Publications

Weston Hurd’s Architects & Engineers Newsletter (Spring 2016) includes articles written by David Patterson and Frederick Bills that focus on: Assignability of Designer’s Contracts; The Loaned-Servant Doctrine and Design Professionals; The Clause Corner; and Are Design Firms Subject to Public Records Request?

The newsletter can be found by clicking: 2016 – Architects and Engineers Newsletter – April

Excerpts from the articles include:

ASSIGNABILITY OF DESIGNER’S CONTRACTS

Assignment of the Owner/Architect Agreement

Section 10.3 of the AIA B101 – 2007 precludes the owner or the architect from assigning the contract to a third-party without the written consent of the other party to the owner/architect agreement. This provision protects the owner from having to deal with a design firm other than the one that was originally selected for the project. By the same token, it protects the architect from having to deal with a different entity than the entity with whom the architect agreed to provide design services. Without such a provision in the contract, either party could assign their contractual rights and obligations to a third-party who had no involvement in the original planning or designing. When an assignment occurs, the party taking on the assignment (assignee) assumes all the rights and obligations of the assigning party (assignor). The assignee steps into the shoes of the assignor and assumes all of the assignor’s contractual obligations and rights. The Restatement Second of Contracts defines an assignment of a right as “a manifestation of the assignors’ intention to transfer it by virtue of which the assignors’ right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.”  Restatement Second of Contracts, Section 317 provides: (1) an assignor may assign any right unless doing so would materially change the obligation of the obligor, materially burden him, increase risks, or otherwise diminish the value to him of the original contract; (2) statute of public policy forbids assignments; or (3) the contract itself precludes assignment. READ MORE 2016 – Architects and Engineers Newsletter – April

THE LOANED-SERVANT DOCTRINE AND DESIGN PROFESSIONALS:

CONTRACTUAL CONSIDERATIONS IN LOANING EMPLOYEES TO ANOTHER DESIGN FIRM

Given the present state of the design industry field and the economy, it is not uncommon for architectural and engineering firms to at times loan or lease one or more of their employees to another firm to assist in completing the design of a project.  The loaned employee may have expertise that a firm lacks specific to a particular type of design, or a firm may simply require additional staff to complete its scope of work on a project.  Whatever the case, it is important for design firms to understand how loaned employees on a project may impact their liability exposure, and the manner in which firms loan employees to another can have a significant impact.  In Ohio, the loaned-servant doctrine may affect the loaning firm’s liability.

The loaned-servant doctrine generally provides that an employee loaned by one employer (the “general employer”) to another employer for the purpose of completing a particular scope of work must be considered an employee of the borrowing employer for all acts completed within that particular scope of work, even though the employee remains employed by the general employer during that period.  Halkias v.Wyckoff Co. (1943), 141 Ohio St. 139. The doctrine has various applications depending on the posture of a case. READ MORE 2016 – Architects and Engineers Newsletter – April

THE CLAUSE CORNER

When tasked with loaning an employee to another design firm for completion of a particular project, the loaning design firm should specify its agreement with the borrowing firm in the form of a contract.  The contract should outline the scope of work to be completed by the borrowed employee and should include language similar to the following:

In return for good and valuable consideration, the sufficiency of which is acknowledged by the Parties to this Contract, Loaning Design Firm hereby agrees to provide the Employee to Borrowing Design Firm on a limited basis for the completion of Project X.  The Loaning Design Firm and Borrowing Design Firm have knowingly entered into this agreement with the understanding that, for the purposes of completing Project X, the Employee will be under the exclusive control of the Borrowing Design Firm for completion of the Employee’s scope of work related to Project X.  The Parties hereto state and acknowledge the following:

1. The use of the Employee by the Borrowing Design Firm shall be limited to the completion of Project X;
2. The Employee offers a unique set of skills particular to the completion of Project X;
3. The tools and/or instrumentalities necessary for the Employee to complete his scope of work shall be provided by the Borrowing Design Firm. Any use of tools and/or instrumentalities provided by the Loaning Design Firm by the Employee for the completion of Project X will be compensated for by the Borrowing Design Firm;
4. The Borrowing Design Firm agrees to provide professional liability insurance, workers’ compensation insurance, workers’ compensation coverage, and any other insurance that may be required by law and/or pursuant to the terms of the Project X contract to cover the Employee’s scope of work in relationship to Project X;
5. The Borrowing Design Firm agrees to defend and indemnify the Loaning Design Firm for any and all claims and/or causes of action which may arise from the Employee’s scope of work on Project X;
6. The Borrowing Design Firm shall compensate the Loaning Design Firm for use of the Employee for a fee in X amount and at an hourly rate of X.

ARE DESIGN FIRMS SUBJECT TO PUBLIC RECORDS REQUEST?

Your design firm has recently completed a project for a local school district and now receives a public records request from the local paper, taxpayer, or disgruntled contractor.  Your immediate reaction is that your firm is not a public entity and therefore not subject to a public records request. Your response to the requesting entity is to advise them that you are not subject to the request and therefore do not intend to provide the requested documents. The requesting authority then files a mandamus action in common pleas court asking for the records to be produced, but also requesting court costs, attorneys’ fees, and statutory damages.

The Ohio Record Act, R.C. 149.43 provides the following:

“Public Record” means records kept by any public office, including, but not limited to, state, county, city, village, township, and school district units, and records pertaining to the delivery of educational services by an alternative school in this state kept by the non-profit or for-profit entity operating the alternative school pursuant to Section 3313.533 of the Revised Code.” READ MORE 2016 – Architects and Engineers Newsletter – April

You receive an internet inquiry for a specific vehicle you have for sale.  The potential purchaser is from Virginia.  The transaction is negotiated by telephone and email transactions.  After you have successfully negotiated the sale of the vehicle, you obtain all of the pertinent customer information on the credit application.  Further, your customer wants all of the sales documents overnighted to him at an address other than his home or work address.  The reason he claims is the vehicle is a surprise for his wife and he does not want her to see the paperwork.  Further, he does not want to mix his personal affairs with his business affairs so he does not want the paperwork sent to his office.  Your internet sales people do not find this strange since you have negotiated internet sales before and customers have requested the sales documents be sent somewhere other than their home address.  The sales documents are returned to the customer with all of the necessary paperwork executed.  You have a copy of the purchaser’s driver’s license and executed credit application, buyer’s order and retail installment contract.  You are willing to deliver the vehicle to the customer, however, the customer states that he will pick up the vehicle at the dealership.  You make arrangements for the delivery at a specific time and date.

Delivery day arrives. The customer calls and says he cannot make it, however, he is sending his son to pick up the vehicle and he will be there at the appointed time.  Later, the customer calls and indicates that his son is running late and will be there very close to or soon after closing.  You agree to deliver the vehicle after hours.  The son shows up and you deliver the subject vehicle.

Approximately 45 days later, an individual contacts you asking why he received a memo title and a payment book from the bank relative to the purchase of a vehicle from you. You indicate that he purchased a vehicle from the dealership and he disclaims any knowledge of the transaction.  Thereafter, you receive correspondence from the individual’s legal counsel and it is readily apparent that the individual’s identity has been stolen and the sale of the vehicle was fraudulent.  What are your obligations?

The facts in the above scenario are real.  Recently, this author has been involved in several identity theft sales situations and it must be noted that the facts in each scenario are not significantly different than those stated above.  Let me drill down to some additional facts that were not contained in this scenario.  First, the purchaser’s photo on the driver’s license was a magnificent fake.  The vital information on the driver’s license was the same as the information contained on the buyer’s order as far as home address, name and identification.  However, the photo on the driver’s license was a complete forgery.

In addition, the telephone number that was provided was a temporary phone number and, was more than likely one of those throw away cell phones with a limited amount of time and usage.  Further, the purchaser’s place of business was almost accurate.  The perpetrators took a small company and changed its name very subtly, provided an address close to the actual company and provided a telephone number.  Again, the telephone number was more than likely one of those limited usage cell phones.  Therefore, when the number was called, an individual acting as the receptionist answered the phone.  It must be noted that the perpetrators went to great lengths in order to commit the crime.  Also, in each case, the vehicle being purchased was not a new vehicle but was a late model, low mileage, high end used vehicle.

How does the dealership protect itself against this type of fraud and theft?  First, there is no one right answer.  In the above scenario, litigation or settlement of the theft of the vehicle and damage to the individual’s identity are issues that will be left up to the insurance companies to resolve.  Obviously, the dealership should be reimbursed for the theft of the vehicle since it will be covered under theft by deception. Damage to the individual whose identity was stolen should be covered through, not only a monetary settlement, but correcting any and all of the individual’s credit ratings and credit bureau listings.

I know you are asking the primary question that I specifically asked which is, “What responsibility does the finance company have relative to the approval of the financing for the purchase of the vehicle?”  Relatively speaking, when a credit application is provided, the dealership relies on the information provided by the customer and submits to the financial institution to review the credit application and verify the information contained therein.  As of the writing of this “You Auto Know,” we do not have a definitive response from the bank regarding its due diligence in investigating and approving the loan.  This is particularly disturbing since when this matter came to my attention, I not only called the phone numbers and found out they were not active, but Googled the place of employment on the credit application and found out that it did not exist.  I called the actual company and, obviously, the individual listed on the credit application was not employed there.

Strictly speaking for the dealership, there are a couple of proactive measures the store can take in order to protect itself.  One, state that any and all paperwork be sent to the address on the buyer’s order.  If it is a business, have the F & I manager Google the business and verify its veracity and Google the person’s name and address to confirm the information.  Second, a driver’s license of the purchaser is mandatory.  Third, have the F & I manager call the business that he found on Google and attempt to determine if the individual is employed there.  Fourth, if the actual buyer cannot pick up the vehicle and sends someone else, demand a copy of the driver’s license of the individual picking up the vehicle and insist that the vehicle has to be picked up during normal business hours on the premises at the dealership.  Next, videotape the delivery so you have actual footage of the individual taking delivery of the vehicle.  There are other things the dealership can do, but for the sake of brevity, the ones listed are the most common sense and easily implemented steps to take.

The first line of defense the dealership has in defending itself regarding this type of situation is information.  The more information the dealership has of the individual purchasing the vehicle, the better it can assess whether or not the transaction is legitimate and/or to present to a court that the dealership took all reasonable steps to determine that the purchase was legitimate.  The next step is to contact your legal counsel and insurance company and follow their advice and, if necessary, file a stolen vehicle report.  As the late, great President Reagan used to say, “Trust but verify.”

2016 – You Auto Know! – Identity Theft – March

In a three part series for the Estate Planner newsletter, Weston Hurd partner, Angela Carlin, poses the question Does Ohio Recognize “Virtual Adoption”? 

In Sanders v. Riley, No. S14A1314, decided March 16, 2015, the Georgia Supreme Court upheld the equitable doctrine of virtual adoption when it reversed a trial court’s judgment in favor of Curtis Riley, who contended that his half-sister, Shalanda Sanders, had failed to prove an inheritance claim from their father, Clifford Riley, under the equitable doctrine of “virtual adoption.”

This is another case where disputes among family members may be avoided by an individual, here father Clifford Riley, if he had the basic estate planning documents: a Will, a Trust, if proper, a Durable Power of Attorney, a Health Care Power of Attorney, and a Living Will.  Unfortunately, Clifford died without a Will or a Trust identifying his beneficiaries. This case also illustrates that once a child, Shalanda, has been “virtually adopted” by her adopting father, Clifford, a later relationship between the child and the child’s natural or biological father does not sever the previous virtual adoption by another person.

Read more about “Virtual Adoption”: 2015 – Does Ohio Recognize Virtual Adoption – Parts 1-3

One day you receive a certified letter from a law firm.  You open the letter and it briefly states that the firm has reviewed your website and that you are in violation of the Americans with Disabilities Act (ADA).  You scratch your head and think, “Well, my building is ADA compliant.  What in the world is this all about?”  Welcome to a new area of litigation.

The facts in the scenario are absolutely true. Read this issue of You Auto Know! to learn more about ADA website compliance. 2016 – You Auto Know! – Americans with Disabilities Act Website Compliance

On January 29, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) and the Obama Administration unveiled a new proposed rule that would require employers with a 100 or more employees to disclose hours worked and compensation for employees by gender, race and ethnicity.  Employers would be required to report this information on revised employer information reports, also known as EEO-1 reports.  This rule would cover more than 60 million employees.

Weston Hurd is pleased to announce that Matthew C. Miller has been named a Partner of the firm effective January 1, 2016.

Matthew focuses his practice on commercial and business litigation, employment litigation, creditors’ rights, business transactions, and real estate matters. He has specific experience representing automobile, truck, motorcycle, and recreational vehicle dealers with respect to administrative and regulatory proceedings, consumer claims, dealer compliance programs, manufacturer disputes and commercial transactions. Matthew also represents clients in shareholder disputes, non-compete and non-solicitation agreements, and trade secret actions.

Matthew joined Weston Hurd as an associate in 2009 after receiving his J.D. from Cleveland-Marshall College of Law and obtaining his Ohio Bar admission. He received his B.S.B.A. in 2006 from Bucknell University. Matthew has admission before the United States District Court for the Northern District of Ohio, the United States District Court for the Southern District of Ohio, the United States District Court for the Eastern District of Michigan, and the United States District Court for the Northern District of Indiana.

He is a member of the American, Ohio State and Cleveland Metropolitan Bar associations and since 2015, Matthew has been named an Ohio Rising Star in business litigation by Thomson Reuters.

2016 – Matthew Miller Named Partner – January

Practical tips at the end of the year for automotive dealers in Bob Poklar’s You Auto Know! – Get Back to Basics and Christmas Cheer.

2015 – You Auto Know! – Get Back to Basics and Christmas Cheer – December

The Ohio November election will have an issue that, if passed, will amend the Ohio Constitution to permit medical and recreational use of marijuana.  This You Auto Know is not going to get into the political aspect of the bill but will attempt a very brief overview of the legal issues. 2015 – You Auto Know! – Up in Smoke