Steven L. Malitz

Arnstein & Lehr Chicago Partner Steven N. Malitz successfully represented a shareholder in two separate suits brought against him by his fellow shareholder. The two shareholders were founders and co-owners of a national goods business for many years. Although Mr. Malitz’s client had expanded the goods business into a foreign country to the benefit of both shareholders, the other shareholder accused Mr. Malitz’s client of dedicating his efforts to an unrelated, foreign business, though he had previously authorized such involvement. The other shareholder then denied his client physical and financial access to their business, eliminated his compensation, canceled his benefits, raided the corporate coffers, and sued to dissolve the business to start a competing business. He also sued Mr. Malitz’s client for an ownership interest in and distributions from the foreign business.

Mr. Malitz persuaded the judge to deny the other shareholder’s motion for immediate dissolution of the goods business. He then counterclaimed alleging a variety of breaches of duty and oppression by the other shareholder, and sought a buy-out from the goods business. As for the suit seeking ownership in the foreign business, Mr. Malitz moved to dismiss and strike discovery arguing that the Illinois courts had no power over the foreign entity. And, even if the foreign entity could be haled into court in Illinois, Mr. Malitz contended that Illinois law did not apply to the shareholder’s claim of ownership in the foreign entity. Rather, the law of that foreign jurisdiction applied and the foreign country would not dignify a court order issued out of a U.S. court. Creating leverage in both cases against the other shareholder, he negotiated a settlement resulting in total corporate divorce, no specter of future liability, no money paid out and dismissal of both cases, enabling his client to freely pursue other lucrative business interests.

JTBF offers educational and inspirational programming to under-served youth from disadvantaged economic backgrounds at no cost to participants, laying the foundation for their educational and professional excellence. JTBF’s mission is to expand the diversity of the legal field.

To view photos from the day’s activities, please click here.

Steven N. Malitz

Chicago Partner Steve Malitz wrote an article for destinationCRM.com entitled “The Plusses and Pitfalls of Arbitration.” The article was a follow up to an article he published about the importance of a strong sales contract.

DestinationCRM.com is the online magazine version of CRM (Customer Relationship Management) Magazine. The article appeared on the website on February 10. Click here to read the full article.

Steven N. Malitz

Chicago Partner Steven N. Malitz recently obtained a victory on behalf of a large real estate inspection business who was being sued by an insurer for failing to notify a homeowner of the improper installation of a spa heater in his garage.  The spa heater allegedly caught fire, resulting in damage to the homeowner’s property.  The case was dismissed based on the expiration of a one-year limit continued within the client’s inspection agreement, and language in the contract that excluded spas and saunas from the inspection. The inspection agreement had been drafted by Mr. Malitz  for the client which is used for each client.  Mr. Malitz was also able to recoup legal expenses for his client based on the attorney fees provision within the inspection agreement.

Steven N. Malitz

It’s rare for an attorney to litigate a contract that he drafted, and a poorly drafted contract can cause problems for the client and embarrassment to the attorney. Arnstein & Lehr Chicago Partner Steven N. Malitz recently had the rare experience of being in court to litigate a contract he drafted for the largest real estate inspection business in Illinois.

Click here to download the full article PDF of Steven Malitz’s successful contract litigation or view it below.

Joseph C. Vitek

Edward A. Snyder

Steven N. Malitz

On Monday, November 1, Joseph Vitek will participate in the Chicago Bar Association’s “You and the Law” program on “Basic Estate Planning” hosted by Edward A. Snyder.   Chicago Access Network Television, Ch. 21 at 10:00pm.

On Sunday, November 7, Steven N. Malitz will participate in the Chicago Bar Association’s “You and the Law” program on the topic “The Successful Lawyer,” also hosted by Mr. Snyder.
“You and the Law” can be found on Comcast Ch 19 (Northern Suburbs), at 7:00pm.

Steven N. Malitz

The “Arbitration – Plusses and Pitfalls” article was written by Arnstein & Lehr Partner and Litigation Practice Group member Steven Malitz. It discusses the commonplace inclusion of the arbitration provision in contracts and the benefits or not of arbitration over litigation. Mr. Malitz states, “while arbitration has become a popular form of dispute resolution, it may not be right for all businesses, at all times.”

To download the full article and learn more about arbitration pros and cons versus litigation, please follow this link to the PDF.

Steven N. Malitz

Chicago Partner Steven N. Malitz represented a business seller in contentious litigation pending on three fronts. Our client–through prior counsel–contracted to sell his multi-tenant office building and business located in the building. After closing on the purchase of the building, buyer took control of the building and barred our seller client from physical, computer and financial access to the building, while simultaneously refusing to close on the purchase of the business or make payments pending the closing. Buyer contended that the stock purchase agreement made closing on the purchase of the business contingent on seller obtaining licensure for buyer to operate the business. However, by law, a license could not be issued to the buyer until the buyer owned at least 25% of the stock in seller’s business. Meanwhile, the stock purchase agreement did not require seller to transfer any stock until buyer paid for it. So, as drafted, the contract documents put the parties in a “Catch-22.” Buyer also refused to close, claiming substantial credits for alleged defects in the building. For two years our client was denied access to the building he owned. Malitz then entered the cases, made demand for an immediate closing, and sought an emergency injunction preventing buyer from denying seller access to his business pending the requested court-ordered closing. Realizing that he could no longer stave off closing, buyer agreed to close on the purchase of the business. In a compact period, Malitz amended the suit drawn by prior counsel to now seek specific performance of buyer’s obligations under the stock purchase agreement to force him to close, reform the agreement to provide an escrow of stock and purchase price pending the issuance of buyer’s license to operate the business, injunctive relief due to buyer’s denying seller access to the business, and substantial money damages for buyer’s failure to pay seller the stock purchase price or any interest on the purchase price pending the closing. The litigation strategy forced buyer to close, Malitz, with the able assistance of Partner Erik L. Kantz, then revised the stock sale transactional documents to accurately reflect the agreement of the parties, researched, counseled and documented the complex tax ramifications and realities of a stock sale which pended over two years where the buyer–to seller’s exclusion–enjoyed the benefits and burdens of the business for that period, documented a myriad other collateral issues bound up in this nearly failed transaction, and then obtained a court order requiring the recalcitrant buyer to appear in court to attend the closing in the judge’s chambers. This exhibition in creativity, teamwork and depth in various practice areas, and rapid fire reaction to a would-be financial disaster, enabled the firm’s business client to obtain the benefit of his bargain and move on to a new and better ventures.

Steven N. Malitz

Chicago Partner Steven N. Malitz defended a large metals manufacturer against a federal suit for discrimination and retaliation based on disability and race.  The employer hired an employee to operate a furnace which produced molten material.  Employee allegedly suffered an on-the-job injury which limited his movement and his ability to lift objects.  Employee alleged that he was subjected to hostile, abusive, harassing and discriminatory conduct by his supervisors which included the refusal to change employee’s employment status after completion of a probationary period, undue scrutiny, refusal to provide employee with reasonable accommodations, and more difficult assignments than his similarly situated non-disabled, Hispanic coworkers.  With an eye toward avoiding costly discovery and motion practice for their employer client (which is endemic in defending such federal employment suits), Malitz performed his own investigation which revealed that employee, pursuant to published Job Description, “Must be able to lift 75 pounds” and be “Willing to do manual labor”; employee complained of no back injury or other disability in his pre-employment physical; employee’s probationary period was extended on one occasion, only, because he was underperforming and required improvement in both the quality and quantify of his work; employer terminated employee after a mere two months and 11 days due to his repeated lack of productivity and overall poor job performance; and, employee was hired and terminated by the same supervisor at employer.  Armed with this damning information, Malitz forced a settlement for nuisance money before any depositions were taken.

Partner David S. Wayne assisted with the case.

Steven N. Malitz

Partner Steven N. Malitz successfully represented an employee against his former employer and its decision-maker for unpaid bonuses, equalized income taxes and other non-wage sums.  The employee entered into a written secondment agreement with his employer by which the employer assigned the employee to its German subsidiary, where he would serve in Germany for an extended period as a senior market maker and trade equity and index derivatives, and recruit and train German traders.  The agreement provided for the employee’s compensation and that the employer would be responsible for equalizing employee’s income tax such the employer would cover employee’s heightened “assignment related” excess German income tax liability over and above any “hypothetical tax” owed by employee had he worked in the United States during the secondment period.  The employee contended that the employer breached the contract, committed fraud and violated certain wage statutes by failing to pay bonuses, investment income and heightened income tax assessed by German taxing authorities.  Besides these damages, the employee was required to take loans to pay the tax liability, he lost an employment opportunity with another prestigious firm and he incurred professional fees and penalties.

In defense, the employer claimed that it did not agree to equalize tax on bonuses, it paid the employee all sums to which he was entitled, the employee caused his own tax liability by failing to pay income tax, and employee’s tax, conversion and exchange rates were incorrectly calculated.  After prolonged negotiations, Malitz forced a substantial settlement at mediation.

Partner Edward A. Snyder assisted Malitz with the case.

Attorney Steven N. Malitz Litigation Victories

Although we all hope for good, long-lasting relationships with our customers, disaster can strike.  Therefore, sellers must protect themselves in all relationships with a strong, well-written sales contract.  The sales contract need not be long, complicated or wordy.  And, one such contract can govern your relationship for years without the need of entering into subsequent contracts for each sale.  The provisions required in the contract depend on the particular deal at hand and the nature and quirks of seller’s business. This article focuses on four key provisions which should be included in all sales contracts.

Warranty Disclaimer
First, your sales contract should include a clause which waives all express and implied warranties.  Under the laws of most states, every sale creates implied warranties that the goods will conform to the standards of the industry and will hold up if used properly or in accordance with a salesperson’s recommendations.  Such warranties are known as the implied warranty of merchantability and implied warranty of fitness for particular purpose.  Given the litigation-happy world we live in, buyers will claim that such warranties require that your goods conform to industry standards 100% of the time, with no room for failure.  If your goods do fail, you may find yourself in costly litigation which may not turn out in your favor.  However, most states permit you to free yourself from the burdens of these warranties by waiving them in a sales contract.  The warranty disclaimer must be “conspicuous” and include specific language to be effective.  The clause should include language such as, “Seller disclaims any and all representations and warranties.”  If properly written, this disclaimer can save your company enormous amounts of time and money in litigation.

Liability Limitation
Another key provision in any sales contract is a “limitation of liabilities” clause.  Without such a clause, if buyer proves your goods are non-conforming or defective, buyer can hit you in the wallet for many reasons including breach of warranty, the cost of finding replacement materials, lost profits, labor costs, attorneys’ fees and other grounds.  Consider a scenario where you sell goods to A for $100,000, who, in turn, sells your goods to B.  If B sues A claiming that your goods are non-conforming, A will inevitably claim that your goods caused B to stop doing business with A, resulting in substantial lost profits to A.  So, although the contract price for the goods was $100,000, A may claim lost profits of $1,000,000!  Obviously, such a claim could destroy your business.  However, many states allow you to limit the amount your customers can recover from you in court if your goods are non-conforming.  For example, you can limit the amount your customer could win to the actual contract price of the goods sold.  A well written limitation of liability clause will explicitly state the type of damages the customer can sue you for, and, more importantly, the type of damages for which the customer cannot sue.

Choice of Law/Forum Selection
You have the opportunity to maintain the home field advantage by including choice of law and forum selection clauses in your sales contract.  With these clauses, you can tell your customer that all disputes relating to the goods sold will be litigated and decided in your state, under its laws.  Without these clauses, you may find yourself litigating a dispute in a courtroom 2,000 miles away instead of within miles of your business.  If your customer is considering suing you and your contract provides that he has to travel 2,000 miles to your state to do so, he may think twice about wasting time and money in litigation.  It is important to explicitly identify which state law controls and in which state the litigation will occur.  And, given that you may from time to time have claims against your buyers for failing to pay the contract price, it is also necessary to have your buyers waive any objection to personal jurisdiction—that is, you want your buyers to waive any argument that your state’s courts have no power to hale them into your state to litigate the case.

Risk of Loss
Including a risk of loss provision in a sales contract can also help you save money.  Imagine your customer places an order with you and decides he will contract with XYZ Delivery Company to pick up the goods from your warehouse.  Based on your experience, you would have never picked XYZ to deliver the goods because its drivers always damage the goods.  Without fail, XYZ destroys the goods that your customer ordered, and now your customer wants you to pay for the damage.  You can protect yourself from having to pay for your customer’s mistake of choosing a bad carrier by putting a risk of loss clause in the sales contract.  That clause will tell the customer that if he selects the carrier, then he is responsible for any damage that might occur to the merchandise while in transit.  The language of the clause must also tell your customer that if he decides to pick up the merchandise, then title to that merchandise passes to him at the time it is placed in his trucks or with his carrier of choice, as the case may be.  Once he has title to the goods, any damage becomes his concern, not yours.

Conclusion
Ultimately, a well drafted sales contract is beneficial to both seller and buyer.  Obviously, seller protects itself from costly litigation when it limits the grounds on which buyer can sue and the amount recoverable if buyer wins.  If seller could not protect itself from litigation, it would have to factor such risk into the purchase price of its goods. Because seller can maximize protection through a well drafted sales contract, it can keep prices lower.  The warranty disclaimer, liability limitation, choice of law/forum selection and risk of loss clauses are all key provisions in any sales contract.  However, to be effective, the language in these clauses must be specific.  Although this article offers a thumb-nail sketch of key clauses, it is best to consult an attorney knowledgeable about the state law at issue when drafting a sales contract.  A generic contract simply won’t suffice—your sales contract must be tailored to your business and its issues, and must be drafted with an eye toward protecting your business and its bottom-line.

Steven Malitz

Edward Snyder

On Monday, November 2, Chicago Partner Steven Malitz, as one of the 2008 40 attorneys under age 40 selected by the Chicago Daily Law Bulletin, will participate in the Chicago Bar Association’s “You and the Law” program on “The Successful Lawyer.”  The program panel will discuss what they consider to be the personal attributes essential for a successful legal career, considerations for someone thinking about law school, practice at a major law firm, considerations for corporate or government employment, and suggestions for undergraduate preparation for law school.

Chicago Partner Edward Snyder will host the program on CAN TV (Ch. 21), Chicago at 10:00 PM.

Steven N. Malitz

Arnstein & Lehr Chicago Partner Steven N. Malitz, a member of Arnstein & Lehr’s Litigation Practice Group, and David Zulawski, chairman CFI/senior partner/speaker of Wicklander-Zulawski &Associates, Inc., published a blog post on General-Counselor.com. The post explores the best practices in taking and documenting a statement.

General-Counselor.com is Arnstein & Lehr’s labor and employment blog for in-house attorneys, business owners and executives.

Steven N. Malitz

Chicago Partner Steven N. Malitz‘s article entitled, “Crafting a Strong Sales Contract,” appeared in the May 20, 2009 edition of destinationCRM.com, which is produced by the editors of CRM Magazine.  The article discusses key provisions of a well written sales contract and underscores the importance of including these important elements in all sales contracts.

Click here to read the article.

View Steven N. Malitz Pro Bono Efforts in Full Screen Mode.

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Chicago Partner Steven Malitz was recently recognized by Law Bulletin Publishing Company as a 2008 recipient of their 40 Illinois Attorneys Under 40 to Watch.  This is a significant honor in that Mr. Malitz was recognized by attorneys, judges, and opposing counsel outside of Arnstein & Lehr for his skill and achievement.  Mr. Malitz will receive a full-page profile in a supplement to the September edition of Chicago Lawyer and an issue of Chicago Daily Law Bulletin.

To read the profile click here.