Quote of the Day - Talk sense to a fool and he calls you foolish.
They Sell Swampland, Too
If your partner occupies partnership property, can that partner "pay" the partnership less than fair market value rent? You probably know the answer, but might be surprised to hear the first part of court's resulting answer: "Remarkably, we have found no case squarely addressing this precise question. [Fn. omitted.] We are satisfied, however, that the answer is a resounding 'No.' "
The partner who occupies property that belongs to the partnership must do so in a manner that provides income to the partnership as if the property had been rented to a non-partner on the open market. That just makes sense. That's the whole idea behind the fiduciary relationship that partners owe to one another.
The property-occupying partners in the case linked above claimed that they had no obligation to collect fair market rent (from themselves) because the partnership agreement did not require them to do so. They also claimed that California's statutory scheme limited their responsibilities to only those enumerated in the statute. Not surprisingly, this specific factual situation is not spelled out in the statute. The trial court bought both of these arguments, but they didn't work on appeal. Another argument that fell flat was the claim that the partnership property was held for purposes of appreciation and eventual sale. No matter what they argued, the appellate court just wasn't buying.
The case reads like a soap opera, including this gem of an argument from the losing side: the property-occupying partners claimed that the non-occupying partner waived his right to claim a breach of fiduciary duty "merely by neglecting to demand that his partners refrain from such breaches." In other words, the argument goes something like this: You can't come after me for something I know I can't do if you forget to tell me that I can't do it.
Consultants Help Katrina/Rita Lawyers Get Back Up And Running
It's not in the forefront of the news like it was two weeks ago, but those in the Gulf Coast haven't forgotten, and many others haven't either. Ross Kodner, who founded HelpKatrinaLawyers.org, reported back today with this news update on MIPTC's previous post on Tammie Holley:
"Craig, I thought I'd let you know the updated status on Tammie. Within 48 hours of her request, we marshaled the HelpKatrinaLawyers.org volunteers and built her a new web presence - this was her immediate concern - to have a rallying point to apprise her clients of her status and to let them know how to contact her. Dale Tincher's team at Consultwebs donated the hosting and design services and nailed this down in one day (http://www.tammieholleylaw.com). Since then other volunteers have been helping her restore her technology capabilities. She's one of about a dozen examples of small firms that have come to us for assistance - our volunteers have been truly magnificent in their willingness to give drop everything and generously offer their time. Special recognition goes to Atlanta consultant David Moon for his 'beyond the call' level of effort to help one particular Mississippi firm restore its practice literally from the ground up."
If you're still looking for a way to plug in, contact Ross at HelpKatrinaLawyers.org, if not just to pitch in, but to give Ross a pat on the back.
Wonder Why Housing Prices Are So High?
If you're a developer, this case reads like a nightmare. If you're an activist that wants to pull up the plank and stop anyone else from moving to California, you will likely take heart in the factual description in the beginning of the case. Certainly after reading the factual description, no one has any right to wonder about high housing prices in California. The case gives a solid blueprint why.
The property in the hills of Malibu has been in the development process for the last 20 years. Think about it. That was when Mikhail Gorbachev (link has sound) was the leader of the Soviet Union - while it was still known as the U.S.S.R. New Coke was released that year and immediately flopped. And if you're still unsure about how long ago that was, Keira Knightley was born and Yul Brenner died.
About twenty years before that, a developer friend of mine tells me, he wanted to build his house and get approvals from the City. He sketched his plans out on Saturday, walked into a local California planning department on Monday at 9:00 a.m., had his plans stamped approved by 9:30 a.m. and was pouring a foundation (which vests development rights in California) by 1:00 p.m. later that same afternoon. Hard to believe.
But back to our story. Trancas wanted to build some homes on its 35-acre parcel in Malibu and had been engaged in litigation over the approvals in and out of appellate courts and trial courts for the time it took Ms. Knightley to become a Pirate in the Caribbean (flash animation). Finally, when it looked like it would never end, the developer sought and obtained an agreement with the City of Malibu approving its development, only to be sued by neighboring property owners. They complained that the deal was cut behind closed doors in violation of the Brown Act, and that the City gave away its legislative power by agreeing not to have future zoning apply to the development.
Don't think it was a complete sweetheart deal for the developer, who agreed to dedicate 26.5 of its 35-acre parcel to the City for open space.
Even so, what led up to that agreement apparently pushed the appellate court over the edge, who agreed with the property owners and scuttled the development once more. The Court said that the City could do neither of those things - meet and agree behind closed doors or give up future legislative power.
Where does that leave the Trancas, the developer? Starting over. Despite the setback, the Court tried to throw a bone to the parties at the end of its opinion by saying, "Our conclusion that the [agreement] is invalid as presently cast should not be taken as disparaging either the values favoring settlement of disputes or in this case particularly, the public benefit that the city sought to reap through dedication of the larger Trancas tract."
In other words, we like the deal, we just don't like how you got there. There's got to be a better way that satisfies both the procedural requirements the Court wants to see followed and realizes the benefit of a large parcel of land dedicated to the City. Any suggestions?
How Would You Decide To Split The Baby?
It's your turn to decide. Here's a snippet from the case's background facts, which is all you get to decide what percentages to assign to the two parties that split the proceeds of a $1.1 million settlement in a wrongful death action. Think about it before you click on the link below to get the actual decision.
"Raymond has an adult daughter, Lisa. Sherry met Raymond in August 1999, he proposed marriage to her in December 1999; and they married in September 2000. Eight months later, in May 2001, Raymond was killed in a construction accident."
It took the court 62 pages to wade through the rest of the facts, analysis and the dissent. Bet you can guess the outcome without all that work? Click here to see if you're right.
Coast to Coast Discusses Pro Bono Work
Why aren't there more lawyers doing pro bono work?
Today's Coast to Coast program explores that issue with special guests Mark O'Brien, Deputy Director of Probono.net, a non-profit organization in New York City, which provides access to justice through innovative technology and volunteer lawyer participation and Ken Babcock, the Executive Director and General Counsel for Public Law Center in its 24th year providing free civil legal services for residents in Orange County, California.
The second segment of the show shifts over as the Supreme Court approaches a new session to discuss what's in store and what cases to watch. My Co-host Bob Ambrogi and I were thrilled to have Marcia Coyle, Washington Bureau Chief for the National Law Journal and Commentator for PBS join us as we discuss the issues Coast to Coast.
Will Condos and Casinos Replace Antebellum Mansions?
While Congress falters, Mississippi worries whether the rebuilding effort will turn its coastline into Stepfordville. The land use decisions facing Gulf Coast residents are particularly troublesome in light of the Kelo decision, and whether the parishes will turn over land to condo towers and casinos or try to maintain the original character of the South.
Planning departments across the country face these choices every day, but in the wake of the Katrina-Rita set of hurricanes, some planning departments are staring at a whole different level of a problem. It's not everyday that you have to rebuild entire sections of states. New Orleans' planning department's site proudly proclaims, "It's time to rebuild the Louisiana of our dreams."
I spent some time in the South while in college, and did my fair share of touring around, when things were in mint condition. There's something to be said for sitting on the veranda, looking down a long, tree-lined driveway while rocking back and forth with a mint julep in your hand on a cool summer evening watching the mighty black water slip by. It's not so simple now, however.
In each city and county general plan in California, we have a requirement for low-income housing, and based on the mantra that we hear from the mainstream media, the poorest in the Gulf Coast have been the hardest hit, and have the most need for housing in the devastated areas.
This disaster, where two out of every three houses on the coastline have been leveled, provides an unprecedented opportunity given such a blank canvas. Hopefully, we've learned our lesson and won't repeat New York's mistake.
Will we take advantage of the opportunity or squander it?
When Is A Press Release An Insurance Claim?
When the Fifth Circuit says it is, that is. The USEPA determined that a subsidiary of RSR Corporation should be added to its National Priorities List, and before it did so, sent out a press release making that announcement.
No comment here from the peanut gallery on whether that qualification merits a press release or gnashing of teeth and renting of clothes. The USEPA later sued RSR's subsidiary, Quemetco.
After it saw the press release, RSR immediately notified its insurance company, International Insurance Company, of the press release, and asked it to provide coverage. Good thing it did because soon after, RSR's reporting period expired, and along with it, the claims-made insurance that RSR had purchased to protect itself. It was not until after the claims reporting period expired that the USEPA filed suit.
In response, International filed an action with the Texas court, seeking a declaration that it was not liable. The USEPA sought $8 million in cleanup costs. Among other reasons, International claimed the the USEPA's press release didn't amount to a claim, and if it was right, then it wouldn't have to cover the $8 million claim because the lawsuit fell outside the policy period.
It's a big deal for claims-made, claims-reported policies because there's a very short window of coverage. After those periods expire, it's like renter's insurance: you don't have any. Some policies and court decisions define "claim" as requiring a lawsuit. Here, however, the policy language is even more ambiguous.
According to the Court, "The policy includes a provision labeled 'definition of claim' which fails to define the term comprehensively. That provision merely states that a claim 'comprises any single claim or series of claims from one or multiple claimants resulting from the same isolated, repeated or continuing environmental impairment.' " In other words, it's as clear as mud.
Never fear, though. The Fifth Circuit saw this one correctly and held International to provide coverage.
Eight Executed For Witchcraft In Salem
Admittedly, I stole that headline from Jurist, one of my favorite legal news sources. It's actually true - but as you've probably figured out by now, it happened 313 years ago today in 1692, even though the headline has a twinge (paste that link here if it's broken) of reality these days. Nineteen witches were burned at the stake, and several more died, languishing in prison.
With Halloween just around the corner (can you believe it's Fall already?), it seemed an appropriate famous trial to feature. That's not the only historical trial out there. Jurist links to UMKC's Famous Trials website, with a host of tremendously interesting trials and hours of reading and learning.
Thankfully, no one got executed this time.