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Inside This Issue
1. Illinois Minton Rule Reversed
2. Fraud under the Mechanics Lien Act
3. Protecting Trade Secrets by Non-Compete Agreements Subject to Challenge
4. U.S. Department of Labor (“DOL”) on a Role Writing Opinion Letters
Illinois Minton Rule Reversed
Since 1983 in the case of Minton v. The Richard Group, Illinois Appellate Courts have held that a purchaser of a new home or condo could bring a claim directly against a subcontractor when the purchaser had no recourse against the builder-vendor for latent defects caused by the subcontractor provided the builder-vendor no longer existed or had any assets to respond to the claim.
The recent case of Sienna Court v. Champion Aluminum, overruled Minton and ruled that a purchaser of a newly constructed home could not assert a claim for breach of implied warranty of habitability against a subcontractor that had no contractual relationship with the plaintiff-purchaser.
The Minton case was most often used by condo owners to sue subcontractors when the prime contractor no longer existed. The Sienna case was decided by a residential purchaser against a subcontractor. We will have to wait and see what appellate courts will do in the future regarding condo units and the implied warranty of habitability.
Fraud under the Mechanics Lien Act
A construction company filed suit for foreclosure of a mechanics lien, breach of contract and quantum meruit. The defendant discovered that the mechanics lien was more than one-hundred percent overstated which the court concluded was constructive fraud. This invalidated the lien and subjected the plaintiff construction company for damages.
The case of MEP Construction v. Truco was decided February 8, 2019.
Caution: There are other cases which hold that a ten or twenty percent overstatement of a mechanics lien is not constructive fraud.
Protecting Trade Secrets by Non-Compete Agreements Subject to Challenge
In Archer Daniels Midland v. Sinele, decided February 1, 2019, ADM sued for a preliminary injunction against a former employee of 18 years. The former ADM employee did not take anything with him other than his memory of what took place at ADM. The court ruled the identity of buyers is not a trade secret if the identity can be ascertained from public sources. Moreover, the desirability of one customer over another is not a trade secret if their desirability depends on information that a customer could tell you.
Confidentiality and non-compete agreements should be tailored narrowly especially with employees. The rules are somewhat more broad and enforceable in the sale of a business.
U.S. Department of Labor (“DOL”) on a Role Writing Opinion Letters
For nearly 10 years the DOL maintained near dead silence in responding to opinion letters. Suddenly, in 2018 the DOL issued opinion letters at the rate of more than 2.5 a month. The opinion letters cover a variety of topics including FMLA, FSLA, minimum wage, overtime, rest breaks as a reasonable accommodation as well as travel time.
Opinion letters may be sought anonymously through legal counsel when a company needs clarity regarding complicated compliance matters. The opinion letters can be found at https://www.dol.gov/whd/opinion/search/fullsearch.htm.
If your company is operating on the edge of the law, it may be prudent to seek an opinion letter.
If so, send an e-mail to: email@example.com with “The Niew Newsletter” in the subject header. In the body of your message, include your name, company name, office address, e-mail address at which you want to receive the Newsletter.