Wednesday, January 30, 2013

Maryland paints a larger target on title companies.

Maryland’s highest court has confirmed a tort duty of care for title companies that search title, prepare abstracts to be relied upon by others, and issue title insurance commitments for insurance companies. The target for claims and lawsuits against title companies has just gotten bigger.

On January 29, 2013, the Maryland Court of Appeals decided 100 Investment v. Columbia Town Center Title,No. 19, Sept. Term, 2012, 2013 WL 322663, ___ A.3d ___ (2013), holding that your title company can now be sued for negligent title searching, and for preparation of an incorrect or incomplete title commitment.

Before this decision, your title company was only really exposed to claims for breach of contract. Trial courts routinely dismissed claims for negligence because the common law did not impose this extra duty.

The Court has now held that since title companies provide “services that have historically been performed by attorneys,” the title companies should be held to the same professional standards as if a licensed attorney had provided the service.

The Court also held that a title insurance company is not automatically responsible for the negligence of the title company issuing it’s policies.  The insurance company’s own liability to it’s customer is limited by language in the title policy to claims under the insurance contract, only.

This will change how claims arising from bad title searches, and incorrect title commitments are prosecuted, defended and settled. The settlement companies that compile abstracts and prepare commitments (and their errors & omissions carriers) now have increased exposure to claims and lawsuits. The title insurance companies, however, remain shielded by the limitations in their policies.

We can help you figure how this new rule impacts your claims.

Tuesday, January 22, 2013

Contractors working without a proper license is just plumb wrong!

Every professional mechanical trade that performs work on your home or buisness must be licensed through the Maryland Department of Labor, Licensing and Employment. You can check before you hire.

But not everyone checks. The owner may check, later, only when the job remains incomplete, is done poorly, or there is a dispute over payment.

The Baltimore Sun reported that one unlicensed plumber must create a $250,000 fund for the benefit of defrauded homeowners.  The plumber worked without licensed employees, and charged for items of work and permits that were not provided. And this is the correct result.

Maryland law empowers the homeowner when confronted with the unlicensed plumber. For instance:
  • The unlicensed plumber may not maintain a lawsuit to recover amounts due under your contract.
  • The unlicensed plumber may not obtain a mechanic's lien on your real property (your house or business!).
  • The unlicensed plumber can be barred from future work.
  • The unlicensed plumber can be ordered to refund money paid by you.

These laws are powerful tools, in the hands of reasonably skilled lawyers. Over the last year, for example, we helped a client defeat a $175,000 mechanic's lien claim on the basis that the plumber was not licensed at the time, and because the actual work was done by unlicensed helpers.

And these tools can be used against other trades and contractors, too. In another case handled by this office, an  unlicensed contractor sued for a mechanic's lien of more than $200,000 for renovation work on a large home in Baltimore County. The contractor was not properly licensed by the State of Maryland when the work was contracted or performed. We beat the case on a pretrial motion that allowed our client to keep the full value of the work (subject to costs of correction), while the contractor took nothing.

Powerful tools, indeed!

Are you having trouble with a contractor or tradesman?  Is the work late, sloppy or missing? Is your contractor licensed by the State of Maryland?  Have you been sued for breach of contract, or for a mechanic's lien?  Visit us.

Monday, January 14, 2013

Proving lost profits in a busted market.

We all want a case with that "smoking gun." The e-mail or letter that declares a parties unvarnished evil intent is rarely my cases!  But in Tower v. Tower, reported November 2, 2012 by the Maryland Court of  Appeals, the case centered on just such a "smoking gun." 

In a case involving lost profit claims for breach of various contracts for development of a building project, the defendants hid their reasons for breaching the contract behind claims that the advice of counsel was not discoverable.  Well, you just don't get to hide behind an "advice of counsel" defense unless you are willing to share the actual advice that was given.  This defendant fought hammer and tong to avoid that disclosure.  And when the last discovery motion was decided, the following e-mail from the defendant to his lawyers floated to the surface of the cess pool and was read by all:

"just make sure you stop the bastards...Whichever way you choose to go. We need some leverage."
Outstanding! We live through dozens of routine cases to find a nugget like this one! This stunning admission helped lead the jury to award over $36 Million in damages to the plaintiffs and against the authors of the e-mail.

On appeal, Maryland's highest court was asked to provide guidance on a very common issue, post-recession:  Under what circumstances should a trial court permit (or require) evidence of post-breach market conditions affecting a claim for lost profits?

It's a fancy way to ask whether a plaintiff can benefit from a rise in market prices, and whether a defendant can minimize it's loss by demonstrating a drop in market prices.

In this case, the defendants who authored the "bastards" e-mail sought to show that the plaintiffs would have made no profits, even absent a breach of contract, because the real estate market had declined after 2008.  Their lawyer argued that "the world has changed" and "the cataclysmic events of 2008" prevented any conceivable profit.

The trial court did not let the defendant's experts testify. This decision was upheld on appeal to the intermediate appellate court, on the general principle that "contract damages are measured at the time of breach."

Maryland's highest appellate court performed an exhaustive review of general versus consequential damages, and ruled that

...consequential lost profits are calculated with reference to what the parties can reasonably be said to have anticipated when they entered into the contract. Thus, circumstances that cannot be said to have been "known to the parties" when they contracted--such as a post breach boom or bust in the market-- should not affect the measure of consequential damages that would "ordinarily arise" according to the "intrinsic nature of the contract."

What's it mean for your lost profits case, in a post-cataclysmic economy? Simply this- If the parties to your contract cannot be said to have foreseen a rise or fall in the marketplace, then evidence of post-breach boom or bust is not relevant.  And if evidence is not relevant, then it is within the sound discretion of the trial court to exclude the evidence.  That means the jury will never hear it.

But do not lose heart, aggrieved friends! Contracts can, indeed, be drafted with terms that allocate the risk of future market swings between the parties.  And many do. But even if your contract does not have this language, the evidence you need may also be in the conduct of the parties, after the contract was signed.  The parties to the contract often change terms as they perform a contract, by word and deed. As Young & Valkenet co-founder Thomas G. Young, III was fond to say, "the signed contract is often the beginning of negotiations."

Think you have a claim for lost profits?  Bring it by, and let's have a look.

Saturday, January 5, 2013

Will you pay Mom and Dad's bills?

I am surprised at how often we receive calls from adults asking "do I have to support my aging parents?" For those asking the question, the answer does not reside in their faith or personal moral code. The kids want a purely legal answer.  The kids want to know if the State of Maryland can force them to foot the cost of maintaining their indigent parents.
As of March 2012, twenty-nine States still have laws to compel children to pay for the care and feeding of indigent parents. Maryland is one of those states.
Maryland law gives the indigent parent, or someone acting on their behalf, the power to petition the State's Attorney to institute a court case against a grown child. With a rapidly aging population of under-insured and uninsured seniors, I expect to see the statute invoked, more frequently.
A recent study published by Katherine Pearson, a professor of law at the Dickinson School of Law at Penn State University, found that long-term care providers are taking advantage of such laws in at least two states: North Dakota and Pennsylvania.
The case in Pennsylvania involved expenses incurred by Maryann Pittas, the victim of a car accident. Ms. Pittas was a patient in nursing home for about six months before relocating to Greece to live with relatives. Her son was sued by the nursing home for nearly $93,000. In May 2012, the trial court found in favor of the nursing home, based on the son's ability to pay.
According to Prof. Pearson's study:
"[b]y holding the son liable for a lump sum of close to $93,000 in the Pittas case, the superior court appears to confirm a significant tool for certain creditors of individuals who are unable to pay their debts personally, permitting the filial support statute to be applied retroactively to substantial accrued debt, without requiring evidence of fault on the part of the targeted family member,"
I do not believe the Maryland statute should be used in the same manner, although lean economic times may well drive aggressive creditors, long term care insurers and court appointed guardians to test the limits of the statute.
On the same subject of caring for elderly parents, China just amended a 1996 elder care law to require children to "visit regularly."  The  amendment has been under consideration for over a year, according to blogs that follow developments in the far east:
"[a]dult children of elderly parents will be required to visit their parents regularly and must care for their spiritual needs and cannot neglect or isolate them...
 In traditional Chinese thinking, children who have come of age have the duty to support and assist their parents. However, among the total number of 167 million elderly people, half of them are living alone without children, and some of them cannot even get good care, said the report.
A Chinese lawyer told state media in 2011 that the proposed new law would be difficult to enforce. In his words, "[i]t would be better to strengthen moral education than to force people to do something legally."  Rather an American statement, I think.

Dubbed the "Going Home Often" law, the Chinese statute seeks to shift care for the elderly away from the government, and back to the immediate family. Here, in the United States, the shift has been steadily away from family, and to the government. The Maryland statute is actually a vestige of statutes predating the creation of medicare, medicaid, and social security. But there are no signs that the statute will be amended or repealed, anytime soon.

So, will your folks sue you for support?  Will the nursing home? Or, perhaps their long term care insurer?  It's coming.

But would it kill you to call your parents, once in awhile?

Sitting, bottom left, is Clara van Dijk-Valkenet, 1880-1962, with her family.