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Houston Business & Commercial Law Blog

Mel Gibson's contract issues involving a film's distribution

Contract disputes sometimes become contentious, even to the point where multiple lawsuits are involved. This is the situation with a movie involving Mel Gibson. The actor-director and his producing partner are being sued by the movie's distributor. The move comes in response to a lawsuit Gibson filed against the company alleging that the distributor failed to honor a co-production deal.

The contract issues started with Gibson accusing the distribution company of not providing enough funds in the budget to shoot what Gibson claims was a critical scene for the movie. He also claims the distributor's unauthorized cut of the film infringes on the movie's screenplay copyright, which the director claims he has the rights to.

Game developer sued for breach of contract

Gaming enthusiasts in Texas might be interested in learning about a lawsuit CryEngine developer, Crytek GmbH ("Crytek"), filed against Cloud Imperium Games Corporation and Roberts Space Industries Corporation (collectively, "CIG"). CIG entered into a licensing agreement with Crytek to use its CryEngine platform for a new game called "Star Citizen," but later switched to a different engine.

Crytek alleges CIG breached the parties' agreement by, among other things, using CryEngine to market, develop, and incentivize funding for more than one game, and failing to prominently display Crytek's trademark and copyright notices in the game and related marketing materials.

New tax law could boost commercial real estate owners

Texas commercial real estate owners may get a boost from the passage of the tax bill. Under it, people who own real estate that is held in pass-through companies stand to enjoy significant reductions in their tax liability.

According to the Wall Street Journal, people who earn less than $157,100 per year and who own pass-through companies with real estate holdings will receive a 20 percent deduction on the amount of income that is taxable. Those who make less than $315,000 and who are joint filers will also receive a 20 percent deduction

Caution is needed when terminating certain employees

Most employers realize that an employee cannot be terminated or penalized for making a Family Medical Leave Act (FMLA) request. Making a leave request does not prohibit termination if the reasons are independent and unrelated to the FMLA. Employers in Texas should pay attention to a recent Missouri federal court case that illustrates how appearances can lead to actionable lawsuits.

The lawsuit describes how an employee was given a favorable annual review by his supervisor. The employee then announced he was seeking leave under FMLA. As the employee had outstanding complaints from customers, the supervisor looked into the work records of the employee and found them to be inconsistent. The employee was then terminated for filing false records.

Blackberry and Nokia settle legal matter

In the past, Texas residents may have been divided over whether Nokia or BlackBerry made the best phones. While that battle is largely over, the two companies have still been engaged in legal battles. However, on Dec. 1, BlackBerry agreed to pay Nokia $137 million in accordance with a ruling from the International Court of Arbitration. This doesn't mean that BlackBerry has stepped back from its assertion that Nokia has infringed on its intellectual property rights.

In February 2017, BlackBerry claimed that Nokia infringed on 11 different patents that the company owns. The intellectual property is considered valuable to BlackBerry because its business model is changing to licensing from actually making phones or other electronics. BlackBerry's CEO has said that it wants to focus more on security and software, and that this may be harder to do without respect for its patents.

Factors that impact a commercial lease

Texas business owners who are looking for a commercial space to rent should be ready to negotiate the terms of a lease. This is because what a landlord may be willing to offer depends largely on market conditions. When times are bad, a business owner may get several concessions from a commercial landlord. Of course, it may be tougher to negotiate in good economic times.

Rent is generally calculated by taking the cost per square foot and multiplying it by the total square footage of the space. That is then divided by 12 to come up with a monthly rental fee. Other costs may be included in the rent as well such as utilities, taxes and insurance. However, that depends on whether the lease is a gross lease, a double net lease or triple net lease. In addition to market conditions, the length of a lease may determine if a landlord is willing to make concessions during contract negotiations.

Green building techniques protect asset value

Building practices designed to reduce energy and water usage along with carbon pollution have emerged as desirable characteristics in commercial real estate in Texas. Both tenants and investors want buildings that produce less pollution and have the ability to resist the effects of climate change. A representative from the Urban Land Institute's Greenprint Center for Building Performance said that building strategies that mitigate or adapt to changing climate conditions have produced value for real estate owners.

A report from the institute indicated that buildings without sustainable designs or upgrades could decline in value. Green buildings, however, protect the value of assets and even increase it. Building owners are increasingly upgrading their buildings along sustainable guidelines to limit a property's vulnerability to climate change and bad weather. Globally, multiple real estate industry leaders have adopted green building practices to meet the expectations of tenants and avoid the drop in value predicted for properties that lack sustainable design.

How to get out of a commercial lease

Business owners in Texas and around the country strive for success. In some cases, this means that it is time to move to another area or to a building with more space. However, this may mean that it is necessary to break an existing commercial lease. A business owner may be able to prepare for this by negotiating exit language in the lease before it is signed.

It may be possible to simply ask the landlord to be let out of a lease. The landlord may be amenable to this if it means seeking a new tenant that may pay a higher monthly rental rate. It may also be possible to buy out the rest of a lease to get out of it sooner. To increase the odds of getting out of a lease, an individual may offer to find a replacement tenant.

How to invest in commercial real estate in 2018

Texas residents that are looking to invest in commercial real estate may be interested in learning about the trends for 2018. Several ideas were discussed relating to industry trends at the 2017 REALTORS® Conference & Expo that recently took place. For instance, the media may be talking up the fact that companies are buying office space in cities again. However, that may generally be restricted to large companies that should never have left in the first place.

Investors also should be wary of the effects of any tax cut coming from the White House. This is because even economists have a difficult time predicting for sure what they will do for the economy in the long run. Those who are looking to invest in trophy properties should be ready for a drop in 2018. Investors may be heartened to know that the correction will be relatively small compared to recent gains.

CRE lenders becoming concerned about climate change risks

The potential effects of climate change and how soon they could have an impact are the subject of contentious debate in Texas and around the country, but the consequences of anticipated rising sea levels have already prompted some commercial real estate lenders to reevaluate their positions on coastal developments according to a panel hosted by the Commercial Industrial Association of South Florida. However, funds may still be readily available to developers in municipalities that have taken steps to address the threat posed by climate change.

Much has been written in recent years about how climate change will impact South Florida, but banks and nontraditional lenders still seem willing to fund commercial real estate developments in the region. The CIASF panel members say that this is because cities like Miami have committed hundreds of millions of dollars to infrastructure projects designed to prevent flooding and mitigate these effects.

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