Monday, July 30, 2007

Business Law and Litigation - New Maryland Case Law on Accountant Client Privilege

In an important case for Maryland businesses, accountants and lawyers, the Maryland Court of Appeals on Friday July 27, 2007, Court held that there is no exception to the Maryland Accountant-Client Privilege, Maryland Code Courts & Judicial Proceedings Article Section 9-110 in cases involving alleged fraudulent conveyances. BAA, PLC v. Acacia Mutual Life Insurance Company, ___ A.2d ___ (Md. July 27, 2007). A copy of the opinion can be found at the Maryland Judiciary Website HERE.

In so deciding, the Court of Appeals specifically overruled a long-standing Court of Special Appeals opinion, Dixon v. Bennett, 72 Md.App. 620, 531 A.2d 1318 (1987), cert. denied, 311 Md. 557, 536 A.2d 664 (1988).

Litigation - New Fourth Circuit Opinion - "John Doe" Defendants

Last week the United States Court of Appeals for the Fourth Circuit issued an opinion further refining its previous holdings on relation-back of amended pleadings. In Goodman v. Praxair, Inc., ___ F.3d ___ (4th Cir. July 25, 2007), the Court specifically reaffirmed its decision in Locklear that the replacement of a “John Doe” placeholder defendant with an actual defendant does not trigger the relation back doctrine. Specifically, the Court held:

Moreover, the majority of courts agree that Rule 15(c)(3) does not permit substitution for “Doe” defendants after the limitations period has run. See, e.g., Wayne v. Jarvis, 197 F.3d 1098, 1103-04 (11th Cir.1999); Jacobsen v. Osborne, 133 F.3d 315, 321 (5th Cir.1998); Baskin v. City of Des Plaines, 138 F.3d 701, 704 (7th Cir.1998); see also Locklear, 457 F.3d at 367. In denying substitutions of new defendants for “Doe” defendants, some courts base their analysis on the Rule's “mistake” language. See Wood v. Worachek, 618 F.2d 1225, 1230 (7th Cir.1980) (“Rule 15(c)(2) permits an amendment to relate back only where there has been an error made concerning the identity of the proper party and where that party is chargeable with knowledge of the mistake, but it does not permit relation back where, as here, there is a lack of knowledge of the proper party”).

Thus, for example, substitutions for “Doe” defendants after limitations have run would be barred by the two separately stated requirements of Rule 15(c)(3) that focus on the new party. Rule 15(c)(3)(A) requires that the change not prejudice the party being substituted for Doe, and Rule 15(c)(3)(B) requires that the new party knew or should have known within the limitations period that but for a mistake, it would have been a party. Most parties substituted for “Doe” defendants would be protected against being added either because they were prejudiced or because they did not have proper notice. Moreover, while parsing among different kinds of mistakes does not typically aid application of the Rule, naming Doe defendants self-evidently is no “mistake” such that the Doe substitute has received proper notice.

As a result of the decision in Praxair, it remains the law in the 4th Circuit that suing a “John Doe” defendant does not preserve the statute of limitations against any real defendant.

Friday, July 27, 2007

Business Law - Commercial Landlord & Tenant - Modification of Lease/Contract

In a recent case I represented a small business here in Rockville that had operated a restaurant in a local shopping center in Maryland. The restaurant had been a tenant in the shopping center pursuant to a detailed written lease for the previous ten years or more. The lease required that rent be paid by check mailed to the landlord’s office due by the 5th day of each month. The lease provided that there would be a late fee (5% of the rent payment) and interest (at 24% per year) on late payments.

During the course of the lease, however, the landlord came into my client’s restaurant and told my client that my client should no longer mail his rent checks to the landlord, and that, instead, my client should give the landlord the rent checks when the landlord came to the shopping center. From that time on, my client had followed the landlord’s instructions and paid the landlord during the landlord’s periodic (usually monthly) visits to the restaurant, which were rarely before the 5th day of any month.

After many years of this method of rent payment, my client decided to move his business from Maryland to Virginia. My client told the landlord of his intention and the landlord immediately told my client that my client owed a significant sum of money for late fees and interest under the lease because the rent payments were always late when the landlord came and picked them up. My client refused to pay interest and late fees and the parties went to court on that and many other issues.

In Court, the landlord argued entitlement to the late fees and interest denying that he requested the in-person rent payments and arguing that even if he did request that method of payment, the landlord’s alleged oral request for in-person late payments could not modify the lease’s requirement of payments by the 5th day of each month. The lease provided that it could not be modified by oral agreement, and that there would be no waiver of any of the terms of the lease unless that waiver was in writing.

In Court we argued that the landlord’s request for in-person payment and the parties’ practice of hand payment of rent was an enforceable oral modification of the lease. The Court agreed that if we could prove the oral agreement and the past practice, we could defeat the landlord’s claim for late fees and interest at trial. Our argument was based upon Hoffman v. Glock, 20 Md.App. 284, 288-289 (1974). In that case, the Court of Special Appeals held that: “Notwithstanding a written agreement that any change to a contract must be in writing, the parties by subsequent oral agreement and by their conduct may waive the requirements of a written contract.” Ultimately, the landlord could not prove the amount of late fees and interest at trial and agreed to walk-away from its claims.

Whether you are representing the landlord or the tenant it is important to know that this argument (oral modification to a written contract) can be made and that you cannot always count on the written lease, or any written contract, to preclude a party from arguing that the parties modified their contract by subsequent oral agreement.

Tuesday, July 24, 2007

Business Law - Residential Landlord Licensing

One very common small business is that of the residential landlord. Just as with any small business, this one should not be entered into without first considering the laws that govern it. We represent landlords and tenants in both residential and commercial landlord tenant lease negotiations and disputes. My partner David W. Lease conducts seminars on landlord tenant law twice a year and both of us regularly are in Court on both simple and complicated issues facing landlords and tenants.

In Montgomery County, Maryland, as well as other jurisdictions within the State (City of Rockville and City of Gaithersburg have licensing departments separate from the County’s Department of Housing and Community Affairs). In order to obtain a license, the landlord must file an application and pay a fee. By so doing, the landlord subjects the property to inspections by the County so that the government can determine whether the rental housing is safe and maintained in accordance with the applicable building code.

Being a licensed landlord is important, because failing to obtain a license subjects the landlord to a fine of $500.00. More important, however, is that failing to have a license, whether that failure is intentional or unintentional, may preclude the landlord from collecting rent from its tenants, and may otherwise render a lease illegal and invalid.

Licensing information can be found here and the application for a license is located here. The sample lease approved for use in Montgomery County is located here.

In an upcoming article, I will discuss some of the most important Maryland appellate court opinions in regard to landlord licensure.

Business Law - Important Clauses for Small Business Contracts - Funds Held in Trust for Contracting Partner

In some instances your company may have a business opportunity that it cannot contract for on its own and it needs the assistance of another company to help it pursue that opportunity. Oftentimes your company may be willing to agree to pay a percentage of the revenue received on the deal to the company that is providing its assistance. You may consider having the revenue flow through the company assisting your company. That company can receive 100% of the funds from the customer and agree to send you 98% of those funds, keeping a 2% fee for its services. If the revenue flows through the company assisting your company you can run into a serious problem: What happens where the company assisting you receives payment from the customer, and then promptly files for bankruptcy before paying you your 98% of the revenue on the deal?

There is no easy answer to this question. If you do nothing, then the revenues received by your business partner will be a fund for the creditors of your bankrupt business partner, and you will be an unsecured creditor and unhappily receive pennies on the dollar, if anything.

One way to protect against such a catastrophe is to include “trust fund” language in your agreement with your business partner. If the funds in question are “trust funds,” then that can be excluded from the bankruptcy and paid over to your company. Specifically, if your company is XYZ Company and your partner is Partner Company, and you have agreed to pay Partner Company 2% of the revenue received by it, an example of such language could be:

Partner Company agrees that all funds received by it from the customer are to be received as trust funds, and are to be held in trust for the benefit of XYZ Company. Partner Company shall not have any beneficial interest in the funds received from the customer except to the extent of 2% of the funds received.

While such a clause is no guarantee that you will be safe in the bankruptcy situation, it will certainly be helpful in your effort to protect your business. A case illustrating the "trust fund" situation is Holmes Environmental, Inc., 287 B.R. 363 (Bankr.E.D.Va. 2002). In that case, the Court reviewed the state of the law in Virginia in regard to the exclusion of property from the bankruptcy estate under trust theory. Specifically, in Holmes, the Court held that funds that were held in a trust created by the debtor were not property of the debtor’s estate. In so holding, the court quoted Old Republic Nat. Title Ins. Co. v. Tyler (In re Dameron), 155 F.3d 718 (4th Cir. 1998), as follows:

Virginia law recognizes three basic forms of trust. Of these, the two that are potentially relevant to the instant case are the express (or actual) trust and the constructive trust. An express trust is created when the parties affirmatively manifest an intention that certain property be held in trust for the benefit of a third party. An express trust may be created "without the use of technical words." All that is necessary are words, or circumstances, "which unequivocally show an intention that the legal estate was vested in one person, to be held in some manner or for some purpose on behalf of another ...,". In contrast to an express trust, a constructive trust "arise[s] by operation of law, independently of the intention of the parties...." Such trusts "occur not only where the property has been acquired by a fraud or improper means, but also where it has been fairly and properly acquired, but it is contrary to the principles of equity that it should be retained...." With either form of trust, Virginia law recognizes the beneficiary as "equitable owner of the trust property." Holmes, 287 B.R. at 375 (citations omitted) (emphasis added).

While we have not litigated this issue through to a court decision, because of language in our client's contracts, we have been able to argue the issue and reach a favorable settlement in a bankruptcy case where our client would otherwise have lost more than $300,000.00. Before contracting to pay another company to be involved in an important business deal, you should always have counsel assist you in the process of developing agreements that protect your interests.

Monday, July 23, 2007

Business Owners - New Minimum Wage Goes Into Effect July 24, 2007

Business owners must take note that July 24, 2007 is the effective date for the increase in the Federal Minmum Wage. The Federal Minimum Wage will increase from $5.15 per hour to $5.85 per hour.

This is the first of three increases in the Federal Minimum Wage. The next increase (to $6.55 per hour) goes into to effect on July 24, 2008 and the final increase (to $7.25 per hour) goes into effect on July 24, 2009.

In Maryland, the minimum wage is currently higher than the Federal Minimum Wage and requires employers to pay employees working in Maryland at least $6.15 per hour. On July 24, 2008, it will increase to $6.55 per hour. On July 24, 2009 it will increase to $7.25 per hour.

In the District of Columbia, the minimum wage is also higher than the Federal Minimum Wage and is now $7.00 per hour. On July 24, 2008, it will increase to $7.55.

In Virginia, the state minimum wage law does not contain current dollar minimums. Instead the state adopts the Federal minimum wage rate by reference. The State law excludes from coverage any employment that is subject to the Federal Fair Labor Standards Act.

A link to the minimum wage rates in all of the states is found here.

Thursday, July 19, 2007

Interesting Defense Issues Under the Maryland Anti-Spam Act - MCEMA - the Impropriety of Suing "John Doe" Defendants

Another issue that is being litigated in cases under Maryland’s Anti-Spam Act, MCEMA, is whether a plaintiff in such cases can sue “John Doe” defendants, or other place-holder defendants. Plaintiffs in these cases often claim that they do not know the true identity of the party responsible for the email and sue unknown defendants as “John Doe” or “Bulk E-mailers 1-600.”

Attempts to sue unknown defendants under the name “John Doe” is not permitted under Maryland law. The Court of Special Appeals in Nam v. Montgomery County, 127 Md. App. 172 (1999), held that:

Pleadings against fictitious persons are often called “John Doe” pleadings. There is generally no authority to proceed against a fictitious party in the absence of statute or rule. 59 Am.Jur.2d Parties § 16 (1987, 1998 Cumm. Supp.) While some states by statute or rule authorize John Doe pleadings and then the subsequent substitution of the person's true name when discovered, Maryland is not one of them. Although Maryland does not recognize “John Doe” pleadings directly, we do permit liberal amendment of pleadings to add a party or correct the misnomer of a party.
Because it is impermissible to bring actions against fictitious persons in Maryland, doing so does not preserve the statute of limitations (the deadline to commence a lawsuit) against any unknown defendants. Moreover, the doctrine of “relation back” does not act to preserve claims against unknown defendants. In Locklear v. Bergman & Beving AB, 457 F.3d 363 (4th Cir. 2006), the Fourth Circuit affirmed the District Court’s dismissal of an amended complaint on limitations grounds. The Fourth Circuit held:

Although Rule 15(c)(3)(B) speaks broadly of a “mistake concerning the identity of the proper party,” we have, in analyzing the scope of this rule, distinguished between mistake due to a lack of knowledge and mistake due to a misnomer. In so doing, we have not viewed lack of knowledge of the proper party to be sued as a “mistake” as that term is used in Rule 15(c)(3)(B). In the principal case on point, Western Contracting Corp. v. Bechtel Corp,we adopted the Seventh Circuit's holding that Rule 15(c)(2) permits an amendment to relate back where that party is chargeable with knowledge of the mistake, but it does not permit relation back where, as here, there is a lack of knowledge of the proper party. 885 F.2d 1196, 1201 (4th Cir.1989)(quoting Wood v. Worachek,618 F.2d 1225, 1230 (7th Cir.1980)) (internal citations omitted).

We have also noted that “Rule 15 has its limits, and courts properly exercise caution when reviewing an application of the rule which would increase a defendant's exposure to liability.” Intown Properties Management, Inc. v. Wheaton Van Lines, Inc., 271 F.3d 164, 170 (4th Cir.2001); see also Rennie v. Omniflight Helicopters, Inc., No. 97-1524, 1998 WL 743678 4th Cir. Oct.23, 1998). Rule 15, moreover, must be applied especially cautiously when an amendment that “drags a new defendant into a case” is proposed. Intown Properties, 271 F.3d at 170.
Under the reasoning in Locklear, the fact that a plaintiff in an MCEMA case or any other case previously sued “John Doe” in its original Complaint does not toll the statute of limitations against previously unknown defendants. As a result, anytime you are faced with defending a case where “John Doe” is sued, it would be appropriate to move to dismiss claims against all such fictitious defendants.

Wednesday, July 18, 2007

Interesting Defense Issues Under the Maryland Anti-Spam Statute - MCEMA - Excessive Statutory Damages

Another interesting legal issue yet to be decided under the Maryland Anti-Spam Act, MCEMA, is whether the statute’s damages provision is enforceable in light of the “due process” clause of the Fourteenth Amendment to the United States Constitution. The due process clause of the Fourteenth Amendment provides that: “Nor shall any State deprive any person of life, liberty, or property, without due process of law.”

MCEMA Section 14-3003, fixes statutory damages at $1,000.00 per electronic mail received by an interactive service provider, and $500.00 per electronic mail received by an ordinary recipient. Maryland law recognizes “that a defendant also enjoys an additional constitutional right, under the Due Process Clause of the Fourteenth Amendment, not to be subjected to an excessive punitive damages award.” Darcars Motors of Silver Spring, Inc. v. Borzym, 818 Md.App. 1159, 1186 (2003), citing, inter alia, BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996).

The United States Supreme Court in the BMW v. Gore case held that the “guide posts” for considering the constitutionality of punitive damages under the 14th Amendment include an assessment of “(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the award imposed in comparable cases.” Considering those “guide-posts” in some cases under MCEMA, the “degree of reprehensibility,” is fairly benign. Plaintiffs often contend that a defendant merely assisted in the transmission of unsolicited electronic mail – not particularly outrageous conduct warranting extremely harsh punishment. Reviewing the “disparity of actual harm when compared to the potential punitive damage award” as required by Gore shows a complete lack of relationship between actual harm and the punitive award. That is, MCEMA does not require any showing of actual harm suffered by anyone.

The Gore “comparable cases” component is instructive in showing how outrageously excessive the damages award can be in cases under MCEMA. Under Maryland Code Annotated Criminal Law Section 3-805.1(e)(2), the Attorney General is allowed to bring a civil action in cases of unsolicited commercial electronic mail and can claim only between $2.00 and $8.00 per electronic mail received by the “victim” of such electronic mail. Even under CAN-SPAM which, as shown in the preceding post has been held to preempt state statutes similar to MCEMA, the damages allowed are far more limited than the damages authorized under the Maryland Act. Under CAN-SPAM, 15 U.S.C. §7706(g), if an “Internet access service” brings a civil action, it may seek only actual damages, or $250.00 per e-mail that has false or misleading header or “from” line information, and $25.00 per e-mail that otherwise violates that Act (including e-mail that has a misleading “subject” line). The Act then allows for “aggravated” damages (of up to three (3) times the statutory damages ($750.00 or $75.00) depending on the character of the e-mail), and for the reduction of damages under certain circumstances.

Remarkably, under well settled Maryland law, a victim of an accident caused by a drunk driver cannot obtain punitive damages without proof of the specific intent to injure the particular individual who is injured. See, e.g. Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 450-463, 601 A.2d 633, 647-654 (1992) (overruling a long line of cases which, in certain ill-defined types of tort actions, permitted the recovery of punitive damages on an "implied malice" basis). Under MCEMA, however, an entity that provides assistance in the transmission of electronic mail, whether or not it has actual knowledge of the electronic mail or its destination in Maryland, is exposed to being hauled into Court in Maryland to face severe punitive damages whether or not there are actual damages suffered by anyone.

Because MCEMA may subject out-of-state persons and entities to these damages, without any requirement that those persons knew they were sending mail into Maryland or even any requirement of actual damages, MCEMA defendants should argue that MCEMA violates the due process clause of the 14th Amendment, rendering its enforcement unconstitutional.

Tuesday, July 17, 2007

Interesting Defense Issues Under the Maryland Anti-Spam Act - MCEMA - CAN-SPAM's Preemption of State Anti-Spam Statutes

One of my practice areas is the defense of cases brought under the Maryland Anti-Spam Act (“MCEMA”) and the Federal statute known as CAN-SPAM. I have represented companies involved in online marketing that have unwittingly become caught-up in these cases. These cases are very interesting and because they are relatively new, there is a lot of uncertainty as to the status of the law on many issues affecting their outcome.

I am currently before the United States District Court for the District of Maryland arguing that the MCEMA is preempted by CAN-SPAM. CAN-SPAM on its face states that it “supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent any such statute, regulation, or rules prohibits falsity or deception in any portion of a commercial mail message or information attached thereto." CAN-SPAM, 15 U.S.C. § 7707(b)(1).

MCEMA broadly regulates electronic mail that has the “capacity” or “tendency” to deceive. As a result, we are arguing on behalf of our clients that MCEMA regulates e-mail that may not contain any false information and it regulates e-mail that is not actually deceptive.

By regulating e-mail beyond the very limited exemption in the CAN-SPAM, the Maryland legislature crossed the line into preempted territory. If the legislature had simply written the Act to prohibit e-mail that is actually false or deceptive, mirroring the language in the Federal Act’s exemption, it could have remained on its side of the line.

In a 2006 case, Omega World Travel, Inc. v. Mummagraphics, Inc., 469 F.3d 348 (4th Cir. 2006), the United States Court of Appeals for the Fourth Circuit held that the Oklahoma anti-spam act at issue in that case was preempted by CAN-SPAM. Our position is that like the Oklahoma statute, MCEMA should similarly be deemed to be preempted by application of CAN-SPAM.

Other defendants in the case have already raised the preemption argument without success. It remains to be seen, however, how the Court will resolve the issue in regard to my clients. Moreover, the case would present very interesting issues for appeal, as the Fourth Circuit has already ruled that a statute similar to the MCEMA is preempted.

Monday, July 16, 2007

Appellate Victory - Real Estate Breach of Contract Case

The next post shows the importance of a fee-shifting clause. This time, in the context of a standard real estate sales contract.

Recently we were hired by a local home seller who was frustrated when the couple purchasing his home refused to go to closing. The purchasers contended that they had not received the Home Owners Association Disclosure Documents (“HOA Documents”) to which they were entitled under Maryland Law. After investigating the matter, we learned the purchasers’ real estate agent had previously told the seller’s real estate agent that he had in fact received the HOA Documents.

We demanded that the purchasers go to closing. The purchasers refused. After some time, the seller re-sold his home, but he suffered a loss due to a downturn in the real estate market. He also had incurred carrying-costs during the months that had passed between his original closing date and the date that he sold to the subsequent purchasers. The total of his damages was approximately $20,000.00.

Eventually, the case was tried before a jury in the Circuit Court for Montgomery County, Maryland. The jury found that the purchasers’ real estate agent had received the HOA Documents on behalf of the purchasers, and awarded our client just under $20,000.00 in damages. After trial, we submitted a petition for payment of our attorneys' fees, and the purchasers were found liable for approximately $17,000.00 in legal fees incurred by our client.

The purchasers then appealed the jury’s verdict to the Court of Special Appeals of Maryland. The Court of Special Appeals affirmed the jury verdict, finding that the purchasers had waived most of their appellate arguments, and also finding that a real estate agent’s receipt of documents constituted receipt of those documents by his clients.

Once the case returned to the Circuit Court, we claimed entitlement to reimbursement of our client's attorneys fees incurred during the course of the appeal. The Purchasers settled, paying out an additional $12,000.00 in legal fees. All tolled, our client collected all of his legal fees and all of the damages awarded by the jury. Without the fee-shifting clause, the case may not have been worth litigating.

A copy of the unreported opinion can be viewed as a PDF document here: Click Here for the PDF File

Saturday, July 14, 2007

Business Law - Important Clauses for Small Business Contracts - Fee Shifting

I find myself explaining the “American Rule” on attorneys’ fees at least a couple of times per week, mostly to the owners of small businesses who need to bring collection claims against customers. Under the “American Rule,” each party to a dispute pays its own attorneys’ fees, whether that party wins or loses the case. This is in contrast to the “English Rule.” Under the English Rule, the loser in the dispute pays the winner’s legal fees.

In the United States the American Rule is the law, and you can only recover your legal fees in very limited situations: (1) where you have an agreement providing that the loser pay legal fees; (2) where a statute provides that the loser pays (for example: civil rights cases, consumer protection act cases); or (3) where a party acts in bad faith or without substantial justification.

Because we operate under the American Rule, one of the most important clauses that any business can have in its agreements is a clause mandating that the losing party in any dispute must also pay the winning party’s legal fees and costs. A sample “fee-shifting” clause is as follows: "The prevailing party in any dispute arising out of or related to this agreement shall be entitled to an award of its reasonable attorneys’ fees and costs."

This type of clause is so important because of the situation that occurs without it. If your business is owed $15,000.00 by one of its customers, and you bring your case to your lawyer to file suit, your lawyer is likely to tell you that the legal fees could be $5,000.00 to bring that matter through your local court system from filing through trial. As a result, immediately the value of your claim is arguably diminished by the cost of bringing the claim: reducing your best case scenario to $10,000.00.

By contrast, if you have a fee-shifting provision in your customer agreements, then the value of your claim is not automatically diminished by your expected legal fees. Instead, if you prevail in your case, then your best case scenario is a $15,000.00 award for your underlying collection claim, plus a possible $5,000.00 attorneys’ fee award.

It makes sense, particularly for the small business owner, to have a business lawyer review your standard contracts to make sure that those contracts include fee-shifting clauses. This is particularly so in those contracts that would form the basis for collecting your company’s revenues.

Friday, July 13, 2007

How Not to Answer Questions at Deposition

This is an article previously posted on my website: or

In the article, I have written about a recent deposition taken in a civil case arising from a dispute between one business owner (my client) against the other owner who had improperly used the company's funds for his own benefit with his co-owner's permission.

The deposition became "colorful" when the witness was confronted with the checks that he had written to his own creditors out of the business' bank account.



In our litigation practice one of the most important tools we have at our disposal is the deposition. In a deposition, we are able to ask questions of parties to the proceeding, and other witnesses. The question and answer session is transcribed by a court reporter. Prior to any of our clients having their depositions taken, we always insist on meeting with our client to discuss the “do’s” and “don’ts” of deposition testimony. One of those “don’ts” is: “don’t be argumentative and hostile to the lawyer asking you the questions;” another is “don’t use profanity.”

What follows is an excerpt from a recent deposition that illustrates how NOT to answer questions in a deposition.

Q. Why didn't you just pay [your lawyer] out of your own personal bank account?
A. Because I didn't see a need to.

Q. I'm showing you what's been marked as Exhibit Number 6 to this deposition.

[The document was a photocopy of a business check written by the witness to one of his personal creditors.]

Can you tell me what that is?

[The answer could have been as simple as “a copy of a check.”]

A. That is an installment loan from the business to Suntrust Bank, endorsed by me on the -- on the 12th 19-05, basically further saying that since the business wasn't making any money, I could pay some personal payments.

[Remember - the document he was to identify was a copy of a check.]

Q. Okay. That's a check that you wrote and you signed off the company's account to pay a debt that you had with Suntrust Bank, correct?

COUNSEL FOR DEFENDANT: I'm going to object. I think he's just answered. He said it was a business loan.

COUNSEL FOR PLAINTIFF: He wasn't answering in a language that I understand.


Q. Well, that check is not an installment loan, correct?

COUNSEL FOR DEFENDANT: You're asking him is this check an installment loan?

COUNSEL FOR PLAINTIFF: You know, whatever anybody else thinks of anybody in this room, I asked what that document is and the gentleman said it's an installment loan.

THE WITNESS: That's right.
Q. It's a check, right? It's a copy of a check?
A. I don't know where you're going, my friend, but, yeah, it's a *%@ing check.

[It’s not usually a good idea to use profanity on the record at a deposition]

Q. Right.
A. What is wrong with you?

[The witness is being argumentative and hostile]

Q. That's why it's an easy question to answer.
A . That's what I said. I answered. It's a check.
Q. You said it's an installment loan.
A. It's a check for an installment loan. That's what I said.
Q. Now, and you wrote it.
A. *%@ing moron.

[This is additional profanity and a personal attack on counsel: that is never appropriate at a deposition]

COUNSEL FOR DEFENDANT: Hey, watch your language.


Q. You wrote it, correct?
A. Yes, I did.
Q. And you signed it?
A. I did.
Q. And you paid one of your creditors with that money?
A. Absolutely, with pleasure.

In this excerpt, a witness was being asked a simple question: to identify a document being shown him at the deposition. The document was a check written by the witness from a corporate bank account to pay his personal expenses. One can infer that because the witness felt “caught” by the question, he answered evasively, and then directed his defensiveness at the lawyer asking him the questions by using profanity.

Because deposition transcripts are routinely used in court filings, for impeachment at trial, and for other purposes, it is not appropriate to turn a deposition into an argument, particularly an argument laden with profanity.

RockvilleLaw First Blog

This is the first Blog entry of Jeffrey D. Goldstein at RockvilleLaw. Jeffrey D. Goldstein is an attorney practicing with the law firm of Smith, Lease & Goldstein, LLC in, (surprise) Rockville, Maryland. We are findable on the web at or

On this RockvilleLaw Blog, I will strive to provide useful and interesting information related to my law practice which includes civil litigation of real estate, construction, collection, corporate, commercial and residential landlord/tenant and many other matters.

In addition to representing individuals and companies in varied litigation, a large part of my practice is serving as outside general counsel to a number of local businesses.

My business clients include companies that:

Provide web-hosting, network administration and Internet related services;
Develop Alternative Education programs for state and local governments;
Provide design, printing, and duplication services;
Enagage in transportation planning for state and local governments;
Are government contractors providing networking, cabling, and software development services;
Organize trade shows throughout the country;
Provide fire and water restoration services;
Construct home improvements and build new construction;
Own and operate automotive dismantling and recycling centers;
Provide real estate title services; and
Manage residential properties.

However you have made it to this Blog, thank you for taking the time to read this. I hope to post some interesting topics, or at least topics that are interesting to me.

Jeff Goldstein