Robin Went To Work For Titans Inc. A Major Banking House

Robin Went To Work For Titans Inc A Major Banking House As a Secur

Robin went to work for Titans, Inc., a major banking house, as a security specialist. He had charge of designing and implementing all security protocols and equipment at Titan Towers for Titan’s physical security and security of their business transactions. Before starting work, Robin signed a written employment agreement. The agreement included a non-compete clause that stated as follows: “18. NON-COMPETE - Employee agrees that for a period of two years following Employee’s term as an employee of Company, Employee shall not be employed as a security specialist for any other company in the financial service industry, anywhere in the world. Provided Employee shall comply with all terms of this provision, at the end of said two year term, Company shall pay to Employee a bonus payment of Ten Thousand (10,000) Dollars within 30 days of the end of the aforesaid two-year period. Robin worked for Titans, Inc. for a year and then left to return to his prior life as a circus acrobat. He toured the world with Hailey’s Circus for two years, doing no work at all in the financial services industry. At the end of two years from the date he left Titans, Inc., Robin returned to the US and opened his own security firm, aimed at the financial services industry. Robin also wrote to Titans, Inc. and informed them that he had lived up to his obligations under the non-compete clause in his agreement, and requested they send him the $10,000 bonus.

Titans writes back thanking Robin for abiding by his agreement. Robin waits patiently, but after six months, his savings are running low and his new business could use an influx of cash. Robin sells his right to collect the $10,000 to Speedy, a friend from his Titans, Inc. days who has also left the company. Two weeks later, Speedy sends a letter to Titans, Inc., telling them that he has acquired the rights to the debt owed to Robin and demanding payment in ten (10) days. A week after Robin sells the debt to Speedy, Titans, Inc.’s accountants do an internal audit. They discover that many debts from former employees to the company, from participating in the company’s Home Down Payment Borrowing Program, had never been collected. Among these debts are $5,000 from Robin and also $5,000 from Speedy. When Titans, Inc. gets Speedy’s letter, they ignore it, believing they are now even with Robin and Speedy. When he does not hear back from Titans, Inc., Speedy sues them for the $10,000 debt to Robin. In the lawsuit between Speedy and Titan’s Inc., who should win and who should collect what?

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The legal dispute between Speedy and Titans, Inc. concerning the $10,000 debt owed by Titans to Robin and the subsequent sale of the debt involves complex issues of contractual obligations, non-compete clauses, and debt assignment. This case illustrates the importance of clear contractual terms, especially regarding debts and rights of assignment, and highlights the legal principles of debt assignment, non-compete enforceability, and set-off rights.

Initially, Robin’s employment contract with Titans included a non-compete clause, which prohibited him from working in the financial services industry for two years after leaving the company. The clause also stipulated that upon complying with the non-compete, Titans would pay Robin a $10,000 bonus. Robin adhered to the clause by leaving Titans, touring with a circus, and later starting his own security firm in the same industry, thus fulfilling the contractual obligation. Consequently, Titans acknowledged Robin’s compliance by thanking him in writing, and the debt of $10,000 was owed to Robin.

Robin’s subsequent sale of his right to collect the $10,000 debt to Speedy raises questions about whether the debt was assignable and whether Titans recognized and accepted this transfer. Generally, debts owed by a company to an employee are considered personal, contractual rights that are often assignable unless prohibited by the contract or law. In this case, there was no explicit restriction on assignment stated in the employment agreement or the debt acknowledgment. Therefore, Robin was permitted to transfer his rights to collect the debt to a third party, Speedy, which is consistent with typical contractual law principles that favors free assignability of claims unless otherwise stipulated.

After the transfer, Speedy demanded payment from Titans, Inc. However, Titans declined to recognize the transfer, assuming they had already settled their obligations. This assumption of mutual cancellation is problematic. From a legal standpoint, unless Titans explicitly agreed to the transfer or accepted the assignment, they are still liable to Robin or any subsequent holder of the claim. The fact that Titans had not paid Robin directly does not automatically extinguish the debt. Instead, the transfer of a debt creates an assignment, which involves the original debtor’s obligation to pay the assignee unless the debtor is notified of the transfer and objects. This notification is crucial because it signals the debtor's obligation to redirect payment toward the assignee.

Furthermore, Titans’ failure to recognize the assignment does not legally negate the rights of Speedy to enforce the debt. Under the law of assignments and negotiable instruments, once the debt is validly assigned, the assignee acquires the right to collect and can sue the debtor directly for payment. Titans’ ignorance of the assignment only places Titan at risk of being liable to the new creditor, Speedy, if they refuse to pay upon demand.

Adding complexity, Titans’ internal audit revealed that they owed both Robin and Speedy $5,000 each from the same program, indicating a set-off situation. Titans might argue that the two debts offset, reducing the total liability, and thus pay nothing if they believed they were “even.” However, this relies on a mistaken assumption that set-off is automatic without proper acknowledgment of the assignment or the debts’ recognition. The law generally favors payment to the rightful creditor unless Titans can prove the debts were extinguished or settled through an agreement or legal process.

In the litigation between Speedy and Titans, Inc., the key issues are whether the debt of $10,000 was validly assigned to Speedy, whether Titans knew or should have known of the assignment, and whether Titans’ internal debts to Robin and Speedy offset their obligation. Since the assignment was valid and Titans failed to contest it adequately, Speedy has the legal right to enforce the debt. Titans’ ignorance or mistaken belief about being "even" does not negate this right.

Therefore, the likely outcome is that Speedy should win the lawsuit and be entitled to collect the full $10,000 from Titans, Inc. The company’s failure to recognize or respond to the assignment does not excuse its obligation. Furthermore, because Titans owed Robin $5,000 from the same debt, it could attempt a set-off if recognized as a valid debt. However, for the purposes of the lawsuit, unless the set-off is formally acknowledged and adjudicated, the amount owed remains $10,000 to Speedy.

In conclusion, the legal principles support that Speedy, having acquired the rights to the $10,000 debt through a valid assignment, has a rightful claim to that sum. Titans, Inc., despite their internal debts, must settle the debt directly with Speedy unless they successfully argue a valid set-off. This case underscores the importance of proper debt assignment procedures, clear contractual language regarding non-compete and debt rights, and the need for careful legal management of employee rights post-employment.

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