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STSW lawyers Bill Sinclair and Anna Skelton recently convinced a New Jersey federal judge that he should compel arbitration of their suit, effectively dismissing a federal complaint. The plaintiff, Precision Funding Group, sued its competitor, National Fidelity Mortgage, for alleged interference with contracts and business opportunities (among other business torts). PFG based its complaint in large part on the actions of two former employees who left PFG to work for NFM. In addition to its suit against NFM, PFG initiated arbitrations against its former employees pursuant to a clause in their employment agreement, drafted by PFG, that required mandatory arbitration.
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Generally speaking, a Maryland corporation provides protection to individuals from personal liability associated with debts of the corporate entity. When a plaintiff or creditor is able to go after an owner’s personal assets, it is commonly called “piercing the corporate veil”.

Maryland law is crystalline that the corporate entity will be disregarded only when necessary to prevent fraud or to enforce a paramount equity. The mere fact that all or almost all of the corporate stock is owned by one individual or a few individuals will not afford sufficient grounds for disregarding corporateness Continue reading →

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Simply put, an insurance agent has no general duty to advise its insureds, with regard to essentially anything after the issuance of the policy. In Maryland, as well as other jurisdictions, the basis for not holding agents to a standard of care stems from a fear that to do so would create a situation where the tort floodgates would open to allow claims against brokers whenever an incident surrounding the policy occurs. While the question of duty can become more complex when the agent is acting on behalf of the insured, as opposed to the insurance company, the question is not affected in a relevant way.

Regardless of the status of the agent, when viewed exclusively in the insurance context, once the policy is issued, the insured is responsible for noticing any problems with the policy and bringing them to the attention of the agent immediately. With regard to administration of the policy following issuance, the basis for not requiring a duty of care stems from a belief that such would require an agent to continuously monitor a clients assets and adjust coverage accordingly. Since agents are generally in a position where they must rely on the information given to them by the insured, imposing a duty of care is unreasonable.
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On of the most common dispute between businesses involves a tort know as tortious Interference of contract. Maryland recognizes two types of tortious interference claims: “inducing the breach of an existing contract and, more broadly, maliciously or wrongfully interfering with economic relationships in the absence of a breach of contract.” Kaser v. Fin. Prot. Mktg., Inc., 376 Md. 621, 628 (2003).

The two claims share the same elements – intentional acts done with the unlawful or wrongful purpose to cause damage to plaintiff’s lawful business with actual damage resulting – and can arise only out of the relationship between three parties, the two parties to the contract and a separate interferer. The three-party relationship applies equally in the instance of a business relationship where no express contract exists; however, in such situations, the right of an individual to interfere is treated more broadly.
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