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carlsbad business journal
www.carlsbad.org
LEGAL LINES This column will gives you the opportunity to tap into the expertise of attorneys who are members of the Carlsbad Chamber of Commerce. If you’d like to submit a question for consideration, send it to jlopez@ carlsbad.org. The responses provided in the article are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. A response in this article by an attorney does not create an attorney-client relationship between the attorney and the reader. The opinions expressed at or through this article are the opinions of the individual author and may not reflect the opinions of the Chamber, its employees, agents, directors or members — Lee Sterling, guest editor
Business Law (Transactional)
Property Law Alexander Maniscalco THE LOFTIN FIRM LLP
My neighbor put up a fence, which I think is partially on my property. What can I do?
Kelly Bagla, Esq. Bagla Law Firm
How do you know which business entity is right for you? It generally depends on what kind of business you want to conduct. The type of business entity should reflect the kind of business you do. The six most common business entities used are: • Sole Proprietorship • General Partnership • Limited Partnership • Limited Liability Company • C Corporation • Subchapter S Corporation Each have their own advantages and disadvantages. Sole proprietorships provide little to no limited liability protection from creditors. In a general partnerships, the general partner bares all the legal responsibilities with little to no liability protection. Limited partnerships do provide some limited liability, but can still be liable for the debts of the partnership. Limited liability companies provide wonderful limited liability protection for its owners as long as corporate formalities are followed. Corporations and subchapter S corporations also provide limited liability protection for its owners as long as all legal corporate formalities are followed. This information is very limited as it does depend on the kind of business you conduct. Before you consider forming a business entity talk to a business attorney first.
If the fence is off the property line, it needs to be moved--whether by mutual agreement or court order, via a “trespass” claim. This is where a problem can arise. Assuming the neighbor is trespassing onto your property with that fence, there are several ways they may permanently gain the right to keep the fence.
First, and above all, be neighborly! Your neighbor cannot instantly acquire your property by installing a fence. So, find out more by politely asking questions. Did they have a surveyor come out to identify the boundary? If so, ask to see the record of survey and have your own surveyor review it. If the neighbor did not obtain a survey for the property line, let them know your concern. You and your neighbor may want to split the cost of a surveyor to mark the property line, and remove the uncertainty.
Labor and Employment Law Michael W. Battin, Esq. NAVIGATO & BATTIN, LLP
I have a former salesperson, who took our customer list with him when he moved to another company in the same business as ours. What can I do to stop him from using that list? The answer to this question hinges on whether the customer list constitutes a “trade secret.” Generally, former employees can only be prohibited from soliciting clients if the solicitation is directly connected to the misuse (“misappropriation”) of trade secret information. Otherwise, this type of prohibition on solicitation will likely violate unfair competition laws. In order for information to qualify as “trade secret,” two requirements must be met. First, the information must derive independent value from not being generally known. Second, the information must be subject to reasonable efforts to maintain its secrecy. With respect to customer lists, the first requirement should be easily satisfied.
Equitable Easement Rather than ejecting the neighbor, a court will issue an easement 1) the defendant occupier is not willful or negligent, 2) the plaintiff property owner will not suffer irreparable injury, and 3) the hardship to the defendant occupier from ejecting them will be “greatly disproportionate” to the hardship caused the property owner by the encroachment. Courts have also used other theories, such as agreed-upon boundaries, prescriptive easements, or adverse possession to correct border disputes. The analysis of a potential property dispute springs from the situation. Like with most legal matters, property law disfavors people who “sleep on their rights.” Give an attorney a call, early on. A prudent attorney can help you choose the lowest cost way to solve the problem, while protecting your chances of success.
Information derives independent economic value if keeping it secret provides a “substantial business advantage.” A confidential customer list provides a substantial advantage because its disclosure would allow a competitor to solicit more effectively and efficiently. The second requirement is where the challenge commonly arises. There is no one measure that can be taken to establish the requisite level of secrecy. For example, including a “non-solicitation provision” in an employment agreement alone is not enough. Nor is simply labeling a customer list as “trade secret.” Rather, a multitude of factors are considered. A few examples of steps that can be taken to maintain the secrecy of customer lists include limiting access to the lists, including confidentiality and non-disclosure provisions in employment agreements that specifically identify customer lists as protected, and requiring employees to return all company materials upon termination. If both requirements are met, a company can seek relief through the courts, including an injunction prohibiting the former employee from soliciting its clients. However, if either requirement is missing, an attempt to prohibit the use of the customer list may be an empty (and costly) endeavor.