Author Archives: Randy Ivie

Food Trucks

Food Trucks Are Small Businesses Too

As small businesses, food trucks in the Triangle face legal challenges

Interest in and support of food trucks has exploded in the Triangle over Food Trucksthe past few years. This Sunday, August 11th, Downtown Raleigh will sponsor its third food truck rodeo of the year from 4 to 9 p.m. Over 70 food trucks will line Fayetteville Street for some 10 blocks to provide consumers a wide variety of dishes. A fourth food truck rodeo in downtown Raleigh is scheduled to be held on October 13th. What makes these events remarkable is the historic opposition by the city of Raleigh to food trucks. City officials worried that the trucks might threaten the business of downtown restaurants and create congestion, litter and noise.

Durham, on the other hand, embraced mobile cuisine long before the first food truck was welcomed on Food Trucksthe streets of Raleigh. The initial success in this city can be attributed in large part to the owner of Only Burger, Brian Bottger, who coined the phrase “food truck rodeo.” Unlike Raleigh, Durham took the position that food trucks are small business owners like their brick and mortar counterparts and deserve a shot at pursuing their gastronomical dreams.

Like most small business ventures, food trucks require hard work and some risk. It’s hard enough to achieve success when you know what you’re doing and do everything right.

In 2010, Mike Strenke invested $19,000 into a pizza truck and supplies only to discover that he couldn’t operate in Raleigh. Strenke, in the Klausie’s Pizza truck, rode out the opposition, championed a change in the city’s attitude and gained a large following. Recent posts on Klausie’s Pizza social media, however, indicate that the truck has been sold and plans are being made to open a brick and mortar location.

Strenke’s story serves to emphasize the need for small businesses to make sure that they understand and comply with the laws that govern formation, organization and operation and plan for the challenges and transitions that come with success as well as failure.

Whatever small business opportunity or dream you may wish to pursue, the Ivie Law Firm can help you navigate the law and implement a business structure to facilitate success. Call, email or use the Contact Form for additional information.

One final note – a group of local film makers working for Creative IllusionsFood Trucks Productions spent the summer creating a series of videos entitled Street Foodie Diaries about the area’s food trucks. The first episode, which features Mama Duke’s, was released on YouTube this morning and can be viewed HERE. You can find and like Street Foodie Diaries on Facebook HERE.

Non-Compete Agreements

Recent Court Decision Emphasizes Need for Restraint in Non-Compete Clauses

North Carolina Court of Appeals finds franchisor-franchisee non-compete agreements to be a hybrid of employer-employee and sale of business agreements but places emphasis upon reasonableness of agreement in protecting legitimate business interests.

Non-compete agreements are valid in North Carolina. Traditionally they are used by employers who fear that an employee may leave the company and create direct competition using the training, information, strategies and customer relations that the employee acquires as a part of the job. They are also used in situations where one purchases an existing business to insure that the previous owner does not open a new competing business across the street by using these same resources.

According to the North Carolina Court of Appeals in a recent decision, Outdoor Lighting Perspectives Franchising, Inc. v. Harders, the level of scrutiny given by a court that is assessing the validity of a non-compete agreement is not the same in an employment context as it is in a sale situation. In reality the distinctions are not as clear. In the Non-Competeemployment context the non-compete has to be in writing, part of the employment contract, based on valuable consideration, reasonable as to time and territory, and designed to protect a legitimate business interest of the employer. In a business sale context the first three elements are not listed, however it would be hard to imagine a sale without a written contract and valuable consideration. An additional element considered by the court in the sale context is whether the non-compete agreement interferes with a public interest.

Regardless of the various reasons that have been ascribed, the difference in scrutiny seems warranted. One can appreciate that an employee has less control over the circumstances under which a job is lost than does an owner over the sale of a business. An owner, at least in theory, negotiates the terms of a non-compete from a stronger position and can avoid the issue completely by deciding not to sell.

The recent decision required the Court of Appeals to consider the validity of a non-compete clause in a situation that does not fall within either category – a franchisor-franchisee relationship. The Court determined that this type of relationship is a hybrid of the employment and sale situations.

Lest one fear that this distinction might create a third set of elements used to assess the validity of a non-compete, the Court focused its attention on the element that is already shared by employment and sale situations: the reasonableness of the time and territory protections carved out by the agreement. The Court did not have to reach the issue as to time, which in this case was 2 years, since it found that the territorial prescriptions were too broad given the range of business in which the franchisor was involved.

The case dicta appears to maintain the possibility of blue penciling by the Court, though the wording of the non-compete agreement did not permit such in this situation. The opinion also discusses the element of good will as a legitimate business interest.

In the end, the opinion emphasizes the need for restraint in drafting a non-compete agreement. Once again, it appears that over reaching results in an unenforceable agreement.

If you have questions about or a problem with a non-compete clause, contact Ivie Law Firm by phone, email or the Contact Form on this website.

Employees and Drugs

Law amended to increase the penalty for employees who illegally use or divert drugs and other controlled substances

Under an amendment that goes into effect later this year, employees who illegally handle drugs within their control are targeted for increased criminal penalties.

It remains unlawful for anyone who is an employee and is authorized to possess controlled substances, or has access to these drugs by virtueDrugs of his or her employment, to embezzle or fraudulently or knowingly and willfully misapply or divert to personal use or other unauthorized or illegal use or to take, make away with or secrete, with intent to embezzle or fraudulently or knowingly and willfully misapply or divert to personal use or other unauthorized or illegal use any controlled substance which shall have come into the employee’s possession or care. That’s legal speak for it’s illegal for an employee to misuse the drugs to which he or she has access as a result of employment.

A new amendment, however, requires that anyone who is found in violation of this particular law after December 1, 2013 to be punished as a Class G felon. In other words, there is little discretion regarding what the consequences will be for an employee who violates the law, and the violation is increased from a Class I to a Class G felony.

What motivated the legislature to focus on employees in this manner is uncertain. The amendment as originally introduced in the legislature would have increased the penalty for a range of controlled substance and drug violations, including the maintenance of a building or vehicle for the purpose of using, keeping or selling drugs, obtaining controlled substances through legal prescriptions gained by willful misrepresentation, and failing to keep appropriate records. While we might understand the hesitation to increase penalties for administrative errors, the first two examples appear just as culpable as rogue employees. In the end, however, only employees incurred the ire of the legislatures under the new amendment to existing law.

If you are facing criminal charges, the Ivie Law Firm can be your advocate before the court and defend your legal rights. Call, email or us the Contact Form for additional information.

Utilities Crime

Reconnecting Utilities Soon a Criminal Offense

Amended law soon makes it a crime for reconnecting or turning back on certain utilities that have been lawfully disconnected.

After December 1, 2013 it will be a crime in North Carolina to reconnect or turn back on certain utilities that have been disconnected or turned off by a provider. The law requires the utility to have been turned off lawfully – meaning the provider has acted in accordance with the law and its contract with the consumer in disconnecting the service. Further, the new crime is limited to certain utilities, including water, gas and electricity. We are left to ponder why cable companies apparently do not possess the clout to push through such protections, since anecdotal evidence suggests that far more people steal cable than current.

Under the new law, the act of reconnecting or turning back on your electricity, gas or water can result in a class 1 misdemeanor conviction. A second or subsequent violation is a class H felony.

In addition to the new crime, the amendments also increase the amount these utilities can automatically recover in a civil action for damages from $500 to $5,000, In other words, if the utility company can show that your actions cost them in any way, like the expense of having to re-disconnect the service, it is entitled to a judgment against you in the amount of $5,000 even if the actual costs are much less in a civil action.

The new law also makes it a similar crime to bypass any load management device that has been installed by an electric utility to alleviate problems associated with peak demand periods. Since such devices are installed with the consumer’s permission, it is not a crime to circumvent the device if the consumer has requested the device be removed and the utility company has failed to do so within 2 working days.

Obviously, these new restrictions and penalties do not apply to properly licensed contractors who act in the course of their occupations.

If you are facing a criminal charge, you can count on Ivie Law Firm to be your advocate and defend your legal rights. Call, email or use the Contact Form for additional information.

School Bus Tickets More Costly

Harsher Penalties Related to Passing School Buses

Fines and Revocation of License for Passing a Stopped School Bus

Partly in response to the death of an 11 year old boy who was killed last December when he was struck by a car while crossing the street to board a school bus, the state legislature has imposed new and harsher penalties for drivers who are convicted of passing a stopped school bus. The bill was signed into law by the governor on July 13th and goes into effect on December 1, 2013.

Hasani W. Wesley, after whom the new legislation was named, was a sixth grader at East Forsyth Middle School when he was struck and killed last year. According to the Winston Salem Journal, at least two other students have been killed by drivers in violation of North Carolina stop-arm lawns this year.

Under the new law, entitled the Hasani N. Wesley Students’ School Bus Safety Act, the minimum fine for illegally passing a school bus increases to $500. A second offense within a period of three years will result in one’s license being revoked for one year in addition to the fine. A third offense will result in a permanent revocation of one’s license. The violation is not eligible to receive a prayer for judgment under any circumstances.

When the violation results in the striking of someone, the offense is a class I felony, the fine increases to $1,250 and your license will be revoked for a period of two years. If the striking of a person results in death, the offense is a class H felony, the fine increases to $2,500 and your license will be revoked for a period of three years.

Regardless of the infraction, Ivie Law Firm will explain the consequences of your traffic ticket and work to diminish them. Call, email or use the Contact Form on this website for further information.

Your Legal Right to Expunction Can be Waived

You can surrender the right to expunge your criminal record, even for a dismissal.

Make sure you protect your legal right to an expunction.

Suppose you find yourself charged with a criminal offense that was committed in the context of a domestic relationship. As a result, your case is assigned to the domestic violence court. If this is your first offense, your attorney may be able to negotiate a deferred prosecution such that the district attorney agrees to dismiss the charge after you jump through a few hoops. This may be counseling, anger management classes, community service, or an abuser program.

That may sound pretty good.

But wait! Not so fast.

In cases involving domestic violence, some district attorneys, including Wake County, have drafted the standard plea agreement such that you agree to waive your right to have the dismissed charge expunged from your criminal record. If you initial and sign the standard form as it is written, the charge cannot be expunged and will remain on your criminal record – even though you jump through all the hoops and even though under state stature you would have had a right to an expunction of the dismissed charge.

As a result, anyone will be able to check your criminal record and determine that you once were charged with assault – or worse. Many who have reason to check such records, including employers, schools or licensing boards, are not reassured by the knowledge that the charge was dismissed. In fact, they may assume, and in many cases they would be correct, that except for some arrangement with the district attorney you would have been convicted of the charged offense.

Before you agree to waive your right to have a dismissed charge for assault or a more serious offense expunged from your record, you should contact an attorney. The Ivie Law Firm has been able to strike that portion of the plea agreement and preserve the right to have the dismissed charge expunged.

If you have a dismissed charge on your record, whether involving domestic violence or not, the Ivie Law Firm may be able to have it expunged. Call or use the Contact Form to see if you qualify.

What You Don’t Know Can Hurt Your Business

Recent Scam Targets North Carolina Businesses

According to the North Carolina Secretary of State Corporations Division, companies in our state were recent targets of a scam. Businesses were mailed an official looking form entitled “2013 – Annual Minutes Form.” The instructions ask for the form to be completed and retForm Seeks to Scam NC Businessesurned along with payment in the amount of $125.00 to the Corporate Records Service that mailed the solicitation. To bolster its authenticity, the solicitation cites North Carolina statutes that address the need for corporations to keep accurate records.

Maintaining corporate records is an important requirement that is mandated by state law. Corporations are required to keep minutes of all meetings of incorporators, shareholders, or board of directors and records of all actions taken by the same without a meeting. However, there is no statutory requirement to file these minutes with the Department of the Secretary of State. In other words, the service being offered for a fee is not, as the solicitation implies, a requirement for North Carolina corporations.

Understanding what is required of your business under the laws of North Carolina is important. Many of the legal problems faced by businesses, particularly small businesses, can be traced to a failure to understand and fulfill these requirements. This lack of knowledge is what made the scam possible. The solicitation was created with the hope that many businesses would simply complete the form and pay the requested fee.

The Ivie Law Firm can help your business do all that is required and avoid doing, and paying for, things that are not. We can review your business records and your procedures for maintaining those records to insure that you are operating within the law. If we find that your business is lacking in some aspect, we can update your records and revise your system to bring your business into full compliance.

Unintended Consequences of a Casual Corporation

The Importance of Maintaining Corporate Formalities

How casual is your workplace? Some businesses observe casual Fridays. Some extend casual Fridays to include the entire workweek. Some provide great flexibility in terms of schedule and allow employees to work from home, though that’s the sort of thing that Yahoo just nixed. There is a limit, however, as to how casual a company should be in terms of governance and the maintenance of business records.

The primary benefit of forming a corporation is the protection that such provides to investors. The risk for each investor is limited to the amount of his or her investment. If corporate assets cannot cover liabilities, creditors and those who obtain judgment against the company are out of luck.

However, the protections provided by this type of business organization require the corporation to observe what are called corporate formalities. Failure to do so may open up the investors, officers, and even directors to personal liability.

For example:

  • Failure to maintain corporate formalities may be pointed to as evidence that the corporation was not an independent entity but merely an alter ego of the sole or dominant shareholder who merely used the corporation to hide inappropriate conduct. If a court finds that conduct to be in violation of public policy, state law or some positive legal duty, or deems the conduct to be fraudulent, dishonest or unjust, it may treat the corporation and the shareholder as one in the same and hold the shareholder liable.
  • Failure to timely file annual reports or pay taxes can result is the state administratively dissolving the corporation. A debt incurred by a corporate officer after dissolution of the corporation may make that officer personally liable for the debt. Further, if vendors or suppliers discover that the entity no longer legally exists, they may refuse to conduct further business with the company for fear of default.
  • Failure to maintain corporate formalities may be used to suggest that directors breached their fiduciary duties to the corporation by making unsound decisions. If a breach of fiduciary duty can be shown, then the directors may be held liable for any damages that result from their actions.

For all these reasons, and more, a corporation needs to keep it formal where it matters. The Ivie Law Firm can help you ensure that your business is not taking unnecessary risks for investors, shareholders, officers and directors. We can help you correct any deficits and bring your records up to date. We are here to help make sure that you don’t suffer unintended consequences, no matter what you wear on Fridays or any other day of the week.