Posts

Force majeure clauses and COVID-19

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on September 17, 2020.


By Phillips Murrah Attorney Kendra M. Norman

Kendra Norman Web

Kendra M. Norman represents individuals and businesses in a broad range of transactional matters.

Force majeure clauses are common clauses in contracts that allocate risk between parties and release a party from liability or obligations during unforeseeable or unpredictable events that are out of the party’s reasonable control.

These events can generally be referred to as acts of God or can be specifically listed in the agreement, often including events like war, strikes, riots or government actions. However, it should be noted that there is not a specific set of events that come under the definition of “acts of God” – this often depends on the context of the contract and the jurisdiction.

Force majeure clauses are ever-evolving and the language used has been influenced by events around us. Before 9/11, most force majeure clauses didn’t include terrorism as a force majeure event. This spurred litigation between parties regarding whether terrorism was an act of God that should be covered by the force majeure clause to excuse performance. Now, terrorism and terrorist attacks are often specifically set forth in force majeure clauses.

The conversation about force majeure clauses now revolves around whether the COVID-19 pandemic qualifies as an act of God and how this will affect contracts. As always, this depends on the type of contract, the language set forth in the contract, the context of the contract, the intent of the parties, and the governing law of the contract. Therefore, this determination is highly fact-specific and depends on several factors.

It is possible that COVID-19 could be considered an act of God in some contracts, or it could fall under force majeure clauses that contain specific references to disasters, national emergencies, government regulations or generally acts beyond the control of the parties. With the extraordinary potential consequences from COVID-19 yet to be determined, businesses should begin ascertaining whether their material contracts contain force majeure provisions and how such provisions may affect their rights and responsibilities going forward. However, given the widespread impact of COVID-19, it is possible that parties may be more likely to negotiate amendments to agreements that have been impacted by COVID-19 rather than forcing parties to rely on and litigate force majeure clauses.

Nevertheless, going forward, those entering into contracts should consider whether adding more specific terms such as epidemic, pandemic or infectious disease as force majeure events will be advantageous for them in the future.

Kendra Norman is an attorney with the law firm of Phillips Murrah.


Phillips Murrah’s attorneys continue to monitor developments to provide up-to-date advice to our clients during the current COVID-19 pandemic. Keep up with our ongoing COVID-19 resources, guidance and updates at our RESOURCE CENTER.

facebook iconPlease follow us on FACEBOOK!

Phillips Murrah announces 61 attorneys named to 2021 Best Lawyers lists

Phillips Murrah is proud to announce that 50 of our attorneys have been named to The Best Lawyers in America© 2021 lists in Oklahoma City and Dallas and 11 attorneys have been named to debut Ones to Watch 2021 list.

2021 Best Lawyers – Lawyers of the Year

Jennifer Ivester Berry – Commercial Finance Law

Michael D. Carter – Insurance Law

Lauren Barghols Hanna – Water Law

Sally A. Hasenfratz – Mergers and Acquisitions

Clayton D. Ketter – Litigation – Bankruptcy

Fred A. Leibrock – Litigation – Real Estate

Jim A. Roth – Energy Regulatory Law

 

The Best Lawyers in America 2021

Jennifer Ivester Berry – Commercial Finance Law; Commercial Transactions / UCC Law; Environmental Law; Real Estate Law

Elizabeth K. Brown – Business Organizations (including LLCs and Partnerships); Energy Law; Litigation – Trusts and Estates; Litigation and Controversy – Tax; Mergers and Acquisitions; Oil and Gas Law; Real Estate Law; Tax Law; Trusts and Estates

Susan E. Bryant – Securities / Capital Markets Regulation; Securities Regulation

John M. Bunting – Commercial Litigation; Insurance Law; Oil and Gas Law

Catherine L. Campbell – Commercial Litigation; Litigation – Labor and Employment

A. Michelle Campney – Commercial Litigation

Michael D. Carter – Insurance Law; Labor Law – Management; Litigation – Labor and Employment; Workers’ Compensation Law – Employers

Rodney L. Cook – Commercial Litigation; Insurance Law; Litigation – Insurance; Product Liability Litigation – Defendants

Cody J. Cooper – Commercial Litigation

C. Eric Davis – Energy Regulatory Law

Bobby Dolatabadi – Corporate Law; Mergers and Acquisitions Law

Joshua L. Edwards – Financial Services Regulation Law; Real Estate Law

Marc Edwards – Administrative / Regulatory Law; Commercial Litigation; Government Relations Practice

Nicholle Jones Edwards – Family Law; Family Law Arbitration

Kayce L. Gisinger – Product Liability Litigation – Defendants

Juston R. Givens – Commercial Litigation; Insurance Law

Mark E. Golman – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law

Lauren Barghols Hanna – Employment Law – Management; Labor Law – Management; Litigation – Labor and Employment; Water Law

Sally A. Hasenfratz – Commercial Transactions / UCC Law; Construction Law; Land Use and Zoning Law; Mergers and Acquisitions; Real Estate Law; Trusts and Estates

Terry L. Hawkins – Public Finance Law

Heather L. Hintz – Commercial Litigation

Patrick L. Hullum – Commercial Litigation

Clayton D. Ketter – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Commercial Litigation; Financial Services Regulation Law; Litigation – Bankruptcy

Timothy D. Kline – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Commercial Litigation; Commercial Transactions / UCC Law; Litigation – Bankruptcy

Jason M. Kreth – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law

Gretchen M. Latham– Commercial Litigation

Fred A. Leibrock – Commercial Litigation; Financial Services Regulation Law; Insurance Law; Litigation – Antitrust; Litigation – ERISA; Litigation – Real Estate; Real Estate Law

Candace Williams Lisle – Banking and Finance Law; Commercial Litigation; Financial Services Regulation Law

Mark Lovelace – Banking and Finance Law; Business Organizations (including LLCs and Partnerships); Commercial Transactions / UCC Law; Real Estate Law

Byrona J. Maule – Litigation – Labor and Employment

Melvin R. McVay, Jr. – Banking and Finance Law; Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Commercial Litigation; Financial Services Regulation Law; Insurance Law; Litigation – Banking and Finance; Litigation – Bankruptcy; Litigation – Real Estate

Andrew S. Mildren – Administrative / Regulatory Law; Banking and Finance Law; Government Relations Practice; Real Estate Law

Jennifer L. Miller – Commercial Litigation

Cindy H. Murray – Real Estate Law

Robert O. O’Bannon – Business Organizations (including LLCs and Partnerships); Oil and Gas Law; Private Funds / Hedge Funds Law; Tax Law

Martin G. Ozinga – Commercial Litigation; Entertainment Law – Motion Pictures and Television; Information Technology Law; Litigation – Intellectual Property; Technology Law

Donald A. Pape – Banking and Finance Law; Financial Services Regulation Law

Dawn M. Rahme – Business Organizations (including LLCs and Partnerships; Commercial Transactions / UCC Law; Litigation and Controversy – Tax; Mergers and Acquisitions; Tax Law; Trusts and Estates

Mary Holloway Richard – Health Care Law

Jim A. Roth – Energy Law; Energy Regulatory Law; Environmental Law; Government Relations Practice; Litigation – Regulatory Enforcement (SEC, Telecom, Energy); Natural Resources Law

G. Calvin Sharpe – Insurance Law; Medical Malpractice Law – Defendants; Personal Injury Litigation – Defendants; Product Liability Litigation – Defendants

Robert N. Sheets – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Commercial Litigation; Litigation – Bankruptcy; Litigation – Land Use and Zoning; Litigation – Real Estate

Ellen K. Spiropoulos – Corporate Law; Mergers and Acquisitions Law; Real Estate Law

D. Craig Story – Business Organizations (including LLCs and Partnerships); Real Estate Law, Trusts and Estates

Kathryn D. Terry – Insurance Law; Labor Law – Management; Litigation – Labor and Employment

Beverly I. Vilardofsky – Mergers and Acquisitions Law

Amy D. White – Commercial Litigation; Product Liability Litigation – Defendants

Lyndon W. Whitmire – Commercial Litigation; Commercial Transactions / UCC Law; Product Liability Litigation – Defendants

Thomas G. Wolfe – Bet-the-Company Litigation; Commercial Litigation; Mass Tort Litigation / Class Actions – Defendants; Oil and Gas Law; Product Liability Litigation – Defendants

Raymond E. Zschiesche – Commercial Litigation; Mass Tort Litigation / Class Actions – Defendants; Product Liability Litigation – Defendants

 

The Best Lawyers in America: Ones to Watch 2021

Oklahoma City:

Justin G. Bates – Commercial Litigation

Hilary Hudson Clifton – Appellate Practice; Commercial Litigation

Jessica N. Cory – Tax Law

Erica K. Halley – Mergers and Acquisitions Law, Real Estate Law

Travis E. Harrison – Mergers and Acquisitions Law; Oil and Gas Law; Real Estate Law

Mark E. Hornbeek – Commercial Litigation

Martin J. Lopez III – Health Care Law

Kendra M. Norman – Mergers and Acquisitions Law; Real Estate Law; Tax Law

Ashley M. Schovanec – Commercial Litigation

Molly E. Tipton – Family Law; Oil and Gas Law

 

Dallas:

Kim Beight Kelly – Product Liability Litigation – Defendants

Equine Estate Planning: What if your horses outlive you?

The following column was originally published in OklahomaHorses Magazine’s July/August 2020 issue.


It is not an easy topic of discussion, but as a horse owner, it is important to consider the care of your horses after your passing. To ensure proper care and management, it is imperative to make equine-specific prior arrangements as a part of your estate planning.

Careful planning and sound legal advice are central to ensuring the well-being of your horses after your life. Why be so diligent and thorough? The best answer may be to consider what could happen if a horse owner does not take the time and put in the energy to plan appropriately.

In the wrong circumstances, a horse’s fate is up in the air. Without specific guidance and resources set forth in an estate plan, a beneficiary may be surprised by what it takes to appropriately care for a horse or multiple horses. If the beneficiary has little knowledge or interest in caring for them, the horses may not be provided for in the way you desire.

While any estate plan is specific to the particular needs and desires of the person doing the planning, when it comes to planning for horses there are two general considerations with which to begin. First, leave a responsible person in charge with the required knowledge to care for your horse and an ability to make good decisions. Second, carefully specify and plan for the outcome you want for your horses.

 

WHO WILL TAKE OWNERSHIP?

There are several options when considering how to provide for your horses after your death. You may opt to allow your personal representative or trustee to sell them, or leave them in the care of an individual or entity as a beneficiary. If you choose to leave your horses to a beneficiary, you should choose a trusted, capable person who values your horses at a level with which you are comfortable.

It is advisable to consider whether the beneficiary has the resources to care for them. Are they able to cover associated costs, or are you prepared to provide funds? Based on the age of and your intentions for the horses, how much funding should you provide? Are you leaving land and facilities to the beneficiary, or are they in the position to provide the horses with a proper living condition? Over time, how might the beneficiary’s circumstances change that could affect the horses’ future? These are all important factors that you should discuss with your attorney, and finding the right person to trust with such responsibility is an important personal decision.

When planning, gather specific information that the beneficiary will need, such as the health history of all horses, your veterinarian’s name, and costs associated with temporary and permanent care, as well as setting aside required funds, if necessary. Even if your estate plan calls for the horses to be sold, it may be some time before the sale can occur. In the interim, an effective estate plan will take this into account. All aspects need to be well thought out, clear, and specific to protect the horses’ quality of life.

 

WILL OR TRUST?

Another critical decision is how you should structure the equine-related portion of your estate planning. Generally speaking, there are two vehicles for planning an estate that ensure the intensions of the decedent: a will and a trust.

With respect to a will, it is important to note that the estate will probably be required to go through the probate process to verify the legality of the will and ensure distribution according to the decedent’s intentions. Probate is a public, costly and time-consuming court processes that often takes up to nine months to several years, depending on the complexity of the estate and whether any family members challenge the validity of the will.

While probate assets are tied up during administration, the will’s executor has a fiduciary responsibility to care for the estate’s assets, including proper care for the horses. Unless the beneficiary of the horses and the executor are the same person, this could be problematic. Additionally, a will takes effect only upon death, which leaves in question what would happen if you become ill or incapacitated.

A living trust, also known as a revocable trust, is a popular alternative for numerous reasons, including the flexibility and privacy it offers. A living trust can be established for your benefit during your lifetime and provide for the disposition of your assets, including your horses, upon your death. You can specify the beneficiaries who will receive your horses after your death, and money can be set aside in a trust account to fund their care. Additionally, the trust may provide directions for your horses if you become ill or incapacitated, and your horses can be transferred by the successor trustee according to your wishes immediately upon death, avoiding a public probate and related costs and court delays.

Importantly, a living trust must be fully funded to avoid probate. You must transfer your assets to it and change the titles of assets to the name of the trust. A trust and its trustee cannot control any assets that are not transferred to the trust, so it is important to make sure the necessary assets are in the trust and not owned in your personal name.

When funding a trust for the future benefit of your horses, consider that when the trust runs out of money, the financial requirements fall to the beneficiary who becomes the caregiver. If they are unwilling or unable to care for them, the outcome may not be what you had originally intended.

 

PET TRUST

In some states, including Oklahoma, a pet trust may be included in a living trust, or as a stand-alone trust. In 2010, Oklahoma Governor Brad Henry signed HB 1641, which validates trusts for the care of domestic pets. Under such an arrangement, rather than your horse being considered an estate asset within a living trust, you can create a trust where your horses are the initial beneficiary for the rest of their lives.

In a pet trust, a trustee is assigned and compensated for the caregiving and must adhere to accounting requirements. You must also assign a separate trust enforcer to ensure the trustee is abiding by the obligations set forth in the trust. Additionally, you must name a remainder beneficiary. After the horses have passed away or the obligations of the trust are otherwise met, any leftover funds are distributed to the remainder beneficiary or beneficiaries under the guidance of the trust.

This type of trust is beneficial to horse owners, in particular, to ensure the beneficiary will have the financial ability to give the horses the care and treatment that you desire. If a caring and responsible trustee lacks the resources to care for the horses, such a trust will eliminate this issue.

Properly planning for the well-being of your horses in the event that they outlive you is a complicated investment in time, energy and money, but for horse lovers, it is all well-spent. An attorney can help you by drawing up the legal documents stating your intentions to ensure your equine interests are handled in the way you intend.

 

Gender equality and the rise of women in the boardroom

It should come as no shock that, although women make up just over half of the U.S. population, they are underrepresented in corporate executive management, as well as in the boardrooms of public companies in the U.S. This is often due to stereotypes that characterize female leaders as abrasive, aggressive and emotional. This disparate societal perception rewards certain characteristics in men while condemning them in women, which damages women striving for leadership roles.

A 2016 Catalyst report found that in the U.S., women made up only 21.2% of the S&P 500 board seats.

A recent push for diversity on corporate boards of directors may change the gender lines of corporate culture. For example, California is the first state to statutorily require female representation on boards of directors.

In 2018, roughly 25% of California-based companies had no female directors on their board. In October, Gov. Jerry Brown signed a law requiring all public companies having principal executive offices in the state to have at least one woman on the board by the end of 2019. By the end of 2021, any California public company with five directors must have a minimum of two female directors, and those with six or more directors must include at least three women. The law imposes a $100,000 fine for a first-time violation and a $300,000 fine for subsequent violations.

California follows several European countries, including Germany, France, Norway, and Sweden, which have implemented quotas and fines to increase female representation in the boardroom. Additionally, shareholder advisory firms such as Institutional Shareholder Services and Glass, Lewis & Co. are now using gender diversity as a factor for shareholder vote recommendations.

While a government-mandated requirement may not be the ultimate solution, it could accelerate the achievement of gender equality.

Such a change in gender representation is likely to benefit companies, as gender and culture diversity results in diverse perspectives, which is likely to improve a company’s performance. It will also create less gender discrimination in recruitment, promotion, and retention.

While Oklahoma continuously ranks in the bottom of states for women when it comes to the income gap, workplace environment, education, and health, Oklahoma ranks 20th with respect to the executive positions gap, according to a recent 2018 WalletHub study. While there is much room for improvement, there may be hope for Oklahoma in achieving executive gender equality.


Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on April 18, 2019.

LIBOR phase out means some mortgage, business loans need updating

Some mortgage, business loans may need updating with looming LIBOR bank rate phaseout.

Q: What is LIBOR?

A: The London Interbank Offered Rate (LIBOR) is the daily calculation of an average of estimated interest rates that a panel of around 20 banks calculate they’d be charged to borrow from other banks. LIBOR serves as the primary reference interest rate that’s overwhelmingly used by lenders to set their own interest rates including mortgage and student loan lenders, as well as credit card companies. It’s been used since 1986 for this purpose. LIBOR hasn’t been without its scandals, and in 2012, media outlets began to allege that LIBOR was being manipulated by the very banks that set the rate, leading to fines levied against financial institutions and prison sentences for individuals involved in the rate manipulation as well as regulatory backlash. The Financial Conduct Authority is the regulatory agency for LIBOR, and on July 27, in an apparent effort to replace rather than reform LIBOR, Chief Executive Andrew Bailey announced the recommendation that LIBOR phaseout at the end of 2021 due to a lack of confidence in the calculation as well as unwillingness among banks to use it.

Q: What’s the future of LIBOR and how could it affect consumers?

A: LIBOR has been used pervasively as a benchmark rate for loans for over 30 years. Most consumers have at least one agreement in effect that references LIBOR, whether it be a mortgage or business loan. Many of these contracts are long-term and won’t expire before 2021 when LIBOR will be phased out. Some of these loan contracts based upon LIBOR contain a fallback provision and reference an equivalent or alternative interest rate to be used in place of LIBOR, laying the foundation for those instruments to be governed by LIBOR’s eventual successor. However, lenders and borrowers should review existing loan documents, especially those continuing after 2021, to ascertain whether they’re LIBOR-based loans and then whether they reference an alternative rate in the event that LIBOR is no longer published. Those documents without fallback provisions or an alternative rate should be amended and updated so that they reference a substitute or new rate to avoid legal uncertainty once LIBOR is replaced.

Q: What will replace LIBOR?

A: LIBOR’s administrator will continue to produce LIBOR until 2021 and possibly after that time if banks continue to contribute to the benchmark rate, so there’s still time to figure out what will replace LIBOR, but there’s currently no go-to replacement. Lenders and borrowers should consider use of fallback provisions and flexible amendment provisions due to the unavailability of LIBOR in the future.

 

Doing business in multiple states

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on March 9, 2017.


One of the first considerations in forming a business entity is where to organize or incorporate. However, there is another important and frequently overlooked inquiry, which is where else to qualify that entity to do business.

If a business entity functions outside of the state in which it was formed, it may need to qualify to do business in that foreign state. Each state has different requirements for what constitutes doing business for this purpose. For many states, certain activities within that state, without more, do not require qualification. These activities usually include maintaining bank accounts, carrying on activities concerning internal corporate affairs, acquiring indebtedness, owning real or personal property, or conducting isolated transactions completed in 30 days.

Thus, the threshold for requiring businesses to qualify is relatively high. While these acts may not constitute doing business for qualification purposes by themselves, the general standard for qualification is based on the cumulative effect of all of the activities performed in the state in question. Generally, to be required to qualify, the foreign entity must transact a substantial part of its ordinary business within the state. To constitute ordinary business, activities must be indispensable to the business rather than simply incidental.

Failure to qualify can result in many penalties. Entities can be barred from access to the courts in states where they are unqualified, including Oklahoma. This can mean they are unable to enforce contracts entered into in these states. Unqualified entities, and individuals acting on their behalf, can be fined by foreign states in which they do business, including Oklahoma, where there is a statutory provision imposing fines. These fines can include backward-looking fees and franchise taxes to the state for the period in which the entity has operated while unqualified in the state, as well as a fine per transaction while unqualified.

The best course of action when faced with these issues is to determine where a business entity will transact substantial business and examine the specific statutory and case law of that state to determine if qualification is required.

Practitioners should keep in mind that what constitutes doing business for qualification purposes may not be the same threshold for what constitutes doing business for taxation and service of process purposes in some states, including Oklahoma.

 

Attorneys Hilary Hudson, Kendra Norman inducted into Order of the Coif

Kendra M. Norman and Hilary A. Hudson after being inducted into Order of the Coif.

Phillips Murrah Attorneys Hilary A. Hudson and Kendra M. Norman were inducted into the Order of the Coif at the University of Oklahoma College of Law’s Order of the Owl Dinner on March 6 at the Oklahoma Memorial Union.

“I’m very proud to be selected as a member of the Oklahoma Chapter of the Order of the Coif. It is such an honor, and I’m very excited about this achievement,” Norman said. “Being selected as a member of the Order of the Coif means always knowing that I did my best throughout law school.”

The Order of the Coif is a national law school honorary society founded to encourage scholarship and to advance the ethical standards of the profession. The Oklahoma chapter, chartered in 1925, may elect each fall from the graduating class — which includes all those graduating during the fall, spring and summer terms — those graduates who rank in the top 10 percent academically.

Each candidate elected to membership must be thought worthy of the honor in the opinion of the voting members of the Oklahoma chapter, according to the OU College of Law’s website.

“It’s a terrific honor to be inducted into The Order of the Coif,” Hudson said. “Law school was a rewarding experience, but it was also grueling.

“When you begin law school, you have no idea how your grades will turn out, so you just work as hard as you can and hope for the best. It’s great to have something like membership with The Order of the Coif to look to and remember what I accomplished. The induction is also a perfect opportunity to spend time with professors and peers and hear about the wonderful things the other inductees are accomplishing as new attorneys.”

Learn more about the Order of the Owl event here.

Phillips Murrah welcomes two new attorneys

hah-web-cutout

Attorney Hilary A. Hudson

Phillips Murrah is proud to welcome Hilary A. Hudson and Kendra M. Norman to our Firm.

Phillips Murrah welcomed Hudson to the Firm’s Litigation Practice Group as an associate attorney.

Hudson represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

Kendra M. Norman

Attorney Kendra M. Norman

Norman has joined Phillips Murrah’s Transactional Practice Group as an associate attorney.

She represents individuals and businesses in a broad range of transactional matters.

Norman and Hudson are recent graduates of the University of Oklahoma School of Law.

Phillips Murrah attorneys and summer clerks visit nursing home

REZ Luau

From left: Marchi McCartney, Kendra Norman, Nancy Parrot, William Sobral, Hilary Hudson, Judge Patricia Parrish, Ray Zschiesche, Monica Ybarra, Travis Weedn and Chance Pearson.

Friday afternoon, Aug 7, the Oklahoma County Bar Association Community Service Committee had a Luau-themed party for the residents of the Edwards Redeemer Nursing Home.

Phillips Murrah attorneys Director Ray Zschiesche and Monica Ybarra were on hand to dance and visit with the Edwards Redeemer Nursing Home residents, along with our summer clerks, Hillary Hudson, Kendra Norman, Jace White and Ben McCaslin.