Cronkhite obtains $40,020.00 award against delinquent tenant.

Issue: Breach of Lease | Eviction

Court: Private Arbitration (Hartford County)

Industry: Real Estate

Judge: Private Arbitrator

Many tenants have abused COVID protections by overstaying their welcome without paying a dime.

My client provides a critical service, relocating disaster victims to temporary housing. Most homeowners have insurance policies that cover relocation costs. But those costs have a limit.

The defendant in this matter used all of her insurance proceeds. But she then refused to move out of the temporary location that my client provided. My client was paying thousands per month for this relocated homeowner to stay there. Worse yet, the homeowner refused to pay anything for over half-a-year.

Thankfully, my client had an agreement with the homeowner that required the homeowner to move out by a certain date. That move-out date coincided with the end of the homeowner’s insurance proceeds for relocation costs.

My client authorized me to sue the homeowner in arbitration.

After a one-day hearing, the arbitrator concluded that the homeowner had violated her agreement with my client by both refusing to relocate and by refusing to pay anything for the housing. (A fundamentally unfair situation.) The arbitrator awarded both the housing costs and attorney’s fees, with a total award of $40,020.

The award highlights that decisionmakers will not tolerate the abuse of COVID-protections. While those protections may prevent eviction in some jurisdictions, they do not allow people to take advantage of others.

Cronkhite successfully defends client in five-day arbitration against $3,700,000 in contractual and partnership claims while simultaneously obtaining injunction on behalf of client.

Issue: Trade Secrets | Non-Solicitation

Court: Private Arbitration (Wayne County)

Industry: Technology

Judge: Private Arbitrator

One of my clients provides sophisticated IT services to the Department of Defense.  The client recently won a lucrative multi-million federal contract. 

The client’s subcontractor then sued my client for more than $3.7 million.  The subcontractor asserted that my client breached alleged partnership and contractual obligations—including a right of first refusal—by not hiring the subcontractor to perform on the awarded federal contract.

The subcontractor also claimed that my client breached non-solicitation provisions—and committed tortious interference—because the client had used the services of one of the subcontractor’s independent contractors to bid on, and win, the federal contract.

 The client countersued because the subcontractor possessed, and refused to return, a number of the client’s proprietary documents and trade secrets, including proposals and pricing used to bid on federal contractors.  Michigan’s Uniform Trade Secret Act, MCL 445.1901 et seq., permits a company to seek an order to return such trade secrets.

After a five-day arbitration hearing, the arbitrator denied all of the subcontractor’s claims and entered an injunction against the subcontractor, ordering it to return the client’s trade secrets and destroy any copies.

At the hearing, I elicited testimony from the subcontractor’s three owners had inconsistent and conflicting interpretations of the parties alleged partnership and contractual rights.  I also introduced substantial evidence that the so-called right of first refusal was merely part of the parties’ negotiations that did not find its way into the parties’ written agreements.

The arbitrator agreed, concluding that there was no “meeting of the minds” regarding an alleged partnership or a right of first refusal.  The arbitrator also held that any discussion regarding the right of first refusal was part of preliminary negotiations, which were “merged and integrated”—in essence, abandoned—as part of the parties’ final agreement.

Similarly, the arbitrator found that the client did not solicit the independent contractor.  Rather, the testimony and written evidence demonstrated that the independent contractor sought out, and obtained, business from the client.  As such, the client neither solicited the independent contractor nor tortiously interfered with the subcontractor’s relationship with the independent contractor.

On the other hand, the arbitrator agreed with my arguments that the client was entitled to an injunction ordering the return of the client’s trade secrets. The arbitrator concluded that the trade secrets could in fact provide an economic advantage to the subcontractor, and that the client had taken reasonable steps to protect them, including a non-disclosure agreement and confidentiality provisions concerning the trade secrets.  The award highlights the critical importance of non-disclosure and confidentiality agreements prior to sharing a company’s trade secrets with third parties.

The award vindicates parties’ trade secret rights under Michigan law: Companies commit immerse energy and money to their proposals, pricing, and bidding strategies.  The award hammers home the point that other companies are not entitled to use litigation as an excuse to keep other’s trade secrets.

Cronkhite obtains $405,120.20 arbitration award and attorney’s fees against former director who defrauded staffing company.

Issue: Employment Fraud

Court: Private Arbitration (Oakland County)

Industry: Staffing

Judge: Private Arbitrator

A Michigan arbitrator recently awarded $405,120.20 to my client—a national staffing company—after arbitration proceedings.

 In 2018, the staffing company hired a director-level employee to manage a new staffing division.  The employee had represented to the staffing company that he had a well-established network of existing clients, as well as a large roster of individuals to staff future staffing contracts.  Based on these representations, the staffing company offered the individual a lucrative employment contract as director of the new staffing division.

Afterward, the director claimed to have signed up a number of customers for staffing contracts whose value exceeded $60,000,000.00.  The staffing company built up the director’s division to service these apparent staffing contracts, and also paid the director sizeable bonuses as a reward for procuring the staffing contracts.

But none of the alleged customers paid.  The staffing company, growing concerned with these developments, retained me to investigate the authenticity of the staffing contracts.  My prompt investigations confirmed that none of the contracts were real, and were instead fraudulently executed by the director.

Arbitration was then initiated against the (now former) director, including claims for breach of the employment agreement, fraud, fraudulent concealment, fraud in the inducement, and unjust enrichment.  The staffing company also requested that the arbitrator rescind, i.e., cancel, the employment agreement because it was a product of fraud.

After lengthy arbitration proceedings, the arbitrator awarded the staffing company $405,120.20 in money damages against the former director in favor of the staffing company.

The arbitrator found that the staffing company prevailed on all counts, concluding that the former director had not only breached his employment agreement but also committed fraud, fraudulent concealment, fraudulent inducement, and false reporting to the staffing company. The arbitrator also agreed that the employment agreement should be rescinded based on the director’s fraudulent misrepresentations to induce the staffing company to sign it.

The award included an award of attorney’s fees to the staffing company.

The arbitrator’s award demonstrates the importance of quickly acting to investigate and prosecute suspected employment fraud—as well as the fruit borne by diligent action.

Achieved Trademark Injunction and $39,464.75 in Attorney Fees for Trademark Misappropriation.

Issue: Tradename Misappropriation | Customer Diversion | Injunction

Court: Oakland County Circuit Court

Industry: Finance

Judge: Hon. Martha D. Anderson

My client is a well-respected business that provides 401k services to self-employed entrepreneurs small business owners.

One day, my client discovered from a customer that one of my client’s employees was soliciting business from its customers.  My client investigated and found that its employee had been mass emailing solicitations to my client’s customer base.  My client tried to speak with the employee, but the employee ignored further communications and effectively ghosted my client.  

I have found that employees who get caught for misconduct often cut ties and run—desperately hoping that a lost job is the biggest casualty of the employee’s wrongdoing. 

This case was different. 

The former employee launched a competitor company using a confusingly-similar name to my client’s tradename—a form of trademark—and resumed contacting my client’s customers and leads.  Worse yet, the former employee misappropriated my client’s work product and also fraudulently altered an IRS approval letter written for my client so that the employee could act as if it were written for his company.

Unsurprisingly, my client began receiving emails and calls from customers and prospective customers who were confusing my client’s company with the former employee’s company.

But the law does now allow such flagrant unfair competition and protects against consumer confusion.

My client tapped my shoulder and directed me to take swift action to protect my client’s tradename and prevent the competitor company from unfairly competing.

Within the first few weeks of the lawsuit, I obtained an order from the court forcing the employee and his new company to stop affiliating himself with my client and to stop operating using my client’s tradename, work product, or altered IRS communications.  The order required, in effect, that the competitor company pull down its website and retract all internet references to my client’s tradename. 

The order led to the public quickly disassociating the competitor from my client and also requiring the competitor, in effect, to re-tool and re-brand if it wished to continue operating.

The former employee did not comply with the order, forcing the court to hold him in contempt twice and issue harsher orders to gain compliance. 

The case concluded with the court awarding my client substantial relief:

  • 1. The former employee was ordered to completely dissolve the competitor.
  • 2. My client was awarded approximately $39,464.75 in attorney’s fees.
  • 3. The former employee was permanently prohibited from using my client’s trade name or work product.
  • 4. The former employee was permanently prohibited from holding himself out to the public as associated or in any way affiliated with my client, including for purposes of soliciting business.

This case demonstrates that the law will not tolerate unfair competition and provides powerful tools that can be quickly used to shut down somebody who is unfairly competing, including through misappropriate of a tradename or trademark.

The former employee tried to vanish from the lawsuit once he realized my client had no intent to let him off for his misconduct.  However, the court did not allow this.

Cronkhite accelerates commercial lease, evicts tenant, and obtains $83,999.00 award.

Issue: Commercial Lease Eviction | Breach of Lease

Court: Private Arbitration (Oakland County)

Industry: Real Estate

Judge: Private Arbitrator

There’s no question that commercial space is moving more slowly in the Covid era. There’s also an uptick in lease delinquencies. Amidst these challenges, commercial landlords have a rare advantage: Covid is allowing landlords to reap increased rents due to lease acceleration.

Lease acceleration occurs when a tenant breaches a lease and the lease’s term has months or even years remaining. Lease acceleration existed before Covid and will exist after Covid. But Covid has significantly increased the amount landlords can collect on a lease’s remaining term.

Case in point, I recently evicted and sued a commercial tenant who had decided to consolidate two offices into one, leaving my landlord client with vacant space and no rent. I accelerated rent on the lease’s remaining fourteen months. During the ensuing arbitration, my expert property manager testified that Covid prevented the landlord from renting the office for the remaining fourteen-month term.

Based on this Covid evidence, the arbitrator awarded my landlord client all rent due and owing over the next fourteen months. In effect, my client can now collect on advance rents.

As tenants continue to take advantage of Covid and make decisions that benefit them, I urge commercial landlords to do the same. Landlords should strategically assess their portfolios and calculate the value in evicting and suing delinquent tenants for the full lease term. This exercise will not only allow landlords to prune difficult tenants but also permit lease collections well in advance of normal monthly rents.