your best legal outcome with
effectiveness, efficiency, & expertise

Blog

A Small-Town Mechanic’s Wisdom

 

I was raised in a small city with a population of less than 15,000 people.   For most of my childhood, it was literally a “one stoplight town” that had eventually graduated to three by the time I left for college.   Growing up in a small town certainly has advantages and disadvantages.   One advantage is that a small town is often populated by unique individuals that you would never meet is the business of a large city.   These individuals, through tough times and personal experiences, have developed a common-sense perspective often missing today.

One group of individuals I remember who possessed this common-sense perspective were the owners and mechanics at a local gas station.   It was a Cononco station in an older building consisting of two sets of gas pumps (one full service and one self-serve) and two mechanic’s bays to maintain and repair automobiles.   It was my grandfather and father’s service station of choice because they trusted the mechanics and owners.  I remember as a child sitting in the chairs in the waiting area, which was also the office, cash register, old soda vending machine, and shelves to display oil cans and promotional materials.   While waiting for the oil change or other repair work on our vehicles to be completed, I noticed that it was often a stopping place for old-timers in the town who would purchase gas, a soda from the vending machine, and stay and talk for a while.

The desk in the office/waiting room included the service paperwork and cash register as well as pictures, stickers, and plaques.   Most of these consisted of humorous sayings about fishing, hunting, and cars.   One that I remember to this day was a plaque that simply stated:

Pay me a little right now

Or pay me a lot more later

This not-so-subtle statement was to highlight the importance of preventative maintenance from a car mechanic’s perspective.   They knew that keeping the car up to date on minor service and repairs (e.g., oil changes, tire rotations, filter replacements, etc. . . ) prevented the major car repairs from occurring.    In essence, paying the few dollars on occasion prevented the larger, unexpected, and unmanageable bill from ever occurring.   Through years of experience and multiple examples, the mechanics understood this fundamental truth.

I have often observed business owners not recognizing this fundamental truth.   Businesses and their respective leaders often either ignore and consistently choose not to perform this “preventive maintenance” on their business.   They justify their decision because it is a low priority or to save a little bit on the bottom line.   Rarely, if ever, does this approach benefit the business in the long-run.   Instead this approach eventually leads to events that jeopardize the long-term health and survivability of the company.

I often see this behavior when business leaders choose not to perform basic legal preventative maintenance.   Preventative legal maintenance for businesses includes areas such as, updating pre-existing contracts, modernizing employee policies and manuals, keeping abreast of new laws and regulations, the initial negotiation/development of new agreements, and the review and drafting of new contracts between parties.   In these circumstances, these business leaders/owners place legal maintenance at a low priority.  They assume that the status quo will continue to work, what they have now is sufficient, they can independently draft or negotiate the agreements on their own, and/or the legal work would be expensive.   Unfortunately, it is usually only a matter of time until this lack of proactive maintenance leads to a major legal dispute, complaint, or litigation that has the potential to lead to the ruin of the company.  Once a dispute has reached this stage, the legal costs of correcting the issue or defending the corporation in the dispute is now exponentially more expensive than the preventative legal maintenance costs would have been.

In that way both an attorney and mechanic’s approach is the same.   We do not want to see a business breakdown occur that could cost substantial fees, costs, and expenses to correct.   As an attorney representing clients, I will always prefer and recommend that regular legal maintenance occur.  The costs are substantially less than the alternative and it better protects the client when an unforeseen event occurs.

© 2017 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

 

THE IMPORTANCE OF A COMMON NARRATIVE

 

As a business attorney, I am typically involved in legal issues involving corporations and those who create and own them.    During my several years in practice, I have observed both successes and failures.   A question I have often though is “what is the formula that makes a group/business succeed where others have failed?”   Is there a secret ingredient that runs through individuals, groups, or businesses (large or small) that binds people to work together to achieve a successful end?

What makes some individuals, families, or groups of people effective, resilient, and happy?   Why are certain people or businesses able to overcome obstacles, challenges, and succeed when others have easily failed?  What are the proven counters to the forces that want to tear apart and how does one prevent entropy/apathy that often occurs? 

Researchers and business experts have been studying this question for over 25 years.   They have arrived at a few specific conclusions.  The research has universally arrived at the determination that the single most important element for a family, group, or business to counter the effects of the natural world may be the simplest action of all—the development of a narrative.

What is a narrative?   In basic terms, a narrative is a common history that a family/group shares.   The narrative describes who they are, where they came from, and what is important to them.   The narrative demonstrates what they are made of and highlights that one can navigate extremely difficult obstacles and survive (even succeed) because others before them have faced almost impossible obstacles and still could overcome.    Those with a common narrative are better able see beyond themselves and (because of their ability to do so) develop a core strength.

Researchers have demonstrated in multiple evaluations and interviews that people and groups who have a strong narrative fare better when challenges come because they have an “polar star” to guide them and an “anchor” when confronted by a serious problem or event.   A “polar star” is found in examples of a family or group’s shared history where individuals can see the successes of their predecessors and model their own lives by them.   An anchor is the ability, when difficult challenges arrive, which allows the individual or group to point to challenges that others have faced in the past as examples of how “this too shall pass.”   Therefore, these individuals and corporations are more positive and develop a resiliency to face problems head on.

Some of the early research in this area involved children and was later expanded to larger groups.   The observations made of the children demonstrated that the stronger the child‘s narrative and family history, that he or she had a stronger sense of control over their individual lives.    They develop a “strong inter-generational self” because they realize that they belonged to something larger than themselves.  As a result, they had higher self-esteem and believed that themselves and their family would be able to overcome the problems they faced.   The children became more resilient because they were part of something bigger than themselves.

When September 11th happened, the researchers returned to the children they had observed previously who lived in the area of the tragedy, who had witnessed the events, and many had family members affected by those events.   After this very traumatic incident, the researchers directly observed the ability of the children to cope was a direct result of those who had a narrative and those who did not.

The fundamental conclusion is this:  If you want to have a successful family, group, business environment, or corporation, there must be a clear telling and retelling of a narrative of both positive elements and the ability to bounce back from difficult ones.

How can concept apply in business?   When a group of individuals comes together for a common goal and purpose (such as working for a company), they are usually more effective in good times, adapt when changes occur and are resilient when negative.    A common goal is often described by utilizing a common narrative that everyone can understand and, in most circumstances, relate to.

The history of Harley-Davidson motorcycles is an excellent example of a corporate narrative.   The beginning of Harley-Davidson is a story of middle-America with William Harley and William Davidson developing and manufacturing their first motorcycles in a 10 x 15 wooden backyard shed.   It demonstrates the independent and inventive nature of the company, which most of its riders share.  It also helped in the development of a brand based on customer loyalty. 

The narrative is seen throughout the corporation.   The history is prevalent in their retail stores with displays concerning its founding, pictures of the shed, and classic motorcycles throughout the stores.  The black color, the logo, and font utilized in its early days continue be reflected throughout their products.   The look and style of their motorcycles also point to their past.   They are not just building and selling motorcycles to travel from point A to point B.    Instead they are building a brand that can be recognized and lore that is passed to future generations.

Through its various ownership changes, corporate restructuring, recessions, the Great Depression, and when times seemed bleak for the company, it often fell back on its narrative to keep in business.  In basic terms, the success of the company is based on the success of its narrative.

 I would suggest you take some time and think about your narrative.   What makes you and your business unique?   What can you point to that can become a foundation for success.   Developing a narrative will provide a north star for guidance in times of growth and success and an anchor for stability in times of difficulty.

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

Why Not? A Thanksgiving Business Story

 

From my experience representing companies and business owners, I often observe general themes that all successful businesses possess.    It does not matter the type of business, whether is started in a garage or with investors, or the actual business experience the owners hold.   Often a successful origin of a business begins with the question “why not?”   

Successful businesses are usually started as a solution to a specific problem.   Often when individuals see problems or issues that they determine  are insurmountable or unassailable, they give up, move on to something else, or decide to travel an apparently easier path.   Whether the problem is technical, scientific, or more general in nature, this mental barrier prevents progress.

The difference is that a successful businessperson sees a problem and reacts to it differently.   Instead of giving up, they ask “why not?”   “Why can’t the problem be solved?”   “There must be a way to overcome this problem.”   “What if we try this approach instead?”   “What if we think of the problem from a different perspective?”   Many successful businesses have been created out of attempts to answer these basic questions.

In fact, history is filled with examples of successful individuals and businesses with this “why not” outlook.    A quote by Thomas Edison highlights this attitude:

I have not failed 10,000 times.   I have not failed once.   I have succeeded in proving that those 10,000 ways will not work.   When I have eliminated the ways that will not work, I will find the way that will work.

A successful person does not see a barrier.   Instead, they see a problem that can be solved—the solution has just not yet been discovered.   Instead of an obstacle, they see an opportunity.

I am reminded of one example of this approach around Thanksgiving.   It involves a children’s book and an idea based on “why not?”    When I was young, my favorite Thanksgiving book was Cranberry Thanksgiving by Wende and Harry Devlin.   It is story about Thanksgiving dinner at grandma’s house, a handsome and charismatic stranger, and the uninvited and unsavory guest, Mr. Whiskers.   Grandma’s famous and secret cranberry bread recipe is in danger of being stolen, but is saved by an unlikely hero.    I still can picture the book being read to me in school as I made turkeys with the shape of my hand.   It always brings back fun childhood memories and was a favorite of my younger sisters and brother as well.

Years passed and my eldest child was born.   For his first Thanksgiving, I began my search to purchase a copy of this book.   Unfortunately, I quickly discovered that the book was out of print, the Devlins had passed away, and Cranberry Thanksgiving had been out of the market for several years.   In my search for the book, I found used copies of Cranberry Thanksgiving being sold for up to $150-$200 apiece.   These copies were being snatched up by parents, similar to myself, who wanted to share their favorite childhood books with their own children.

Where I saw a barrier to purchasing a cherished childhood book and memory, Jill Morgan saw a business opportunity.   She had a similar experience to mine when she attempted to locate her favorite children’s book to read to her own children.   Instead of moving on, she asked “why can’t these good children’s books be published and find new homes?”   With that question fresh in her mind she founded Purple House Press whose mission it is to locate and publish children’s books that have been out of print and lost to time.   With this purpose in mind, Purple House Press tracked down copyright holders to classic no longer published children’s books, usually by communicating with authors who had long-retired or the spouses and children of the deceased authors and illustrators.   After obtaining the appropriate rights, Purple House Press would republish and sell these books at a fraction of the cost for which the used copies were being sold on auction sites.  

The authors and illustrators (and/or their families) were happy that their books could find a new audience.  Parents were also happy that they could share their favorite books and memories with their own children.   The Purple House Press approach has been a success and attracted positive publicity from major publications and news organizations as lost children’s books are being rediscovered by a new generation of young readers.  As a result, Purple House Press has sold well-over 500,000 books and publishes several rediscovered books a year.  Where others saw a barrier or no solution, someone else saw an opportunity.   Success then followed.

One of the books republished a few years ago by Purple House Press was Cranberry Thanksgiving.   I eagerly purchased multiple copies and presented them to my siblings.   Now this beloved childhood story is being read by the next generation of my family members each Thanksgiving.

cranberrybooks2

This Thanksgiving I propose that you take a problem or issue that has been a barrier to your business.   Then, say to yourself “why not” and view the problem from a different perspective.    You will be surprised with the results. 

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

Breaking Up is Hard to Do . . . Business Partnership Issues

 

When I first meet with a group of prospective partners who have an idea and want to create a business, one of the questions I ask that often receives the most unique reaction is “what would you like to have in place if this partnership does not work out.”    Often times, the prospective partners, who are still in the afterglow of their new idea and the thought of a business venture, don’t want to discuss if it does not work between them.    They also do not want to discuss what to do if a personality issue or other conflict impacts the business and their chance to be successful.   However, in reality, it is essential that this discussion occur, and key decisions are made before the business is created.

Why is Preparing for Future Disputes Important?

During this initial discussion, I tell these prospective partners that there are three general categories of circumstance that will cause stress and conflict within a business partnership.   These are:

  • Failure of the business

When the business lags or begins to fail, partners start to look to each other to place the blame.   Rarely does a business partner state “this is all my fault.”  Finger pointing begins in earnest between the individuals.

  • Success of the business

Money and success often bring out the extremes in people’s personalities.  Conflicts escalate when the dollar amount is higher.   Rarely does a business partner state “I give all the credit to my other partner.”  Pride begins to impact the business.

  • The business remains the same

Business, like nature in general, abhors the status quo.   Stagnancy is the precursor to problems with the business.  If you are not moving forward, you are actually moving backward.

After I discuss these three scenarios, which can impact any business, they realize that it does not matter the circumstances or good feelings of the moment, it is best to address the question now and have the proper preparations in place.

Strong Corporate Documents and Legal Framework

One of the keys to avoiding partnership issues and future disputes is to both define the business relationship between the partners, and the procedure that is in place when an issue occurs.   This is accomplished by the operating documents created at the initial corporate organization of the business.   These documents may include, a partnership agreement, an operating agreement, and specific corporate bylaws or policies enacted during the first corporate meetings.  

These operating documents provide the proper framework for the business, outlining authority and who is responsible for certain items.   They also will provide the framework to address issues that arise for the business and how disputes will be addressed.   When a business partnership has defined their expectations and individual responsibilities early, the odds of misunderstandings decrease because everyone knows their responsibility, everyone knows the procedure if there is a question, and everyone knows what they are entitled to if the business dissolves.

Even if there are no issues or disputes between the business partners, a strong corporate and legal framework will assist when unexpected contingencies occur.   For example, these documents will address what procedures are to be taken when there is a medical situation, disability, or death of a partner.   They can also provide the framework when an unexpected economic, nature disaster or other development occurs, which often requires decisive action in order for a business to survive.

Conclusion

Although it may seem counterintuitive to prepare for a partnership disputes before a business has begun, it is actually essential that this type of preparation occurs.   If fact, completing strong corporate documents and a legal framework to address these contingencies, increases the likelihood that these negative effects can be avoided.

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

CLAIMS AGAINST AN ARCHITECT

CLAIMS AGAINST AN ARCHITECT

WHEN THEY INVOLVE A BUILDING CODE VIOLATION AND OTHER CONTRACT MATTERS

One contentious area of Arizona law is what duty, if any, an architect or engineer has once a code violation occurs.  Claims against architects are generally based on negligence or negligent misrepresentation.  Although architects and engineers have contracts with their clients (either an owner or a general contractor) the performance of the architect or engineer is generally measured by whether or not the architect or engineer performed his or her services consistent with the ordinary skill and prudence of a licensed engineer or architect practicing in Arizona.[1]  Under this standard, the creation of plans and specifications that do not comply with applicable building codes is not in and of itself enough to impose liability on an architect or engineer.  In other words, failure to comply with the building code is not always considered a failure to meet the required standard of care.[2]  Since an architect merely warrants that plans are adequate and not perfect, it will always be necessary to obtain an expert opinion that an architect’s violation of the building code was a violation of the standard of care.[3]

However, the fact that a design professional met all applicable building codes is not in and of itself sufficient to establish he/she met the standard of care.  As such, an architect who established that he had met all applicable codes and standards may still be subject to a claim for negligence.  In addition, it is not a defense to a claim for negligence that a building inspector has approved a design. 

Contractors who are damaged by reliance on plans and specifications that violate building codes may, however, have claims against architects and engineers even if the contractor does not have a contract with the architect or engineer.  In Donnelly Const. Co. v. Oberg/Hunt/Gilleland, the Arizona Supreme Court held that a contractor who suffers foreseeable injury as a result of an architect’s failure to meet the appropriate standard of care in drafting plans has a claim against the architect even though the contractor does not have a contract with the architect.[4] 

In Donnelly, a general contractor relied on plans and specifications prepared by the owner’s architect while preparing a bid on a project.  After successfully winning the bid and beginning construction, the general contractor discovered significant errors in the project plans and specifications that made construction substantially more expensive than anticipated in the bid.  After completing the project, the general contractor brought a claim against the architect for the extra costs incurred.  In permitting the general contractor to proceed with its lawsuit, the Arizona Supreme Court stated:

Design professionals have a duty to use ordinary skill, care, and diligence in rendering their professional services.  When they are called upon to provide plans and specifications for a particular job, they must use their skill and care to provide plans and specifications which are sufficient and adequate.  This duty extends to those with whom the design professional is in privity and to those with whom he or she is not.[5] 

Finding that it was foreseeable to the architect that a general contractor would rely on its plans while bidding and could be injured if the plans were defective, the Arizona Supreme Court permitted the general contractor’s suit to move forward.[6]

Although there may be an avenue for recovery, design professionals do have options to limit their potential liability.  In Arizona, the Supreme Court has held that an architect or other design professional may properly limit its liability through contract.[7]  In 1800 Ocotillo, L.L.C. v. WLB Group Inc., the Supreme Court held that a clause in an architect-owner contract limiting damages to the amount of fees paid to the architect did not violate public policy and was enforceable.[8]  Often times, contracts entered into between an architect and an owner-developer limit their liability to a certain amount.[9]  These caps in potential liability have been upheld in Arizona.

Negligence Actions

Contractors, architects and even building inspectors may be sued in tort when a negligent action of the contractor leads to personal injury or property damage.[10]   “Negligent conduct is doing something that a reasonable person should realize involves an unreasonable risk of causing an invasion of an interest of another.”[11]  To establish a claim for negligence, a plaintiff is required to show the existence of a duty, violation of the duty, and foreseeable damages caused as a result of the violation.[12] 

Construction that violates building codes can give rise to negligence claims against contractors if the violation leads to a personal injury or damage to property other than the building itself.[13]  As discussed above, violation of a building code may be sufficient to establish the contractor’s duty of care and violation of that duty.[14]  This is referred to as negligence per se, and the doctrine applies when a person or entity violates a safety statute intended for the protection of third parties.[15]  Violation of a building code provision may be negligence per se.[16]  However, violation of the building code does not definitively establish that negligence per se occurred.  This finding depends on several factors with results determined on a case by case basis. 

This principle is described in the Ohio Court of Appeals case Moore v. McCarty’s Heritage, Inc.[17]   In Moore, the court examined the interplay between code violations and negligence when it opined:

A building code provision which prescribes a standard or obligation for a builder to follow in abstract or general terms, permitting alternative choices and use of discretion and setting no fixed and absolute standards of duty, cannot form a basis for a determination that a violation thereof by a builder is negligence per se. . .

[w]here a building code imposes upon a builder a specific duty for the protection or benefit of others and he neglects to perform that duty, he is liable to those for whose protection or benefit it was imposed for any damages which were proximately produced by such neglect.[18]

Therefore, if the code provides requirements and restrictions in abstract and general terms with no fixed duties outlined, the ability for a determination of negligence per se is minimized.   However, if the building code provides definitive and established requirements and a distinct and articulated duty is shown, the ability for negligence per se to be found increases significantly.  This process will involve a fact-intensive and case-by-case analysis of both the code and also the actions in question.

Even if a violation of a building code is held to be negligence per se, the violation leads to liability only if damages occurred and there is causation between the negligence and the damaged caused.  This principal is examined in the New York case Beecher v. Northern Men’s Sauna.[19]   In Beecher, a patron died from smoke inhalation during a fire at the business.  It was argued by plaintiff’s counsel that the architect was negligent because the design of certain exit doors at the building had violated code.  The court rejected plaintiff’s argument and held that even if the architect did violate the building code, there was no evidence provided by the plaintiff that the location and design of the exit doors contributed to the death of the patron.  Since there was no causation between the potential negligent door design in violation of the building code and the smoke inhalation of the patron, the architect could not be held liable for damages.[20]

[1] National Housing Industries, Inc. v. E. L. Jones Development Co., 118 Ariz. 374, 377, 576 P.2d 1374, 1377 (Ariz. App 1978).

[2] See, e.g., Garaman, Inc. v. Williams, AIA, 912 P.2d 1121, 1124 (Wyo. 1996) (architect’s failure to comply with code requirement does not in and of itself establish negligence).

[3] Id.

[4] 139 Ariz. 184, 677 P.2d 1092 (1984).  It should be noted that subsequent case law has limited portions of this opinion for other issues.  See i.e, Flagstaff Affordable Housing Ltd. v. Design Alliance, Inc., 221 Ariz. 433, 212 P.3d 125 (Ct. App. 2009).  However, the basic premise concerning potential lability of architect remains intact.

[5] Id. at 187, 677 P.2d at 1265 (citations omitted).

[6] Id. at 187-88, 677 P.2d at 1295-96.

[7] 1800 Ocotillo, L.L.C. v. WLB Group, Inc., 219 Ariz. 200, 196 P.3d 222 (2008).

[8] Id. at 204, 196 P.3d at 226 ¶¶ 17-21.

[9] It is prevalent that a contract will contain a limitation of any damages to the amount paid to the design professional, which can be substantially less than the actual damaged caused by the defective and negligent design of a project.

[10] Chirco v. Woodward Const. Co., 141 Ariz. 514, 516, 687 P.2d 1269, 1271 (1984).

[11] Wilson v. City of Tucson, 8 Ariz. App. 398, 402, 446 P.2d 504, 508 (1968).

[12] Id.

[13] Chirco, 141 Ariz. at 516, 687 P.2d at 1271.

[14] J.H. Welch & Son Contracting Co. v. Gardner, 96 Ariz. 95, 99, 392 P.2d 567, 570 (1964).

[15] Id.

[16] See, e.g., Pierce v. ALSC Architects, P.S., 890 P.2d 1254 (Mont. 1995) (holding that an architect violated the uniform building code when a door was left in a remodeled building which permitted an employee to gain access to a storage room and fall through a drop ceiling).

[17] 404 N.E.2d 167 (Ohio App. 1978).

[18] Id.at 172.

[19]707 N.Y.S.2d 465 (App. Div. 2000).

[20] Id. at 456-66.

© 2016 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.