returning to Dallas, they joined just about every Jewish service organization in town. "It was like I had what I considered to be a fairly boring, average life, says Werbner. Suddenly I saw I had this great treasure of things that offered purpose, challenge, and adventure."

The protracted litigation which began in 2004 -- has tested both Werbners resolve and previous legal boundaries. The case is among the first to apply new provisions of the Anti-Terrorist Act, passed by Congress in 2001, in part to prevent the secret bank financing of international terrorism. Through the course of litigation, Arab Bank has steadily resisted the discovery efforts of the plaintiffs, many of whom have lost loved ones or been wounded themselves by terrorist attacks in Israel. The ruling from the Eastern DIstrict of New York instructed the jury that based on Arab Bank's resistence to producing discovery material requested by the plaintiffs, they may infer from that Arab Bank processed and distributed payments to terrorists on behalf of the Saudi Committee to Support the Intifada Al Quds.

"This ruling is an important turning point in this long-running terror financing case," says Mr. Werbner, lead counsel for many of the victims. "It clears the way for a jury trial in Brooklyn and represents a landmark ruling for Americans injured or killed by international terrorism."

The instructions have given new fire for Werbners fight on behalf of terror victims. And likely they have strengthened Werbners faith in both his cause and his case.

Anything you say can and will be held against you

Mon, 23 Aug 2010 16:02:28 -0500

Potential defendants in the BP oil spill prosecutionsand that list could be very long indeedneed to do two things: 1) keep their mouths shut and 2) settle in for a long, hard fight with the feds. This advice comes courtesy of Houston criminal defense attorney Dan Cogdell, of Cogdell & Ardoin, in an Aug. 22 editorial in the Houston Chronicle.

Cogdells editorial came out the day before federal prosecutors gather ammunition at the U.S. Coast Guard and the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement hearings on the BP disaster. The hearings began today in Houston.

Cogdell, who has represented numerous clients in environmental and white-collar criminal cases, admits that staying silent may seem uncooperative, but it will be the smartest path. The federal government is preparing its BP prosecutions across a variety of fronts, including the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Actand they wont just be seeking slaps on the wrist, Cogdell says.

First, the government will rely on the "Responsible Corporate Officer Doctrine," which allows Clean Water Act violations to be directed at even top corporate officers. Prosecutions under this theory have resulted in convictions of people who were not even at work sites and, in one case, a person not even working for a company but who had "honorary power." The Responsible Corporate Officer Doctrine may be the prosecutor's ticket to tag BP's hierarchical elite while soothing the related political nightmare currently facing the U.S. government.

With such threats looming, employees of BP and other companies involved must balance the idea of seeing justice done with protecting themselves and their employer. Taking the Fifth at this point may be the least popular but most prudent move, Cogdell writes.

Defendants have two other things working against them, Cogdell writes. First, to secure a misdemeanor Clean Water Act violation, the government doesnt have to prove intentional harm. It only needs to show that employees were negligent and failed to provide the proper care to avoid an accidenta much lower bar for prosecutors. Second, this is not BP's first rodeo, according to Cogdell.

A company culture that prosecutors contend encourages money-saving over safety has landed BP in the government's sights time and time again, and will only bolster the efforts of Howard Stewart, the formidable top prosecutor on the BP spill.

Delaware Supreme Court ruling: investors in failed hedge fund gain important transparency

Wed, 18 Aug 2010 14:14:44 -0500

Houston law firm Ahmad, Zavitsanos & Anaipakos have earned a significant court ruling that helps lift a veil of secrecy that has allowed hedge funds to avoid disclosing the identities of their investors. In its August 12 ruling, the Delaware Supreme Court rejected the idea that federal law keeps investors who suffered hedge fund losses from learning who else might be interested in joining an investigation or a lawsuit against fund managers or third parties like auditors.

The ruling from Delawares highest civil court stems from a case involving Brown Investment Management, L.P., a limited partner that invested in Plano, Texas-based hedge fund, Parkcentral Global. In less than 90 days, Brown Investment Management lost all of its investment in the hedge fund. Parkcentral Global is now a liquidated hedge fund run by affiliates of billionaire and former presidential candidate H. Ross Perot. Court documents show Parkcentral Globals loses at approximately $2.6 billion.

Hedge funds exploded in the last decade because pooled investments provide a largely unregulated way for hedge fund managers to make money for themselves. This ruling helps those who lost money in poorly-managed funds to find other investors and join together to take legal action, says attorney Amir H. Alavi, with Ahmad, Zavitsanos & Anaipakos who tried the case for Brown Investment Management. Hedge funds where managers lacked diligence and proper risk analysis can no longer use divide-and-conquer tactics to avoid responsibility for losses.

In Garderes Managing Partner Search, Goods Best

Wed, 18 Aug 2010 10:20:17 -0500

Much has changed in the legal world since Steve Good began his first term as Garderes managing partner back in 2000. Under Goods leadership the firm doubled its profits, expanded its expertise and added new offices, among other things.

Facing a term limit that would have prevented Good from serving a third term as managing partner, Garderes Management Committee realized that a shake-up at the top was unnecessary and voted instead to waive the partnership agreement in his case and allow him to serve another term. The popular Mr. Good will now continue as managing partner until 2017.

The decision to extend his term was an overall vote of confidence in the work Mr. Good has done since becoming Managing Partner, according to committee member Eric Blumrosen. Gardere has seen its profits more than double under Mr. Good's leadership. In that same period, the firm also went from three offices to four as he was instrumental in adding the Austin office which provides legislative and regulatory services. The firm also has offices in Dallas, Houston and Mexico City.

"In this job, you want to look around at the end of the day and see success not only for your clients, but also for your fellow lawyers and employees, says Mr. Good, who also maintains an active tax practice at Gardere.