By:  Stuart R. Lundy, Esquire

In a recent Lawrence County, Pennsylvania, case the court heard a case filed by the buyer of the assets of an accounting firm.  The parties had a written  Asset Purchase Agreement (“APA”) that contained a restrictive covenant precluding the seller from using its trade secrets after closing.  In the lawsuit, the buyer claimed that the seller violated the restrictive covenant after the restricted period had expired by using the client list to contact clients to notify them that the seller was returning to the accounting profession.

The court held that a client list is a trade secret; however, the court ruled that the restrictive covenant in the APA did not preclude the seller from contacting clients on the client list because: (a) it was after the restricted period had expired; (b) the clients contacted by the seller were family members, friends, or had been engaged in non-accounting business transactions with the seller after closing on the sale of the assets; (c) the contact with the clients was limited to a letter informing the clients that seller was once again rendering accounting services; and (d) the letter did not disparage the buyer.

As a result of the holding of the court and as a “belt and suspenders approach,” every restrictive covenant should: (a) specifically provide that a client list is a trade secret that may again never be used thereafter by the seller, directly or indirectly, including, but not limited to, after the expiration of the restricted period; and (b) that anyone on the client list including, but not limited to, family, friends, and persons engaging in other types of business with the party may not be contacted at any time in the future, directly or indirectly, for any reason related to the type of business identified in the agreement.

By:  Stuart R. Lundy, Esquire

One of the key issues in preparing a trust is to insert language to allow for the removal and replacement of a trustee without judicial approval.  Why?  The Pennsylvania Supreme Court recently unanimously ruled that the Pennsylvania Uniform Trust Act (the “Act”) does not allow the removal of a trustee, even if all of the beneficiaries of the trust unanimously agree to the change, unless:  (a) the language of the trust provides for such removal; or (b) such removal is approved by a court.  In other words, the beneficiaries of a trust cannot remove or replace a trustee at their discretion absent court approval.

When the creator of a trust appoints a trustee, he or she must recognize that a financial institution that has existed for decades and they believed would exist for decades thereafter could be the next Lehman Brothers.  Therefore, the creator of a trust must, in the trust itself, provide the beneficiaries with the ability to change the trustee if the beneficiaries unanimously agree.

By:  Stuart R. Lundy, Esquire

Recently, the Pennsylvania Superior Court awarded trouble damages to a tenant in an action against his landlord in an action for violation of the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”).  In Nexus Real Estate, LLC v. Erickson, 2017 WL 2536524 (Pa. Super Ct. June 12, 2017), the Court held that the landlord’s conduct in refusing to repair a hole in the bathroom ceiling and taking nine months to repair a non-functioning HVAC unit was the type of intentionally wrongful and deceptive conduct that warranted treble damages under the UTPCPL.

Accordingly, residential landlords should be sure that they timely make repairs and do not make false promises to tenants regarding when repairs will be performed.

If you have questions about a landlord or tenant’s obligations under a residential lease and/or applicable law, contact one of our real estate attorneys.

By:  Stuart R. Lundy, Esquire

On June 9, 2017, the IRS issued a revenue ruling that provides a more liberal time frame for certain estates to make the federal estate tax portability election.  The portability election allows a surviving spouse to claim their deceased spouse’s unused portion of the federal estate tax exemption and add it to the balance of their own federal estate tax exemption.  The amount of the exemption ported to the surviving spouse is called the “Deceased Spouse Unused Exclusion” or “DSUE” amount.

Prior to the recent ruling, in order to utilize the portability election, the estate tax return had to be filed within nine months (or fifteen months if a prior extension was filed) after the death of the first spouse.  Now, for estates below the federal estate tax threshold (currently $5.49 million), the estate tax return must be filed within two years of the death of the first spouse in order to use the portability election.  The personal representative must state, “This return is being filed pursuant to Rev. Proc. 2017-34 to elect portability under § 2010(c)(5)(A)” at the top of the return.

For more information on the portability election, contact one of our estate planning attorneys.