LEGAL REPORTS

PUBLIC CORRUPTION, REALLY?

2013-04-12T10:42:00.000-07:00

Socrates was famously charged, convicted, and sentenced to death for the crime of “public corruption.” Specifically, he was charged with corrupting the youth of Athens. It was believed by the jury that Socrates had encouraged students to follow his chosen path, which was in conflict with the Athenian form of democracy and the powers at be. In other words, Socrates ruffled the wrong people’s feathers.

Attorneys can also ruffle people’s feathers in the aggressive pursuit of a client’s cause and will often pay a personal price doing so. Years ago I represented a small business owner that was wrongfully sued by an individual. I pursued the matter with my usual attention to detail and aggressive-style litigation. After a few months of litigation with David Derringer, the plaintiff, it became clear that he was so caught up in his self-righteousness that he would never give up on the cause.

After winning the action for the business owner, the disgruntled Derringer sued me, my client, my client’s employees and a number of other individuals. In fact, he sued me not less than three times — two federal court actions and one state court action. He took his matter all the way to the Ninth Circuit Court of Appeals and the Arizona Court of Appeals. In fact, he even made a writ of certiorari to the United States Supreme Court. Obviously, the actions were defeated because they were baseless.

So, how does this relate to Socrates? I was accused of, among other things, public corruption. Derringer has created a website dedicated to the bogus claims of public corruption allegedly committed by me, Robert Sewell.

David Derringer, wherever you are, I view your relentless pursuit of me as a badge of honor. I may not be Socrates, but I certainly pursued a cause in which I believed and successfully defended against your claims. Moreover, I will continue to aggressively pursue my clients’ causes, even if it results in more ridiculous defamation against my character.

OFFERS OF SETTLEMENT – AN IMPROVED LITIGATION WEAPON

2013-03-26T10:07:00.002-07:00

I once represented a client who was sued for over $400,000. My objective analysis showed that my client actually owed somewhere between zero and $100,000. So, my client offered in writing $100,000 to settle the case. That offer, which was rejected, put the opposing side “on the ropes,” as case became more about beating the $100,000 offer than winning $400,000. A settlement offer can act as a weapon in litigation and turn a losing case into a winning case. As you see, rather than being a sign of weakness, an early settlement offer can actually turn the tide for a defendant in a difficult spot.

A new law supports early settlement offers even more strongly. As of January 1, 2013, the Arizona Legislature changed A.R.S. 12‑341.01, regarding attorneys’ fees in a contract action, to allow the court to consider written offers of settlement in determining the reasonableness of attorneys’ fees for the party who is granted judgment. Under this statute, if a party that makes an offer of settlement that is equal to or more favorable than the ultimate award, then the offeror may be deemed the successful party and, therefore, may be awarded attorneys’ fees. The exact language of the statute reads like this:

In any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees. If a written settlement offer is rejected and the judgment finally obtained is equal to or more favorable to the offeror than an offer made in writing to settle any contested action arising out of a contract, the offeror is deemed to be the successful party from the date of the offer and the court may award the successful party reasonable attorney fees. This section shall not be construed as altering, prohibiting or restricting present or future contracts or statutes that may provide for attorney fees.

In other words, settlement offers can make a losing party the successful party.

Therefore, as a strategy, a defendant with a difficult case should honestly analyze the case early in the action and determine what the defendant may owe. Thereafter, the defendant should make a settlement offer to reflect what the plaintiff may win at the end of the litigation. If the defendant’s guess is ultimately correct, but the plaintiff rejected the offer, the defendant can lose the case but still collect attorney’s fees. At the end, the defendant’s award of attorneys’ fees could potentially be used to offset the final award.

A recent case styled Hall v. Reed Development, Inc., analyzes this very strategy. In that matter, the defendant made numerous settlement offers. However, each time the defendant offered settlement, the settlement offer was significantly less than the attorneys’ fees plaintiff had incurred at that stage in the litigation. The court of appeals reasoned that “we conclude that comparing the ‘judgment finally obtained’ under Section 12‑341.01(A) to a settlement offer should involve only those reasonable fees and costs incurred as of the date the offer was made.” The takeaway from this case is that a defendant should make a reasonable offer of settlement early and include the current attorneys’ fees and cost to that point.

Therefore, in a difficult fight, make realistic offers, make them early, and fight hard if those offers are rejected – even if you “lose” you can still win!

2013-02-04T10:18:00.001-07:00

TOO SMALL FOR PROBATE

I frequently have people ask me this question: Do I need to probate the estate when my loved one had nearly nothing?

The answer is—like in nearly all legal questions—it depends. When an estate is small, Arizona will allow for mini-probates accomplished by affidavit called a “Small Estate Affidavit.” To qualify for probate by Small Estate Affidavit the estate and the person signing the affidavit (“affiant”) must meet certain qualifications. There are two types of small estate affidavits: (1) Real property, and (2) Personal property.

Real Property Small Estate Affidavit

To transfer real property by Small Estate Affidavit the estate and affiant must meet these qualifications:

1. The affiant must be legally entitled to the property.

2. The value of all real property, less liens and encumbrances, cannot exceed $75,000.00.

3. There must be no probate application pending, or it must be over one year from the closing of an estate or discharge of the personal representative, or no personal representative has been appointed in the past year.

4. Six months must have passed from the decedent’s death.

5. All funeral expenses, unsecured debt, and taxes must be paid.

Personal Property Small Estate Affidavit

To transfer personal property by Small Estate Affidavit the estate and affiant must meet these qualifications:

1. The affiant must be legally entitled to the property.

2. The value of all personal property, less liens and encumbrances, cannot exceed $50,000.00.

3. There must be no probate application pending, or it must be over one year from the closing of an estate or discharge of the personal representative, or that no personal representative has been appointed in the past year.

4. Thirty days must have passed from the decedent’s death.

If you meet the above requirements, a full probate may not be necessary. The best way to determine whether you qualify to avoid probate is to discuss the estate with a qualified attorney.

YOU’RE OUT!—HOW TO DISINHERIT YOUR FAMILY AFTER YOU’RE DEAD

2012-11-15T17:05:00.001-07:00

Every family has that special family member who causes all the problems—the bad seed—the redheaded step child—the sponge—etc. When mom and dad die, this bad seed wants to argue about everything, including why he/she receives a smaller portion of the estate than others. The bad seed just cannot understand why mom or dad would give less to him/her than the other children.

To defend against the bad seed and to protect the other people receiving bequests from the estate, attorneys place poisonous pills in the will or trust to disinherit the bad seed if he/she files a lawsuit to protest the estate plan or the administration of the estate. These clauses are called “in terrorem” clauses. These clauses are designed to “frighten” or cause “terror” in the bad seed so as to dissuade the bad seed from filing the lawsuit. The reason this is so important is that lawsuits frequently deplete the estate for every other beneficiary of the estate.

In Stewart v. Stewart, et al., a case decided on September 27, 2012, the Arizona Court of Appeals reversed a trial court that ruled against a particularly harsh in terrorem clause. The clause was so harsh that a beneficiary who “cooperates or aids” another in contesting the will or trust was disinherited. The trial court ruled that such a broad clause violated the public policy of Arizona because Arizona Revised Statute 14-2517, along with case law interpreting it, allows for good faith attacks on wills or trusts, even if unsuccessful.

In reversing the decision, the Court of Appeals reasoned that the clause only applied to beneficiaries who “voluntarily cooperate or aid a party to contest” the will or trust. The Court of Appeals further reasoned that a party that brings the lawsuit with probable cause and in good faith has no reason to fear the in terrorem clause as current Arizona law supports those attacks. The Court explained that if a reasonable person at the time of the challenge would have believed there was a substantial likelihood of success for a contest or attack, then the in terrorem clause will have no force.

In making this decision, the Court of Appeals provided significant support to in terrorem clauses and, therefore, increased ammunition against bad seeds. So, do you have a bad seed in your family? If so, a properly drafted in terrorem clause will aid in limiting the damage from a lawsuit after you die.

ARIZONA SUPREME COURT HELPS BANKS VICTIMIZED BY FORECLOSURES

2012-07-27T13:07:00.001-07:00

U.S. banks have become victims of the foreclosure crisis. Given today’s political environment, it is hard to think of banks as victims of anything. However, during this foreclosure crisis, overly-creative attorneys, misguided consumer advocates, and desperate homeowners filed numerous lawsuits against banks on the false legal theory commonly called “Show Me the Note.” In Hogan v. Washington Mutual Bank, decided July 11, 2012, the Arizona Supreme Court debunked the Show Me the Note theory and concluded that banks must simply follow the current foreclosure laws as written.

Under the Show Me the Note theory, the homeowner admits he/she is in default but still files a lawsuit claiming that the bank cannot foreclose unless it “shows possession of, or otherwise documents its right to enforce, the underlying note.” As the theory goes, the promissory note and the deed of trust “go together” and “must be construed together;” therefore, proving mutual possession of the original promissory note and the deed of trust is mandatory before foreclosure begins. Frequently, the homeowner will allege that the bank must produce the “wet ink” signature on the promissory note and not simply a photocopy. At the end, the homeowner seeks to own the home free of the bank without paying off the promissory note.

This theory is baseless and was advanced by attorneys who did not understand the foreclosure laws or were abusing the system. However, the cases were so pervasive that the Arizona Supreme Court took up the issue. The Arizona Supreme Court explains as follows:

. . . the note and the deed of trust are . . . distinct instruments that serve different purposes. The note is a contract that evidences the loan and the obligor’s duty to repay. See A.R.S. § 33-801(4). The trust deed transfers an interest in real property, securing the repayment of the money owed under the note. See A.R.S. §§ 33-801(4), -801(8), -801(9), -805, -807(A). The dispositive question here is whether the trustee, acting pursuant to its own power of sale or on behalf of the beneficiary, had the statutory right to foreclose on the deeds of trust. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1043-44 (9th Cir. 2011)

In other words, the Court is saying “you don’t get it.” The underlying message is that when the homeowner fails to pay on the promissory note, the deed of trust may be foreclosed, regardless of who “owns” deed of trust and regardless of whether the deed of trust and promissory note are owned by the same person. The deed of trust and promissory note are not dependent upon each other. Homeowners facing foreclosure can recover and find solutions; however, filing a Show Me the Note lawsuit will not help.

THE POWER OF SEDUCTION AND A DYING MAN’S WILL

2012-07-20T12:13:00.001-07:00

Nothing looks more suspicious, though quite common, than the dying man who makes a deathbed will. It is the stuff of Hollywood. Picture the elderly man summoning his lawyer to his deathbed. The lawyer drafts the will as the invalid dictates the contents. The invalid declares that his entire estate shall pass to his wicked mistress—a young looker and manipulative gold digger. The scarlet woman places the pen in the man’s hand and firmly demands, “sign it.” The will is signed. The priest reads the testator’s last rites as his soul leaves his body. His faithful children are now destitute.

Of course, a lawsuit will follow. The faithful children accuse the mistress of unduly influencing their father and demanding, in court, that the judge refuse the will. After all, why would a loving father not provide for his children at death? Had the mistress not used her seductive powers and lies to poison the mind of their father, the children would enjoy a profitable future. Unfortunately for the children, a woman’s seduction alone is not enough to invalidate a will.

In the case of Parrisella v. Fotopulos, 111 Ariz. 4, 6, 522 P.2d 1081, 1083 (Ariz. 1974), the Arizona Supreme Court defines “undue influence” as follows:

Conduct by which a person unduly influences a testator in executing a will, when that person through his power over the mind of the testator makes the latter’s desires conform to his own, thereby overmastering the volition of the testator.

The court reasoned that a woman’s seductive power does meet this standard:

It is settled law of this state that [an] illicit relationship is not sufficient per se to warrant a conclusion of undue influence. And no presumption of undue influence arises merely from the fact that a man . . . makes a will in favor of his mistress.”

Id. (citations omitted). So, unlike in the movies, in real life, the wicked mistress just might win.

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

2012-03-08T12:01:00.000-07:00

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

2011-12-20T15:19:00.001-07:00

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(B).

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

2011-06-03T16:55:00.002-07:00

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

2011-05-19T13:58:00.000-07:00

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.

TIMING OUT—ARIZONA’S CHANGES TO THE STATUTE OF LIMITATION ON CREDIT CARD DEBT

2011-04-26T15:52:00.001-07:00

The consumers’ battle against the credit card industry just got tougher because of recent changes to one of Arizona’s statute of limitations. The change will negatively affect consumers because it increases the time period for which a credit card company can sue upon on a bad debt, from three years to six years. However, the change creates more certainty for all involved as Arizona’s former law was applied unevenly.

Photo by Michelle Meiklejohn http://www.freedigitalphotos.net/images/view_photog.php?photogid=901

A “statute of limitation” is the legal time limit for suing on the matter. The purpose of a statute of limitation is to create finality and certainty for all parties to a dispute. Prior to April 12, 2011, Arizona’s statute of limitation on credit card debt was unclear; therefore, it was applied unevenly. Some judges applied Arizona Revised Statute § 12-543 to credit card debt, which states that plaintiffs suing upon a “stated or open” account have three years from the default to bring the action. On the other hand, some courts applied Arizona Revised Statute § 12-548 which gives six years to sue for contracts made in writing. The uneven application of the law was problematic for judges, creditors, consumers, and attorneys.

The law was applied unevenly because the definition of “stated or open” account was undefined. Some judges and attorneys believe that a “stated or open” account is synonymous with “credit card.” Other judges and lawyers believe that credit cards should be viewed as only a contract made in writing, thus the six year statute of limitation under § 12-548 would apply. The new legislation has the effect of clarifying the rule by specifically defining what a credit card is and granting the credit card companies six years from the date of first default to bring a cause of action.

How will this affect the average consumer? The change means that the credit card companies will have six years (rather than three) to sue the defaulted debtor; however, it also means that the average consumer will have more certainty as the law will be applied evenly to all consumers.

If you have been sued on a credit card that is six years in default, I do not recommend that you attempt the defense on your own. You should contact a qualified attorney who can help you dismiss the action in your favor.

CAN I CREATE MY OWN WILL?

2011-03-23T16:53:00.000-07:00

Many people ask whether they need an attorney to draft a will or whether they can do it on their own. In Arizona, the answer to that question is that you do not need an attorney to draft a will—a will does not fail because it is drafted by a non-lawyer. That said, I have yet to find a non-lawyer that understands the legal requirements of a will or common pitfalls in will drafting. Moreover, I have seen too many self-made wills that are lawsuits waiting to happen.

The case of Gloria Waterloo, decided by the Arizona Court of Appeals on March 8, 2011, illustrates that a well drafted will is the “ounce of precaution” that avoids “the pound of cure.” Ms. Waterloo had an estate with a value of at least 3 million dollars. One month before she died, she decided to will some or all of her estate to a certain Rabbi Zack Zimmerman.

No doubt Ms. Waterloo believed that her will was adequate to probate. However, her will made reference to a “list of final instructions” that did not exist. Therefore, the trial court declined to probate the will because it could not ascertain Ms. Waterloo’s “complete intent . . . without knowing what was to be contained in the list of instructions.” On appeal, the Court of Appeals reversed the trial court sending the will back to probate because a will “should be admitted to probate as a will even though all of its terms are not capable of being enforced.”

So what’s the moral of this case? You do not need an attorney to draft a will. However, a qualified attorney knows how to draft a will that probates without needless litigation. If you have a poorly drafted will, you may end up like Ms. Waterloo, spending tens of thousands in attorneys’ fees just to have her last wishes fulfilled. I doubt it is your desire to have your money expended in this way. Therefore, I highly recommend that a qualified attorney prepare your estate plan.

U.S. SUPREME COURT RULES THAT WESTBORO BAPTIST CHURCH HAS CONSTITUTIONAL RIGHT TO PICKET AT FUNERALS

2011-03-02T13:04:00.001-07:00

The Supreme Court ruled on March 2, 2011, that the Westboro Baptist Church has a constitutional right, under the Free Speech Clause of the First Amendment, to picket at the funerals of our fallen soldiers. The court went on to reason that the First Amendment is a defense to the tort of intentional infliction of emotional distress. The opinion can be found here.

The facts of this case arise out of the picketing of the funeral of Lance Corporal Matthew Snyder. At the picketing Fred Phelps and followers of the Westboro Baptist Church held signs outside the funeral of Cpl. Matthew Snyder that read “Thank God for Dead Soldiers,” “Fags Doom Nations,” “America is Doomed,” “Priests Rape Boys,” and “You’re Going to Hell.” After the funeral, Cpl. Snyder’s father filed suit against Fred Phelps, his daughters, and the Westboro Baptist Church for, among other things, intentional infliction of emotional distress. His father won a multimillion dollar award. An appeal of the award followed on the theory that the First Amendment protects this type of speech.

In ruling against Snyder, the U.S. Supreme Court reasoned that the First Amendment serves as a defense to torts when the speech in question is of a public concern rather than a private concern. Speech is of a public concern when it can “be fairly considered as relating to any matter of political, social, or other concern to the community,” or when it “is a subject of general interest and of value and concern to the public.” Whether the statement is “inappropriate or controversial . . . is irrelevant.”

The court went on to reason that the content of the Westboro Baptist Church’s speech is a public concern and, therefore, entitled to special protection under the First Amendment. However, the court further reasoned that choice of when and where to conduct picketing is “subject to reasonable time, place, or manner restrictions” so long as the regulations are “content neutral.”

Only one justice dissented the majority opinion, Justice Alito. In that dissent, Justice Alito summoned the voice of the people. His words are worth mentioning:

Petitioner Albert Snyder is not a public figure. He is simply a parent whose son, Marine Lance Corporal Matthew Snyder, was killed in Iraq. Mr. Snyder wanted what is surely the right of any parent who experiences such an incalculable loss: to bury his son in peace. But respondents, members of the Westboro Baptist Church, deprived him of that elementary right. They first issued a press release and thus turned Matthew’s funeral into a tumultuous media event. They then appeared at the church, approached as closely as they could without trespassing, and launched a malevolent verbal attack on Matthew and his family at a time of acute emotional vulnerability. As a result, Albert Snyder suffered severe and lasting emotional injury. The Court now holds that the First Amendment protected respondents’ right to brutalize Mr. Snyder. I cannot agree.

Our hearts go out to the Snyder family. This ruling will be difficult to handle.

YOUR NEIGHBOR IS CHEAP? – JUST SUE!

2011-02-17T13:40:00.001-07:00

The Arizona Court of Appeals says that when your neighbor is cheap you can sue him. Well, that is not exactly what the Court of Appeals ruled, but it is pretty close. In the case of Friedland v. Sorchych, which was decided just last month, the Arizona Court of Appeals was grappling with the dispute of two feuding neighbors. The subject of their dispute was a private road that serves both of neighbors’ parcels of land.

In this case, the road came in the form of an easement, which is defined as the right to use another’s land. At some point, the parties made a verbal agreement that they should share the cost of maintaining the road. However, the Defendant later refused to provide his share of the costs claiming the repairs were unnecessary and too expensive. Therefore, the Plaintiff sued but lost the case.

The Court of Appeals reversed the trial court ruling that “the doctrine of equitable contribution should be extended to remit one dominant tenant to require another dominant tenant to contribute to the necessary repair and maintenance of an easement that both tenants are using . . .” “Consequently, [the parties] . . . have a shared obligation for the necessary maintenance and repair of the roadway.”

In other words, if you and your neighbor share an easement and your neighbor will not help pay to maintain the easement, sue him for being cheap. There is no such thing as a free road.

HOW THE DISAPPOINTED HEIR GETS REVENGE

2011-01-26T14:08:00.002-07:00

When those we love pass away, every family hopes that the legal and financial aspects of the deceased’s estate will settle easily and without argument. Most of the time the deceased’s estate is resolved without incident. However, there are times when an heir is disappointed in his/her portion of the estate. When this happens, the heir looks for someone to sue. In the law, we call this person the “Disappointed Heir.”

Dealing with a Disappointed Heir can be challenging. After all, the Disappointed Heir expected to receive a certain bequest but it was taken away. Right or wrong, the Disappointed Heir wants vindication for the loss.

There are two classic fact patterns for a Disappointed Heir to obtain “revenge.” The first one is where the Disappointed Heir is a truly rotten son/daughter and the deceased writes him/her out of the estate plan. This Disappointed Heir will say and do just about anything to get back the money, including by bringing a court action. The second classic fact pattern is when the bad son/daughter commits some wrongful act to cause the good son/daughter not to receive a bequest. This often happens through some act of fraud such as changing the deceased’s will, causing an incompetent testator to sign a new will, or taking the money before it can be distributed. However, in either case, a nasty legal battle over the estate is inevitable.

So, how can you avoid or limit your family’s involvement in a legal battle after you die? With a little bit of planning, you can avoid tens of thousands in litigation fees for the beneficiaries by performing a few simple acts when you create your estate plan:

1. Doctors Evaluation: Obtain a doctor’s opinion declaring you competent and declaring that you have the mental capacity to make a will. This declaration should be done with the assistance of an attorney so the declaration addresses legal issues paramount to competency.

2. Hold a Family Meeting: Hold a family meeting, with outside witnesses present, describing why you chose to make certain bequests or did not make certain bequests.

3. Draft a Letter: Draft a letter to family members describing why you chose to make certain bequests and/or did not make certain bequests.

4. Prepare a Video of Yourself: Prepare a video of yourself reading the will/estate plan and discussing why you decided to make certain bequests. Be sure to explain why you disinherited the heir. Once again, the family meeting, letter, and video needs to address important legal issues so I recommend having the assistance of an attorney.

5. File a Declaratory Lawsuit: You may take the extraordinary step to file a lawsuit against all possible beneficiaries and ask the Court to declare you competent to make the will/estate plan. This final step is most likely “over kill.” However, you may find it necessary to do so under your specific facts.

If you are in a legal battle with a Disappointed Heir or you are the Disappointed Heir, seek good legal help. The litigation process is not easy. The last will and testament is frequently upheld because the burden of proof is on the person challenging the will. However, from a practical stand point, even if the will is in your favor, you must carefully construct a litigation to prove the person was competent to make the will. This process is full of unintended pitfalls if you do not perform it correctly.

The vast majority of people’s estates pass to the beneficiaries without incident. Families and friends recognize the good intentions of the testator and typically follow his or her will. However, when things go wrong, they can go very wrong and painful litigation will ensue.

ARIZONA PASSES FUNERAL PICKETING LAW—RESPONSE TO WESTBORO BAPTIST CHURCH

2011-01-17T12:50:00.003-07:00

Last week Arizona passed SB1101 to address threats by the Westboro Baptist Church that its members would picket the funeral of Christina Taylor Green, a nine-year old victim of the Rep. Gabrielle Gifford shooting. The new bill makes it a class 1 misdemeanor to picket or protest within 300 feet of the property line of any residence, cemetery, funeral home, church or other establishment, before, during or after a funeral.

In October, I posted an article discussing the undecided U.S. Supreme Court case, Snyder v. Phelps, which regards a multi-million dollar emotional distress verdict spawned by a Westboro Baptist Church funeral protest. In that case, Phelps and the Westboro Baptist Church argued before the U.S. Supreme Court that funeral protests are a protected form of the free speech. Therefore, the multi-million dollar verdict against Phelps and other protester defendants should be overturned.

The new Arizona law will have no effect on the outcome of Snyder v. Phelps . However, the new Arizona law, SB1101, is related because it is designed to limit the type of speech that Westboro Baptist Church argued it was entitled to speak--funeral protests. After all, SB1101 funeral protesters will be limited in the times of the protests and the location of the protests.

So, does the new law violate the First Amendment? Answer: Quite possibly. A similar funeral protest law in Missouri was found unconstitutional in August, 2010. (A copy of the ruling can be found here.) Arizona's law is a restriction on free speech. Restrictions on free speech are Constitutional if the restrictions meet "tests" concocted by the Supreme Court to guide lower court judges. In the Missouri case, the Court found that law could not meet two of the tests: (1) Whether the law serves a significant goverment interest, and (2) Whether the law is narrowily tailored to meet that interest.

These test are complex and beyond the scope of this ariticle. However, from a practical stand point, the tests are designed to allow limits on speech that is disruptive to everyday society. So, what makes speech disruptive? Frequently govement regulations in the name of public safty are upheld. A good example would be a law that causes protesters to hold signs below a certain size and height so that the signs do not block street signs; or a law that causes protesters to not protest near street intersections so as to not interfere with traffic.

We will need to wait and see whether this law becomes another hot button at the U.S. Supreme Court. However, given the Missouri case, this law could once again put Arizona in the national spotlight.

JULIAN ASSANGE OF WIKILEAKS—CRIMINAL SPY OR JOURNALIST EXERCISING RIGHT TO FREE SPEECH?

2011-01-04T18:20:00.010-07:00

For some time now, Julian Assange, founder and editor of the website WikiLeaks, has been publishing U.S. government secrets that he allegedly received from an army private employed at the Pentagon. See article from Wall Street Journal. The army private allegedly downloaded thousands of secret and classified documents from his Pentagon computer and, thereafter, delivered the documents to WikiLeaks and its editor. Now people are calling for Mr. Assange to be prosecuted under the Espionage Act. See article from Wall Street Journal.

If you have not seen it, this is what the Wikileaks website looks like. You can currently reach Wikileaks at http://213.251.145.96/

The Espionage Act makes it a crime for a person to be in possession of a U.S. government secret and transmit that secret to another party who is not entitled to receive it. Certainly in this case Mr. Assange is in possession of U.S. government secrets and has transmitted it, via the web, to the world. Therefore, at first glance there appears to be some justification for investigating further whether the Espionage Act applies to these acts.

The rub here is that the First Amendment right to free speech possibly trumps the Espionage Act. This blog post is not to make an opinion about whether or not Mr. Assange has violated the Espionage Act and/or is protected by the First Amendment. Rather it is to point out the similarities between the case of New York Times vs. the United States, aka the Pentagon Papers case, and let you determine whether Mr. Assange is protected by the First Amendment right to free speech.

In the Pentagon Paper case, the U.S. government sought to enjoin (or stop) the New York Times and other newspapers from publishing a classified study entitled, “History of U.S. Decision-Making Process on Vietnam Policy” and other government secrets. Just as in the Wikileaks matter, in the Pentagon Papers case a government informer revealed top secret papers to a third party, journalists. Thereafter, the Journalists sought to publish the secrets.

When the government learned of the Pentagon Papers leak, it sued to stop the publication on the theory that the publication would violate the Espionage Act. Lower courts enjoined the publication of the secret papers. However, when the injunction made its way to the Supreme Court, the Supreme Court ruled that the U.S. Government was not entitled to stop the publication of the confidential report.

Justice Black delivered the opinion of the court denying the injunction against the New York Times. In the opinion, Black states, “I believe that every moment's continuance of the injunctions against these newspapers amounts to a flagrant, indefensible, and continuing violation of the First Amendment.” Justice Black further states that the continued injunction “would make a shambles of the First Amendment.”

As if these words were not clear enough, Black went on to write the following:

Madison and the other Framers of the First Amendment, able men that they were, wrote in language they earnestly believed could never be misunderstood: "Congress shall make no law . . . abridging the freedom . . . of the press . . . ." Both the history and language of the First Amendment support the view that the press must be left free to publish news, whatever the source, without censorship, injunctions, or prior restraints.

In the First Amendment the Founding Fathers gave the free press the protection it must have to fulfill its essential role in our democracy. The press was to serve the governed, not the governors. The Government's power to censor the press was abolished so that the press would remain forever free to censure the Government. The press was protected so that it could bare the secrets of government and inform the people. Only a free and unrestrained press can effectively expose deception in government. And paramount among the responsibilities of a free press is the duty to prevent any part of the government from deceiving the people and sending them off to distant lands to die of foreign fevers and foreign shot and shell. In my view, far from deserving condemnation for their courageous reporting, the New York Times, the Washington Post, and other newspapers should be commended for serving the purpose that the Founding Fathers saw so clearly. In revealing the workings of government that led to the Vietnam war, the newspapers nobly did precisely that which the Founders hoped and trusted they would do.

Justice Black’s elegant words showed unequivocal support of a newspapers’ right to publish government secrets. Mr. Assange has published government secrets and for that there have been calls to prosecute him as a criminal. However, given the ruling of the U.S. Supreme Court in the Pentagon Papers case, is there any room to doubt that the press may publish a government secret? If Justice Black was writing the decision, what would he say about Wikileaks? Now that you have read the words of the constitution and the opinion of the Supreme Court, you make up your mind whether or not Julian Assange is a criminal or deserving of First Amendment protection.

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

2010-12-14T13:34:00.003-07:00

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

2010-12-02T18:41:00.002-07:00

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

2010-11-16T13:16:00.003-07:00

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?

2010-11-05T10:15:00.000-07:00

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

2010-10-25T16:40:00.002-07:00

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?

2010-10-20T14:07:00.005-07:00

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

2010-10-11T10:38:00.001-07:00

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

2010-09-29T15:35:00.040-07:00

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.