Quote of the Day - The political lesson of Watergate is this: Never again must America allow an arrogant, elite guard of political adolescents to by-pass the regular party organization and dictate the terms of a national election.
Lawyer2Lawyer Internet Radio Gets in to the Battle for Superdelegates
The democratic race for the Presidential nominee has been an exciting one-and as of this week, Senator Obama bypassed Senator Clinton in superdelegates.
Please join me as I welcome the experts, Daniel P.Tokaji, Associate Professor of Law at the Ohio State University's Moritz College of Law and the Associate Director of http://electionlaw.osu.edu/ and Lanny J. Davis, partner and member of the Litigation Group at the global law firm, Orrick and special CNN political analyst, as they look at the legal issues behind the superdelagates. We discuss the superdelegate quandary, explore election law, the Michigan/Florida issue and take a look ahead at what this fight to the finish means for the Democratic party. My co-host, Bob Ambrogi, is off this week.
A Home With Four Walls, A Roof And A Floor, Right Off The Boat
Foreclosure? Sub-prime crisis? No place to live but under a bridge?
Don't fret. Here's a perhaps not-so-new housing idea for you: live in a storage container. Well, not quite just any storage container. Consider one with a landscaped balcony, plumbing and running water and complete with windows, doors, stairways, and since you're going to be living in Detroit, heat.
No, I am not kidding. Like I've said many times before, I can't make up stuff this good. That's right, just go right ahead and read that fifth sentence again: Storage containers. Stacked four high (that's why they're adding stairs, of course). Assuming the City of Detroit approves the project, you could buy one by next year.
Now, here's the more than $64,000 question. How much would you pay to live in one? If you guessed between $100,000 and $190,000, then you'd be correct.
Call me silly, but there are sites on the web where you can rent one for under $100 a month, but then again, there's no heat, windows, plumbing or landscaping, and definitely no stairs.
Maybe I can find one with a view of the ocean.
Louisiana Begins Its Way Toward Recovery Through Condemndation
New London, Connecticut condemned a private home on private property and gave it to a commercial developer to build a commercial hotel and retail development, as part of the city's attempt to stem the tide of blighted property within its borders. After a series of challenges, the United States Supreme Court approved the condemnation in Kelo v. New London.
Now, New Orleans, Louisiana is attempting to do something similar, but after the state adopted a series of "Kelo amendments" to its Constitution to prevent what at least a majority of Louisianians saw as abuse of the government's power of eminent domain, called "expropriation" in the French-based Napoleonic Code Louisiana uses for its style of government (no matter what it's called, expropriation still requires just compensation, despite what Wikipedia incorrectly says). Those three amendments, named Amendments 4, 5 and 6 limit the state's condemnation power.
The first reduces the level of compensation paid for taking private property for hurricane protection projects, but carves out an exception for buildings in a president-declared emergency area, allowing higher compensation for the three years following. Amendment 5 prohibits the taking of private property "for the predominant use" by another private person or business. The final Amendment 5 - the one relevant to this discussion - forces the government to either hold the property in public trust for 30 years or offer seized property back to the original owner or his heirs before trying to sell it on the open market.
With that backdrop, let's get to the facts. Joseph Burgess Jr. and his wife Kittoria Johnson apparently owned two vacant lots on Clouet Street in New Orleans, within the area devastated by Hurricane Katrina. Mr. Burgess is dead, but his wife is alive. Their son stands to inheirit the properties. The New Orleans Redevelopment Authority earlier demolished what was left of the homes on the property for public safety reasons, not an issue today. The problem now arises from Amendment 6.
The two properties have outstanding tax liens of some $37,500 (more than their fair market value) that have remained unpaid for years, three health violations and ten citations for high grass, all in violation of city ordinances. The NOLA Redevelopment Authority moved to expropriate the land, wipe out the tax leins, cure the violations and citations and then it transferred the property to Habitat for Humanity. The NOLARA did not offer the property to either Mrs. Johnson or their son, arguing that to do so was not required where the condemnation was based on blight and in any event, futile since they have not paid the taxes or cured the code enforcement problems.
This case is the first challenge to the Amendments, and there are some 1,500 other properties in the city awaiting similar treatment.
The New Orleans Civil Court appointed an attorney for Mr. Burgess the third, but the record is not clear whether Mrs. Johnson has a property interest or was represented by an attorney. In any event, the Redevelopment Agency was represented by counsel, and the two attorneys argued the pros and cons of the situation. The Redevelopment Agency attorneys argued that Louisiana lawmakers never intended for the latter amendment to apply to blight takings. They claimed it would be an "absurd" proposition to offer the property back to owners who let the property fester.
Judge Madeleine Landrieu sided with the Redevelopment Agency. Local law professors disagree over whether the judge was right, but one thing is certain: the law won't be settled until the Louisana Supreme Court steps in to clarify the law, which will likely take several years.
In the meantime, one legislator is introducing another Amendment to get to the point first. Senator Edwin Murray, D-New Orleans, seeks to change Amendment 5 so it would not require the right of first refusal to the prior owner in blighted situations. The orginal amendment's drafter, Peppi Bruneau, a former legislator, said the Amendment already deals with that issue and should not stand in the way of blight remediation. He simply tried to prevent Kelo-style takings. "This was for economic development, not for blighted property or anything," Bruneau said. "That was not the purpose at all. It really just dealt with government taking property and flipping it to someone else who wanted to do business there."
Either way, the legislators and voters or the courts will have to weigh in and resolve the inevitable appeal from the good judge's decision. Meanwhile, recovery in New Orleans gets one more roadblock.
Lawyer2Lawyer Internet Radio Discusses the ALM 100
The results of the AM Law 100 are in and total revenues for the Am Law 100 firms have reached $64.5 billion! Please join my fellow Law.com blogger and co-host, Bob Ambrogi as he talks to the experts about the AM Law 100.
Bob welcomes Aric Press, Editor-in-Chief of The American Lawyer Magazine and Bruce MacEwen, a lawyer and consultant to law firms on strategic and economic issues and blogger for "Adam Smith, Esq." On this edition of Lawyer2Lawyer, we take a look at the AM Law 100, what goes into the research, discuss the final results, go back ten years to see how firm's revenue per lawyer has changed and look ahead to what the future looks like for law firms.
In A Commercial Lease Transaction, Brokers Owe No Cross Duty To Disclose
When you're leasing commercial property, it's helpful to know who's on your side. Especially when it comes to leasing agents, as we just found out in the case of Blickman Turkus, LP v. MF Downtown Sunnydale, LLC.
Handspring wanted to rent space, and perhaps not surprising, MF Downtown Sunnydale had commercial space available. Blickman was Handspring's leasing agent. MF Sunnydale owned the land, and apparently contracted with Mozart Development to construct rentable space on the property on a "build to suit" basis for two buildings. Mozart was represented in the lease transaction by a leasing agent, Commercial Property Services. CPS was to be paid its commission by Mozart in two halves: first when the lease was signed and the other half when the rent started.
Before we get much further, let me point out one particular word above: "commercial." Quite unlike residential leasing, the law considers that commercial leases do not deserve the same type of protection that consumer leases need. In fact, the law in California considers commercial landlords and tenants sophisticated and knowledgeable. I also need to add a couple of other facts. No contractual relationship existed between Blickman, on the one hand, and either CPS or Mozart, on the other hand.
So, then, with that warning and information, perhaps the result of the case won't surprise you.
Apparently the tenant Handspring came to the landlord Mozart through a leasing agent, Blickman Turkus, who negotiated the lease. Handspring signed the leases, and Mozart started building. Mozart paid the first half of the commission due to both CPS and Blickman. Mozart received and reviewed Handspring's financial data, and satisfied, started construction on the two buildings.
During the lease negotiations, Blickman became aware that Handspring's financial condition was precarious and the two considered Handspring's exit strategies to get out of the leases.
Blickman, however, never told either CPS, Mozart or MF Downtown Sunnydale of Handspring's financial problems. Ultimately, Handspring was not able to move in, never paid rent and then terminated the leases. Mozart refused to pay the second half of the commission to either CPS or Blickman. Mozart also sought repayment of the $850,873.22 it paid Blickman for the first half of the commission for procuring the lease with Handspring.
In the case, Mozart argued that Blickman had a duty to disclose Handspring's precarious financial condition, which Blickman denied and argued it had no obligation to do since it was not Mozart's agent, but instead was Handspring's agent.
The appellate court agreed with Blickman's position, ruling that without a direct agency relationship between Blickman and Mozart, Blickman owed no duty to disclose Handspring's financial condition. The court agreed with Mozart that since Handspring never paid rent, the second half of the rent never came due to Blickman. The court also refused to award either side its attorneys fees and costs.
While the result of the case was a wash, there's at least one worthwhile lesson to take from it. Contrary to the obligations of real estate brokers in residential transactions, a commercial broker for a party on one side of a transaction does not owe a duty to disclose to the other party.
A Lesson Contractors Still Need To Learn: You Must Have A License To Work
Sooner or later, courts and contractors are going to get a clue. First, there's California Business and Professions Code section 7031, which requires contractors to be licensed at all times when engaged in, surprising enough, construction. As if that requirement weren't enough, there's an older California Supreme Court case that ruled when a contractor isn't licensed, it can't collect payment. That case, Hydrotech Systems, Ltd. v. Oasis Waterpark, came out in 1991, just a few years after I started to practice.
It must have made a big impression on me at the time, because I've never forgotten it. I was surprised that the court would deny a contractor recovery of more than $1 million it spent building a wave machine in the waterpark out in the desert. The court, however, saw its ruling as upholding the legislature's licensing requirement to protect citizens of California.
It was a harsh result meant to teach a lesson, apparently one that still hasn't hit some corners of California.
Take, for example, the recent case of Great West Contractors v. WSS Industrial Construction. WSS Industrial applied for a contractor's license in August 2001 and then submitted a subcontract bid to Great West. In October, it sent to Great West the first of two invoices.
Finally, in December 2001, the California Contractor's License Board approved WSS Industrial's contractor's license.
Great West however, didn't pay WSS Industrial's invoices for $91,000. WSS sued, and the trial court ruled that WSS had substantially complied with the state's contracting laws, and the jury awarded a verdict in favor of WSS and against Great West for the $91,000. Great West appealed.
The appellate court reversed the ruling on the basis that WSS had not complied with California's Construction Services Licensing Law, and barred any recovery by WSS. The court said, "For the past 50 years, it has been held that 'courts may not resort to equitable considerations in defiance of section 7031.' [citations omitted] That is because the statute 'represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties ... .' "
It's been 50 years, and we're apparently still working on this concept. Sooner or later, you'd think we'd get it.
When Grandma Goes To Court
An Apocryphal Tale To Demonstrate Why An Attorney Won't Ask A Question Without First Knowing The Answer
In a trial, a Southern small-town prosecuting attorney called his first witness, an elderly woman to the stand. He approached her and asked, "Mrs. Jones, do you know me?" She responded, "Why, yes, I do know you, Mr. Williams. I've known you since you were a boy, and frankly, you've been a big dissapointment to me. You lie, you cheat on your wife, and you manipulate people and talk about them behind their backs. You think you're a big shot when you haven't the brains to realize you'll never amount to anything more than a two-bit paper pusher. Yes, I know you."
The lawyer was stunned. Not knowing what else to do, he pointed across the room and asked, "Mrs. Jones, do you know the defense attorney?"
She again replied, "Why yes I do. I've known Mr. Bradley since he was a youngster. too. He's lazy, bigoted, and he has a drinking problem. He can't build a normal relationship with anyone, and his law practice is one of the worst in the entire state. Not to mention he cheated on his wife with three different women. One of them was your wife. Yes, I know him."
The defense attorney nearly died.
The judge asked both counselors to approach the bench and in a very quiet voice said, "If either of you idiots ask her if she knows me, I'll send you both to the electric chair."
Hat tip to my son, Michel Ayer, who forwarded this joke to me.
Lawyer 2 Lawyer Internet Radio Discusses Free Case Law
The legal publishing market is a nearly $5 billion business. Apart from the main players, others have taken case law into the public domain, calling it free case law, which allows attorneys, legal scholars, and the general public to have access to decisions for state & federal courts and the U.S. Supreme Court.
Please join me and my fellow Law.com blogger, Bob Ambrogi, as we discuss this hot topic with the experts: Professor Thomas F. Bruce, Director of the Legal Information Institute at Cornell University Law School, Carl Malamud, founder of Public.Resouce.org and Andy Martens, Senior Vice President of New Product Development, from Thomson West. Please join us as we explore the controvesry over who is entitled to access these public records and at what cost.