Demand Letter Contract Breach Cease Desist - DOC

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Demand Letter Contract Breach Cease Desist - DOC Powered By Docstoc
					Mary Bowman
Janet Dickson
Creative Problems/Engaged Students Presentation
June 9, 2006

                       Presenting Facts by Using Legal Documents
                                Masekala Memo Problem

                        INTEROFFICE MEMORAND UM

TO:            Legal Intern
FROM:          Supervising Attorney
DATE:          August 22, 2005
RE:            Maya Masekala, File No. 05-118
               Possible Conflict of Interest Issue

       Maya Masekala, has taught Kindermusik classes in West Seattle since August of
2000. During this period, she has worked for Carla Fontana, who owns the Laugh and
Play Kindermusik business for which Maya teaches. Carla recently approached Maya
about whether she would like to buy Laugh and Play Kindermusik.

       Maya is very interested in the opportunity to buy the business, but she is
concerned about some of the legal and financial matters regarding Carla’s operation of
the business. In particular, she is concerned about some of the employment law issues.
Maya would like me to review these issues, helping her with the due diligence and the
purchase and sale agreement in connection with this transaction. The current owner of
the business, Carla Fontana, would be the adverse party in this matter.

        I would like to help Maya, but I have not done any legal work for her before.
About three years ago, however, Maya referred Carla to me regarding a dispute with
another teacher, Danielle Brady, from Laugh and Play. Danielle violated the terms of a
non-competition clause in her contract with Laugh and Play, in that she tried to contract
directly with the YWCA where she was teaching the Kindermusik classes. On Carla’s
behalf, I wrote her a “cease and desist” letter, informing her that she was violating her
contract. I also spoke with her by telephone, and she agreed to stop teaching at the
location. A month or so later, Ms. Brady moved out of the area. Carla paid the bill for
my services promptly, and I closed the file on the matter.

        I have not done any further legal work for Carla, and she is a former rather than a
current client. I know she has retained her own lawyer to help with the sale of the
business. But I want to make sure, before I agree to represent Maya in the sale, that
doing so would not create a conflict of interest in violation of the Rules of Professional
Conduct. So I would like you to research that question, whether representing Maya
in the purchase of Laugh and Play Kindermusik would create a conflict of interest
per the Washington Rules of Professional Conduct because the adverse party is a
former client.
Other Information You Might Find Helpful

      I will provide you with the notes of my interview with CF from the representation
       related to the non-compete. I will also provide you with a copy of the contract
       between DB and Laugh and Play, which Carla gave me in 2002.

      According to Maya, Laugh and Play Kindermusik is an independent business, and
       Carla has owned it for approximately eight years. It has a distribution agreement
       with Kindermusik International, and that agreement governs the curricula that will
       be taught in classes, the supplies that will be used, and teacher qualification, for
       example. We don’t currently have a copy of that contract, although we would get
       it if we agreed to represent Maya.

      Maya estimates that approximately 200 families have children enrolled in Laugh
       and Play classes. If we agree to represent Maya, we can get more information on
       that issue.

      Laugh and Play’s classes are held in three different locations. Maya doesn’t know
       much about the leases for those spaces. That’s something she wants me to look
       into if we take the case.

      When I represented Carla in 2002, she told me that all teachers for Laugh and
       Play sign the same “Independent Contractor Agreement.” Maya also mentioned
       that she thought all the teachers for Laugh and Play (there are five currently, all
       part-time but with various hours worked) have the same agreement with Carla.
       Maya gave me a copy of her contract, which I have attached.

      One of the other teachers (Erimie Li) at Laugh and Play recently mentioned to
       Maya that she’s not sure they should really be classified as independent
       contractors. Maya hadn’t been concerned about that before, but now that she’s
       considering buying the business, she’s a little concerned that Carla should have
       been paying employment taxes for the teachers. That’s one main issue she wants
       me to look into – whether she could have any liability (or how to prevent taking
       on liability) if the teachers have been misclassified as independent contractors
       rather than as employees. Her major concern regarding the purchase of the
       business is making sure that she avoids liability to the government for any
       mistakes that Carla may have made (e.g. employment taxes, social security, etc.).

      If I assisted Maya in this representation, I also anticipate that I would either draft
       or review a purchase and sale agreement for the business.

      Maya has good relationships with the other teachers, and she does not anticipate
       that any of them would try to leave and violate the non-compete clause in their
       contracts if Maya purchased the business.

      Maya would prefer our work to be “behind the scenes.” She and Carla are trying
       to work out the sale amicably, but Maya is somewhat concerned about the way
    that Carla has been handling the business lately, so Maya is afraid the situation is
    volatile, and she would prefer to have our help without telling Carla that we are
    involved. I told her that I wasn’t sure that was possible or a good idea, but she
    asked me to look into the possibility.

   Do not research the substantive issues involved either in my prior representation
    of Carla or in the potential representation of Maya. I will give you a bit more
    information about what would be involved in my representing Maya. Just focus
    your attention for now on whether or not we should agree to represent Maya in
    light of the potential conflict problem.

   Also, please limit your research to Washington law (the Washington Rules of
    Professional Conduct, cases construing it, and any helpful secondary source
    material). Do not do out of jurisdiction research at this time.

   I am the only lawyer in our firm (which has six lawyers plus one legal intern –
    you) to have ever done work for Carla or LPK.
                        INTEROFFICE MEMORAND UM

TO:            File
FROM:          Senior Partner
DATE:          August 22, 2005
RE:            Maya Masekala, File No. 05-118
               Information about prior representation of Carla Fontana

I have attached the notes from the Fontana v. Brady file regarding my interview with
Carla Fontana in July 2002. These notes are the only thing I found in the file that I
thought you would need in evaluating the conflict of interest issue.

You’ll see from the attached notes that I interviewed Carla about the situation. After the
interview, I updated some old legal research on the enforceability of non-competition
agreements, drafted and revised the letter to Danielle Brady, and talked to her twice on
the phone. The second time I spoke to Danielle, she told me that she convinced her
friend Paulette to have Danielle move back to Colorado and go into business there
instead, so she wasn’t going to teach at the YWCA. I let Carla know that, and closed the
file. According to our billing records, I spent a total of 7.3 hours on the matter.

Please let me know if you need anything else about that prior representation.
                       INTEROFFICE MEMORAND UM

TO:           File
FROM:         Senior Partner
DATE:         July 8, 2002
RE:           Carla Fontana, File No. 0271-96
              Client Interview Regarding Breach of Non-Competition Agreement

Notes to file re. interview with Carla Fontana, owner of Laugh and Play Kindermusik
(LPK), re. breach of independent contractor agreement.

      CF owns LPK. Provides music and movement classes for infants – 7 yr. old kids.
       Emphasizes child development principles. Standardized curriculum, from
       Kindermusik International. LPK provides materials teachers need to teach the
       curriculum (instruments, books, scarves, toys, arts & craft supplies, etc.).

      CF teaches LPK classes 3 mornings a week in Ballard. 4 other teachers work for
       LPK, teaching classes in a total 7 other locations throughout Seattle. CF
       negotiates leases for the classes and hires teachers to staff the locations. CF also
       does the rest of the administrative side of the business.

      All the rest of the teachers just teach their Kindermusik classes. They all sign the
       same basic agreement (DB’s contract is attached). CF has been using this
       agreement (or one substantially like it) since she started LPK in 1997. This is the
       first time CF has had to take action against a teacher based on the contract.

      Danielle Brady has taught for one year at the West Seattle YWCA. Before
       coming to LPK, DB taught for a Kindermusik program in Colorado.

      Last week, CF received letter from West Seattle YWCA saying they weren’t
       going to renew the LPK lease, effective Sept. 1, 2002. When CF called, YWCA
       manager Lynette Crane said they had decided to contract with Danielle Brady to
       teach the class there. LC said DB offered slightly more money for lease.

      CF then called DB, who said she was going to go into business with her friend
       Paulette Norton, who ran a Kindermusik program in Colorado. Paulette was
       going to move to Seattle, provide all the supplies, and find other places to teach.
       Danielle had also explored other places to teach, in addition to the YWCA, all
       places that LPK wasn’t serving currently.
   CF told me that DB said that when she told LC from the YWCA that she was
    leaving to go into business with a friend, doing the same thing elsewhere, Lynette
    said please stay and teach here.

   When I asked why CF has the non-competition clause in the agreement with the
    teachers, she said that LPK’s business is almost exclusively about customer base
    and goodwill. Other providers offer Kindermusik classes in the area, but CF
    provides the highest quality teachers and experiences for families, in convenient
    locations. If the teachers could then steal locations and families, LPK would go
    out of business quickly.

   Another Kindermusik business owner provided CF with the initial “Independent
    Contractor Agreement” she uses, and then CF modified. She had talked to
    another lawyer (David Merrill) about the non-competition clause, and he advised
    her to keep the length of time short to make the clause enforceable. She thought
    as a practical matter, the one-year after leaving time period would allow her to
    make sure she found another great teacher and to deal with any lease issues.

   The West Seattle location has a large number of families. If DB took those
    customers, it would provide a significant dent in LPK’s income. But CF thought
    she could probably also find another space in West Seattle, and another LPK
    teacher, Erimie Li, has expressed interest in teaching in West Seattle. So she
    could probably keep some of the families who currently attend DB’s classes at the

   CF wants demand letter, a little follow-up with DB, to see if she’ll reconsider. If
    that doesn’t work, she’ll reevaluate whether it’s worth it to pursue the action
    against DB, or whether she just wants to try to find a place to have Erimie teach.

   Promised her a letter to DB by July 15th, and a follow-up phone call a few days
                           INTEROFFICE MEMORAND UM

TO:              Legal Intern
FROM:            Supervising Attorney
DATE:            August 22, 2005
RE:              Maya Masekala, File No. 05-118
                 Basic Law on Covenants Not to Compete and the Distinction Between
                 Independent Contractors and Employees, For Purposes of Evaluating the
                 Potential Conflict of Interest

        Please use the information below to help you evaluate the conflict of interest
issue, and do not do further research on these topics.

        Enforceability of Non-Competition Agreements

         Washington courts will enforce non-competition agreements, also called
covenants not to compete, when the agreements are reasonable. Perry v. Moran, 109
Wn.2d 691, 698, 748 P.2d 224 (1987). “Whether a covenant is reasonable involves a
consideration of three factors: (1) whether restraint is necessary for the protection of the
business or goodwill of the employer, (2) whether it imposes upon the employee any
greater restraint than is reasonably necessary to secure the employer's business or
goodwill, and (3) whether the degree of injury to the public is such loss of the service and
skill of the employee as to warrant nonenforcement of the covenant.” Id.

        Employee Versus Independent Contractor

        Washington Pattern Jury Instruction (Civil) 50.11 defines “independent
contractor” as “a person who undertakes to perform work for another but who is not
subject to that other person’s control of, or right to control, the manner or means of
performing the work.”

        Washington Pattern Jury Instruction (Civil) 50.11.01 lists a number of factors to
consider when distinguishing between agents1 and independent contractors. These
factors include:

 For our purposes, assume that “agent” and “employee” are the same. If we agree to represent Maya, I
might have you do some more research on this issue.
       1. the extent to which, by their agreement, [Laugh and Play] could
           exercise control over the details of the performance of the work by
       2. whether or not [Maya] was engaged in a distinct occupation or
       3. the kind of occupation, with reference to whether, in the locality, the
           work is usually done under the direction of an employer or by a
           specialist without supervision;
       4. the skill required in the particular occupation;
       5. whether [Maya] or [Laugh and Play] supplied the tools/equipment and
           place of work . . .;
       6. the length of time for which [Maya] was performing work for [Laugh
           and Play];
       7. the method of payment, whether by time or by the job;
       8. whether or not the work was part of the regular business of [Laugh and
       9. whether or not [Maya] and [Laugh and Play] believed they were
           creating an employment relationship or an independent contractor
           relationship; and
       10. whether [Laugh and Play] was or was not in business.

Again, do not worry about analyzing whether or not Maya was properly classified
as an independent contractor. Instead, just use this information about the relevant
law to help you evaluate the similarity of the issues in the proposed representation
and the representation of Carla and Laugh and Play against Danielle Fiedler.

        This INDEPENDENT CONTRACTOR AGREEMENT (the “Agreement”) is
made as of August 1, 2000, by and between Laugh and Play Kindermusik (“Laugh and
Play”), a Washington sole proprietorship with its principal place of business in Seattle,
Washington, and Maya Masekala, an individual, whose address is 4516 40th Avenue
Southwest, Seattle, Washington, 98116.

      In consideration of the promises made by each to the other, Laugh and Play and
Ms. Masekala agree as follows:


        A.       Responsibilities. Ms. Masekala shall have the following responsibilities:
(i) teaching approved Kindermusik classes to groups of between five and fifteen students
at a time; (ii) collecting tuition payments from each parent once a semester; (iii)
maintaining your Kindermusik license through Kindermusik International; and (iv)
carrying out other duties incidental and/or relating to the listed duties above. Ms.
Masekala will determine the number of classes she wishes to teach each semester, as well
as the method, details, and means of performing the above-described services.

        B.      Compensation. Ms. Masekala shall receive $20 for every class session
that has up to 10 children in it. For each class session that has 11 to 15 students, Ms.
Masekala shall receive $25.

        C.     Status as an Independent Contractor. Ms. Masekala agrees that she is,
and will remain throughout the duration of this agreement, an independent contractor.
She agrees that she is not and will not become an employee, partner, agent, or principal
of Laugh and Play while this Agreement is in effect. Ms. Masekala is not entitled to
employment benefits such as sick leave, disability or unemployment insurance, worker’s
compensation, medical insurance, or vacation pay. Ms. Masekala is further responsible
for paying when due all income taxes, including estimated taxes, incurred as a result of
the compensation paid by Laugh and Play to Ms. Masekala for the services under this
        D.       Non-Competition Clause. Ms. Masekala shall not be required to devote
full time, attention, and energy to the performance of the duties under this Agreement.
During the course of this Agreement, however, Ms. Masekala shall not obtain
employment with any other entity offering Kindermusik classes, nor shall she
independently contract to teach Kindermusik classes, within a five mile radius from the
address[es] at which she teaches for Laugh and Play. This non-competition clause shall
also apply for one year after the termination of this Agreement

        E.     Termination. Laugh and Play and Ms. Masekala agree that either party to
this agreement can terminate it by providing thirty days written notice to the other party.

       F.      Amendment. This Agreement may not be amended except by written
instrument signed by both parties hereto.

         G.     Nonwaiver; Remedies Cumulative. No delay by any party hereto in
exercising any of its rights hereunder, or in the partial or single exercise of such rights,
shall operate as a waiver of that or any other right. No right under any provision of this
Agreement may be waived except in writing and then only in the specific instance and for
the specific purpose for which such waiver was given. The rights and remedies provided
for in this Agreement are cumulative and are not exclusive of any other rights, powers,
privileges or remedies provided for by law or in equity.

        I.      Severability. If any provision of this Agreement is held to be invalid,
void or unenforceable, all other provisions shall remain valid and be enforced and
construed as if such invalid provision were never a part of this Agreement.

       J.      Governing Law. This Agreement and all rights and obligations
hereunder, including, but not limited to, matters of construction, validity, and
performance, shall be governed by and construed in accordance with the laws of the State
of Washington.

        K.     Entire Agreement. This Agreement is the entire agreement of the parties
with respect to the subject matter hereof and supersedes all other prior understandings
and agreements whether written or oral.

        L.     Captions. Captions of the sections of this Agreement are for convenience
of reference only and are not intended as a summary of such sections and do not affect,
limit, modify or construe the contents thereof.
        M.      Notice. Any notice, request, approval, or consent under this contract will
be sufficiently given if in writing and delivered in person or mailed (certified or first
class) by one party to the other at address set forth in this contract or to such other
address as the recipient may subsequently have furnished in writing to the sender.

        N.     Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original, and all of which taken together shall
constitute one and the same Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of August 1, 2000.

                                             Laugh and Play Kindermusik
                                             By Carla Fontana, Sole Proprietor

                                             Maya Masekala

Description: Demand Letter Contract Breach Cease Desist document sample