When Your Employee Manual May Hurt More than It Helps- a Fresh Utah Example

IMG_4161You have carefully crafted your employee handbook to expressly and explicitly disclaim any contractual relationship with your employees and keep them at-will and then- BOOM. You got cute with the fine print. You kept your important language buried in the minutia of the handbook while keeping all the employee-friendly terms front and center. This may have been good enough in the past but it is no longer. Let’s look at Reynolds v. Gentry Finance Corporation, 2016 UT App 35, a recent case from the Utah Court of Appeals on this issue.

“[A]n employee handbook distributed to an at-will employee may modify the at-will employment relationship.”

A company’s employee manual is a great opportunity to define its employment relationship with its employees. In fact, employers often expect and hope that employees refer to the employment manual to understand the terms of their employment– not every employee warrants an employment agreement. Here’s where the Gentry company went a bit awry.

Gentry wanted to keep the bundle of at-will employee ‘privileges’ intact while at the same time make the broad statement that “NO EMPLOYEE WILL BE TERMINATED OR HAVE ANY ADVERSE ACTION TAKEN AGAINST THEM FOR BRINGING A COMPLAINT TO THE ATTENTION OF THE HOME OFFICE.” (Capitalization, boldface, and italics in Gentry’s handbook).

“Utah law allows employers to disclaim any contractual relationship that might otherwise arise from employee manuals.” To do this, however, the employer must include in the employee handbook “a clear and conspicuous disclaimer of contractual liability.” This is where it gets sticky and you need to step carefully because 1) “[t]he prominence of the text, [2)]the placement of the disclaimer, and [3)] the language of the disclaimer are all relevant factors in determining whether a disclaimer is clear and conspicuous.”

What does this mean? Well, for example, in a Utah Supreme Court case, a disclaimer that was conspicuously located at the top of a employee handbook and prominently bolded and SET APART by a text box was good enough or “sufficiently prominent” to put employees on notice of its terms. Use your imagination. Look at the ALLCAPS, italicized, and bolded statement from Gentry’s handbook. It stands out. And, if it stands out to you, it is likely to stand out to your employees. If you have questions, talk to a lawyer. I’m getting ahead of myself. Let’s get back to Gentry.

Gentry got sideways with its employee handbook even though it had four separate disclaimers in it. Unlike the disclaimer case example above and Gentry’s statement that an employee would not be terminated or had adverse action taken against them, Gentry’s disclaimer was nearly invisible. The court found that the disclaimer had not been placed at the top of the relevant policy, was “not prominent, not bolded, and not set apart by a text box. It [was], in a word, inconspicuous.”

So what? Well, for Gentry it meant that its employee could avoid having its case dismissed and a jury would get to hear her case. Juries are a mixed bag. If your employee handbook is clean and clear and meets all the right requirements to keep your at-will rights intact, you punch your ticket out of the case early and cheaply. Gentry, however, now gets to pitch its story to a jury who may be sympathetic to an employee that the jury may feel has been wronged.

The takeaway from Reynolds: don’t get cute with your employee manual. Don’t put the important stuff in the fine print or make it inconspicuous. Bold it. Put it in ALLCAPS and italicize it. Make it a black box label that cannot be ignored.

There are issues and nuances for employee handbooks that certainly cannot all be addressed here. If you have questions, you should get specific legal advice. If you would like more information about employee manuals, employment agreements, protecting your rights, or rectifying wrongs committed against you, contact Utah attorney Ken Reich directly. Mr. Reich has represented both companies and individuals in business matters and disputes. Using his many years of experience and backed by a firm of legal specialists in nearly every legal field, Mr. Reich can help you evaluate your situation and help you make smart decisions about your business and your life that will best fit your circumstances.

Utah Property Law- What to Do About Annoying Neighbors

IMG_4011Do you have a neighbor whose conduct is reducing or barring you from enjoying your own property? A nuisance claim may be the answer to your problem.

Nuisance law is alive and well in Utah and modern courts. The problem, however, is its relative complexity.

“There is perhaps no more impenetrable jungle in the entire law than that which surrounds the word ‘nuisance.’ ” W. Page Keeton et al., Prosser and Keeton on the Law of Torts (Prosser on Torts ) § 86, at 616 (5th ed.1984).

There are two kinds of nuisance, public (see Utah Code Ann. § 76–10–803) and private (see Utah Code Ann. § 78B-6-1101). Bear with me for a moment while I give you the gist of these claims. I am not trying to provide a treatise on nuisance but to give you enough information to determine whether you should look into it further if you believe it applies to your circumstances. Once you see the elements of the claims, I will show you the claims in action.

Public Nuisance

“A public nuisance is a crime against the order and economy of the state….” Utah Code Ann. § 76–10–803. Here are the four elements to prove a public nuisance:

  1. “Unlawfully doing any act or omitting to perform any duty,”
  2. The “act or omission … in any way render[ed] three or more persons insecure in life or the use of property,”
  3. You “suffered damages different from those of society at large,”
  4. Your neighbor caused or is responsible for the nuisance complained of; and
  5. Your neighbor’s conduct was unreasonable.

Note: ‘your neighbor’ could be a person, business, or government entity.

Private Nuisance

“The essence of a private nuisance is an interference with [an individual’s] use and enjoyment of land.” W. Page Keeton et al., Prosser on Torts § 87, at 619 (5th ed.1984). (On a side-note, if you are at all interested in wrongs or torts, find a copy of Prosser on Torts. It’s the bible of torts). Here are your three elements to prove a private nuisance claim:

  1. A substantial invasion in the private use and enjoyment of land
  2. caused by your neighbor or for which your neighbor is responsible, and
  3. the invasion is either (a) intentional and unreasonable, or (b) unintentional and otherwise actionable.”

Simply, a private nuisance focuses on whether you have suffered an ‘unreasonable injury.’ Meaning, is your injury of the kind that a person would not be reasonably expected to endure (making it ‘otherwise actionable’)?

Nuisance Applied

A few early cases provide great examples of how nuisance can be used to curtail problematic neighbors:

Right to clean air: Walter v. Selfe (1851), 29 L.J.R. (20 N.S.) 433 (Ch.) Selfe manufactured bricks on his property in the English countryside. His neighbor, sued to stop the brick manufacture and objected to the smoke, vapor, and “floating substances.”

The judge found that the brick burning was a legal nuisance. He enjoined further brick burning, finding that the neighbor was entitled to “unpolluted and untainted air” which he described as “air not rendered to an important degree less compatible, or at least not rendered incompatible, with the physical comfort of human existence – a phrase to be understood of course with reference to the climate and habits of England.”

Inappropriate residential use: William Drysdale v. C.A. Dugas (1896), 26 S.C.R. 20: In Montreal, Drysdale constructed a livery stable 25 feet away from Dugas’s home. Of course, the stable stank and its 30 noisy horses disturbed Dugas. Dugas’s nuisance action prevailed and proved damages for discomfort and reductions in tenant rents.

Trees may or may not be a nuisance: Cannon v. Neuberger, 268 P.2d 425, 427 (Utah 1954). Cannon sued Neuberger, his neighbor, to require him to remove trees to “control their growth as to keep their branches from overspreading, or the roots from permeating, or the leaves, twigs and branches from falling or being blown upon his lot…” Neuberger was ordered to cut 20 feet off the top and remove dead wood from his trees to reduce the risk of wind-blown and broken branches. Cannon wanted more and the Utah Supreme Court denied further relief stating:

To hold trees to be nuisances . . . merely because leaves or twigs or even branches in the ordinary course of affairs may be blown from them onto neighbors’ lots, would be to condemn to abolition all shade trees in communities sufficiently settled to have perils of such experiences. Cannon.

So, trees are a question mark. They are desirable and somewhat protected but also must be reasonably controlled.

Appropriate use of property: Hatch v. W.S. Hatch Co., 283 P.2d 217 (Utah 1955). Hatch sued his brother and neighbor W.S. Hatch for using his property as base of operations for his road-building business, vehicle garage, and maintenance facility. This was held not a nuisance because the ‘neighborhood’ was more like an industrial park that included: the main line of the Union Pacific Railroad (42 trains passing 195 feet from Hatch’s house every 24 hours) with flashing lights and signals; a petroleum plant, refinery, and a catalyst cracker; two racks for loading tank trucks with oils; and two other semi-truck service garages. Not a nuisance because his use fit the neighborhood- even though it was loud, dirty, and obnoxious.

A nuisance claim may be your friend if your neighbor is making your life difficult. Take a look at the elements of a nuisance claim and the examples above. Nuisance claims can require a complex bit of legal wrangling. I do not recommend attempting it on your own. If you have questions, you should ask them- contact me, Utah attorney Ken Reich. I regularly represent companies and the individuals and families that own them. My job is to know and understand my clients and their goals. Together with the right legal experts, I can help you get the result you want.

Does Your Business Need Insurance? Tips from a Utah lawyer

20160119_103832Insurance covers whatever has a value. I do not sell insurance but I am a consumer of it: in business, at home, and as a source of income. It is a monster topic with many issues. Let me share some bits that you may not have considered.

Why should your startup or new business consider insurance? If this question is a revelation to you, here’s the gist: the more you have to lose, the more diverse insurance products you should consider.

What does insurance do for you? It protects against loss. If you have nothing to lose personally or in business, then I suspect you may be running thin on insurance and keeping only the state-required minimums. (Hopefully you are not going without). If this is where you are, keep the following in mind: legal costs and interruption of your business.

If you or your business is sued on a covered claim and you have insurance, your policy will pay for a legal defense. In business disputes, legal fees mount very quickly. Quite. Legal fees can quickly be the tail that wags the dog.

Insurance allows you to continue to focus on your core business and less on the lawsuit threatening it. Insurance covers both the ultimate liability and the cost to defend the claim.

As an attorney, I consider it my duty to assume the burden of my client’s lawsuit so my client can focus his/her attention on business.

Consider this: A solo startup that is well-protected in its business organization (i.e., LLC or Inc.) could potentially risk running short on insurance when there is little to lose. As the business fills out, however, and assets are obtained (such as equipment, real property, intellectual property, copyright, patents, trademarks, etc.), or employees are hired, so should the insurance. Insurance is a hedge against unknown losses.

Some basic insurance individuals cannot go without include:

  • Auto insurance. If you own a car, it’s required by law.

The minimum amount of Utah auto insurance coverage is $25,000/$65,000/$15,000. This means limits for bodily injury are $25,000 per person, with a total maximum of $65,000 per incident, and up to $15,000 for damage to another person’s property.

  • Property insurance: If you own a home or any real property, it is presumably an asset that you do not want to lose. There is no sense owning property if you do not protect it from loss.

Some basic insurance a Utah business should consider:

  • Auto. If your business owns a vehicle, it must insure it. If employees are required to use a car for business purposes, the business must provide insurance. Typical personal policies do not cover the business use of vehicles. Talk to your insurance agent if your business requires the use of a vehicle.
  • General Liability. Every business is different and you should evaluate your risk. General liability insurance typically covers libel, slander, property damage to others, and personal injury to others.
  • Business Property Insurance. This includes both real property insurance for property you own as well as renter’s insurance. Think of it as homeowner’s insurance for commercial property. It will protect your products (widgets or whatever you manufacture or inventory) and your assets (equipment, furnishings, etc.) from fire, flood, or whatever your policy covers.
  • Worker’s Compensation. If you have one or more employees in Utah, you will definitely want to read the Utah Labor Commission’s Employer’s Guide. A good start from the Guide: “Businesses with no employees may not be required to carry workers’ compensation coverage. For example, sole proprietorships, partnerships and limited liability companies in which the owners perform all the work and have no employees and may not be required to have workers’ compensation coverage. Refer to Utah statute 34A-2-104.”
  • Professional Liability. Some professions (doctors!) are required under Utah state law to carry malpractice insurance. If not required, you really (really) should have it. It is your livelihood at risk.

Here’s the list of optional insurance you may want to consider:

  • Umbrella.  This is excess insurance. Typically if your underlying policy (auto, homeowners, general) covers a claim but the claim exceeds the coverage limit, the umbrella kicks in to cover the loss up to its limit on the claim. Note: policies vary; it is up to you to read the fine print or have your agent explain it to you. I personally have an umbrella policy. It gives me a cushion if my teenager happens to cause a catastrophic accident that my basic auto insurance may fail to cover. It usually comes in increments of one million with the lowest available being $1m.
  • Health and Life. Goes without saying. These topics are too big to address here.
  • Data Breach. If you obtain or collect private, sensitive, or financial information from your clients, you are at risk of having it stolen by a hacker or virus. Data breach insurance covers this risk.
  • Business Interruption. This is often a sub-set of a property policy. It covers your business operations and earnings in the event of a covered event (fire, flood, etc.).
  • Employment Practices Liability Insurance. When you have employees, this insurance covers your management of them.  It covers wrongful acts arising from the employment process. The most frequent claims include wrongful termination, discrimination, sexual harassment, and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct such as employment-related defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation. The policies cover directors and officers, management personnel, and employees as insureds.
  • Directors and Officers. This insurance covers claims made against officers and directors for acts in the course and scope of their employment. You can get D&O insurance to cover nearly any business enterprise. It will cover claims arising from managerial decisions that have adverse financial consequences.
  • Errors and Omissions. This is more of a subset of a policy rather than the policy itself. E&O insurance protects you against liability for committing an error or omission in performance of a professional duty. It will cover financial rather than bodily injury or property damage.
  • Miscellaneous. Depending on your business or profession, there may be specialized or niche insurance to cover you.  Some examples include commercial general liability (CGL) policies (often for construction businesses), lender-placed and REO insurance for financial institutions, event insurance, terrorism insurance, and travel insurance.

Insurance is very broad topic but one that you really need to look at closely for yourself and your business. If you have questions, you should ask them. There are many insurance agents, brokers, and options. I can provide some local references if you would like. If you would like more information about insurance and its intersection with the law and how it affects your business, contact me, Utah attorney Ken Reich. I regularly represent companies and the individuals and families that own them. My job is to know and understand my clients and their goals. Together with the right legal and insurance experts, I can help you get the result you want.

Posting Bail in Utah: a Free Tip from the Royal Consulate of the Kingdom of Saudi Arabia

cash saudiThis is a cautionary tale for those who lend money for bail in Utah. You have to know that your money is at risk if you lend money to bail someone out of jail. It is apparently a profitable business but you should probably leave it to the professionals. So, when your buddy or brother-in-law calls you from jail and begs you to post his bail, remember the mistakes made by the Saudi Consulate and decline.

In a recent case from the Utah Supreme Court, Saudi Arabia v. Pullan, our good Judge Pullan got it right. A Saudi Arabian citizen, Al Shammari, was arrested in Orem on rape charges. The Royal Consulate of the Kingdom of Saudi Arabia posted his $100,000 bail in cash. Shammari immediately high-tailed it to the Tijuana border and tried to cross over to Mexico where he was arrested by the Customs and Border Patrol. When Shammari failed to appear at his next hearing, the bail was declared forfeit without providing notice to the Consulate.

The mistakes by the Consulate were to post the bail on its own, post it in cash, and not bother to read the Utah Code. Bail bonding companies make money because they do everything they can to keep their money. They know the rules and follow them. If the Consulate had followed the rules it would have been entitled to notice before forfeiture.  Or, if it had posted bail through a bail bond company, the bonding company would have done it right and protected the $100,000.

In this appeal, the Consulate claimed it was a “surety” for purposes of the Utah Code and was entitled to notice before the bail was forfeited. Unfortunately for the Consulate, it did not meet any of the requirements to demonstrate it was a surety.

Bail in Utah can be made in one of two ways:  (1) filing with the court an undertaking tendered by an individual or entity that ordinarily will be accompanied by the posting of a bond (i.e., agreement to pay money supported by evidence of ability to pay); or (2) depositing into the court a bail by cash or an equivalent form of payment. The first method requires the court give notice to the person posting the bond and the second does not.

The Consulate argued that it should have been given notice because it loaned Shammari the cash bail money, making it like a bond. The Supreme Court clarified that the source of the funds is not relevant and does not make a deposit into a bond without following the Utah Code:

“The statutory scheme for bail does not concern itself with the manner in which the defendant obtains the funds for cash bail or the nature of the relationship between the defendant and another provider, if any, of the funds. The person posting the cash bail may be merely functioning as a courier for the defendant’s own funds, may be providing the funds out of friendship or familial loyalty, or may have extracted some agreement that may or may not be legally enforceable as a private contract.”

Be careful with your money- you worked hard to get it. If you have questions, ask them. If you would like more information about criminal law or bail bonds, contact me, Utah attorney Ken Reich. I am no expert on bail bonds or criminal law, but I have partners, friends, and colleagues who are. I would be happy to answer whatever questions you have and send you to people I trust for ones I cannot.

Utah Property Rights: Tips for Claiming Adverse Possession

20150501_143806What is adverse possession you ask? Good question. It’s when a possessor of land claims ownership of land when title is held in the name of someone else. It can make a claimant into the legit title owner of real property. It applies to raw land as well as the all structures on the land. The laws governing adverse possession are found at Sections 78B-2-208 to -219 of the Utah Code.

Let me give an example: You and your neighbor own adjacent real property. Over the generations that your family has owned the land, you and your family have believed and acted like you owned a bigger tract of land than what your record title shows. It happens all the time. You have used the land for grazing, maintained fences, used portions for hunting pheasants, posted ‘no trespassing’ signs, and let your friends ride dirt bikes on parts of it. You also have paid taxes on the entire portion that you used. One day your neighbor dies and his heirs have a survey done that shows that you have been trespassing on a substantial portion of the neighbors land all these years. The neighbor politely asks you to stop using the land and starts moving fences. You politely tell him you own it by adverse possession and commence a quiet title action to get the title changed into your name.

Here’s what you need to prove adverse possession in Utah:

  1. Show that your use of property is actual use. This means it cannot be ‘in theory’ but requires you to do something. In the example, this would be actually grazing your animals or giving permission for someone else to do it. People get in trouble when they get cute and try to claim they ‘intended’ to develop the land or had plans. Intentions or plans are not actual use, even if you spend money on your plans. Adverse possession is all about putting land to good use.
  2. Show that your use was open and notorious. This means you do it in such a way that someone looking at the property would know that you are using it. Fence the land. Build something. Enforce rights against others (keep them out or let someone in to use the land). If asked, tell others that its yours and you claim ownership.
  3. Show that your use was exclusive. You must act like an owner and not share your use with others or the record owner. Do what an owner would do.
  4. Show that your use was hostile. Do not let anyone, especially the record owner, exert control over the land you claim as owner. If you do, then you are not acting like a true owner but are acquiescing to others as an acceptance that you do not own the property.
  5. Your use must use the land continuously for seven consecutive years.
  6. You must pay all taxes levied on the property for the seven years.

See Allred v. Allred, 2008 UT 22, ¶17. I was extensively involved in the Allred case with my partner Mike Carlston. It was a hard-fought family dispute. In Allred, a son (an attorney) obtained legal title to his parents’ commercial property by disputed means. Over the course of many years, the parents continued to act like they still owned the property (because they believed they did) by collecting all rents, paying taxes (triple net lease), and signing new leases and amendments. When the son tried to take over the property, the parents were able to successfully have title returned to them via adverse possession.

Here are some other things to consider in adverse possession claims:

  • If it is open, unimproved land, a few other rules apply:
    • If you claim title based on a written document that unfortunately fails to give you title, then you must do one of the following three things:
      • (1) cultivate crops or install an improvement,
      • (2) enclose the claimed property with a fence; or
      • (3) use the property for agricultural uses, pasture, or to harvest fuel or fencing timber.

Any one of the these activities may constitute possession and you may acquire entire parcels described in the written claim even if only a portion is actually used or cultivated.  See § 78B-2-211.

  • If the claim is not based on a written document, but on some other claim to title, then possession is established by performing all of the following:
    • (1) a substantial enclosure;
    • (2) cultivation or other improvement; and
    • (3) at least $5/acre expended on irrigation improvements.

All three criteria must be satisfied, and only the land actually occupied may be acquired through adverse possession.  See §§ 78B-2-212 and 78B-2-213.

  • If you fulfill each element for adverse possession, you still only have a claim. In order to turn your claim into title, you must either obtain an agreement with the record owner or bring legal action (quiet title, trespass, eviction, etc.). Once successful, you then take your judge’s order and have it recorded with the county in which the property is located.
  • You cannot adversely possess any land owned or held by a government entity and designated for public use or lands owned or controlled by the state or federal government.  See § 78B-2-216.
  • Water rights may not be acquired by adverse possession unless the seven-year possession period was completed prior to 1939. See Otter Creek Reservoir Co. v. New Escalante Irrigation Co.
  • Do not ever accept ‘permission’ from the record title owner. If you claim to own the property, you must act independent of everyone, especially the record title owner. Permission, if accepted, breaks your hostile possession.

Adverse possession can require a complex bit of legal wrangling. I do not recommend attempting it on your own. If you have questions, you should ask them. If you would like more information about adverse possession, contact me, Utah attorney Ken Reich. I regularly represent companies and the individuals and families that own them. My job is to know and understand my clients and their goals. Together with the right legal experts, I can help you get the result you want.