Fourth Circuit Affirms Chapter 11 Dismissal
July 30, 2007
The Fourth Circuit, on June 15, 2007, affirmed the dismissal of a Chapter 11 reorganization petition filed by a tenant debtor in a commercial lease dispute. <i>Maryland Port Administration v. Premier Automotive Services, Incorporated (In re Premier Automotive Services, Incorporated).</i> As the Court of Appeals explained, the tenant had filed its Chapter 11 petition 'in order to forestall eviction on an obviously expired lease ' to prevent the [lessor] from evicting the debtor from the [lessor's] property,' seeking to tie up the landlord 'in endless, fruitless litigation.' According to the court, the Chapter 11 filing here 'demonstrate[s], unfortunately, how the good and useful ends of the bankruptcy process can be badly abused.'
Making Sense of Contra Proferentum
June 29, 2007
One traditional rule of contract interpretation is to construe contact terms in appropriate circumstances against the drafter, a concept often referred to as <i>contra proferentum</i>. This doctrine sometimes fits uncomfortably with two other views expressed by American courts. On one hand, many decisions say that insurance contracts are interpreted just like any other commercial contract. <i>See, e.g., Sims v. Mulhearn Funeral Home, Inc.</i>, ___ So.2d ___, (La. 2007); <i>Bear River Ins. Co. v. Williams</i>, 153 P.2d 798, 801 (Utah Ct. App. 2006). On the other hand, some decisions say without qualification that insurance contracts should be construed strictly against the insurer. <i>See, e.g., Carter v. Concord Gen. Mut. Ins. Co.</i>, ___ A.2d ___ (N.H. 2007); <i>Cinergy Corp. v. Associated Elec. & Gas Ins. Servs., Ltd.</i>, 865 N.E.2d 571, 574 (Ind. 2007). And sometimes a single opinion tries to express both at the same time: 'It is well settled that a <i>contract of insurance is no different from any other contract</i> and must be construed in a fair and reasonable manner, having regard to the risk and subject matter of the policy, and that special rules such as liberal construction in favor of the insured and against the insurer who drew the contract apply.' <i>In re New York Cent. Mut. Fire Ins. Co.</i>, 833 N.Y.S.2d 182, 183 (App. Div. 2007) (emphasis added).
In the Marketplace
June 28, 2007
Highlights of the latest equipment leasing news from around the country.
FTC and Texas AG File Suit Against IFC Credit
June 28, 2007
In yet another round of lawsuits stemming from the NorVergence telecommunications fraud, the Federal Trade Commission and the Attorney General of Texas filed simultaneous complaints in the U.S. District Court for the Northern District of Illinois and Harris County, TX, against Illinois-based commercial finance company IFC Credit for violating federal law by helping to finance the scheme and continuing to seek payment from defrauded NorVergence customers.
Is Your (Non-True) Lease a Sale?
June 28, 2007
Just in case the transaction you've just documented using your standard lease forms is not a 'lease,' you've included a granting clause in the form and filed UCC 'notice' filings. So, you've protected the lessor from a re-characterization risk (<i>i.e.,</i> that the transaction is deemed not to create a 'lease' under commercial law) — right? Well, maybe not.
Allocating Construction Obligations in Leases
June 28, 2007
One of the biggest areas of conflict after a lease is signed is the allocation of construction responsibility between the landlord and the tenant, but many of these problems are easily avoided by careful drafting and use of terminology at both the letter of intent and lease negotiation phases. Often, especially in the letter of intent, parties use terms that each thinks is perfectly clear, but actually mean different things to each of them. Below are some suggestions for how to handle these issues effectively.
The Leasing Hotline
June 28, 2007
Highlights of the latest commercial leasing cases from around the country.
Making the Work Letter Work
June 28, 2007
The Work Letter (sometimes referred to as a 'Construction Agreement' or 'Work Agreement') is the portion of a lease, usually an exhibit, setting forth the provisions relating to the build-out of the tenant improvements to be made to the space leased. Often dealing with very large expenditures, the Work Letter is an extremely important part of the Lease. However, perhaps because of the varying types of build-outs, with differing parties responsible, it is a document that often breeds considerable confusion. This two-part article discusses the three common types of office space build-out arrangements to which landlords and tenants might agree, how they differ, and how those differences are to be addressed in drafting the Work Letter.
In the Spotlight: Lease Commencement -- Getting the Ball Rolling
June 28, 2007
Sometimes the hardest part of a leasing relationship is getting started ' establishing if there will be contingencies, when they will expire, when the space will be delivered, and when the rent will commence. Often the transition is smooth, and everything falls into place. In other situations, however, coordinating the requirements, obligations, and schedules of both landlord and tenant feels like an in-air refueling of a jetfighter.
