For Businesses

Homeowner’s Association Defends its Residents Against Dream-Threatening Construction Defects

Posted on Mon, Aug 24, 2015 @ 3:43 PM

Rainwater on the outside of a home can be a blessing during the heat of a summer drought. But when that water gets inside—no matter the season—the damage can be devastating.

Residents of a condominium community experienced this disaster firsthand when a series of units across the neighborhood began struggling with water seeping from the ceilings and walls. The water ruined carpets and personal belongings, and it rotted away the underlying wood structures, causing mold to develop.

The homeowner’s association realized the damage was happening across many units. It wasn’t just a small problem—it was structure-wide. At the same time, they realized water bills across the neighborhood were increasing; the problem was both internal and external.

As the damage spread, the repair estimates started coming in. The destruction would cost hundreds of thousands of dollars to fix. Water was penetrating everywhere and the damage was major, even though the residences were less than ten years old.

The residents and homeowner’s association knew they had to do something to fix the problem, and they knew they had to act quickly to save their investment.

The homeowner’s association, tasked with overall governance, protection, and advocacy for the homeowners, had its work cut out. It was clear that this relatively new property had defects stemming from shoddy construction. In addition to dealing with daily reports of damage, they had to figure out where to begin assessing the original construction process to figure out where they went wrong. They were overwhelmed, and they turned to us for help.

Helping the homeowner’s association make things right

After hearing their story, we knew we had to take the case, even though construction cases are often incredibly expensive to prepare for court. Hiring experts to assess the underlying structural defects, as well as reviewing the building process, could be a very expensive investment for the homeowner’s association.

Unlike a lot of other law firms, we were ready and willing to take the case on a contingency basis. This was particularly important because many of the residents in the condos were retirees living on a fixed income. Had we not taken the case on a contingency basis, the homeowner’s association would have passed those fees on to the residents in the form of increased assessments. Those retirees could have been forced to choose between paying for medication and paying these extra fees—we were able to prevent that scenario.

We knew the right construction experts that could assess the structural damage by tearing down walls to figure out the underlying issues. It was a huge project—and we were ready to help.

Shoddy construction, defect disaster

What we discovered was appalling. The construction company had failed to install moisture barriers between the exterior and interior walls, which would have stopped the rain seeping into people’s living rooms. Additionally, they had also failed to follow the manufacturer’s instructions on various materials used in the overall construction project.

But for us, the icing on the cake was this: the construction firm failed to hook up the lines that fed water to the entire community. Water was leaking out underground, wasting a valuable natural resource and costing thousands of dollars in utility bills.

Fixing a defect—and making a wrong right

The builder initially refused to assume responsibility for their mistakes. We battled with them while they denied any wrongdoing, blamed it on the construction materials themselves, and claimed they weren’t liable for any internal water damage to the condos.

Thankfully, by using an Ohio Supreme Court ruling, we were able to apply pressure on the builder’s insurance company to encourage the construction company to do the right thing. We had to do a lot of extra homework on this one, but it was worth it. The homeowner’s association walked away with a substantial settlement that completely covered the cost of repairs, and it felt great to know these families would get their homes back to normal.

Home is where the leakage isn’t

The thing that touched us the most about this case was that a lot of these residents had put their life savings into these places. Many were retirees or empty nesters, and they felt safe investing in brand-new homes in a lovely community run by a great homeowner’s association. Before that “new house smell” had even worn off, they were fighting off rainwater. Then they had to deal with excavating the water lines to repair them, tearing out walls and carpets to fix the damage, and many other inconveniences to alleviate each construction defect.

It was just the opposite of the low maintenance lifestyle they were looking for when they bought the condominiums in the first place!

Today things are back to normal. The dream that these families bought into is finally real. They’re living in lovely, maintenance-free homes, and we’re proud to have helped them attain their goals. As part of our normal pre-trial process, we visited these condos, walked the grounds, and met the homeowners. It’s a practice we enjoy, one that we think really connects us to our clients. Drive through the neighborhood now, and you’ll see it’s a pretty place and home to some good people who really deserve it.

*Names in this article have been changed to protect our client’s privacy. 

The outcomes of any client’s case will depend on the particular legal and factual circumstances of the case.

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Real Estate Developers Battle Industry Tycoon with Help from Ohio Business Attorneys

Posted on Mon, Aug 17, 2015 @ 7:52 PM

An imposing land tycoon

Usually when we tell you about cases, the names are changed to protect the parties involved. This case is a bit different. It involves Austin Eldon Knowlton, the eccentric millionaire better known as Dutch. Dutch was a wealthy architect, businessman, and part owner of the Cincinnati Reds. He was also a shrewd real estate investor and industry tycoon.

Bad business practices

Our client, an Ohio real estate development company, was interested in growing its business and developing the community. So when they found a large property ideal for commercial development in the outer belt of Columbus, they contacted the owner, Dutch Knowlton. They made him a fair offer, which he readily accepted.

The agreement was contingent on the results of engineering and soil studies, which our client would pay for, to make sure the land could be developed commercially. Our client paid Knowlton an earnest money deposit of $250,000 to secure the agreement, and then proceeded with the studies. The studies went well, and our client was ready to close the deal and start their new real estate endeavor.

But Knowlton had sold the property to another buyer.

Before coming to us, our client sought assistance from another law firm in town. They hoped the other Ohio business attorneys could seek an injunction and help them recoup their losses. They were quickly disappointed. The developers were told all they could hope to recover was their earnest money, and that the legal fees to do so would likely be as much as the deposit. Knowlton’s deep pockets would allow him to drag the case out to ensure the developers would walk away with nothing but frustration and lost time.

Contingency-fee-based litigation

Thinking they had run out of options, the developers came to us because they heard we handled business litigation on a contingency-fee basis. This way they could afford to go after someone as rich and intimidating as Knowlton and still hope to recover a portion of their deposit. They were even more elated when we explained they could seek the lost earnest money as well as the amount of profits they would have earned had the commercial property been sold to them as initially agreed.

We set out to firmly establish the costs of real estate development and the potential profits our client would have made from the purchase. Using the records they supplied on previously-developed properties, we decisively proved that their profits would have been substantial.

Not seeing eye-to-eye

Usually parties involved in lawsuits see their sides very differently, but often as the case develops some middle ground is established and a settlement can be reached. Not Here. Knowlton’s legal team insisted we were barking up the wrong tree. They said our client wasn’t entitled to recover the profits or even the deposit.

Eventually they invited us to meet for lunch to discuss a settlement. Thinking they had finally come to see our point of view, we met with them. We sat down and things were very cordial. After some small talk, they finally presented their offer:

Knowlton was willing to pay for the lunch plus one dollar!

At that point, it was quite clear that Knowlton wasn’t ready to see eye-to-eye with our client.

Righting a deal gone wrong

The case went to trial. We were concerned about how the jury would react to Knowlton, because he had proven to be quite charming when we had taken his deposition. To our surprise, however, Knowlton didn’t bother to show—he had opted to go sailing instead.

We proceeded to present the facts to the jury and argued that in this instance, Ohio law entitled the real estate developers to receive lost profits in addition to their earnest money. The jury agreed and a substantial judgement was returned in favor of our client.

Not only did our client feel a sense of relief, but they were able recover the profits lost on a deal gone bad. They were able to use that money to grow their company and make future deals that improved the area. Without the ability to use affordable, contingency-fee-based litigation, they never would have been able to take down their wealthy, imposing opponent and right a business deal gone very wrong.

If you find yourself in a similar situation, don’t hesitate to reach out to the Ohio business attorneys at Cooper & Elliott for legal assistance. We’re here to help.

 

The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.

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Betrayed Trust and Livelihoods in the Balance: Ohio Malpractice Attorneys Find Justice

Posted on Tue, May 19, 2015 @ 4:36 PM

In this modern age of specialization, we rely now more than ever on experts to help us with complicated tasks. But what happens when there’s a breakdown in that trust? One of our clients found out the hard way.

A promising business is imperiled

Like a lot of inventors, Liam Moore* was extremely proud of his invention. While the terms of an eventual settlement prevent us from revealing the exact nature of his technology, Liam’s invention would change people’s lives—and provide him, his company, and his employees with considerable income.

Liam started small, gradually growing a company around his invention. He relied heavily on his lawyers and other experts who knew the ins and outs of the industry, especially in the matter of patents, a crucial element for a company like his.

For all his carefulness, however, he never anticipated the possibility that the experts he trusted so much would threaten his life’s work.

When you get a patent, as Liam had for his invention, you’re required to file certain paperwork and pay a maintenance fee in order to show the government that you’re using your invention. Otherwise, the government will open up the idea to the rest of the world.

For some reason, Liam’s patent lawyers, ostensibly experts looking after Liam’s own interests, missed one of his maintenance fee filing deadlines. By the time this was discovered, one of his most important patents had lapsed, and competitors were allowed to use and profit from his idea.

Liam’s invention was no longer his anymore, and competitors had taken advantage of their opportunity. Liam’s livelihood, and those of his employees, hung in the balance.

Layers and layers of a complex case

When Liam asked us to represent him, we knew we had our work cut out for us. This kind of case has many layers of complexity, because not only are we trying to prove relatively simple things—like how a law firm missed a filing deadline and failed to alert its client—but we’re also trying to prove there was patent infringement that resulted in damages (and what those damages actually were). We call that proving the “case within the case,” and it can become highly technical.

To further complicate things, deep emotions ran through this case. First, Liam felt a tremendous sense of betrayal from his original attorneys. Not only did those attorneys commit malpractice, but then as a defensive tactic, they actually started attacking Liam and the validity and quality of his patent.

Second, and most tellingly, this was a “bet-the-company case.” Losing the case could destroy the entire company, costing the jobs of everybody employed there.

We dove right in.

Our Ohio malpractice attorneys go to work

Believe it or not, the defendant law firm’s first argument was “no harm, no foul.” They assailed the patent itself, claiming that if it had ever been challenged, it would never have stood up. Then they pointed the finger at Liam: “We thought you really weren’t interested in this patent. Maybe you should have been a little more attentive to it. Maybe you should have told us more. How do we know that you really patented anything special?”

To fight on Liam’s behalf, we took a number of actions. Although the malpractice portion of the case was fairly straightforward, the “case within the case” more than made up for it in complexity.

One of the approaches we used for determining damages was to look at the products Liam’s competitors brought to market after his patent had lapsed. We had economists and experts identify those products’ market reach and analyze what royalties Liam would have received if somebody had been caught infringing on his product or patent.

We also had to become, in a sense, experts in Liam’s technology ourselves. To understand the case—the infringement, the damages, and everything in between—we had to work closely with industry experts to learn and understand the technology behind Liam’s product. Steeping ourselves in the engineering aspects of his invention allowed us to effectively and knowledgeably cross-examine our opponent’s experts and other witnesses.

While it doesn’t always pertain directly to the courtroom and the lawsuit itself, business cases (which may seem like dry affairs) still require caring and counseling. Our opponents had ruined the business Liam had spent years of hard work and sacrifice to build, and then attacked his invention and conduct. In such emotionally charged situations, providing stability, advice, and an outlet for our clients to express themselves—even if just to vent—can be invaluable to help them process what they’re going through.

Livelihoods preserved, justice served

In the end, all of the preparations and hard work paid off: The law firm settled fairly.

Needless to say, Liam was very happy and relieved. Not only would he and his employees have a chance to stay in business, but the spurious allegations about his invention and his handling of the patent were effectively disproved.

As it happens, this outcome turned out to be crucial. With the settlement, Liam was able to pivot his business and focus it on some of the other patentable ideas and products he had been developing. It enabled the company to stay in business, keep its employees, and maintain its operations.

For our part, we were gratified to see Liam not only get the justice he sought, but also be able to keep running the company in which he’d invested so much time, money, and passion. It was gratifying for us in another sense, too. For us as professionals, the kind of rigorous intellectual exercise that comes with preparing for a complex case, requiring a deep knowledge of a new industry, was as rewarding as it was challenging.

There’s a natural curiosity our lawyers have, about how the world works, and how people interact, and how the law should govern and support us. Add to that a passion for justice and helping people through their toughest times, and you can see why a difficult case like Liam’s didn’t scare us away—it just made us work harder.

*Names in this article have been changed to protect our client’s privacy.

 The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.

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Federal Judge OKs Multiple Cases Against Pilot Flying J for Fraud

Posted on Wed, Mar 25, 2015 @ 9:56 PM

Columbus, Ohio – Trucking companies represented by Cooper & Elliott in cases against Pilot Flying J for alleged fraud, breach of contract, and negligent misrepresentation will be allowed to continue their lawsuits. U.S. District Judge Amul Thapar rejected Pilot Flying J’s request to dismiss these claims. Requests by Jimmy Haslam (CEO of Pilot Flying J) and other executives to dismiss RICO conspiracy claims asserted against them in companion cases were also denied.

Pilot Flying J has already paid out nearly $85 million to settle an initial class action suit and another $92 million to the federal government that spared the company from criminal charges. However, not all trucking companies damaged by Pilot Flying J were part of this initial settlement.

These additional cases now move to the discovery phase, where the trucking companies can obtain emails and company documents from Pilot Flying J and require current and former employees and executives to give sworn testimony.

In April 2013, Pilot Flying J’s headquarters were raided by the FBI, which had investigated claims that the company deliberately withheld rebate payments from trucking companies and lied to the companies about how much they were owed.  To date, ten Pilot employees have pleaded guilty to mail and wire fraud charges arising from the long-running scheme, including Pilot’s former national sales director.

Pilot Flying J’s illegal rebate scheme – referred to within its sales force as “jacking the discount” – is yet another example of large-scale corporate greed.  Pilot Flying J is the largest seller of over-the-road diesel fuel in the United States, and its size and market share gave the company the chance to commit massive fraud.

According to court documents, in a recording made by an undercover informant, Pilot Flying J’s former vice president of sales indicated that CEO Jimmy Haslam knew of the scheme.

Trucking companies trusted that a company with Pilot Flying J’s size and reputation would deal honestly and fairly with them. Their trust was violated in the worst way. In an excerpt from undercover recordings made by the FBI, Pilot’s director of national sales was caught on tape explaining and teaching the fraud to other salespeople, including how to target less savvy trucking companies:

“Some of ‘em, some of ‘em don’t know what a spreadsheet is.  I’m not kiddin’.  So, again, my point is this: Know your customer… If the guy’s sophisticated and he truly has gone out and gotten deals from the other competitors and he’s gettin’ daily prices from us, don’t jack with his discounts, ’cause he’s gonna know, okay?… There’s guys that I move a penny, there’s guys that I move 15 cents.  I mean, it’s an art, it’s a feel, it’d do what you do.  It’s not do more, don’t, you know, don’t ever expose yourself…

I ask myself, is this a customer that I send a daily price fetch to?  Does he buy from anybody else?  Does he have any idea what cost-plus-4 means to his business?  Nope.  Has no clue.  Absolutely know [sic] idea.  Well, do I want to pay him $25,000?  Maybe… I look at my P&L, and my P&L says, ‘Huh.  I’m payin’ him $25,000 and we made $25,000 on it.  That’s not a very good deal for me.’  I’ll probably cut this one down to like 21.  This customer is not a very sophisticated buyer and he doesn’t know what we’ve done here, right?”

“The financial consequences to a small business dealing with a corrupt partner can be devastating,” said Chip Cooper of Ohio business litigation law firm Cooper & Elliott. “Standing up to big corporations like Pilot Flying J sends a strong message that they can’t get away with fraud just because they’re an industry leader or think their customers are too naïve to detect the fraud or too intimidated to cry foul.”

Cooper & Elliott has a long history of successfully representing small businesses against much bigger opponents. “The contingency fee-based representation we offer has allowed many small companies to take action, even though they may lack the resources to pursue behemoths like Pilot Flying J,” said Cooper.

The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.

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Thinking Out of the Box: How Complex Civil Litigation Helped a Diamond Merchant

Posted on Tue, Jan 27, 2015 @ 1:12 PM

Clients come to Cooper & Elliott because complex civil litigation is one of the areas where we excel. And because we want to help, there is nothing we dislike more than delivering bad news. And the initial news we had to give Henry Jackson* was devastating. 

Henry was a diamond merchant from New York who had come to Columbus for a jewelry show carrying a briefcase containing $1,000,000 in stones. He checked into a hotel and stored his precious inventory in the hotel’s safe-deposit boxes. It was standard operating procedure in his business, and he’d done it dozens of times over the years. He took the keys to the needed three safe deposit boxes, put them in his pocket, and then went up to bed.

Henry didn’t know it, but he—and everyone else in the hotel—was about to sleep through the kind of thing that’s supposed to happen only in the movies. A group of jewel thieves was about to pull off a heist months in the making.

The Hotel’s Insurance Liability

During the chaos of a hotel remodeling project, the thieves managed to obtain the hotel’s master key to the safe-deposit boxes and then alter the locks on the boxes so that the second key—like the ones that Henry kept with him in his room—weren’t needed to open them. And on the very night Henry checked in, the thieves made their play and walked away with millions in precious stones, which included Henry’s entire inventory and the inventory of several other diamond merchants.

The FBI eventually caught the thieves but didn’t recover the loot. Henry felt the hotel was at fault for the whole thing, so he wanted to sue.

After our first look at the case, we had to give him the bad news. The hotel’s liability for the theft was covered under Ohio’s innkeeper’s statute, which was unchanged from the 1800s. As long as a hotel had locks on the windows and a “metal safe or vault in good order,” by law the hotel’s liability for theft was limited to $500, no matter how big the loss or how careless the hotel was.

Henry was devastated. He had lost $1,000,000 in diamonds, but because of the way the law was written, $500 was the extent of the hotel’s liability.

Henry’s company wasn’t a big one, and the jewels that had been stolen made up much of his inventory.  A $500 settlement or verdict wasn’t just unfair, it was financially crippling. So we went to work trying to find a way to correct this injustice.

Why Civil Litigation Can Be Complex

Complex civil litigation is called “complex” for very good reasons. It takes a lot of work to get a good result, especially when the odds seem stacked against you. We researched the law. We read every case that had ever applied Ohio’s innkeeper statute and dug through old cases in other states to see how courts had analyzed similar laws. We made sure we uncovered every possible angle that might make a difference in the case.

Finally, we hit upon an approach that seemed promising. It revolved around the simple phrase “in good order.”

On the day we took depositions from the hotel employees, we asked a few preliminary questions before we got down to what we really wanted to know. We got them to agree that safe-deposit boxes are the modern-day equivalent of the “metal safes and vaults” hotels provided a century ago (when Ohio’s innkeeper statute was enacted). Then we asked the manager to tell us precisely how a safe-deposit box is supposed to work.

The manager explained that it took two keys to open the box. One was the master key, and the other was the key given to the owner of whatever was going in the box. When it came time to open the box, both keys were required. We asked if the box could ever be opened with one key—either with the master alone or the guest’s key alone. The manager told us it always took two.

If you could open the safe-deposit box with only the master key—which is what the jewel thieves had done—the box would not be “in good order.” And that meant the hotel wouldn’t be protected by the innkeeper’s statute and its $500 liability limit.

Henry was going to win his case.

The Insurance Company Settles the Case

In court, we argued that the hotel had not provided a vault or safe in good order because it could be opened with one key. As you might expect, the hotel and its insurance company objected strongly to our argument.  They pointed out that other diamond brokers who had jewels stolen in the same heist had filed lawsuits, and the courts in those cases had limited the damages to $500.    

But those other victims hadn’t come up with the argument we made. In the end, the judge in Henry’s case was persuaded. He issued a ruling in Henry’s favor and scheduled the case for trial where the only issue would be the amount of damages.  It was only then that the hotel’s insurance company decided to make a settlement offer to Henry. Henry ended up with an offer that covered his lost diamonds.  

In the course of our research on the Jackson case, we found that the antiquated innkeeper’s statute had been upheld time and again over the years. Surely some of those plaintiffs might have been entitled to more than $500, but for whatever reason, they didn’t get it. We’re just glad we were able to come through for Henry, and for anybody who might be in the same boat in the future and might be able to take advantage of the approach we developed to get around an unfair law.

With complex civil litigation, the winning solution isn’t always obvious. It takes research and consultation, along with creative thinking and tenacity. But it’s like any other line of work in that if you really want to help people, you’ve got to make the commitment and put in the time it takes to get the best possible result.

*Names in this article have been changed to protect our client’s privacy. 

The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.

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