ARIZONA'S EMPLOYER SANCTIONS LAW AT U.S. SUPREME COURT

The Supreme Court had arguments on Wednesday, December 8, 2010, on the case of Chamber of Commerce v. Whiting, which involves the Employer Sanctions Law of Arizona.  Arizona’s Employer Sanctions Law is among the toughest in the nation. The Law imposes sanctions on employers who hire unauthorized workers who work illegally in the country. It mandates that employers participate in the federal employment verification system called E-Verify, which verifies the work status of a worker.

Lower court decisions have upheld the Arizona’s Employer Sanctions law as constitutional. Based on these lower court decisions, it is anticipated that the Supreme Court will uphold the Employer Sanctions Law. However, opponents of the law, including the Asian American Justice Center and the National Immigration Justice Center, filed amicus briefs on the theory that the application of Arizona’s Employer Sanctions Law has a discriminatory effect and is unconstitutional.

This case is one to watch for the ongoing debate between the states and the federal government over the federal government’s handling of immigration.  The case will certainly act as a guidepost on how far the Supreme Court will allow states to intrude on immigration enforcement, a domain traditionally reserved for the federal government. 

While much has been made on both sides of the debate about what the U.S. Constitution says about immigration, it is interesting to note that the U.S. Constitution is incredibly brief on the subject.  Article 1, Section 8 of the United States Constitution, only requires Congress to "establish an uniform Rule of Naturalization."  Given the brevity of words, it is not surprising that we have so much debate on the subject. 

TAKE AWAY THE KEYS—PARENTS LIABLE FOR CHILD'S CRASH

If you ask the Arizona Court of Appeals, parents may be liable for harm caused when their kid crashes the family car, even when the kid drives without permission.  The reasoning lies in the case of Young v. Beck.  That case is currently on review at the AZ Supreme Court.  Therefore, parents with driving children may want to watch this case carefully. 

The facts giving rise to Young v. Beck are typical of many households with teenagers.   Jason Beck, 17, was joy riding with his friends in a car provided by his parents.  On his way home, Jason crashed into Young who received serious injuries. However, the rub here is that the Becks told Jason that he could no longer have friends in the car because of a previous accident. He was only to drive the car to school, church, or work. Therefore, Jason did not have permission to joy ride as he did on the day of the accident.   

So, why are his parents liable?  Arizona follows what’s called “The Family Purpose Doctrine.”  The Family Purpose Doctrine simply says that a parent who “furnishes an automobile for the pleasure and convenience of the members of his[/her] family makes the use of the machine . . . [the parents'] affair or business, and that any member of the family driving the machine with the [parents’] consent, either express or implied, is the [parents’] agent.” See, Benton v. Regeser.  In other words, if you let your kid drive the family car, you are responsible if the kid crashes the car.

In Young v. Beck, the Becks argued at trial that Jason did not have express permission to use the car for driving his friends. Therefore, the Becks argued they should not be liable under the Family Purpose Doctrine. The Court, however, reasoned that the Becks gave Jason implied consent to drive the car for family purposes because Jason had permission to drive the car for many other purposes.

So, what’s the moral of the story? If you have an accident prone child, take away the car keys and deny him or her the right to drive your car. Therefore, when he or she crashes the car and subjects you to liability, you’ll have an excuse at Court why your disobedient child should be the only person responsible for the damage. But, that’s easier said than done.  Your other choice is to carry a huge insurance policy. 



I CAN'T BELIEVE IT'S OVER—AVOID UGLY PROPERTY DISPUTES WITH YOUR EX

Boy meets girl.  Boy falls in love with girl.  Boy and girl buy a house together and that's when all hell breaks lose.  You see, in this story only girl signed the promissory note because boy had bad credit. Girl cannot really afford the house without a paying roommate.  But, boy is such a flake that he is not paying his part and girl is going broke paying all the mortgage. 

This really makes girl mad because, after the break up, he promised to pay rent.  Now the courts are involved because girl wants boy out but he refuses to leave claiming that since he is on the title to the home he has the right to live there.  Moreover, boy’s lawsuit claims that girl gave half the house to boy for his down payment of $2,000.00.  Of course he is lying, but boy and girl never bothered to write down any of their agreements. 

Several months later boy dies and boy's 18 year old son from another relationship wants 1/2 of girl's house in the probate of boy's estate.  Now girl is spending thousands in attorneys' fees trying to sort out the mess.  Ah . . . its a love story as old as time.  Frankly, I wish stories like this were not true.  However, because people fail to plan and fail to seek good advice, this story is all too real.    

Here are 3 simple ideas that can help you avoid problems when buying property with someone other than a legal spouse. 

1.  GET GOOD ADVICE ON TITLE:  Decide now how to title the property, whether it be joint tenants with right of survivorship, tenants in common with 50/50 ownership, tenants in common with some unequal division of ownership, or some other form of ownership such as through a trust or business form.  In simple terms, “title” means ownership.  If you do not define your ownership interest well, you will have unintended consequences.  You should counsel with a qualified real estate attorney about the type of title you should seek. 

2.  GET A GOOD CONTRACT:  I know you trust him/her and I know he/she is a great person, and I know that contracts are not romantic, but it's the law.  Contracts for real property must be in writing, otherwise the contract may be unenforceable.  Therefore, if you want to buy real property with someone other than your legal spouse, get a contract written up between you that reflects your agreement about payment, ownership interests, disposing of the property, or any other concerns you may have.  Otherwise, you will leave these decisions to the courts, which is not a good idea. 

3.  STICK TO THE CONTRACT OR GET A NEW ONE:  People often change contract terms after signing the agreement.  This typically arises when a party has a change is situation that prevents him or her from fulfilling the terms.  Therefore, the parties make new terms that modify the original contract.  In theory, modifying the terms of the contract is not a problem. However, when those modifications are not in writing, it presents a problem of proof in the courtroom.  Moreover, only some changes to contracts are recognized by the law as binding.  So, either stick to the original contract terms or get a new written contract.  

This is just a primer on ways to avoid pitfalls of buying property with someone other than your legal spouse.  With just a little planning, you can avoid a lot of heartache.   

ARE RESIDENTIAL INVESTORS WRONGFULLY EVICTING?

I have begun to see an increase of complaints that residential real estate investors are wrongfully evicting occupants.  The problem arises when investors purchase residential properties at foreclosure auctions.  When this happens, the bank typically sells the home with occupants still in the home.  

Thereafter, with deed in hand, the investor appears at the home, orders the occupants out, threatens to file a criminal complaint for trespassing, and threatens to have the police drag them out.  Some investors say they will be "nice" and give the occupant a couple days to move.  

Many occupants comply with the demands, walking away from thousands in personal property because they are scared and do not have time to move.  Most people are just not used to this type of behavior.  However, I have seen investors lock the occupants out of the home, without warning, without judicial process, and without allowing the occupant to remove all the personal property.  

Investors who engage in such actions risk both civil and criminal liability.  Investors simply do not have the right to use "self help" when evicting someone.  When an investor has spent tens of thousands, if not hundreds of thousands, to purchase property, why not spend a few hundred dollars with an eviction specialist to properly evict the occupant.  Properly evicting the occupant will save the investor from liability; moreover, it's the  law.  

   

NO TITLE INSURANCE ON FORECLOSED HOMES

Some of the nation’s largest title insurance companies have threatened to stop issuing title insurance for Chase and GMAC foreclosure properties. See, Washington Post article here. See, My Fox Phoenix report here.  The reason is that the so-called “robo-signers” have created a situation where title insurers feel uncomfortable issuing polices on these banks’ properties. (See my previous post). The supposition is that defects in the foreclosure process have caused defects to title. However, there are reports that some title insurers will issue insurance so long as Chase and GMAC agree to indemnify the insurer should the foreclosure be found defective. See, Miami Herald article here. It remains to be seen how this will affect Arizona home sales.

So, what does this actually mean? Title insurance is a policy that a buyer obtains when property is purchased to protect the buyer from defects in “title.” Title is the legal elements that constitute the right to control and dispose of real property. When title is “defective” the seller cannot legally convey clear title. No purchaser of property in their right mind would purchase without title insurance. Most lenders require that title insurance be purchased at the time of sale, otherwise they will not lend for the property.

Consider the following example: John buys a home from Frank. Frank sold the home in his capacity as personal representative for his father’s estate. Unknown to John, Frank failed to give notice in the probate action to certain heirs who were entitled to the home per the will. Thereafter, the disenfranchised heirs bring suit to recover the home. John is protected from financial losses by his title insurance.

Consider another example: John purchases a home from Frank. According to the county records, Frank “purchased” the home from Sue some 6 months previous. The only problem is that Sue never “sold” the property. The deed from Sue to Frank was an absolute forgery. When Sue returns from her 2 year Christian mission to Africa, she finds John living in her home. Sue sues anyone and everyone, including John, so she can recover her losses. John is protected by title insurance.

Consider a final example: Bill owns a home he purchased with a loan from Chase bank. The home has significant equity. Last June and July Chase misapplied two of John’s mortgage payments. Thereafter, Chase initiated foreclosure proceedings during which Chase failed to provide notice to John about the proceedings. Last week Bill found out his home was sold at a foreclosure auction to Sue. Bill sues anyone and everyone, including Sue, so he can recover his losses and/or receive a return of the home. Sue does not have title insurance because the insurer refused to issue a policy on Chase properties. Sue must defend title and her investment with her own money.

These examples may seem far fetched, but they are not as rare as one might expect. Moreover, the fee for title insurance is a good investment to protect from these types of harms. In light of these examples, it is easy to see the importance of the announcement that title insurance companies will not issue polices for Chase and GMAC foreclosure properties. How much would you pay for a home with no ability to purchase title insurance?

SHOULD BANKS HALT FORECLOSURES?

There has been much talk in the media regarding whether or not foreclosures should be halted. Accusations have been made that banks are illegally foreclosing on innocent homeowners. The accusations stem from the so-called “robo signers,” who signed foreclosure documents without verifying the accuracy of the documents—not a good idea. See, Daily Finance article here. Now that foreclosures are moving forward again, consumer advocates and attorneys general are questioning whether banks have sufficiently complied with the foreclosure laws. See, Rueters article here. I note, with few exceptions, that the accusation against the banks is that the foreclosures are procedurally wrong—the homeowners are still in default.

From a practical prospective, it is difficult to contest a foreclosure when the homeowner is in default on the mortgage. As someone who advises and represents parties in contested foreclosures, the best result a homeowner in default can expect is to prolong the foreclosure process. However, in some instances, prolonging the foreclosure process through judicial procedure is counter productive for the homeowner because the homeowner has a very real possibility of losing in court.

Judges are often not sympathetic when a homeowner in default contests the foreclosure with highly technical arguments such as “I never received the notice sent in the mail” or “The notice was never posted on my property.” Banks often deny problems in the foreclosure process and often have some proof that the legal procedures were followed. Furthermore, these arguments typically fail because the homeowner had to receive some sort of notice otherwise the homeowner would not know to file suit to stop the foreclosure. Moreover, it’s easy for the court to disbelieve the homeowner who is months behind on the mortgage and does not have the ability or intention of bringing the mortgage current. In these situations, Courts view the efforts to stop the foreclosure as gamesmanship by the homeowner.

Furthermore, let’s say that the homeowner convinces the court to stop the foreclosure because of a technical problem with the foreclosure process. The homeowner in default does not keep the home free and clear of the mortgage. The bank will simply restart the foreclosure process, which only takes 90 days in Arizona. Therefore, in most instances contesting the foreclosure is only prolonging the inevitable. Furthermore, unless the homeowner is highly sophisticated in the law, so as to represent him or herself, it will cost thousands in attorneys’ fees for the homeowner to fight the process.

Notwithstanding the above, there are some instances when the foreclosure process has been wrongly initiated and/or legally defective and it makes sense for the homeowner to fight the foreclosure. These situations typically arise when the homeowner (1) is current on the mortgage, (2) can become current on the mortgage, and/or (3) has equity in the home. In these cases, fighting the foreclosure makes sense. A homeowner with one or more of these factors is a highly sympathetic plaintiff and can expect to do well in court. However, if the homeowner is not current on the mortgage, cannot become current on the mortgage, and has no equity in the home, fighting the foreclosure will be difficult to justify.

THAT'S OUTRAGEOUS, SNYDER V. PHELPS

The Supreme Court recently heard arguments on the case of Snyder v. Phelps, et al. and will decide the case this season. This case is certain to test the limits of the free speech clause of the First Amendment. Fred Phelps, of the Westboro Baptist Church, has gained notoriety for protesting at funeral of military service members. However, this time Phelps and his followers protested against the wrong family when they protested the funeral of Snyder's son, Lance Corporal Matthew Snyder.

For the subject protest, Phelps positioned his followers outside Cpl. Snyder's funeral so that when the family left the funeral they would see Phelps' hate signs—signs such as "GOD HATES YOU" and "THANK GOD FOR DEAD SOLDIERS.”

Naturally, Snyder was emotionally disturbed by Phelps and his followers. So, he sued for, among other things, Intentional Infliction of Emotional Distress. Snyder won winning a multimillion dollar verdict. Phelps appealed on the theory that his hate speech is protected by the First Amendment. Hence, he is at the Supreme Court asking for relief.

Most are familiar with the First Amendment. The First Amendment is the part of the Constitution that allows citizens to speak what they want (within reason) without fear of prosecution. However, many may not be familiar with the tort of Intentional Infliction of Emotional Distress.

To prove Intentional Infliction of Emotional Distress, Snyder had to prove that Phelps intentionally or recklessly caused emotional distress by showing the following:

1. Phelps’s conduct was extreme and outrageous; and

2. Phelps's conduct was either intentional or reckless; and

3. Phelps’s conduct caused Snyder to suffer severe emotional distress.

Conduct is “intentional” if a person’s objective is to cause emotional distress. Conduct is “reckless” if a person is aware of and disregards the near certainty that it would result in emotional distress.

Given the standard for Intentional Infliction of Emotional Distress, it is not too hard to see why Phelps lost. The conduct of Phelps and his followers is beyond defense and societal decency. I can’t imagine how the Snyder family felt.

I firmly believe Phelps is free to continue the protests under the First Amendment. The government should not make his acts criminal or seek to restrain his speech. However, I also believe that Phelps should be held accountable when his actions harm real people. It would be sad if our Supreme Court allowed people like Phelps to intentionally cause harm to another without repercussion.

Allowing claims for Intentional Infliction of Emotional Distress will not harm the First Amendment. You have not seen the government trying to stop Phelps’s speech. Claims for Intentional Infliction of Emotional Distress merely give victims a means of recovery from harmful speech.

NEGOTIATE BEHIND THE SCENES

Negotiation is art, not science. Those who are good at negotiating understand the psychology of the deal—the often emotional process that brings people to compromise. If one is to win at negotiations, one must understand triggers that cause people to compromise and the emotional baggage people bring to the negotiating table.

Negotiating with a lawyer over an ongoing legal dispute can be different than typical business-type negotiations. Some factors influencing a negotiation in a lawsuit that are not present in typical business negotiations are as follows:

1. The cost of attorneys’ fees can cause parties to perceive that their position is worth more than it really is worth;

2. The lost opportunity caused from a protracted litigation can increase the price of settlement;

3. Intangibles such as emotional fatigue from litigation, anger over perceived slights, and a desire for revenge; and

4. An attorney that riles his client to anger so he/she can generate more fees.

However, these influences only serve to highlight the need to employ psychology and strategy in the negotiating process.

I highly recommend that attorney and client work together on the negotiation process. Business clients who negotiate well are great allies in the negotiating process. Often times the client can provide helpful insight into the opponent’s finances, personality, and stomach for risk.

There are times when a party will not come to the negotiation table because that party feels empowered by having an attorney litigate on his/her behalf.  After all, in the early stages of the lawsuit, the attorney helps keep the client from dealing with difficult conversations and stressful court battles. In many ways, the attorney is the "big brother" protecting the client from ugliness.  Moreover, the opposing attorney may be provoking his/her client to continue the action.  Therefore, the opponent is often unwilling to come to the table.  

So, what does one do? Answer: Bring the ugliness to the opponent, but give the opponent a way to control his/her fate by settlement. This is the proverbial “carrot and a stick.” This strategy takes patience, money, and an appetite for risk.

                            The Stick

Have your attorney take the hard-line—setting and performing depositions—sending out discovery requests—sending out subpoenas—filing motions. Expect your attorney to aggressively push forward and expect to spend money. This will cause the opposing attorney to ask for more money from his client. Therefore, the opponent will feel financially pinched.

                            The Carrot

Once the opponent is fatigued from the dispute, have your attorney draft communication to send out under your signature (a letter, text, email, etc). The communication will be something similar to the following:

Dear John,

I’m willing to take this dispute as far as I need to. Frankly, I can’t afford to walk away from the money you owe me. You simply owe me too much money. You know that you breached the contract. You know that I will likely win at trial. That said, paying attorneys does not get either of us what we want. If you want to talk about ways to resolve this dispute, then let us get together. Otherwise, we will get this resolved in court.

Sincerely,

Reasonable Man

If the opposing party is at all reasonable, he/she will consider the upcoming costs for litigation and balance that against a reasonable settlement. Staring down thousands in attorneys’ fees, being subjected to ugly depositions, and having to disclose thousands of pages of personal documents that could potentially be made public in court, has a tendency to make litigation less appealing. Moreover, if there is any goodwill left in the relationship, the party will want to settle so long as the settlement is “win-win.” In essence, you have opened the door and reasonable settlement talks can start.

A New Breed of Attorney

I started this blog to share my insights regarding dispute resolution through mediation, arbitration and litigation in the state, federal, and administrative courts. My intent is to make the law more accessible for the consumers of it. In my experience, litigation is often a poor method to resolve one’s legal difficulties. However, it is frequently a necessary evil because parties simple are unable to come to reasonable conclusions regarding their legal disputes.

Too much of the time litigation ensues because of ego, because parties fail to understand the consequences of litigation, and because the parties fail to take advantage of litigation alternatives. Therefore, I share these insights in the hope that people will not fall victim to excessive attorneys’ fees, loss of time, as well as anxiety and heartache caused from litigation.

I also share these insights so readers know what it takes to win a dispute and so readers know when to litigate. Loss of reputation, loss of significant sums of money, loss of the ability to work, and loss of intellectual capital are all good reasons to litigate civil disputes. Litigating on “principal” is simply not worth it.

As a primer to my philosophy, I offer you this advice: Litigate only when losses significantly exceed the costs of litigation. I am constantly surprised how in the heat of the moment litigants ignore this advice. So, what are the costs and how do you know when to litigate? That is what this blog is about.