Business Law

Texas Trademark Law

A trademark is a brand’s identification and can be a useful part of any business. Before using or registering a trademark, it is important to understand how Texas trademark law works.  What Is a Trademark in Texas? The Texas Secretary of State (SOS) defines a trademark as a mark “used in connection with tangible goods or products.” Under Texas trademark law, it is a “word, name, symbol, or device, or any combination of those terms” used to identify and distinguish one person’s goods from another and identify its source.  Keep in mind that trademarks and service marks, while similar in many respects, are different. A service mark is used to identify a service, rather than a product or good. How Do I Get a Trademark? There are two ways to obtain a trademark in Texas. First, by simply using a mark in connection with your products, you acquire common law ownership rights. Second, you can register your mark with the SOS or United States Patent and Trademark Office (USPTO). Common Law Ownership Rights There is no requirement to register a trademark to obtain ownership of it. If you use the mark in commerce in connection with your products or goods, then you own the trademark.   Registering a Trademark While common law ownership rights might be the quick and easy option for owning a trademark, Texas does not provide the same rights as it does to owners of registered trademarks. There are certain benefits to registering with the SOS. Notice Registration with the SOS alerts the state of Texas that you claim ownership over a trademark. Before someone else applies to register a similar mark, they are put on notice that the trademark is already registered. If you intend to use your trademark throughout the country, you can register it with the United States Patent and Trademark Office (USPTO). This provides notice to the rest of the country that you claim ownership of the trademark. Proof of ownership Once you receive your certificate of registration, you have proof of the following: Valid registration, Ownership of the trademark, and Exclusivity over the use of the trademark. This may be useful if someone else is accusing you of using their mark. Legal Protection  Texas trademark law allows you to sue someone for infringing on a registered mark. Plaintiffs who are successful with their trademark infringement cases may be awarded the following:  An injunction prohibiting the infringer from using and profiting from your trademark, The amount of profits the infringer made by using the trademark, and Attorney fees. The amount of the award cannot exceed three times the amount of actual profits the defendant made by using the trademark.   Registering your trademark with the SOS does not guarantee you have the superior right to use the mark. For example, you could be unaware that someone else has common law ownership rights over the mark because the mark is not registered. When processing a registration application, the SOS looks only at those marks registered with the SOS and the USPTO. The applicant is responsible for conducting a more thorough check to avoid infringing on someone else’s mark. What Do You Need to Register a Trademark? There are three requirements to register a Texas trademark. First, the mark must be “in use” before you file the application. Second, the mark must be distinctive. Third, the mark cannot be so similar to any other registered mark that it would confuse or deceive consumers.    Any individual, partnership, incorporated entity, or other legal entity can own and register a Texas trademark. How Long Does a Trademark Registration Last? Texas trademark registrations expire after five years. To re-register a trademark, the owner must submit a renewal to the SOS office during the last six months of the five-year registration period. The SOS requires that the mark still be in use at the time of renewal. Do You Need a Trademark Lawyer? Some businesses need help working through the registration process while others may be facing a trademark infringement accusation. In either situation, a Texas trademark lawyer is incredibly beneficial. Trademark Registration  Before even starting the registration process, you must know what actually qualifies as a protectable trademark. Between Texas statute and case law, there are legal tests and doctrines that determine what qualifies. Next, the application process to register the trademark brings its own set of complexities. According to the SOS, it initially rejects a majority of applications submitted by non-attorneys. Thus, it is important to hire an experienced attorney who can help you satisfy the legal requirements and accurately complete your application.  Trademark Infringement Cases As discussed above, both registered and unregistered trademarks are protected. However, there is no Texas trademark authority who can enforce your rights. If you believe someone is using your trademark, a lawyer can ensure your rights are protected through a trademark infringement claim. These cases can be complex, but at The Hunnicutt Law Group, our litigation lawyers have successfully represented businesses involved in trademark infringement disputes.  Contact The Hunnicutt Law Group Today Whether you need to register a trademark or believe you have a trademark infringement case, we can help. Founder Stephen Hunnicutt brings over 30 years of legal experience to his clients, providing zealous advocacy and personal attention. Contact us today so you can get back to business. 

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Business Law

Texas Whistleblower Act & Whistleblower Protection Overview

Are you a whistleblower in the state of Texas? Get your questions answered by an attorney ASAP. Call 214-361-6740 or contact us online with your questions. If you are a public employee in Texas and you discover that your employer has violated state, local, or federal law, you may be wondering what your options are. Of course, you don’t want to jeopardize your employment, but you also understand right from wrong. The good news is that you have options for protection under the Texas Whistleblower Act.  What Is the Whistleblower Act in Texas? According to Texas Government Code, Chapter 5, Section 554.002, “The Texas Whistleblower Act protects public employees who make good faith reports of violations of law by their employer to an appropriate law enforcement authority.” Whistleblowers play an important role in keeping an eye out for corporate and government wrongdoing. An employee who discovers that their employer is engaging in unlawful conduct must choose between risk of the behavior continuing, and potentially being found partially responsible, or facing potential retaliation from the employer. Texas whistleblower protections serve to prevent retaliation and make this ethical choice much easier.  Who Is Protected by the Texas Whistleblower Act? The law applies to people employed by local or state government entities. This includes employees of state education institutions, commissions, boards, law enforcement, bus drivers, and others. It does not apply to employees in the private sector except for some circumstances in the medical field.  How to Establish a Claim for Retaliation Under the Texas Whistleblower Protection Act There are a number of factors that must apply for a whistleblower to bring a successful claim for retaliation. These include: The Texas whistleblower was a public employee; They acted in good faith when making the report; The reported behavior of the agency or public employee was unlawful; The report was made to an appropriate law enforcement authority; and The employer took adverse action against the employee in response to the report.  Details can be important when determining how to proceed in blowing the whistle on your employer.  Violation of the Law You do not have to know the exact law that was violated. Most people have a moral compass that helps to determine whether an action was right or wrong, and you must believe that the action was wrong and egregious enough to justify an official report rather than conversation with the employer.  Appropriate Authorities  One stipulation of blowing the whistle in Texas is that the report must be made to an appropriate law enforcement authority. There have been circumstances where reporting to the wrong authority has impacted the case. Depending on your circumstances, you may consider discussing the action with an attorney to determine the correct authorities to approach.  Retaliation Tactics Retaliation can come in many forms. It’s common for whistleblowers to be fired by their employers, but this is not the only method of retaliation. Employers may try to disguise the retaliation using other justifications. If your employer treats you unfairly after you have reported their illegal behavior, this may be considered retaliation. The type of retaliation will determine what kind of legal action you take. In some circumstances you may make a report of the retaliation to another organization for review, such as the company human resources department or the Equal Employment Opportunity Commission. An experienced whistleblower attorney can help you decide your next steps.  Compensation for Texas Whistleblower Retaliation The amount of compensation you receive in a claim against your employer for retaliation depends on the strength of your claim and extent of damages attributable to the retaliation. In a successful case for wrongful termination, an employee may entitled to: Lost wages and benefits as a result of the termination,  Reinstatement of employment,  Wages lost while searching for new employment,  Out-of-pocket expenses as result of searching for a new job, and  Attorney fees.  In cases involving harassment or discrimination, you may also be entitled to compensation for “pain and suffering.” Depending on the extent of your employer’s conduct, a court could also choose to award punitive damages to punish the behavior and set an example for similarly situated employers.  Why You Need an Attorney It is extremely difficult to pursue a whistleblower claim without legal representation. An employer will virtually never openly admit that they have retaliated against a whistleblower employee. You will need to have proof of the wrongdoing as to the legal violation of the employer and the retaliation conduct. Whistleblowing is a sensitive process, and you should not undertake it alone.  The experienced team at Hunnicutt Law Group can answer all your questions about the Texas Whistleblower Act and help move your case forward. We understand the complicated nature of these types of cases. Our team can assist you by reviewing the facts, explaining your options, and estimating how much your claim may be worth. Contact us to schedule your case consultation. 

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Business Law

Texas Uniform Trade Secrets Act Overview

The Texas Uniform Trade Secrets Act (TUTSA) serves the purpose of defining trade secrets and providing guidelines and remedies to businesses whose trade secrets are exposed.  What Is a Trade Secret? Under Section 134A.002(6) of the Texas Uniform Trade Secrets Act, a trade secret is information that has been protected by reasonable measures. The information is valuable because it adds a benefit to the product or service.   Trade secrets can be the ingredients in a recipe, a manufacturing process, or any other information that provides an advantage or key element to a business. The TUTSA states that Texas trade secrets include any business, scientific, technical, economic, or engineering information, as well as any design, prototype, plan, program device, code, or procedure related to a business.   Importance of the Texas Uniform Trade Secret Act If a trade secret is crucial to the success of your business, it is important to protect that secret. Let’s say you make chocolate cookies and your cookies are better than everyone else’s. This could be because of a special ingredient. It could be because of the ratio of that ingredient to other ingredients. It could be your baking process. All of those things set your cookies apart, and without that “secret” your cookies would be like everyone else’s. So as a successful entrepreneur, you wouldn’t want your cookie secret leaked to your competitors. This is where the TUTSA applies. Misappropriation of Trade Secrets The legal cause of action for exposed information is called the “misappropriation of trade secrets.” Misappropriation occurs when a trade secret is improperly acquired, or the trade secret is disclosed or used without consent. Consent to use the secret may be expressed or implied. There are a number of factors that a court may take into consideration when evaluating a claim of misappropriation. Some of these factors may include: The scope of the trade secret known outside of the business; The degree of knowledge possessed by others involved in the business, including employees; The measures taken by the business to keep the information a secret; The value of the information to the success of the business; The value of the information to competitors of the business;  Time, money, and effort put into developing the trade secret; and  How easy or difficult it may be for competitors to acquire or duplicate the protected information.  The trade secret does not actually have to be used in order for you to seek legal remedies.  Legal Remedies for Trade Secret Misappropriation Under the TUTSA If you believe your company’s trade secrets have been misappropriated, you may be entitled to one or more legal remedies.  Injunctive Relief Injunctive relief is available if actual or threatened misappropriation takes place. Injunctive relief prevents the potential or continued use of trade secret information. In exceptional circumstances, an injunction may allow royalties to be paid as a condition for future use.  Damages The value of the trade secret and how much it impacts the business determine economic damages. This may include actual loss caused by the use of the information and unjust enrichment. Compensation for royalties from the use of the information may be appropriate. If the defendant’s behavior was malicious, the court may choose to award punitive damages to punish the behavior.  Attorney Fees If it hadn’t been for the misappropriation, you would not have had the unexpected cost of attorney fees. The court has the ability to award attorney fees to the prevailing party.  Maintaining Secrecy Under TUTSA The Texas Uniform Trade Secrets Act states that the information cannot just be deemed a secret by the owner after it has been exposed. The company must show that they took reasonable efforts to protect the trade secret. Reasonableness may vary with the circumstances of the business operations, industry, and importance of the information. Some protective efforts may include: Labeling information as confidential; Requiring a nondisclosure agreement before employees view the information; Stating confidentiality guidelines in an employee handbook; Maintaining control over passwords and restrictions; Storing information in a way that is not readily available to everyone; Keeping records of who accesses the information; and Maintaining employee exit protocol to ensure the return of all information.  Efforts made to prevent disclosure of the trade secret help the court determine the importance placed on the information before it was exposed.  Legal Assistance in Protecting Your Trade Secrets For over 25 years, The Hunnicutt Law Group has been handling sensitive business law needs, including the application of the Texas Uniform Trade Secrets Act.  Preventatively, we can help you protect your trade secret through drafting legally binding contracts for employees and partners along with comprehensive nondisclosure agreements for anyone who may have access to your information. Our experienced attorneys can assist you with copyright applications and pursue litigation to defend your rights. Contact our commercial litigation team to learn more about how we can help. 

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Business Law

Understanding Shareholder Oppression in Texas

Owning and operating a closely held corporation can become contentious when you don’t have equal shares and an equal say. When a few owners have a majority of shares and call the shots, their actions may not benefit you. Sometimes, their actions rise to the level of shareholder oppression. What Is Shareholder Oppression? Shareholder oppression is conduct by the majority shareholders that is unfair to minority shareholders’ interests. Oppression arises because shareholders don’t have equal rights. Some stockholders may hold more shares than others, allowing them to exert more control over the business. This type of oppression of minority shareholders most often happens in private, closely-held corporations. These are businesses formed by just a few people. If you go by the Internal Revenue Service (IRS) definition, a closely held corporation is one in which five or fewer individuals own more than 50% of the outstanding stock at any time during the last half of the tax year. In order to qualify, the company must not be a personal services corporation. What Is Minority Shareholder Oppression? Minority shareholders are those who own fewer than 50% of the company’s voting shares. The majority shareholders own more than 50% of the company and often end up controlling the direction of the business and dictating the outcome of any disputes that may arise. In this way, minority shareholders end up with very little say in the business. Furthermore, they usually have few options to remove themselves from the situation. Because most shareholder oppression occurs in closely held corporations, minority shareholders can’t easily sell their shares and move on. As a result, they are often stuck with their investment. Examples of Shareholder Oppression Shareholder oppression can take on many forms. Oppression of the minority shareholders can happen when majority shareholders: Vote in their own best interests, ignoring the interests of minority stockholders; Exclude minority shareholders from important financial and management discussions and decisions, effectively freezing them out of company management; Fail to provide adequate corporation records to minority shareholders; Use tactics to force minority shareholders to sell their shares to the majority for less than the shares are worth—also known as “squeezing out;” Block minority shareholders from business premises; Use their position to dilute minority ownership; Use their power to fundamentally change the nature or structure of the business from what minority shareholders initially agreed to; and Refuse to pay dividends. If you believe the majority shareholders in your company are treating you and other minority shareholders unfairly, talk with a Dallas business litigation attorney. What Are Minority Shareholders’ Rights? In Ritchie v. Rupe, the Texas Supreme Court noted that when there is no shareholders’ agreement, minority shareholders lack contractual rights regarding the business and voting power. The minority shareholders also lack any statutory rights to demand equal say. Without a contract, minority shareholders have limited rights and are at risk of abuse by majority shareholders. Can I Sue for Minority Shareholder Oppression? Before 2014, minority shareholders could force the majority shareholders to buy them out for a fair amount. This option gave minority owners a way out of a bad situation. Ritchie v. Rupe changed that. In Ritchie v. Rupe, a fourth shareholder who owned 18% of the company tried to sell her shares to the other three shareholders. They refused. Next, Rupe tried to sell her shares to a third party, but the majority shareholders wouldn’t cooperate again. Rupe sued, and the trial and appeals courts ruled in her favor. However, the Supreme Court of Texas ruled state law didn’t recognize a court-ordered buyout. The court limited minority shareholders’ remedies when dealing with shareholder oppression in Texas by deciding shareholder oppression is not a basis for filing a lawsuit.  Because of this case, minority shareholders can’t hold majority shareholders responsible for oppression unless the conduct harms the corporation. Are There Remedies for Shareholder Oppression in Texas? Minority shareholders may have the right to file a derivative lawsuit. This is a case brought on behalf of the corporation to enforce the corporation’s rights when the business leaders won’t. In response to shareholder oppression, minority shareholders can file a derivative lawsuit based on a breach of fiduciary duty. Instead of alleging the business leadership harmed minority shareholders, they argue the leadership has damaged the business. Call for Help Today If you believe the majority shareholders are oppressing you and other minority shareholders, contact a Dallas business litigation attorney at The Hunnicutt Law Group online or at 214-361-6740. Our attorneys will carefully review your situation and advise you of your legal options, such as filing a breach of fiduciary duty suit. 

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Business Law

How to Dissolve a Corporation in Texas

Whether you’re a shareholder, board member, or corporate officer of a C or S Corp, at some point you may realize it’s time to shut down. But there are specific steps to take. You can’t simply shutter operations and walk away.   If you’re wondering how to dissolve a corporation in Texas efficiently and properly, contact our Dallas corporate attorneys at The Hunnicutt Law Group. You can reach out online or call 214-361-6740 to schedule your initial consultation. We’ll help you navigate this process, even if it’s complicated by various debts and obligations. Why Do I Have to Terminate a Corporation? A corporation is a legal entity that lives on forever until the owners formally end it. Without a proper dissolution, the entity continues to exist with corporate reporting requirements and other legal obligations. How to Shut Down a Corporation Step 1: Initiate the Process of Termination The steps to dissolve a corporation begin with: Unanimous shareholder consent; or The board of directors adopts a resolution to dissolve and seeks approval from the shareholders. If all shareholders agree, they can sign a written document indicating they approve of the dissolution. This method is most appropriate for small businesses in which the shareholders also act as the directors. To dissolve a C corporation with many shareholders and directors, the board of directors can adopt a resolution. This resolution goes to the shareholders, who then meet and vote. The Texas Business Organizations Code (BOC) requires the board to give shareholders with voting rights at least 10-days’ notice of the meeting. The shareholders need a two-thirds majority to approve the resolution unless the corporate bylaws say otherwise. Step 2: The “Wind Up” Process Once the shareholders have agreed to dissolve the corporation, you’ll begin what’s called the “wind up” process. The corporation’s bylaws and the BOC describe the necessary procedures: Stop business functions except those necessary to complete final transactions; Notify any known creditors; Resolve any ongoing lawsuits; Liquidate corporate assets; Discharge the corporation’s debts, taxes, and other liabilities; and Distribute remaining corporate assets to shareholders. Navigating the corporation’s taxes and other liabilities is essential. The business must satisfy its creditors before it can distribute assets to the shareholders. Additionally, if the corporation has foreign corporations operating in other jurisdictions, the business must wind up and dissolve those before dissolving the Texas corporation. Step 3: Obtain a Certificate of Account Status Once your business is current on all taxes and in good standing, you’ll use Form 05-359 to request a Certificate of Account Status for Dissolution/Termination from the Texas Comptroller of Public Accounts. If you’re a nonprofit corporation, you’re exempt from obtaining this certificate. Step 4: File a Certificate of Termination Finally, you must file two signed copies of the Certificate of Termination of a Domestic Entity along with your Certificate of Account Status with the Texas Secretary of State (SOS). There’s a filing fee of $40 for all corporations other than nonprofits, which have a $5 fee. The SOS can reject your certificate of termination if it’s not filled out correctly, or you fail to include your official Certificate of Account Status. Step 5: Inform the IRS You’ll take several steps to wrap up your business with the IRS, including: Filing IRS Form 996 within 30 days of the SOS’s approval of your dissolution; and When filing your last corporate tax return, check the “final return” box. The IRS doesn’t cancel Employment Identification Numbers, but it can close your business account.  Step 6: Close Your Accounts Be sure to close any corporate banking and credit card accounts. Step 7: Cancel Any Licenses If you have any state or local licenses or permits, cancel them to avoid reporting requirements or fees. How Do I Close an S corporation? All corporations, even those with an S election, dissolve through the same process outlined above. How Long Does it Take to Close a Corporation? The length of time depends heavily on the complexity of the business and the remaining liabilities.  And remember that the paperwork takes time, too. Expect it to take up to six weeks to receive your Certificate of Account Status and up to five days for the SOS to process your Certificate of Termination. What Happens if I Don’t Shut Down the Corporation Properly? If a corporate entity exists, the shareholders, directors, and officers have ongoing and annual requirements including annual reporting fees and minimum taxes. The business also remains open to claims from creditors and other parties. Call a Texas Corporate Attorney for Dissolution Advice If you have questions regarding how to end a corporation, call The Hunnicutt Law Group at 214-361-6740 or contact us online.    

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Business Law

Hunnicutt Law Group Scholarship

Hunnicutt Law Group is proud to represent the best interest of our clients in legal situations but also in life. We are dedicated to providing knowledgeable legal counsel that makes our clients’ lives easier, more stable, and less stressful. We know that, to uphold our commitment to the highest professional standards, we must continue to bring the best and brightest legal minds into the profession. To do our part to help law students become lawyers, Hunnicutt Law Group will award a scholarship to one student who answers the question: What has made you pursue a career in the law? We want to know if there has been a life event that shaped your legal career, if your passions drew you to the law, and/or if you aspire to a specific legal pathway.  How Do I Apply For The Scholarship? To apply for the scholarship, submit an essay of no more than 500 words that answers the question: What has made you pursue a career in the law? In addition to your essay, you must submit proof of enrollment or intent to enroll in an accredited undergraduate program, or law school for the upcoming 2021-2022 academic year. How Much Money Is The Scholarship Award? We will award $1,000 to the scholarship recipient. What Else Do I Need To Know? The scholarship application deadline is January 15, 2022. We will review all applications and notify the winner soon after. To submit your application for the Hunnicutt Law Group Law Student Scholarship, click the button below.

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Business Law

Breach of Fiduciary Duty in Texas Overview

Dealing with a breach of fiduciary duty dispute? Get your questions answered by an attorney ASAP. Call 214-361-6740 or contact us online with your questions. Ethical and legal responsibilities are the cornerstones of fiduciary duty. Texas judicial systems place severe responsibility on those with the title of fiduciary. If someone has or may allege that you have breached a fiduciary duty, you need a lawyer. There are breach of fiduciary attorneys who can help you understand all that may encompass the landscape of breach of fiduciary duty. Texas lawyers in this field stand ready to defend you if needed. When Is There a Fiduciary Duty? Texas finds a fiduciary duty for a person or organization that acts on behalf of another person. A fiduciary duty requires you to put your clients’ interests ahead of your own. There are several types of fiduciary relationships. For instance, common professional relationships are: Promoters and stock subscribers, Lawyers and clients, Investment corporations and investors, Insurance companies/agents and policyholders, Trustees and beneficiaries, Corporate board members and shareholders; and Executors and beneficiaries. There are various complexities to the services and responsibilities of each type of fiduciary duty. Every fiduciary must know and follow the expectation specific to them.  General Fiduciary Duties The law expects every fiduciary to protect their client’s best interests and consistently show a high level of ethics when making decisions on their behalf. Various Texas laws address fiduciary responsibilities. Again and again, they bind a fiduciary legally to act in the other’s best interests and follow specific rules concerning their relationship. Examples of Breach of Fiduciary Duty  Texas law allows for a wide breadth of situations to encompass a breach of fiduciary duty. It seeks to protect all manner of individuals to whom a fiduciary duty is owed. Here are two examples of conditions where a breach of fiduciary duty in Texas could exist. A Corporate Officer  Corporate officers and directors owe clear fiduciary duties to the corporation for which they work. As a result, they are bound to an honest relationship with the corporation, including being fully transparent regarding competing interests. For example, consider a situation where: A corporate officer uses their influence or power to hire contractors to work on projects for the corporation; and The corporate officer does not inform the company that the contractors they hire are tied to a company owned by their spouse’s family.  This could be a breach of fiduciary duty. It would be irrelevant whether the contractors were competent. The primary issues are that the corporate officer was not transparent and that their decision as a fiduciary was not without clear potential legal, ethical, and financial conflicts. An Executor of an Estate The office of executor is complicated and vital. An executor is tasked with many responsibilities, including: Finding and organizing documents, Taking inventory,  Identifying and notifying beneficiaries, and Managing assets. It is carrying out the last item on the above list—managing assets—which most often will lead to a claim of breach of fiduciary duty. Texas law requires executors to make sure that the assets of the estate stay secure and properly maintained. If an executor uses an estate’s income for personal use or ignores an estate’s business and allows it to deteriorate or close while taking no action, they may have violated their fiduciary duty. Many things can go wrong in estate administration, and executors who misstep may get involved in a dispute over fiduciary duty in Texas. Exact Legal Standards for Fiduciary Cases  Fiduciary duty is more than a moral, social, or personal relationship of trust. Legally, the elements of a breach-of-fiduciary-duty claim must show: The existence of a fiduciary relationship between the plaintiff and defendant;  The defendant’s breach of the fiduciary duties arising from that relationship; and  Injury to the plaintiff, or benefit to the defendant, resulting from that breach. Courts lean toward protecting those whom the fiduciary is expected to serve and can be stern toward those with the duty. Defenses to Breach of Duty in Texas You will need a lawyer skilled in fiduciary cases to analyze your situation and prepare the best defense. It is not enough to say that a breach of fiduciary duty was not intentional or that you did not understand the fiduciary duty. Texas also does not provide a loophole for powerful  professionals such as attorneys or investment bankers to avoid responsibility. However, do not lose hope if you are facing a breach of duty allegation. There are strong winning defenses, including that: You did not breach your duty; Your fiduciary duty ended; The allegation was not about fiduciary duty, but a personal grudge/issue; or  The alleged breach did not result in injury to the plaintiff or benefit to you. Whether someone has unjustly accused you of breach of fiduciary duty or you are concerned that you may have breached a duty, you need legal help. Take no action without first consulting a trusted, experienced lawyer who will start by working with you to determine what success for your case looks like and develop a plan to get you there.  The Hunnicutt Law Group: We Never Lose Sight of What It Means to Be the Client Lawyer Steve Hunnicutt founded and still leads the top-rated Hunnicutt Law Group. Mr. Hunnicutt has practiced law for 30 years. Prior to starting his firm, he served as in-house counsel for a Fortune 500 company and worked for a large law firm. The Hunnicutt Law Group will never lose sight of your best interests. We will offer you the representation that you deserve.  At The Hunnicutt Law Group, you benefit from a highly knowledgeable attorney’s experience. You will receive an in-depth look at the intricacies of your unique matter without the high fees of big downtown firms. Call us today at 214-361-6740 or contact us online or by email to arrange a time to meet in person or via video conference. 

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Business Law

Statute of Limitations for Breach of Contract in Texas Overview

Dealing with a breach of contract dispute? Get your questions answered by an attorney ASAP. Call 214-361-6740 or contact us online with your questions. When you are counting on someone to do something they are legally obligated to do and they fail to execute, you may have a claim for breach of contract. There are consequences when someone does not uphold their end of the bargain. But the window of opportunity for relief is limited. The Texas statute of limitations for breach of contract extends for four years past the date of the breach.  What Are Statutes of Limitations? A statute of limitations is a fixed period during which a legal proceeding can be brought. These usually start on the date that the event in question occurred. The purpose of the statute of limitations in Texas for breach of contract is to make sure that the case is still relevant. Evidence can be lost, and witnesses become difficult to locate as time passes. That is why it is important to bring your cause of action within the four-year Texas statute of limitations for contract disputes.  Exceptions to Texas Statute of Limitations for Breach of Contract In most cases, if you do not file your claim in court before the statute of limitations expires, your claim will be barred. However, there are two primary exceptions to the breach of contract statute of limitations in Texas. Fraudulent Concealment This type of defense applies to the statute of limitations for a Texas contract when the defendant has concealed information about the breach in such a way that you could not have known it had occurred. The statute of limitations for breach of contract will not begin until this information was discovered or reasonably should have been discovered.  Discovery Rule This rule is similar to fraudulent concealment and pertains to situations where the plaintiff was unaware the breach had occurred or that they had sustained an injury because of the breach of contract. Under these circumstances, the statute of limitations in Texas for breach of contract will not begin until the breach, or injury caused by the breach, is discovered.  When Can You Claim Breach of Contract in Texas? To prevail on  a valid claim for breach of contract in Texas, you must first prove that there was a valid contract. Once this fact has been proven, you can claim that the obligations stated in the contract were not met.  Proving a Valid Contract A legally binding contract in Texas must satisfy several conditions: An offer was made; Offer terms were accepted; Written or verbal communication existed to demonstrate consent to the terms; The contract was intended to be mutual and binding to both parties; and There was consideration on both sides of the contract. Consideration is a legal term that means that both parties were benefiting from the contract. These requirements for a valid contract apply to both written and verbal contracts.  Verbal Contracts in Texas Verbal contracts are more difficult to prove, and the actions of both parties can play a big role in determining whether a contract existed. Some types of contracts fall under the statute of frauds, which is a law requiring certain agreements to be in writing, including: Contracts relating to real property; Contracts for the sale of goods for over $500; A will or trust; Marriage contracts (with the exception of common-law marriages); Sale of securities; Contracts that cannot be completed within one year; and Contracts to answer for the duty of another (guarantee/suretyship). It is always a better idea to put everything in writing when possible.  What Constitutes a Breach of Contract in Texas? Establishing that there was a valid contract is the first step of proving breach of contract. There is no breach without a valid contract. Additionally, the elements of a Texas breach of contract include: The plaintiff performed their end of the contract; The defendant breached the contract; and The breach caused damage to the non-breaching party.  If all these elements exist, you can bring a cause of action for breach of contract in Texas within the statute of limitations for breach of contract.  What Damages Are Available for Breach of Contract? The damage from a breach of contract is often financial. The non-breaching party is generally entitled to compensation, which should restore them to the position they would have been in had the contract been performed as planned.  The non-breaching party will be responsible for proving the extent of their damages due to the breach. Because important documents and conversations may be less accessible with time, it is important to start legal proceedings as soon as possible despite the four-year Texas statute of limitations for contract disputes. There are multiple types of damages available depending on the circumstances of your case.  General Damages Compensatory damages are a part of general damages and include the foreseeable losses suffered by the non-breaching party. Compensatory damages include things like reimbursement of costs for the breach and other basic financial losses. Special Damages Texas courts may grant special or consequential damages caused indirectly by the breach. Loss of profits would constitute special damages. These could be due to delays, tarnished business reputation, or loss of business opportunities  Equitable Relief In some cases, the Texas court may order non-monetary relief. Some examples include specific performance of the contract, which requires the breaching party to fulfill their obligations under the contract. A court-issued injunction, revision, or recession of the contract agreement are also available as equitable remedies.  Defenses to Breach of Contract There are several valid defenses to breach a contract that a court may honor: A mistake was made during contract formation; The contract was made under duress; The contract is unconscionable or grossly unfair; The contract is illegal—for example, it includes unlawful dealings, violates tax law, or requires the destruction of records; or It becomes impossible for one of the parties to fulfill their end of the bargain. The court will review the circumstances of each contract […]

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Business Law

Can an Employer Sue an Employee?

What are an employer’s rights to legal remedies when it comes to the employment relationship? There are many circumstances under which an employee can sue an employer or file a complaint, but legal resources speak less frequently about employers suing employees.  If you are wondering whether an employer suing an employee is an option, know that the answer is yes. While the opportunities for suing an employee aren’t as numerous, there are multiple scenarios in which an employer can seek legal recourse against an employee.  Can an Employer Sue an Employee for Negligence? When you have employees, there is a likelihood that an employee will damage your business or its patrons. The possibility exists that your employee’s actions could invite a lawsuit, and a lawsuit against your employee could mean a lawsuit against you. Under the doctrine of respondeat superior or vicarious liability, a victim of your employee’s negligence can sue you for damages. With this kind of exposure to liability, you may be asking, Can an employer sue an employee for poor performance? Or, Can an employer sue an employee for a mistake? In certain circumstances, the answer is yes.  In St. Anthony’s Hospital v. Whitfield, 946 S.W.2d 174, the Texas Court of Appeals ruled that if an employer was sued and made to pay for damages caused by an employee’s negligence, the employer could then sue the employee. When an employer sues an employee for negligence under these circumstances, what the employer is seeking is called indemnity. If the employer wins its indemnity case, the employee must pay the employer back for the money it had to pay in the original negligence case. The employer can only recover damages in this kind of indemnity case if its liability is wholly vicarious. An employer cannot recover in an indemnity case if it has any direct fault for the original negligence, such as fault for an equipment failure or negligent hiring.  An Employer Can Sue an Employee for Theft Unfortunately, an employee could betray you by diverting company funds for their personal use, or by taking company property. Under those circumstances, you can sue the employee for theft and recover the value of what was stolen. If a high-level employee stole funds, property, or opportunities from you, you can sue for breach of fiduciary duty.  An Employer Can Sue an Employee for Misappropriation of Trade Secrets If your employee improperly uses any of your business formulas, devices, or information not known to the public, you can sue them for misappropriation of trade secrets. When determining whether an employee misappropriated your trade secrets, Texas courts consider: The extent to which the information is known outside your business; The extent to which others involved in your business know the information; The measures you took to keep the information secret;  The value of the information to you and your competitors; The money and effort you put into developing the information; and The difficulty with which the information could be acquired or duplicated by others. If a court finds an employee liable for misappropriation of your trade secrets, you can receive relief. Relief can be damages for your financial loss, damages for the employee’s unjust enrichment, and injunctive relief.  An Employer Can Sue an Employee for Defamation You can sue an employee for making false, damaging statements about your business. In this age of social media, an employee’s false and damaging post against your business could be subject to damages in a libel suit. Libel is the written form of defamation. Under Texas law, you can only maintain a defamation suit if you timely asked your employee to correct or retract their false statement, or if your employee already corrected or retracted their statement.  Employers Can File Many Kinds of Lawsuits Against Employees for Breach of Contract In some circumstances, a relationship between an employee and employer is based on a contract. If an employment contract was the basis of the relationship between you and your employee, you can sue them for breaching the contract terms. Common employment contract terms include: Confidentiality agreements, Non-compete clauses, Non-solicitation clauses, and  Other terms of employment. Employment contract terms should be very clear regarding your expectations of the employee and what they can expect from you.  Can an Employer Sue an Employee for Quitting? Your right to sue an employee for quitting depends on the circumstances of the employment. Texas is generally a right-to-work state. This means employers and employees can end the employment relationship at any time and for almost any reason without liability. While general Texas rules do not allow an employer to sue an employee for quitting, an employer can sue an employee who quits in violation of an employment contract. If an employee agrees by contract to stay with an employer for a specific period of time, or if they agree to give adequate notice before leaving, an employer can sue the employee for their failure to fulfill the agreement.  Are Non-Compete Clauses Enforceable? Yes, non-compete clauses are enforceable in a lawsuit. But the clause terms must be reasonable if you want to prevent your former employee from working for a competitor. Your non-compete clause must be reasonable in its duration, geographical area, and scope of activity. Your non-compete clause cannot eliminate all possibilities for a former employee to work in their field. You must also show how you would be harmed without enforcement of the clause and how the clause is not an unreasonable burden on an employee’s ability to work.  An experienced business attorney can help you determine if you have the right to sue an employee under the terms of an employment contract.   Protect Your Business Rights by Contacting an Attorney You have rights if a current or former employee mistreats you. Legal action against an employee’s mistreatment may be your best option to protect your business, but it isn’t always easy. The lawyers at The Hunnicutt Law Group have decades of business law experience and are focused on helping you […]

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Business Law

How Much Can You Sue for Breach of Contract?

When a party to a contract fails to fulfill their obligations, it can be financially detrimental. You may consider filing a lawsuit and wonder, How much can you sue for breach of contract? The law does not provide a formula for contract damages, but there are several important considerations that factor into calculating the appropriate amount of damages. Can I Sue for Breach of Contract? Before diving into how much you can sue for breach of contract, first determine if you have a viable claim. A valid breach of contract claim must include the following four elements:  There is a legally binding contract between the parties; The plaintiff fulfilled their contractual obligations; The defendant breached their contractual obligations; and The plaintiff suffered losses as a result of the defendant’s breach.  As the plaintiff, you must be able to prove you suffered harm due to the breach. Our breach of contract attorneys at Hunnicutt Law Group will walk through each element to help you determine whether you have a strong case.  What Type of Damages May You Seek? When suing for breach of contract, you may ask for compensatory, consequential, incidental, and liquidated damages. Punitive damages, which are meant to punish the breaching party for their behavior, are available only for breaches of contract that also involve a tort, such as embezzlement or fraud.  Compensatory Damages The purpose of compensatory damages (also known as “actual damages”) is to compensate the nonbreaching party. These damages cover the losses that directly stem from the breach and make the nonbreaching party whole again. Courts typically award compensatory damages in breach of contract claims.  Consequential Damages Consequential damages (or “special damages”) are damages that occur as an indirect, but reasonably foreseeable, result of the breach. Loss of profits is an example of consequential damages.  Incidental Damages Incidental damages are expenditures that the nonbreaching party incurs when trying to minimize the losses from the breach. For example, if the nonbreaching party needs to buy substitute goods or services and has to pay a premium for the last-minute purchase, those are incidental losses. Liquidated Damages Some contracts include a liquidated damages provision, which specifies an agreed-upon amount in the event of a breach. This provision kicks in when the computation of damages is too difficult to calculate. What Was the Extent of the Breach? The extent of the breach factors into the amount you can sue for because it will impact how much you lost. Consider the following severity levels of breach: Minor or impartial breach: a portion of the contract was fulfilled, but not the entire contract. Material or total breach: either the entire contract is unfulfilled or the unfulfilled portion is substantial enough that it prohibits the parties from continuing to perform under the contract.  Anticipatory breach: one party informs the other that they will not be able to perform. Remember, the breach must have caused you losses for you to seek damages.   How to Calculate Damages As the nonbreaching party to a contract, you have legal rights to damages for your losses. When calculating damages, the following considerations apply: Damages must compensate the nonbreaching party for the harm directly caused by the breach (i.e. compensatory damages); Damages must have been reasonably foreseeable or anticipated by the parties at the time of contract (i.e. consequential damages); Damages must be proven through ascertainable measures; and Plaintiffs cannot recover more than they lost, meaning the damages may only restore the plaintiff to the position they would have been in had the contract been fulfilled. At The Hunnicutt Law Group, we can help you navigate these factors to determine an amount that will recoup your losses.  Limitations on Award of Damages Most states, including Texas, do not have a general cap on compensatory damage awards. However, the nonbreaching party has a duty to mitigate damages, meaning they must minimize the amount of damages to the extent reasonable. The nonbreaching party will not be able to recover losses that they could have avoided.  Contact The Hunnicutt Law Group  At Hunnicutt Law Group, we represent clients in a wide variety of contract matters. Our founding attorney, Steve Hunnicutt, has 30 years of experience achieving success for his clients. He and his team focus their practice on litigation and disputes, and we have helped countless clients navigate their contract litigation disputes. Call us at 214-361-6740 or fill out our online form to schedule an initial consultation either in our office or by remote video conferencing.

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