Thursday, March 22, 2012

Child visitation prior to the Temporary Hearing

A question was put to me this morning.  Can a mother prevent a father from visitation with his own daughter before the hearing to establish a temporary placement arrangement?

My answer to the question was a hedged "No, but...". 

You see, after being served with process in a family action, the served party falls under the restrictions set forth in Wisconsin Statutes Sec 767.117 "Prohibited acts during pendency of action".  Namely, the served party may neither (a) restrain the liberty of any child of the marriage nor (b) conceal the child from the other parent.

The only two methods I can imagine for preventing the visit would be to hide the child or physically restrain the child.  Thus, if a visit were scheduled to take place after process has been served, then given the prohibitions outlined above, I cannot see any method available to the custodial parent that could prevent it from happening. 

But here's the rub.  If the custodial parent were to use a prohibited method to stop the visit, the wronged party could only bring an action for contempt against the custodial parent.  But, generally speaking, contempt hearings are not immediately scheduled and probably would not take place until after the temporary hearing was already concluded. At that point the issue would be moot.  Thus, in the pendency between the service of divorce petition and the commencement of a hearing that would establish a temporary child placement order, the prohibitions of 767.117 seem to have no teeth!

So, in short, my answer is that a mother may not technically prevent a father from enjoying visitation with his child, but if she tries to prohibit it, there are no immediately available effective enforcement mechanisms at the father's disposal.

Wednesday, March 21, 2012

Stipulated damage clauses are unenforceable if they constitute a penalty for breach

A local company recently brought me a Complaint that had been served upon them, and they asked me to review and counsel them on the same.

The Complaint was brought by a towel and uniform service with whom the client had recently contracted. It alleged in relevant part that my client had breached the parties agreement for toweling services by failing to remit timely payment owed for the last month of services provided.  The Complaint seemed fair enough.  However, the Complaint prayed for damages in the amount of $14,515!!  How could this be?  Were the uniforms and towels they provided weaved with gold or pixy dust?

I asked my client to send me the underlying agreement between the parties so I could figure out how on Earth one month's worth of simple services gave rise to such disproportional damages.

Well, as it turns out, my client signed a four year agreement (mistake number one) with the Plaintiff and the terms of that agreement included a ridiculous "stipulated" damages clause that essentially allowed the Plaintiff, upon the event of breach, to claim damages in an amount equal to one-half of its usual monthly invoices on the account multiplied by the number of months remaining for the term of the agreement.  And since the ridiculously lengthy agreement was only in its fourth month, the Plaintiff Complaint asked for damages equal to 22.5 months worth of service charges (the original unpaid month in the full amount plus one-half month's charges for every remaining month)! .

Unfortunately for the Plaintiff, under our English common law system, one is allowed to collect "damages" for the breach of an agreement, but one is not allowed to collect "penalties".  Why?  Because if the court's allowed for stipulated penalties that exceeded real damages, then a party would be better off hoping the other party would breach the agreement than it would be if the agreement were kept.  That would be an absurd state of affairs. 

That was what we had in the instant case.  Had the "Stipulated Damages" clause been upheld, then the toweling service would have benefited far beyond the amount it was actually damaged by the client's breach.  Here's why.  If the agreement had been fulfilled, the toweling service have had to perform the services, but it have only been entitled to the agreed payment. If the stipulated damage clause were upheld, then upon breach, the toweling service was no longer obliged to perform, freeing it to benefit from being able to perform services for a substitute client, while at the same time it would reap the benefit of 43 half-month payments for  work that it never had to perform. It could have its cake and its meal!

Indeed, at trial we brought evidence showing as much.  And in response thereto, the Court refused judgment for any amount above the actual damages suffered as a result of my client's breach.

The lesson to be learned from this story is twofold.  One, you should rarely sign any service agreement that obligates you to a term of more than 12 months.  If you are satisfied with the service after one year, you can renew for another year. Its almost never to your company's advantage to have it locked into any obligation that stretches out longer than that.

Secondly, if you or your company is in the habit of signing agreements without professional review, beware of clauses labeled either "liquidated damages" or "stipulated damages".  Companies often include these on their standard form agreements without explaining their consequences to the prospective customer.  You should never obligate your company to pay any amounts that are outside the reasonable amount of foreseeable damages.

Tuesday, March 20, 2012

When will the IRS fix their automated FEIN registration

If you register companies as I do, you need to simultaneously provide them with a Federal ID number ("FEIN").  The process used to be simple and easy.  You could do it on-line with a minimum amount of expertise.

For the last two weeks, however, the IRS on-line FEIN application has not worked.  I complain and all I get is an automated response.  It is very frustrating. I cannot believe I am the only one in America who has been put off by this system failure.

Of course, there is always the option of doing a manual application over the phone, if you happen to have three free hours to sit and wait for a live human voice.  Then, of course, they dink you on any little technicality.  Its probably how the IRS got their bad reputation in the first place.

I, however, have had no complaints about the Service in the last few years... until now.  Hopefully, this is nothing more than a "tax season" snafu.  If it represents deeper issues within the Service, we who are forced to occasionally rely on them may be in for a return to "a new dark age" to quote Winston Churchill.

I am back on Blogger with a Personal Blog

On this site, I will be blogging about random personal topics.  I think I will be using it more as something of a personal journal.

It will be somewhat different from the sports topics I normally comment on.  I have not been on Blogger since I moved Bucks Diary to the now defunct network.

I will say it is much better than it used to be, and much easier to use.  Kudos to Google.