Scottsdale Personal Injury Lawyer - Miscellaneous

Mandatory Closing Provisions Strictly Enforced in Real Estate Purchase Contracts

Geoff Trachtenberg — Tue, 11 Mar 2008 12:41:19 GMT

That hissing sound you hear is not just air coming out of the real estate bubble, it's the folks at Mining Investment Group, LLC ("MIG") who today learned the importance of a mandatory closing date where a contract specifies that "time is of the essence." The case, Mining Investment Group, LLC v. Roberts, shows just how strictly the courts will interpret real estate purchase contracts - indeed, what a difference a (business) day makes - where the contract includes a specific date for closing, a term that is currently quite common in many real estate purchase contracts.

The short story: MIG contracted with Roberts to buy some land for $126,000. MIG deposited $10,000 in earnest money into escrow, promised another $30,000 at closing and a note for the rest. The closing date was ultimately set on a Friday and MIG failed to deposit the $30,000 into escrow. Roberts then faxed the escrow company a cancellation after the close of business on the date of the closing, withdrawing the property from escrow. The next business day, however, MIG wired the $30,000 to the escrow company (the escrow company was closed over the weekend). Roberts refused to close and MIG sued Roberts for specific performance. Roberts countersued MIG for filing a groundless lis pendens against the property.

The trial court granted Roberts' motion for summary judgment that, in light of the "time of the essence" clause in the contract, the failure to close on the specific date was a material breach. The trail court enforced the liquidated damages clause of the contract, awarding the $10,000 earnest money to the Roberts, awarded attorneys' fees to Roberts pursuant to the contract and ordered the lis pendens to be released (although it did not find it was groundless). Both parties appealed and the Court of Appeals affirmed the trial court on all counts.

MIG relied upon one the Supreme Court's decision in Foundation Development Corp. v. Loehmann's, Inc., 163 Ariz. 438, 788 P.2d 1189 (1990), to support its argument that, notwithstanding the "time is of the essence" term of the contract, there must be a material breach to work a forfeiture of an equitable property interest, and that the "materiality" of a breach was a question of fact. Loehmann's involved a tenant in a commercial lease who was subject to a forcible detainer action after it was three days late paying an assessment for common areas. In Loehmann's the Supreme Court held that a "time of the essence" clause was not dispositive in determining the materiality of a breach, that "[t]he mere incantation that 'time is of the essence' works no magic to transform trivial untimeliness into a material breach; rather, the same factors . . . in determining general materiality apply to evaluating the effect of a particular 'time of the essence' provision."

At first blush, Loehmann's seems to support MIG, but the Court of Appeals saw it differently. The Court distinguished an "executory contract for the purchase of real estate" from leasehold contracts. The Court found an "equitable interest" in land under a purchase contract was sui generis to a "possessory interest" in land under a leasehold, with the possessory interest apparently enjoying more protection from "inequitable forfeiture" as described in Loehmann's. The Court was also troubled by having to "ignore the express terms that the parties contracted for and essentially rewrite the contract." Not surprisingly then, the Court affirmed the trial court's award of the $10,000 earnest money and attorneys' fees, also pursuant to the express terms of the contract. The Court also agreed with the trial Court's determination that the lis pendens was not groundless.

This case is a big deal, and I have to wonder whether it will withstand further review. There are many reasons why real estate deals do not close on a specific dates, which are usually agreed to weeks or months in advance. Bank delays in wiring money, lender or broker delays of all kinds and simple press of business sometimes makes a precise closing impossible. Further, in my view, it is grossly unfair and bizarre to enforce the "time is of the essence" provision in one type of real estate contract (a lease) but not in others (a purchase) under some legal fiction that one is possessory and the other is "merely equitable."

For now, at least, if you are buying property in Arizona, you better make sure you build in sufficient room for delaying closing because the slightest delay may result in a substantial forfeiture.

Originally posted at InjuryBoard by Geoff Trachtenberg

Arizona Supreme Court Holds Professional Negligence Against Insurance Agent is Assignable

Geoff Trachtenberg — Wed, 06 Feb 2008 09:16:33 GMT

Surprising result in Webb v. Gittlen, a new opinion from the Arizona Supreme Court which holds that a professional negligence claim against an insurance agent is assignable. Although a long overdue holding, it highlights the badly misunderstood law concerning assignments, including the scope and justification of anti-assignment law (see my earlier article on Assignments vs. Liens in the Personal Injury Context).

To be sure, how many modern opinions rely upon 400-year old case law from "Lord Coke"? This one does.

The opinion is a actually a good read in that the Supreme Court takes us through centuries of anti-assignment history and jurisprudence, neatly summarizing Arizona law on this issue as follows:

The current principles under Arizona law for determining if an unliquidated claim may be assigned can be summarized as follows: (1) claims generally are assignable except those involving personal injury; (2) the legislature may specify whether particular claims are assignable; and (3) absent legislative direction, public policy considerations should guide courts in determining whether to depart from the general rule.

The Court then turned to the case at issue and, without specifically saying so, seemed to accept that a claim against an insurance agent -- relating to a wrongful death claim -- does not "involve a personal injury." While I think this is clearly correct, it is surprising how often the issue gets ignored or taken for granted -- namely, what constitutes an unlawful assignment of a personal injury claim?

For example, is a medical lien an unlawful assignment of a personal injury claims? Why not? Since most personal injury attorneys encounter these every day, wouldn't it make sense to know whether they are valid and why? Well, this opinion may shed some light on the issue where Court stated as follows:

Arizona case law generally allows the assignment of unliquidated legal claims except those involving personal injury. This distinction reflects the evolution of the common law, which once held that "choses in action" could not be assigned, except to the crown. Welch v. Mandeville, 14 U.S. (1 Wheat.) 233, 237 n.a (1816). A legal claim is one type of "chose in action," but the concept also encompasses "debts of all kinds" and "rights to recover ownership or possession of real or personal property."

While not the focus of the opinion, the Court's discussion of the affirmative assignably of "legal claims" and "debts of all kinds" is important. For instance, even though a medical lien creates an interest in a person's bodily injury recovery, maybe it is a valid "legal claim" since it covers a "debt." But if you think this is a slam-dunk, consider what the same Court said in Allstate Ins. Co. v. Druke, 118 Ariz. 301, 576 P.2d 489 (1978):

Whatever the form, whatever the label, whatever the theory, the result is the same. The [documents] create an interest in any recovery against a third party for bodily injury. Such an arrangement, if made or contracted for prior to settlement or judgment, is the legal equivalent of an assignment and therefore unenforceable.

Id. at 304, 576 P.2d at 492; Lo Piano v. Hunter, 173 Ariz. 172, 175-76, 840 P.2d 1037, 1040-43 (App. 1992) (holding that reimbursement provision was an unenforceable assignment of a personal injury claim). So it is still up in the air whether such assignments are valid.

Anyway, the substantive thrust of the Court's holding was to explain the difference between assignments of legal malpractice claims and professional negligence claims against insurance agents. Without holding whether legal malpractice claims were assignable, the Court went on to "assume they are not" and distinguished the attorney-client relationship with the insurance agent-client relationship, essentially saying that the later was of a lesser duty (i.e., generally not a fiduciary, which was a bit of a surprise to me) and drawing on other differences (without saying why the differences made a difference by the way). The Court just concluded that the relationship with an insurance agent was not "uniquely personal" to justify making claims against an insurance agent non-assignable.

Next, the Court addressed public policy arguments. Surely, the best line in this section is the following refreshing dose of common sense to the argument that allowing such assignments would "commercialize" the insurer-client relationship: "Although the agent-client relationship has personal dimensions, it arises from a commercial transaction - the purchase of insurance. It is therefore odd to suggest that it should not be commercialized." This, of course, begs the question -- isn't the relationship between an attorney and client commercial? That is, it involves the commercial exchange of money for services, so why should it get any different treatment?

It is probably too much to hope for, namely -- the complete abolition of anti-assignment law -- and even though it sometimes helps our clients in the lien context, it has always seemed unnecessarily paternalistic and outdated to me, especially the nonsense about "trafficking in personal injury claims." Still, it was nice to see the Court tip its hat, in footnote 3, to commentators "who advocate allowing assignment of all tort claims."

In fact, the Court alluded to the inconsistent and strange genesis of the non-assignablity issue, noting that "[a]s courts became more accessible and litigation a more accepted means for resolving disputes, the prohibition on assignment gradually became the exception rather than the rule." The Court explained that the rationale behind the "exception" of prohibiting assignment of personal injury claims was basically tied to the idea that the claims were "personal" and did not survive death, therefore, they could not be assigned during the person's lifetime. But the Court observed:

This "survivability" test did not itself survive in Arizona after 1955, when the legislature enacted a [now amended] statute providing for the survival of most causes of action, including personal injury claims. Although this statute undermined one rationale for refusing to allow the assignment of personal injury claims, courts did not abolish the rule. Instead, they resurrected the common law public policy rationale - fear of vexatious litigation.

In other words, the reason we still have non-assignment law today is simply a function of judicial activism from 50 years ago. So it's possible that, one day, courts will see it differently -- afterall, who would have thought the Court would permit assignment of a claim against an insurance agent, but not a lawyer?

Originally posted at InjuryBoard by Geoff Trachtenberg

Peak Oil: A Crude Awakening

Geoff Trachtenberg — Sun, 30 Dec 2007 15:39:46 GMT

Ask most people, and they'll probably tell you global warming is our greatest global obstacle. Some will even say something like terrorism or illegal immigration. Frankly, I thought I was pretty damn clever spotting the global credit bubble, and believed it to be the greatest global crisis we'd face in our lifetimes (i.e., something on order of five times larger than the S&L crisis). Even if I'm right about that number, I'm far from being right about the significance of the event.

I rented a movie this weekend, A Crude Awakening (2006), from Netflix. You have to see it; it changed my thinking in 90 minutes.

I had previously read about "Peak Oil," but nothing put it together as persuasively as this movie. The magnitude and consequences of a global oil crisis are staggering, imminent and unavoidable.

For anyone who does watch it or who has seen it, I'd really like to know your thoughts on the following: When the world can no longer fulfill our global oil demand (sometime between now and 10 years from now), do we get massive price inflation or deflation of assets and commodities (or will it be different for one versus the other)?

Don't be too quick to answer; it's trickier than you might think. While the law of supply and demand dictates dramatically higher prices (for commodities anyway), global asset and commodity prices during the Great Depression sank almost 50%, and there's reason to believe that long-term effects of a real global oil crisis (unlike the temporary and politically-induced "oil shock" of the 70s) would not necessarily lead to higher prices if it disrupted economic activity for any appreciable amount of time. Simply put, if economic activity slowed or stopped, there'd be massive unemployment, less money and, consequently, less demand for everything (with the exception of things like guns, ammo, food and water, in my opinion).

So, think $100 per barrel is expensive? What if oil cost $1,000 per barrel or $50/gal of gasoline? How much does bread, clothing or heating cost then? Will people be able to afford it? Will they have a job under such conditions? What about American cities, like ours, that are spread out and utterly dependent upon personal transportation? What will happen to economic activity in a place like Phoenix or, more broadly, the "American way of life"?

Originally posted at InjuryBoard by Geoff Trachtenberg

Mortgage Rate Freeze: A Flim-Flam Scheme to Recharacterize Billions of Fraudulent Mortgages and Trick Investors

Geoff Trachtenberg — Sun, 09 Dec 2007 11:56:20 GMT

Imagine a loan of $100,000 based upon (1) a borrower's true income / ability to repay and (2) the true value of the real estate collateral. Now imagine a loan of $100,000 based upon (1) fictional income figures and (2) fictional valuation of real estate collateral. Which type of loan do you think predominated in the United States for the last five to ten years?

Now imagine these "liar loans" were bundled into securities with a few good loans thrown on top to make them smell nice. A little like giving someone a stack of bills with $100 bills at the top and monopoly money underneath. Then imagine those bundled securities are sold to various pension funds and foreign investors. Sound familiar?

Add in the fact that you are now the treasury secretary of the United States, formerly with Goldman Sachs, one of the major players in this bundled securitization scheme and you are facing record foreclosures and home price devaluation. What do you do?

Do you worry that those pension funds or foreign investors might sue your banking buddies for selling them a bill of goods? You bet you do. So how to fix the problem?

The answer: freeze mortgage interest rates for five years in a massive national refinancing scheme.

It's a brilliant plan. You appear to be the benevolent bureaucrat, concerned for the "working man" who is going to "lose their home." You even get to claim that you are doing a service to all those investors in mortgage-backed securities because, after all, they are better off taking a little less interest than dealing with the expense of foreclosure, right?

But not so fast. Did you catch the flim-flam? Did you spot it?

You see, in five years, those same people will own real estate that, let's face it, is going to be worth the same or, most likely, less money at that time than it is today. And please spare me the National Association of Realtor's rosy projections on home valuations. Those cheerleading saps have never been right about predicting home values and live in a perpetual state of euphoric denial. Moreover, even if unemployment stays as low as it is and wage growth continues in a Goldilocks economy, once the rates unfreeze, those people will be facing the very same issues. And what if we get that recession that everyone's talking about?

Do you see it now? Well here it is: after the five year rate freeze, those bankers who sold the fraudulent junk debt will have a great defense to any claim that the junk was fraud. Namely, they'll be past most statutes of limitation and be able to turn back to the suckers - I mean investors - who bought those securities and say the investors "knew all along," and certainly knew as of the rate freeze, about the true income and valuation status underlying the various mortgages in the packaged securities.

Such as plan is equally ingenious and corrupt, but don't be fooled by the flim-flam man. Although this plan is going to save Wall Street, get ready for one hell of a ride on Main Street, because it is you, me and our children that are ultimately going to pay the heavy, heavy price in the years to come.

Originally posted at InjuryBoard by Geoff Trachtenberg

Wyeth Recalls Cold Medicine Due to Dosing Cup Issue

Jenny Albano — Fri, 02 Nov 2007 23:07:32 GMT

Wyeth is recalling several brands of nonprescription cold medicine because they come with a dosing cup that does not mark the half-teaspoon level recommended for children aged 2 through 5 years old. According to the Wyeth spokesperson, there is nothing wrong with the product.

The cold medicines being recalled are: Robitussin Cough DM, Robitussin Cough & Cold CF, Robitussin Cough & Congestion, Robitussin Head & Chest Congestion PE, Robitussin Cough Sugar Free DM and Children's Dimetapp Cough & Chest Congestion

The company is recommending that consumers with children in the 2 through 5 age group not use the medicines until replacement products with a new dosage cup are available. That will probably begin in early November, and the new boxes will be marked to indicate the replacement.

The spokesman, Doug Petkas, says the recall and replacement will probably take a couple of months because their are millions of the products in stores now. But he stated that customers should not try and recieve a refund because there have been no injuries in relation to the recall.

For more information on this subject, please refer to our section on Defective and Dangerous Products.

Originally posted at InjuryBoard by Jenny Albano

Legal Malpractice Statutes of Limitation - Tort and Contract

Geoff Trachtenberg — Thu, 18 Oct 2007 19:56:19 GMT

Interesting legal malpractice case from Division Two, Keonjian v. Olcott, dealing with the issue of when the statute of limitations begins to run and whether the tort or contract limitation period applies.

The essence of the alleged malpractice was that the plaintiff got bad advice from her attorney concerning the deeding of some land that she co-owned with another party. The trial court had granted summary judgment to the defendants, holding that the two-year tort limitation period applied and that the suit was time-barred.

The Court first examined, based upon the "discovery rule," when the plaintiff knew or should have known about her potential legal malpractice claim. The Court noted that "'[t]he discovery rule applies not only to the discovery of negligence, but also to discovery of causation and damage.' . . . Thus, for legal malpractice claims, the limitations period starts to run when the client has suffered harm and knows or should have known that the harm was a direct result of the attorney's negligence."

While the Court stated that, "[i]n the majority of malpractice cases, 'the damage or injury occurs contemporaneously with the malpractice,'" the Court also observed the limitations period can being to run at different times depending upon the circumstances. For example, cases show that the time period may be different where the negligence occurs "in the course of litigation" versus malpractice that occurs in a "transactional" context. Anyway, this was a "transactional" type case and the Court concluded that the damage or injury occurred "contemporaneously with the malpractice."

In this regard, it was quite obvious that the plaintiff actually knew of her legal malpractice claim well-before she elected to file her malpractice lawsuit when, in a deposition, she testified:

Q. Ms. Keonjian, are you aware, if you didn't think the lawyer did his job, you have the right to sue the lawyer for malpractice?

A. Yes, I probably will. You have no idea how many people are complaining about him.

Ouch.

The Court next addressed the argument that a longer contract limitations period ought to apply because, according to the plaintiff, the defendant breached his promise "to draft a deed that reflected her wishes and capital contributions and . . . to advise her as to the significance and potential effect of the Gift Letter." This is where, in my view, the case was most interesting.

As many practitioners know, very few legal malpractice actions fall under contract - i.e., in general, there has to be a "specific promise" that the lawyer breaches for there to be a legal malpractice action sounding in contract. The Court, however, highlighted the fact that, not only must there be a specific promise, but that the action only sounds in contract to the extent of nonperformance of the specific promise.

"The key word is 'nonperformance,' and the distinction to be drawn is that between nonfeasance and malfeasance." That is, legal malpractice subject to contract law is limited to situations were the attorney fails to perform specific promise, and not those situations where the attorneys does not "properly perform" a specific task. Accordingly, the Court of Appeals affirmed the trial court.

Originally posted at InjuryBoard by Geoff Trachtenberg

Court Blasts Sheriff's Office for "Arbitrary and Capricious" Action Against a Local Newspaper

Geoff Trachtenberg — Tue, 28 Aug 2007 14:16:00 GMT

Another new opinion from Division One, West Valley View v. Maricopa County Sheriff's Office, blasts the Marcopa County Sheriff's Office. In short, Sherriff Joe decided he did not like the coverage by the West Valley View, a local newspaper, so he eliminated the West Valley View from the electronic distribution list for press releases and refused to respond to public records requests or provide copies of the press releases.

The Court of Appeals affirmed the trial court's holding that the Arizona Public Records statute requires the Sheriff's Office to provide hard copies of the press releases to the West Valley View the same day they are released to the other entities.

More interesting, however, is the Court of Appeals' reversal of the trial court's denial of West Valley View's request for attorney's fees. You gotta read it for the full flavor, but here's the bottom line:

The record fully supports the superior court's observation that the refusal of the Sheriff's Office to reinstate the newspaper to its list of e-mail news release recipients was "petty." More than that, the decision by the Sheriff's Office to remove the newspaper from its e-mail list because it did not care for the coverage the newspaper provided was without a doubt arbitrary and capricious.

The Court of Appeals, therefore, awarded attorneys' fees against the Sheriff's Office.

Originally posted at InjuryBoard by Geoff Trachtenberg

Dog Food Recalled Due to Salmonella

Courtney Mills — Wed, 22 Aug 2007 11:38:45 GMT

Mars Petcare has announced in tandem with the U.S. Food and Drug Administration that it is recalling its 'Red Flannel Adult Formula' dry dog food and its 'Krasdale Gravy' dry dog food. Mars Petcare has issued this recall because of a potential for the dog food to be contaminated with Salmonella.

The FDA and Mars Petcare are under taking the recall as a precautionary measure after FDA investigators found Salmonella in a sample of both of these kinds of dog foods. The company chose to take this action to avoid another fracas similar to recent pet food scandals.

Red Flannel is sold in 50 lb. bags, and Krasdale Gravy is sold in 5 lb. bags. Make certain to not feed any to your dogs, as there is always a risk of cross-contamination on salmonella to children and the immunocompromised.

For more information on this subject matter, please refer to the section on Defective and Dangerous Products.

Originally posted at InjuryBoard by Courtney Mills

Rescue Crews Send Mike Down to Check on Miners

Courtney Mills — Fri, 10 Aug 2007 11:28:19 GMT

Rescue efforts involving over a hundred of people in Huntington, Utah have lasted several torturous days as workers struggled to find trapped colleagues. Six miners were trapped 1,500 feet beneath collapsed rubble in a coal mine, the unfortunate result of a disastrous mining accident that occurred early Monday, August 6. The fate of the men has not yet been established.

Early rescue efforts were thwarted by seismic reverberations throughout the collapsed mine, making the continuance of rescue operations a hazard for those involved. Rescue operations then resumed as big drilling and dig equipment was brought in.

Rescue authorities determined to drill holes down to the cavity where the trapped miners were thought to be located. A 2 Â½ inch wide hole was drilled for a microphone and video camera to send to the miners; a much larger hole for food and water was being drilled as well, with corresponding slower progress.

Rescue workers, upon lowering the mike into the underground cavern, were unable to distinguish any stirring in the underground cavern where the men are thought to have been buried.

Workers are still hopeful that the miners have survived the accident, and rescue crews still have another few agonizing days of digging before reaching the underground cavern.

Originally posted at InjuryBoard by Courtney Mills

Man Paralyzed with Botulism Poisoning

Jenny Albano — Fri, 03 Aug 2007 16:20:50 GMT

A man in New Mexico was found to have botulism poisoning. State health officials are trying to figure out if the man ate any food that was included in the Castelberry's Food Co. recall.

Castleberry's Food Company has recalled over 90 different brands of canned food and pet food because cans of hot dog chili sauce were found to contain the bacterium that causes botulism.

The 52 year-old man, whose name has not been released, is from Sandoval County in New Mexico. He was hospitalized on July 26 and is reported to be in serious condition; as of now he is only able to wiggle his toes.

The only way health officials are able to communicate with the man is by him responding to questions by moving his toes. The CDC announced that preliminary tests showed positive for botulism.

There have been four other reports of recent botulism poisoning that resulted from eating contaminated hot dog chili sauce.

For more information on this subject, please refer to our section on Defective and Dangerous Products.

Originally posted at InjuryBoard by Jenny Albano