E-mail alert 8-15-03

The McTexLaw Email Alert for August, 2003

In this issue, we look at the differences between covenants not to compete and non-disclosure agreements, hidden risks for an investor in a typical privately financed real estate deal, the challenges of suing Satan, and some new legal imports from Jamaica to California.

New on The McTexLaw Business Owner’s Resource Center:

Covenants Not to Compete vs. Non-Disclosure Agreements

Businesses can insure their fixed assets (machines, equipment, vehicles) to protect from loss. But if your business watches its most important income-producing assets leave the premises every day, in the form of the intellectual knowledge in the heads of your employees, how do you protect from loss of those assets, say when an employee leaves to start their own business or join a competitor? Stealing employer secrets and stealing a vehicle are actually quite similar and both can be devastating to the business without some means of protecting their value. This article looks at covenants not to compete and non-disclosure agreements in the contexts of three recent Texas cases.

New on The McTexLaw Commercial Real Estate Resource Center:

The “Whole Deal” Legal Principle: Private Investor Avoids Usury Claim

Typical deal: private financier of land purchase wants a separate deal with the borrower to earn additional money for services other than the lending of money. Upon default of the debt, Deadbeat Debtor claims the additional compensation “for services rendered” is really “interest”, making the whole deal “usurious.” The remedy is that the financier can’t collect the debt owed. The law considers all documents involved in one transaction as part of one transaction, and not separate deals. It’s what I call the “Whole Deal Principle.” How can an investor avoid this result when the court applies this principle? Click the headline to read a recent example of hard fought investor success, a July 23, 2003, case where everything that could go wrong, did. In re: CPDC, Inc.; Zer-Ilan v. Frankford, et al., Case No. 02-20197, United States Court of Appeals for the Fifth Circuit, July 1, 2003, revised July 23, 2003.

SUING SATAN; THE DEVIL’S IN THE DETAILS

Back in the ‘70s there was a saying that became popular (so I’m told, anyway): “the devil made me do it.” Now that’s what I call going after the source, the real cause of the problem. These days we just go after symptoms–alcohol, tobacco, obesity, etc. But back in 1971, Mr. Mayo wasn’t distracted with whatever form Satan may take from time to time. He sued the Devil.

And he didn’t pull any punches, either. Mr. Mayo claimed that Satan and Co., on numerous occasions, caused him misery, made unwarranted threats, placed deliberate obstacles in his path, and caused his downfall. By reason of those acts, Satan had deprived Mr. Mayo of his constitutional rights. The guy even asked the Court to make the case a class action! Talk about looking out for others.

Unfortunately, though, in the context of formal litigation a certain process must be followed before the substance of someone’s complaint can be addressed. For example, to begin a lawsuit the “plaintiff” must write down the problem, title the document with the name of the case, identify the various parties and tell how they can be notified of the fact that they’re being sued. When the “defendant” gets notice of the case, they must file an answer within a certain amount of time.

Suing the Devil obviously raises far more procedural issues than substantive ones. First, how to caption the case? Mr. Mayo chose “Mayo v. Satan and His Staff.” Second, how does one notify Satan of the case, and require him to appear and file an answer? No one seemed to have a clue. The unlucky judge assigned to hear this case also wondered how the court could ever obtain personal jurisdiction over Satan anyway, the power to make Satan abide by the decision of the Court.

And so, with no way to bridge the gap from the physical to the spiritual world, the judge dismissed the case, and did so without even being asked to dismiss it by anyone. Think this is made up? The decision is reported at “Mayo v. Satan and His Staff,” 54 F.R.D. 282(1971). What a spectacle it would be, though, if someone ever successfully put Satan on trial.

JAMAICAN ME A LAWYER, MON

Perhaps you remember the challenges Jamaica overcame launching their Olympic bobsled team. Disney even memorialized it in the movie “Cool Runnings.” Well, Jamaica has now targeted its next big challenge, opening their first law school. And this law school isn’t training lawyers to practice in Jamaica, mon. No, the Clarendon School of Law in Jamaica is preparing graduates for the California bar exam. It’s targeted for those who could not clear admissions stateside. As if California didn’t have enough problems what with the whole Gov. Davis recall situation.

Now I don’t know about you, but studying law in a beautiful tropical paradise isn’t exactly what I would consider an optimum use of available resources. I’d rather be snorkeling off a sailboat. But if the law must be studied, I’d be hard pressed to name a more beautiful (albeit distracting) setting.

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