A DEAL IS NOT A DEAL UNTIL IT’S A DEAL

PROBATE.  The word is often synonymous with controversy and has been for hundreds of years.  Probate can pit brother against brother, mother against child, cousin against uncle, etc., in ugly legal battles that last years.  Charles Dickens’ famous novel “Bleak House” fictionalized such a probate battle styled Jarndyce v. Jarndyce, in the Court of Chancery of England, a case lasting so long the legal fees exhausted the means of the entire estate.

The case of In re Estate of Mary A. Riley, 2-CA-CV2010-0149, may not be Jarndyce v. Jarndyce, but it illustrates the problems that can be found in probate battles.  In re Riley involves an estate with 13 potential beneficiaries who are battling over “inaccuracies” in the proposed accounting and distribution of the estate’s assets.   Apparently, 4 of the 13 beneficiaries reached an agreement to which the others could not agree.  The court, however, approved the compromise. 

On appeal, the Arizona Court of Appeals, Division 2, ruled that pursuant to A.R.S. § 14-3952(1) a compromise is not a compromise unless everyone agrees and signs to the terms.  Quoting the Court:

Section 14-3952(1) requires the compromise to be ‘executed by all competent persons . . . having beneficial interests or having claims which will or may be affected by the compromise.’ . . . [A] compromise that has not be executed by all the persons with beneficial interests in the estate is void. 

At the end of the day the result of the ruling means that the beneficiaries just keep fighting it out in court.  I wish the parties a speedy conclusion to this matter. 

CHANGES TO ARIZONA’S JUDGMENT RATES OF INTEREST

If you are an attorney that represents creditors in debt collections, whether it be large commercial notes or  small private notes, your practice will be affected by recent changes to A.R.S. § 44‑1201, regarding judgment rates of interest.  This is how I interpret the statute:

A. Loans with a stated rate of interest:  If plaintiff is seeking to collect on a loan, indebtedness or other similar obligation and the parties have a rate of interest contracted for in the writing, the rate of interest in that writing will apply.  See A.R.S. § 44‑1201(A).

B. Loans without a stated rate of interest:  If plaintiff is seeking to collect on a loan, indebtedness, or other similar obligation, which rate of interest is not contracted for in writing, plaintiff will apply the rate of 10% per annum to that loan.  See A.R.S. § 44‑1201(A).

C.  All other amounts on a judgment:  All other amounts on a judgment, including attorneys' fees, costs, and damages not found in A or B above, will bear interest at either the rate contracted for in writing or prime rate, plus 1 percent, as identified by the Federal Reserve Statistical Release H.15, on the date of judgment.  A hyperlink to this Federal Reserve rate is found here.  See A.R.S. § 44‑1201(B). 

These are significant changes from the old statute.  I urge you to review the statute.  Also, if you interpret the statute differently, please comment to this article.  The statute has caused some debate on how to interpret the words in unique cases.  Moreover, each attorney I have talked with about these changes has come to a different conclusion. 

MORE FORECLOSURE TROUBLES FOR BANKS

Banks Must Give 90 Days Written Notice
Before An Eviction Action

When a bank forecloses on property, the legal issues that follow can be sticky.  I frequently get questions about a bank’s obligation toward a tenant following a foreclosure.  The scenario is as follows:  Tenant is paying his/her rent every month.  The landlord is not paying the mortgage every month.  The landlord falls in default and the bank forecloses.  That is when the problems start.  The bank's goal is to evict the tenant as soon as possible, while the tenant wishes to stay in the property. 

So what are the tenant's rights and the bank's obligation following a foreclosure?  After a foreclosure, the tenant has the right to stay in the property 90 days following written notice from the bank informing the tenant that they will be evicted in 90 days.  It is not enough that the bank simply wait 90 days to foreclose.  The bank must provide written notice that the tenant has 90 days to vacate the property before an eviction action is filed. 

This point of law was confirmed in the case of Bank of New York Melon v. Patricia de Meo, which was decided by the Arizona Court of Appeals in May 2011.  In this matter, the bank foreclosed on the landlord and one day later the bank provided a standard five-day written notice for the tenant to vacate the property.  Thereafter, the bank waited 90 days prior to bringing an action for forcible detainer.  The Court of Appeals ruled that the trial court erred in evicting the tenant because the bank failed to provide a 90-day written notice to vacate.

The lesson to foreclosing banks is that it is not enough to provide the standard five-day notice provided in the Arizona Landlord-Tenant Act.  The bank must provide a 90 day written notice.  It is also not enough that a bank simply wait 90 days prior to filing the action.  The lesson to a tenant is that he/she need not vacate after 90 days.  A tenant must only vacate after receiving 90 days written notice of termination. 

If you are a tenant or bank and in need of a landlord-tenant attorney, I urge you to contact me where I can make a proper recommendation for your needs. 

SOMETIMES THE GUILTY GO FREE

One of the hallmarks of American justice is that sometimes the guilty go free, even when the court system knows the person is guilty.  This fact often makes prosecutors, judges, and citizens uncomfortable, but our U.S. Constitution demands it.  If police violate the Constitution in the course of their duties, even when the violation was not malicious, the guilty may go free. 

In the case of State v. Fisher, which was decided on May 19, 2011, the Arizona Supreme Court grappled with our pesky Constitution, specifically with the Fourth Amendment that grants citizens "[t]he right of the people to be secure in their persons, houses, papers, and effects, and against unreasonable searches and seizures."  Based on the Fourth Amendment, the courts have ruled that unless there is a recognized exception police must have a warrant to search a home. 

In this case, police were searching for a person suspected of an assault.  In the process of the search, police detained Fisher, and several other people, outside Fisher’s apartment.  Thereafter, the police entered his home without a warrant and found a duffel bag containing marijuana.  The Arizona Supreme Court reasoned that the apartment search was unconstitutional because police lacked reasonable suspicion and probable cause to search a home as the suspects were detained outside the home; accordingly, a warrant was required for the search.  The Arizona Supreme Court decided to exclude evidence found in the illegal search, meaning a jury will never hear of the evidence. 

The court further reasoned as follows: 

We likewise are aware of the high price of suppressing evidence. . . . The principal cost of applying the [exclusionary] rule is, of course, letting guilty and possibly dangerous defendants go free – something that offends basic concepts of the criminal justice system. . . .  But the right to privacy in one’s home is basic to a free society. Thus, specific facts, and not mere conjecture, are required to justify a protective sweep of a residence based on concerns for officer safety.  (Citations and quotations omitted).

The U.S. Constitution is a curious thing.