Blow limitations, file for arbitration.

 The three-year Statute of Limitations is Maryland Canon- if you fail to file a lawsuit for breach of contract or most torts within three years, you are out-of-court. Many lawsuits are dead on arrival where a claim has been filed even one-day beyond the Statute of Limitations.

The Statue of Limitations is memorialized in the Maryland Code, established by the Legislature, and enforced daily by the judiciary at all levels. It is an ancillary fact that a top cause of legal malpractice is missing Statutes of Limitations, resulting in a total loss of client rights to sue. The deadline for filing claims is just that important.

Contracts sued upon often contain arbitration clauses. These give parties to a contract the right to elect privately conducted arbitration, complete with all the trappings of a court case, such as written discovery, depositions, witness subpoenas and evidentiary hearings. For decades, it has been an article of faith that the same three-year Statute of Limitations applicable to court cases also limited the time for filing a demand for arbitration. 

But not anymore. On March 25, 2022, Maryland's highest appellate court issued its opinion that the Statute of Limitations does not impose the same three-year limitation on a demand for arbitration that it imposes on a civil court filing.

In Park Plus v. Palisades Parking, the Court held that an arbitration provision in a written contract is not automatically constrained by the Statute of Limitations. The Statute of Limitations applies only to "a civil action at law." A demand for private arbitration is not "a civil action at law."

A decision that may well breathe life into otherwise stagnate and expired claims.

The Court did make clear that parties to a contract are free to impose filing deadlines on arbitration demands. You can expect language doing just this in your next contract, as lawyers throughout the State are now bent over keyboards, pecking out language that will quickly bring arbitration demands to heel within three-years, or less. 

Maryland reinstates ground rent remedy of ejectment and reentry.

On February 26, 2014 Maryland's Court of Appeals struck a statute that eliminated a ground rent owner's right of re-entry.  Maryland v. Goldberg is a slam dunk victory for ground rent owners of property consisting of four or less residential units. By this opinion written by Judge Harrell, they have reclaimed the right to eject delinquent tenants, and exercise their full reversionary interest in the real property.

This builds on the 2011 Muskin decision, which struck the legislature's effort to invoke mandatory ground rent registration. The failure to register would have caused complete forfeiture, or loss, of the ground rent owner's rights in the real property.

The owners of ground rents challenged the State of Maryland in the Circuit Court for Anne Arundel County, arguing that the most important aspect of a ground rent is the owner's right to reclaim the property if rent is not paid.  Just like your apartment, a ground rent owner has traditionally been able to evict a non-paying tenant, and reclaim the entire fee interest in the land. But in 2007, after a wave of bad publicity about evictions, Maryland's legislature passed a law that took away the ground rent owner's right to evict a tenant for failure to pay.

The owners of ground rents argued that that the right to re-enter and evict is a vested property right, and that the legislature violated some basic constitutional precepts by swapping this remedy for a system of liens.

Under Maryland's new statute, a ground rent owner was entitled only to impose a lien for unpaid ground rent.  And like any other lien, it could be foreclosed.  That meant the ground rent owner would get paid out of the fund created by the foreclosure sale. The Court of Appeals described it this way:

Shortly put, this process replaced ejectment with a lien-and-foreclosure sale. The, lien receives priority from the date the ground lease was created. The debt is paid from
the proceeds of the sale. If the ground lease is redeemable, the redemption amount is deducted also from the proceeds of the sale. If the ground lease is irredeemable, the foreclosure buyer takes subject to the ground lease.

The legislature had completely eviscerated the ground rent owner's right to take back the property upon the failure to pay rent. The trial court ruled against the State of Maryland, and in favor of the ground rent holders.

And the highest court stood firm. declaring that the right of re-entry and ejectment is a fundamental property right, fully vested and deserving of constitutional protection. This is a good thing for property rights, which have been eroded steadily by legislative action.

Do you own land with four or fewer residential units that is subject to annual or bi-annual ground rent? Are you buying or selling land subject to ground rents? Or are you an owner of a ground rent? The questions that will arise in your transactions go beyond the mere existence of a ground rent.  For example, what must be done with liens that have already been filed pursuant to the now invalid law? Can they still be foreclosed?

Your upcoming settlements and title claims just got a bit more interesting.

Maryland's highest court makes foreclosure easier.

Your mortgage note is often passed around like an endorsed check. Welcome to the wild and wonderful world of "endorsements in blank."  On March 22, 2013, the Maryland Court of Appeals made it just a bit easier for mortgage lenders to foreclose in the case called (take a deep breath ) Deutsche Bank National Trust Company as Trustee for the Certificate Holders of ISAC 2006-5 MTG Pass-Through Certificates and Bank of America, N.A., as Successor by Merger toBAC Home Loans Servicing, LP v. Angela Brock. 

This case allowed the appellate court to settle a common dispute involving a lender or loan servicing company's right to enforce a note, or to foreclose the deed of trust securing that note. Mrs. Brock argued that the foreclosing loan servicer lacked authority to take her home because the mortgage note was endorsed "in blank," and did not specifically name the loan servicer.  And if you are not in the law biz, you may just be mumbling "what's 'in blank' mean?"  Glad you asked. Pour yourself some strong coffee and read on.

An endorsement is the act of signing over a negotiable instrument (imagine the check from your own checking account). You might write a check to your friend, "Jane."  Well, Jane usually will sign the back of the check and deposit that check in her account.  She has "endorsed" the check.  And the bank normally will require that she sign the check before it is accepted for negotiation.

But Jane can also choose to pass your check to someone else.  Imagine that she owes the exact same amount of money to her friend "Dick." She would sign her name to the back and add "pay to the order of Dick."  She'd hand him the check and Dick can now drop the check into his own bank account.

But Jane can also endorse your check "in blank."  That is, to anyone who possesses the check.  She would simply sign her name, or she might add "pay to bearer."  This converts our check to something that can be passed around from Jane to Dick, and from Dick to any number of others.  And each person in that chain of possession may deposit the check to their account.  It doesn't matter that their individual names do not appear on the back of your check because it has been endorsed "in blank."

So, back to our case.

Mrs. Buck argued that the loan servicing company should be required to prove that it had received her mortgage note from the last entity identified in the chain of endorsements. This is the standard of proof when a loan servicer has possession of a note that is missing endorsements.  And it would have made foreclosure of Mrs. Buck's home more difficult.  Her note was endorsed "in blank," and had been physically delivered to the foreclosing lender without any additional endorsement stamps.

Remember your check that was passed from Jane, and then to Dick and his friends? Well, the Court of Appeals made the same analysis.  It held that the servicing company does not have to make additional proof as long as it is in physical possession of the original note, where that note is endoresed "in blank."

What's this mean for you? Very simply, another avenue of attack on mortgage lenders and mortgage servicers has been closed to the homeowner. The court recognized the long standing practice of negotiating notes endorsed "in blank" as legitimate, and not falling into the category of cases where a note is missing endorsements, or a servicer has lost the original.

In a March 14, 2013 posting, the website Mortgage News Daily reported over 158,000 new foreclosure actions were docketed across the Country in February.  This is reported to be a slight increase from the prior month. (http://www.mortgagenewsdaily.com/03142013_realty_trac_foreclosures.asp, last checked 4/13/2013). In the following chart, Maryland is reportedly experiencing a 319% increase in new foreclosure activity.

 

As a practical matter, there are hundreds of cases clogging Maryland's courts where homeowners have sought to forestall foreclosure by arguing the lack of standing by a lender or servicer. These fights take years to resolve (Mrs. Buck's foreclosure started in 2009, four years before this final decision), and thousands of dollars in legal fees, and the delinquent homeowner often remains in the house without paying a dime in mortgage payments. 

Is that a good thing? For Mrs. Buck, perhaps, but what about you and others who struggle to make your monthly payments? But that's a different discussion, for another day.

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.

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 found....in 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.

Of Canada, Facebook, and Bears escalating war on society.

A few words about Canada, Faceook, and Bears.

Last year, I wrote a bit about Facebook evidence, and new Maryland Court of Appeals standards for using social media evidence.  Here's something of interest from a personal injury lawyer, in Canada, about use of Facebook evidence in Canada.

And the bears in Canada don't give a hoot about Facebook, or lawyers, and will attack anyone, even a guy chilling in his hot tub.

 

 

 

UPDATED: August 27, 2012--And it just gets worse!  This poor slob was hiking in the Denali State Park, in Alaska, when he was mauled to death by a grizzly.  The horror! it is reported that he snapped photos of the bear just eight minutes before the attack. And how about this 2000 item, describing how "this was not an attack, the bear ate him."

 

UPDATED: October 5, 2012-- Tech Saavy black bear snatches iPad from picnic site. And feeding bears will lead to their execution by the authorities in New York , Montana, and in Connecticut. In Florida, the bears are commiting suicide by cop! And don't forget to the annual "Virginia Harvest!"

 

UPDATED: October 8, 2012-- Black Bears stake their claim to the lobby of a New Mexico ski resort, seeking something tender to chew!

 

UPDATED: October 13, 2012-- Bears are now interfering with our children's education by blocking test booklet access!

 

 

UPDATE: October 16, 2012- Alaskan man half-eaten by bear.  Chilling. And in Canada (it gets back to our neighbors) a murderer's corpse was dragged out of a car and eaten by a bear (shades of Dexter?) Vigilante bears?



Maryland's Court of Appeals decides Anderson v. Burson, and leaves the lender "standing."

On December 20, 2011, the Maryland Court of Appeals deftly greased the skids for continued enforcement of mortgage notes and deeds of trust in the case Anderson v. Burson. Judge Harrell has poured oil over the troubled waters created by repeated challanges to lender standing to enforce debt instruments, as described in my prior post on this case.

The anlysis is elegantly simple, dealing with the Uniform Commercial Code and the differences between a "holder" and a "transferee."  More importantly, the Court gives yearning litigation lawyers a standard analysis for establishing the "standing" of their lender clients. In practice, the standard will impose a large investigative burden on the lender.  But it is perfectly reasonable for any entity seeking relief from the court to do the work required to establish it's particular entitlement, n'est pas? Take a walk through the decision, after the jump.

Masssachussetts takes on the Medusa

The Massachussetts Attorney General has cast herself as Perseus, hoping to slay the many headed banking Medusa that allegedly has been foreclosing upon Massachussetts citizens in violation of state recording and foreclosure laws. The December 1, 2010 Complaint alleges that lenders have sued to foreclose while falsely representing themselves as the "holder" of the indebtedness. The Complaint recites examples where the foreclosing lender did not take actual assignment of the mortgage until after the cases were filed, after important orders and affidavits were filed, or even after the foreclosure process was final. This is alleged to be a deceptive and unfair trade practice.

But wait, there's more!

Unlike Maryland, the Commonwealth of Massachussetts requires that every transaction involving real property, including assignments of interests in the recorded liens, must hit the land records. Several lenders are being sued for deceptive and unfair trade practices for keeping MERS related assignments off record.

WWMD (what would Maryland do)?  IHTS (it's hard to say). Read more after the jump.

Ground rent confiscation law is stricken by the Maryland Court of Appeals.

The long awaited ground rent decision is here!  On October 25, 2011, the Maryland Court of Appeals published Muskin v. State Department of Assessments and Taxation, declaring a significant portion of the ground rent registration statute unconstitutional.

The short and sweet is this:  The legislature went beyond its authority to implement a “register or forfeit” system that transferred a ground rent owner’s reversionary interest to the lessee.  The Court recognized the vested ownership rights of ground rent owners, echoing my own thoughts from a previous post  about this appeal.  That post has links to the webcast of oral argument, if you like that sort of thing. Read about the important parts of this opinion, after the jump.