Category Archives: Business

Online Business Defamation and Public Forum Websites — Part II

By Andrea Jacobs 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 Corey Giroux 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.

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

By Strang Scott 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.

Jury Awards $1,000,000 For Business Defamation Claim

By Chris Strang on August 3, 2017

In a recent decision in Dallas, Texas District Court, a jury awarded $1,000,000 in damages to a wedding photographer due to defamatory statements published in the media, and in particular on internet sites and social media.

Every business owner fears the damage that negative comments made online can do to their reputation. With the advent of social media and ratings websites, any post can take on a life of its own, making its way around the world. In many cases there’s not much a business owner can do to combat negative opinions. However, when the posts are actually false and defamatory there may be recourse.

In this instance, an unhappy bride and groom went public with their dispute over a $125 fee with their wedding photographer. Instead of sticking to the facts, a jury found they went far beyond that. The jury’s opinion was that many of the statements, including that the photographer stole money and did this to many other customers, were malicious and defamatory. The photographer put on evidence of severe decline in revenue immediately following the statements. The jury compensated her $1,000,000 as a result.

While the case remains subject to appeal, it gives hope to business owners that enraged customers might think twice before getting carried away with online retribution. If false and defamatory statements are posted about your business online, you should consult with an attorney that practices online business defamation law to consider your options.

Online Business Defamation and Public Forum Websites

By Andrea Jacobs on July 15, 2017

All publicity is good publicity — or so the saying goes. Nevertheless, it’s safe to assume that businesses saddled with false and misleading reviews on public forum websites, such as Google, Yelp, Angie’s List and other rating websites, would strongly disagree.

People leave reviews on such sites for many reasons: to reward good service, to offer legitimate advice, to warn of a bad experience and for other reasons. While bad reviews may be rightly earned, what happens when that is not the case? In other words, what can a business owner do when false and misleading reviews harm business?

In Massachusetts, a business may have a claim for online business defamation. An online business defamation claim contains five elements. In order to prevail on such a claim, a business must prove, “(1) that the defendant published a written statement; (2) of and concerning the plaintiff; that was both (3) defamatory, and (4) false; and (5) either caused economic loss, or is actionable without proof of economic loss.” Noonan v. Staples, 556 F.3d 20 (1st Cir. 2009). Further, a statement is considered defamatory when it, “may reasonably be read as discrediting [the business] in the minds of any considerable and respectable class of the community.” Clay Corp. v. Colter, 2012 Mass. Super. LEXIS 357 (Mass. Super. Ct. 2012).

Who is responsible to the business for a defamatory review? While it is tempting to want to pursue the public forum website itself, federal law, specifically, Section 230 of the Communications Decency Act (“Section 230”) limits whom businesses can hold legally responsible for defamatory postings. 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. As a practical matter, claims against the Googles, Yelps and Facebooks of the world present significant additional challenges and businesses are 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.

Should you find your business interests harmed by false or misleading statements on the internet, you’d be well-advised to consult an attorney concerning the potential rights and remedies available to you.

New Hampshire Supreme Court Denies Consumer Protection Act Claim in Real Estate Transaction Gone Bad

By Corey Giroux on June 15, 2017

In the recent case of Fat Bullies Farm, LLC, v. Lori Devenport et al., the New Hampshire Supreme Court had occasion to consider whether a series of less than truthful representations made by a prospective purchaser in the course of negotiating a real estate transaction gave rise to liability under NH RSA 358-A, New Hampshire Consumer Protection Act (the “Act”).

After a trial in the matter, the Superior Court determined that the plaintiff and counterclaim defendants, Fat Bullies Farm and its principals, were liable for an award of enhanced damages – double attorney’s fees and double costs – pursuant to the Act. On appeal, Fat Bullies Farm and its principals argued that the trial court erred in determining that the conduct underlying the award was sufficient to support liability under the applicable legal standard – that is, that the conduct was sufficiently unfair and deceptive to meet the “rascality test” for determining liability under the Act.

The Act proscribes unfair and deceptive practices in commerce generally, and provides an inexhaustive list of specific types of conduct that give rise to liability under the Act. For conduct not specifically listed, courts in New Hampshire consider the conduct complained of under the Act’s general proscription against unfair and deceptive conduct. When considering whether any particular conduct not proscribed in the Act nevertheless supports liability, New Hampshire courts consider the conduct against the so-called “rascality test.” Under the “rascality test” the conduct complained of must “attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” As a practical matter the court seeks guidance from the Federal Trade Commission Act (the “FTCA”) to determine whether such conduct runs contrary to the “rascality test” and offends the Act.

The FTCA test considers whether the complained of activity offends public policy as embodied in other statutes, the common law or otherwise offends established norms of fairness, whether the conduct is immoral, unscrupulous, oppressive or unethical or whether it causes substantial harm to consumers.

In the instant matter, the trial court found that Fat Bullies Farm’s conduct, which consisted of a course of unscrupulous behavior including misrepresenting their intentions for the future of the real property included in the proposed transaction, along with certain other selfish bargaining and business dealing tactics, was sufficient to establish liability under the Act.

The Supreme Court disagreed with the trial court’s decision, however, and held as a matter of law that misrepresentations concerning future uses of real property to be purchased could not give rise to liability under the Act if not contained in writing, because oral promises concerning real property are unenforceable under the Statute of Frauds. The Supreme Court noted that even though Fat Bullies Farm’s misrepresentations encouraged property owner to sell the property to them, a course of misrepresentations of intent were not enough to support liability under the general proscription of the Act and the “rascality test” absent more.

Each decision concerning liability under the general proscription of the Act and the related “rascality test” is inherently fact based, and therefore may not serve as strong precedent for future decisions of the Court. Nonetheless, the Fat Bullies Farm decision further underscores the larger body of New Hampshire Supreme Court jurisprudence that demonstrates a pattern of restraint in its application of the Act to business dealings. While other states with similar statutes apply the remedies offered by the Act liberally, the New Hampshire Supreme Court applies the remedy sparingly, and potential litigants should not be confident that, absent extraordinary circumstances, the Act provides redress for unscrupulous conduct in business dealings. To consider whether the circumstances of your dispute merit consideration of a claim under the Act, litigants are well-advised to contact a New Hampshire litigator.

Property Owners and Landlords Beware: New Ruling Clarifies Restriction on Claims to Remove Holdover Owners and Tenants After Foreclosure

By Strang Scott on June 5, 2017

Every eviction action centers on one or both of the following issues: which party is entitled to possession and what amount of damages are appropriate. Recently, the Massachusetts Appeals Court faced a unique set of facts with regard to the right of possession in Fed. Nat. Mortgage Ass’n v. Heather Gordon, et al., 2015-P-0441, and reaffirmed the requirement for post-foreclosure owners to resort to summary process to remove holdover owners and tenants.

In Nat. Mortgage Ass’n, the occupants of a property in Roxbury appealed from a judgment in favor of Fannie Mae, the party obtaining title to the property after foreclosure, from the Boston Housing Court. The occupants argued Fannie Mae’s common-law trespass claim against them was barred by statute and that Fannie Mae failed to obtain actual possession of the property before filing its claim. The occupants previously entered into a 3-year residential lease with one of the former owners of the property who lost title at foreclosure. Interestingly, the lease was executed after the date of foreclosure and after Fannie Mae filed a summary process action against the former owner. The former owner moved out of the property several months after signing the lease and the occupants moved in. Once Fannie Mae learned the occupants had taken possession, it brought a separate action for common-law trespass against them. The Boston Housing Court entered judgment awarding possession to Fannie Mae.

The occupants argued on appeal that Section 18 of Massachusetts General Laws Chapter 186 prohibits property owners from bringing common-law trespass actions against holdover former owners or tenants and requires resort to summary process to lawfully regain possession. The Appeals Court agreed with the occupants, reaffirming the Supreme Judicial Court’s holding in A.G. v. Dime Sav. Bank of N.Y., 413 Mass. 284 (1992). The Appeals Court held that the former owner occupied the property at the time of foreclosure and that the occupants became holdover tenants. The Court went on to hold that the occupants’ status in relation to the property could not be treated as different or lesser than that of a holdover tenant without attributing actual or constructive knowledge that the occupants knew the former owner did not have title when signing the lease or when they moved into the property. The Court declined to create an expectation that residential tenants would need to take steps to make sure their landlord has title to a property before entering into a tenancy. Under the ruling set forth in Fed. Nat. Mortgage Ass’n, post-foreclosure owners may not bring a trespass action against holdover tenants who remain in possession, even where that holdover tenant’s leasehold rights arose after the date of foreclosure, but before final judgment for possession in favor of the foreclosure purchaser.

The Appeals Court also held in favor of the occupants’ argument that Fannie Mae never took actual possession of the property. Actual possession is one of the elements claimants must prove in order to succeed on a common-law trespass claim. In holding for the occupants, the Court reaffirmed the ruling in Dime Savings that actual or constructive possession by an owner asserting a trespass action cannot be maintained when the property is actually possessed by another. The Appeals Court clarified that “actual” possession does not terminate the minute the former owner vacates the property and that the facts presented in Nat. Mortgage Ass’n showed that the execution of the lease and surrender of possession to the occupants did not “indicate [the former owner]’s surrender of possession in relation to others [namely, Fannie Mae] who might claim title.” To the contrary, the facts suggest the opposite and that a gap in time between when the former owner vacated and the occupants took possession cannot signify surrender of actual possession by the former owner. The Court determined that surrender of possession is a factual dispute “to be determined by the intent as expressed by words and acts of all the parties in the light of the circumstances” and the facts presented suggested that the former owner intended to remain in possession after she moved out, regardless of the pending summary process action against her by Fannie Mae.

The outcome of Fed. Nat. Mortgage Ass’n further emphasizes the strict conformity Massachusetts require in connection within regaining possession and the necessity for landlords and residential property owners to undertake summary process to protect and enforce those rights. Evicting holdover tenants and former owners can be a complicated and fact-specific process. As such, you should contact an experienced attorney to ensure the proper timelines and steps are taken to evict a tenant.

Purchasing At Foreclosure? Foreclosed owners may remain in possession longer under new Housing Court ruling

By Strang Scott on April 10, 2017

By Jennifer Lynn, Esq.,

The required timeline for notice of eviction to holdover former homeowners was recently altered by the Southeastern Division of the Massachusetts Housing Court in Lenders Comm. Finance LLC v. Pestilli, et al., docket no. 16H83SP03779BR. After obtaining title, Lenders Commercial Finance brought a summary process action against the former-mortgagor who refused to vacate after receiving a 30-day notice to quit. The bank moved for summary judgment, requesting the court to enter judgment in its favor because no facts were disputed between the parties and it brought a valid action to evict. In a departure from long-standing practice, the court ruled that Section 12 of Massachusetts General Laws Chapter 186 requires service of a 90-day notice to quit in order to regain possession from the holdover former-mortgagor properly. The court based the ruling on the fact that no agreement existed between the purchasing mortgagee and the former mortgagor to pay rent for any definite rental period. This ruling is a marked departure from the longstanding principle that a former-mortgagor, as tenant-at-sufferance, is only entitled to “reasonable” notice prior to eviction, and customary practice provided 30 days’ notice to the holdover occupant.

The court’s ruling in Pestilli is an unpublished district court decision and stands only as persuasive authority for future summary process decisions. The ruling, however, may signal a shift in Massachusetts housing courts toward statutory interpretations that provide foreclosure occupants a longer period of notice before the mortgagee regains possession of foreclosed property. Should the standards set forth in this ruling be adopted widely, the timeline for eviction will be extended, creating additional burdens for the foreclosure purchaser and increased overall costs. In addition, the change will likely create an increase in “cash for keys” deals, under which the purchaser offers a deal to the former-mortgagor to vacate voluntarily and to forego challenging the right to possession. Evicting holdover tenants and former homeowners can be a complicated and fact-specific process. As such, you should contact an experienced attorney to ensure the proper timelines and grounds for eviction are present.

Show Me the Money: When Payment is Due on Massachusetts Public Construction Projects

By Andrea Jacobs on April 5, 2017

Traditionally, general contractors on Massachusetts state-level public construction projects employed one of two types of risk allocation provisions in payment clauses in their subcontracts with subcontractors: a “pay-if-paid” or a “paid-when-paid” clause. This changed, however, due to a 2004 Massachusetts court decision that largely did away with condition precedent payment clauses commonly referred to as “pay-if-paid” clauses. While the differences between the two clauses may not jump off the page, the use of one rather than the other had a significant impact on a subcontractor’s right to collect payment from the general contractor.

“Pay-if-paid” clauses create a condition precedent to payment. That is, a subcontractor has no right to be paid for completed work until or unless the general contractor received payment from the owner. “Pay-when-paid” clauses create no such condition precedent to subcontractor payment. Rather, a “pay-when-paid” clause is a timing provision; that is, the general contractor has a ‘reasonable time’ to obtain payment from the project owner, but in the event the owner does not pay the general contractor within a ‘reasonable time’ the subcontractor retains the right to collect payment from the general contractor for its work. Ambiguous contract language often complicated the subtle, yet substantial, difference between the two types of clauses, leading to high stakes contract interpretation disputes.

In 2004, Massachusetts did away with the distinction between “pay-if-paid” and “pay-when-paid” clauses on state-level public construction projects. In, Framingham Heavy Equip. Co., Inc. v. John T. Callahan & Sons, Inc., 807 N.E.2d 851, 855 (Mass. App. 2004), the court reasoned, that absent express contract language, if “payment to the subcontractor is to be directly contingent upon the receipt by the general contractor of payment from the owner,” then the default interpretation of subcontract payment provisions, “should be viewed ‘only as postponing payment by the general contractor for a reasonable time after requisition … so as to afford the general contractor an opportunity to obtain funds from the owner.’” This decision virtually eliminated “pay-if-paid” in favor of “paid-when-paid” clauses on Massachusetts state-level construction projects.

While the holding in Framingham is generally good news for payment-seeking subcontractors, the issue remains, however, as to what a “reasonable time,” is to afford general contractors before general contractors must make payment to subcontractors should the owner not pay. In Framingham, the court determined that where the payment issues originated in December 1998 and continued through March 1999, that by the end of April 1999, “the general contractor had exceeded any reasonable period of time,” and thus the subcontractor’s claim for payment for completed work could not be defeated even though the owner had yet to pay the general contractor for the subcontractor’s work.

There has been no subsequent case in Massachusetts that further defines the “reasonable time” standard to determine when general contractors must pay subcontractors when the general contractor objects to making payment as a result of a “pay-when-paid” clause. Thus, subcontractors should be keenly aware of any developments in the law regarding what constitutes “reasonable time” for payment in connection with these provisions. If you have questions regarding payment issues on state-level public construction projects you should contact a Massachusetts construction lawyer.

Keeping up Formalities: Protecting Assets Across Commonly Owned Companies

By Andrea Jacobs on February 2, 2017

A recent Massachusetts Bankruptcy Court decision should serve as a clear reminder to business owners that, in order to enjoy the benefits that limited liability entities afford, one must respect established corporate formalities and comport business accordingly. Briefly, in In Re: Cameron Construction & Roofing Co., Inc. the Bankruptcy Court held that the assets of a Massachusetts limited liability company, closely related to a Massachusetts construction business subject to Chapter 7 bankruptcy proceedings, could be reached to satisfy the claims of the creditors of the construction business.

The two separate entities shared a common owner yet were formed as distinct enterprises. In this case, however, the Court determined that the owner controlled both the non-debtor LLC and debtor construction business and had allowed for the intermingling of assets. Further, the Court noted that the common owner “was thinly capitalized, and the two entities observed only minimal corporate formalities by filing separate tax returns and Annual Reports.” Thus, the Court held that ‘substantive consolidation’ was the appropriate remedy- effectively disregarding the sovereignty of the separate entities and combining their assets as a means to satisfy the liabilities of one. Had the owner resected the separate corporate forms of his commonly owned entities in his everyday operations he likely would have been in a better position to shield assets held by the non-debtor LLC from creditor access.