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Wednesday
Oct052011

Practical Tips for Local Permitting

Andrew Upton authored an article in the Fall 2011 Boston Bar Journal on practical tips for local permitting.  Here is the link to the article:    http://www.bostonbar.org/pub/bbj/bbj_online/bbj1112/fall2011/PracticeTips1.pdf.

Thursday
Sep292011

Non-Compete Agreement Cannot Be Extended By Employer

By Damon M. Seligson, Esq.

In the case of EMC Corporation v. Arturi, et al., the United States Court of Appeals for the First Circuit ruled that an employer could not equitably extend a non-competition agreement with a former employee beyond the agreed-upon duration of the agreement, and instead is left with a damages remedy only.  

            In the underlying case filed in the United States District Court for the District of Massachusetts on the basis of diversity, the plaintiff, EMC Corp., sought, among other things, a preliminary injunction against its former employee, Christopher Blotto, forbidding violation of his employment agreement.  Specifically, EMC sought to enforce the agreement to enjoin Blotto from competing with EMC; from soliciting EMC’s customers and remaining employees; and from possessing and using confidential information gained while employed.  District Court Judge, Frank D. Saylor, IV granted a preliminary injunction as to the confidential information, but not as to competition or solicitation, declining on the ground that the contractual restrictions on these activities limited Blotto’s efforts for one year only, a period that had passed before any injunction could be issued. 

            EMC Corp. appealed to the U.S. Court of Appeals for the First Circuit.  Associate Justice David H. Souter (Ret.) of the Supreme Court of the United States, sitting by designation, wrote the decision.  

            In short, the First Circuit Court of Appeals agreed with Judge Saylor’s decision below.  Judge Souter noted that because the case was venued in federal court of the basis of diversity of jurisdiction, the law of Massachusetts governs.  In All Stainless, Inc. v. Colby, 364 Mass. 773, 308 N.E.2d 481, 485 (1974), the Supreme Judicial Court of Massachusetts stated that, after a non-compete expired, the only relief available to an employer for an employee’s contract breaches is monetary damages.  Accordingly, the First Circuit Court of Appeals denied EMC Corp.’s appeal. 

            Both Justices Saylor and Souter, however, expressly noted that an employer such as EMC Corp., which typically stands in a superior bargaining position relative to an employee, could have “contracted” around the issue.  In Arturi, however, EMC Corp. did not.  Thus, the request to extend the restriction period beyond the agreed-upon twelve months was denied.  

Going forward, the impact of Arturi will likely be that employers will contract around this issue by including a tolling of the term of restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach.     

            A copy of the opinion can be accessed at: http://www.ca1.uscourts.gov/pdf.opinions/11-1001P-01A.pdf

   

Friday
Sep232011

New Alcoholic Beverages Control Commission Member Named

Kathleen McNally to be Associate Commissioner of Massachusetts ABCC


Kathleen McNally was named this week to the three-member state Alcoholic Beverages Control Commission, which oversees liquor licensing activity in Massachusetts. She joins ABCC Chair Kim Gainsboro and Associate Commissioner Susan Corcoran. McNally worked as executive secretary and general counsel for the Licensing Board for the City of Boston from 1997 to 2002. Our brief canvas of professionals who have worked with McNally in the past revealed praise for her expertise, experience and calm demeanor.

September 23, 2011

 

Thursday
Sep152011

Damon Seligson named Super Lawyer

DSU partner Damon Seligson has been selected as a 2011 Massachusetts Super Lawyer for litigation by Super Lawyers magazine.  This is the 7th time Mr. Seligson has been selected by Super Lawyers magazine.

Thursday
Sep082011

Waiver of Subrogation - Good News for General Contractors

A recent Massachusetts Appeals Court case held that a waiver of subrogation clause was enforceable by the general contractor even though the general contractor failed to obtain a waiver of subrogation from a subcontractor as required by the general contract.  In North Am. Specialty Ins. Co. v. Payton Constr. Corp., Appeals Court No. 09-P-1391 (September 8, 2011), the all risk insurer sued a general contractor and two subcontractors as subrogee to the project owner after the insurer paid a claim for fire damage.  At issue was the American Institute of Architects A201 General Conditions, which contains the waiver of subrogation language.  That provision waives either party's rights against the other for claims covered by property insurance.  Therefore, when a property insurer pays a claim, even though it subrogates to the rights of that particular party (the owner in this case), the parties had previously waived those rights against one another and the insurer has no recourse.

The waiver of subrogation provision also required the general contractor to include similar provisions in its subcontracts with all of its subcontractors.  In North Am., the general contractor did not procure a waiver of subrogation with one of the subcontractors that was alleged to have caused (at least in part) the fire.  The insurer argued that the general contractor's failure to obtain a waiver of subrogation from the subcontractor was (1) a material breach of the general contract; and (2) as such, the entire waiver of subrogation provision was void and unenforceable.

The Superior Court and the Appeals Court disagreed.  The Appeals Court succintly held, "that the failure of a general contractor to obtain a waiver from a subcontractor under the AIA contract, in circumstances such as presented here, does not invalidate the subrogation waiver, nor does it render it unenforceable.  In short, the insurer, North American, is bound by the subrogation waiver set forth in the AIA contract at issue."

The waiver of subrogation clause is one of the most important clauses in a construction contract because it defines and limits risk.  This case is significant because (1) it enforced the waiver of subrogation clause; and (2) it enforced the clause even though there was a technical violation of the clause by the general contractor.  It is in the best interests of all parties to a construction project to have appropriately drafted waiver of subrogation clauses in all contracts.  However, in the event aproject participant does not consent to such a clause, this case makes it clear that a party that has a waiver of subrogation clause in its contract can utilize it, and it will be enforced.