Friday, February 26, 2010

Boundaries I. Gerrymanders, and California's mess.

This is the first in a series on the issue of political, administrative, and electoral district boundaries. How many wars and lesser fights involve boundary disputes? How little “science” or even conventional wisdom seems to go into boundary creation? It may seem dry, but then what is football but a kind of fast moving boundary dispute.
I received a call today from a Democratic Party fund-raising group which was soliciting money to influence selected state legislature races, with the pitch that, this being a census year, the state legislatures would be responsible for redrawing congressional district lines. In an effort to control the governance within the national boundary of the U.S. the group hoped to elect enough state legislators to gerrymander congressional electoral districts to make sure that Democratic voters have a disproportional influence, or as they put it, to prevent the Republican Party from doing the same thing for their voters.
Gerrymandering, which has been practiced as an exact science by the California legislature, typically means that when setting up electoral districts, the party in control (here in California the Democrats) divides up the map so that the maximum number of districts have just an adequate safety margin of Democratic voters, while the Republicans are in a minority in the majority of districts, but are carefully concentrated in a few districts as an overwhelming majority. This can be done even while meeting one man, one vote requirements.
The result voids the very reason for electoral democracy - namely that the people, through representative elections can change the rules by which their society is governed. The rule creates representatives from the majority party who are reasonably sure they are going to be re-elected but most appeal to a wide range of voters, and it creates representatives from the minority party who, while they may be disgruntled that they can’t get their laws through, know that they personally are absolutely certain of retaining the honors and benefits of office, and need to only appeal to their partisan political base.
In California, where the voters have imposed the requirement that two thirds of the legislature must pass the budget or raise taxes, the party gerrymander system is particularly devastating because the Democrats, couldn’t gerrymander so blatantly as to prevent a bit more than a third of the seats being held by Republicans, and the Republicans who are elected have no motivation for finding any common ground. As a result, the state has been completely unable to cope with the economic downturn through adjustment of its budget and taxes to the current situation.
More in future blogs

Saturday, February 20, 2010

Cal law keeps lawyers from helping clients with foreclosure problems

In the name of consumer protection, the Calif. state legislature recently passed draconian restrictions on attorneys assisting with loan modification. (Civ Code 2944.7 (a) (3) Stats 2009 ch 630 (SB 94), s 10 ) and Business and Professions Code 6106.3.

At times I have been called on to help people in default on their home loans. On each of the occasions I have run into difficulties when the banks or servicing agent invokes the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801–6809). This is the so-called bank secrecy act, and it prevents the bank from revealing or talking about its borrowers’ information with a third party. One of its few exceptions is for
“(E) to persons acting in a fiduciary or representative capacity on behalf of the consumer;”

There is no set way to establish such capacity. The most ordinary and effective way to establish a "fiduciary or representative capacity" is through a written power of attorney.

Now, while trying to shut down unethical attorneys who were taking clients' money and falsely promising their mortgages would get modified, the state legislature has forbidden people who are seeking to help another with a loan modification, including attorneys (under Business and Professions Code 6106.3(a) as applied to Civil Code 2944.7 (a) (3)) to:
"Take any power of attorney from the borrower for any purpose."

These words effectively prohibit or thwart the use of attorneys from helping a homeowner who might hire them to try to modify their mortgage.
In fact, as written, an attorney who helps modify a borrowers mortgage literally cannot hold a power of attorney to do anything else for that person.

Certainly persons promising mortgage modification help should be regulated. Also customers should be warned that the efforts of attorneys seeking to achieve their customers' ends may well be no more successful than those of a homeowner's without any experience or knowledge of the possible tools involved. But the same may be said of plumbers and beauticians with regard to their efforts.

The law could be made reasonable at least by changing the prohibition on powers of attorney "for any purpose" to "for the express or actual purpose of collecting or receiving fees for assisting with loan modification."
Meantime, with private lawyers pretty-well shut out of helping in this field, the advice usually given: to seek out HUD approved non-profit services is probably the best.

Deposit on 14 $million house has to be returned if sold for $15 mil

Does a seller of a $14 million dollar house get to keep a $620,000 deposit from a buyer who backs out? How about if the Seller immediately sells the house to a backup buyer for 15 million? Does it make a difference that these were sophisticated parties who had described the deposit as “non-refundable? That was the issue in a California appellate case from Orange County decided February 3, 2010. (Kuish v Smith) Relying on Civil Code section 3307, the court held that if the spurned seller came out of the deal with a profit, then the deposit must be refunded and the “non-refundable” clause is unenforceable. The deposit only gives the seller the limited practical advantage of shifting the burden to the buyer to show that the seller’s retention of the deposit constitutes unjust enrichment.

Tuesday, February 16, 2010

How much wisdom or lack thereof should go into statutory construction


In a California Supreme Court case released last week the court stated in predictable terms how it looked at construing a statute.

“To answer this question, we apply well-established principles of statutory construction to determine the Legislature‟s intent in enacting section 21167, “ „so that we may adopt the construction that best effectuates the purpose of the law.‟ ...We begin with the statutory language because it is generally the most reliable indication of legislative intent. If the statutory language is unambiguous, we presume the Legislature meant what it said, and the plain meaning of the statute controls. We consider extrinsic aids, such as legislative history, only if the statutory language is reasonably subject to multiple interpretations.” [citations omitted.]
Committee for Green Foothills v Santa Clara County, Calif. State Supreme Court, February 11, 2010, an environmental law case on how long a party has to sue after a notice of decision.

Try contrasting the above argument with that espoused recently by a California Appellate Court, February 1, 2010 (Judge Bruiniers) in Woodland Park v. East Palo Alto Rent Board (opinion of Judge Bruiniers), where the court relied in part on what the City should have thought about when it passed its ordinance. The court held that a landlord, “Woodland Park”, could not recover attorney’s fees from a suit against the City of Ea st Palo Alto. Woodland Park had successfully sued to require the city to accept a rent registration at the rate the City of East Palo Alto had published under its rent control law instead of a higher rate the City had passed but not published or billed its landlords. A part of the applicable City ordinance read: “In any civil proceeding that a landlord or a tenant initiates to enforce his/her right under this Ordinance, the prevailing party shall be entitled to reasonable attorney‘s fee as determined by the court.” The court’s opinion, interpreted the whole statute to render this language inapplicable, saying: “Given that the Board generally finances its expenses through the collection of registration fees that are paid by landlords (and indirectly, in part, by tenants) ….the electorate would have had good reason to insulate City from attorney fee awards like the one made here.”

Contrast the above application of ascribed wisdom in construing a conceivably ambiguous statute with the Tiburon v. Bonander court, (January 4, 2010) discussed earlier in this blawg when the court observed: “Counsel nonetheless urged that we uphold the validity of the Supplemental District in spite of its imperfections, reasoning in effect that no special assessment district could survive scrutiny if courts expected rigorous mathematical precision in the calculation and apportionment of assessments. We agree with the Town in principle. Any attempt to classify special benefits conferred on particular properties and to assign relative weights to those benefits will necessarily involve some degree of imprecision.” The court then went on to require what amounted to mathematical precision by a local assessment district, thereby making such districts vulnerable to litigation and scrutiny, I expect, few will survive.

Monday, February 15, 2010

Real Estate Law - Cal Appellate Case: Distinguishing damages between a rescission from fraud and one from mutual mistake

February 5, 2010, Sharbianlou v. Karp et al. This was a California appellate case arising out of non-completed sale a commercial property in Burlingame. The property turned out to have once housed a dry cleaner, and to have ground contamination of PERC, the common dry cleaning fluid. The prospective sellers and buyers sued each other. The trial court ordered the would be buyers, among other things, to pay the seller the difference in price between their contract, and the lower amount for which he later sold the property, as well as the difference between what the seller got in rents from a property that he did buy and the higher rents he could have got from a property he could have bought if the deal in Burlingame had just gone through as planned.

The appeals court ruled that these awards were an error. Consequential damages, based on the prevailing party receiving the benefit of his bargain might have been available on a breach of contract, and they might have been available in the event of seller fraud. But the court ruled only out-of-pocket costs, and a return of money paid and property bought, could be recovered from a rescission based on a mutual mistake such as in this case, where neither party knew the extent of the environmental contamination.

Please note. The discussions here no not constitute legal advice.

REAL ESTATE & ENVIRONMENTAL LAW a neighbor's mitigated timber cutting remains enforceable

Environmental Law - Katzeff v. Cal. Dept. of Forestry

In this appellate case from Mendocino County written by Judge Rivera, the plaintiff was complaining that his neighbor was cutting down trees that had been set aside from a prior timber harvest plan as a specific windbrake and mitigation in the plan.
The case came as an appeal from a demurrer, so the issue was whether the plaintiff had stated a cause of action. The court said that the Department of Forestry couldn’t arbitrarily jettison a mitigation that had been considered when the larger stand of timber had been cut. The court also said that since the permit to cut the remaining trees was improper, the plaintiff could state a claim for nuisance.

Comment:. Court got the main point. Ending a mitigation to an environmental harm should not be lightly allowed.

On the other hand, I keep looking in vain for courts to narrow the application of “nuisance”. “Nuisance” is a catchall tort with a definition that allows a defendant to be sued if a plaintiff alleges an interference with their use and enjoyment of land such that “an ordinary person would have been reasonably annoyed by defendant’s conduct.” This is an extremely vague and subjective standard that on its face could force a person who has done nothing genuinely harmful to have to prove at trial that a plaintiff’s annoyance is unreasonable by the standards of an ordinary person.


Tiburon v Bonander: Why communities will no longer be able to choose to assess themselves.

January 4, 2010, a California appellate court: in an opinion by Judge McGuiness, decided the case of the Town of Tiburon v. Bonander. The court found that a special district formed to bury utility wires, could not levy an assessment whatsoever against the property owners in the assessment district because the assessments exempted a school and were, at least in part based upon lot size. The court found that the California voters in a 1996 constitutional initiative Proposition 218, had written into the marble tablets of the California constitution the concept that “An assessment can be imposed only for a “special benefit‟ conferred on a particular property. ...A special benefit is “a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large.‟. . . Further, an assessment on any given parcel must be in proportion to the special benefit conferred on that parcel: “No assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel.”

What the court decided was that if a special assessment district exempted any property, such as a school, then logically, (it said) the assessment on every other parcel must exceed the non-exempt parcel’s proportional benefit. Additionally where the Town differed its assessments on lot size because it would cost more to put utilities underground where the lots were larger, the court held that this was not explicitly proportional to the benefit received. That it might incidentally benefit a parcel to bury, say, 200 feet of overhead line proportionately to a parcel with 25 feet taken out of its area view does not seem to have occurred to the court.

Comment: Proposition 218 was yet another of the ever-popular “let’s get something for nothing” initiatives. Like the two thirds rule for the legislature to pass a budget, it is a law that chokes off the right of the community to engage in some common effort. As interpreted by the appellate court in this case, the law appears to condemn to oblivion any effort of a community to form a special assessment district, since someone can probably always make an argument that at least one parcel is receiving a benefit one iota less than its cost. And even where it could have been argued, as in this case, that a large parcel must be getting a greater benefit from undergrounding , there is likely to always be some aspect of the formula for assessing properties that can be litigated as not equal to the benefit received.



1. The U.S. Supreme Court on January 21, 2010, in Citizens United v. Federal Election Commission ruled that Corporations and Unions get to spend their money to directly propagandize in order to influence elections up to election day. The decision was made by the right wing majority of Justices Kennedy, Roberts, Scalia, Thomas, and Alito.

Comment: The decision is likely to have the practical effect that wealthy corporations will inundate media to persuade voters to vote for their commercial interests and in particular to vote against anyone who dares oppose them, and will do so with all of the fakery and misdirection that they now devote to selling suburban freeway drivers SUVs.
The decision was wrapped in first amendment colors of “free speech.” In a glib concession to influence group that often helps the Democratic party Unions were given the same “free speech” as corporations. However to come to the obviously intended result of greater power of corporations over your lives and government, and probably to channel money to Republican Party interests that stick to the big money interests’ agenda.
To reach the intended agenda the court had to engage in the following Orwellian jumps:
a. Corporations are “persons. Corporations, are of course institutions. State and federal law allows the establishment of corporations, gives them a particular tax status, and provides them with limited liability if they are sued. Their profits are supposed be allocated according to shares. They have a legally prescribed system of governance that distributes power between the shareholders, board of directors, and Chief Executive Officer. They function regardless of changes to the individuals in any of those positions.
Nonetheless in Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886) a court reporter decided that corporations are “persons” entitled to equal protection. One may search the decision itself in vain for any such holding by the justices, but it is considered precedent.
b. The speech rights of corporations are equal to that of an individual citizen. Reasonably, corporate contracts and corporate property should be guaranteed the protection of due process of law. Neither common sense, nor constitutional law for the last century guarantees the same rights of free speech to an institution created and governed for the sole purpose of making profits. Although a corporation has wide latitude in its business decisions, in the 1916 case of Dodge v. Ford Motor Co., the Court held that a business corporation is organized primarily for the profit of the stockholders, as opposed to the community or its employees. The court in Citizens United hung its argument that Corporations have free speech rights on First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978), which simply assumed corporate free speech rights with the grand statement: “The inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual.” This grand comment ignores that a corporation’s speech is not an expression of opinion for which any individual takes responsibility. Moreover a corporation might conceivably be sued by its shareholders if “its speech” represented an unsound business decision that hurt its profits. Moreover "commercial speech" generally cannot be so misleading that it constitutes fraud or an unfair business practice. Political speech by a corporation has no such limits.
c. Money is speech, "[R]estriction on the amount of money a person or group can spend on political communication during a campaign,"..."necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached." The court crushes regulation of corporate speech by raising straw arguments, first that restrictions on corporate spending to influence elections would be applied to “media corporations”, (something no law suggests ); and second by adopting the highly dubious view, without evidence, that restricting an avalanche of purchased media would restrict discussion of issues.

d. Regulation of the flow of money into political propaganda is “silencing.” Free speech has generally been limited by content-neutral time place and manner restrictions. The community may limit the amplification of annoying method of free speech so long as it is content neutral and very reasonable to do so. Citizen United opined that laws (though not actually the one at issue) might “ silenc[e] certain voices at any of the various points in the speech process.” “(Government could repress speech by "attacking all levels of the production and dissemination of ideas," for "effective public communication requires the speaker to make use of the services of others"). “...Its purpose and effect are to silence entities whose voices the Government deems to be suspect.” The majority’s rationalization ignores the obvious fact that rich corporate executives can use their own money to speak for themselves, and groups may form PACs to express any collective message, and that ensuring that the available media is not overwhelmed by a single viewpoint may be a legitimate restriction. By demonizing “Government” the decision takes away from representative government the power to reasonably regulate the manner in which corporations may use corporate money to influence elections by overwhelming the media access available to private citizens.

Suggestion: a long overdue constitutional amendment on the order of: “For-profit, limited- liability corporations, are institutions subject to regulation in all respects.”

Prediction: The clear beneficiaries are not a party but the wealthiest of corporations. The losers are all other voices in society. One of the groups that may surprisingly lose as a result will be the “social conservatives” whose hold on the Republican Party is likely to be diminished now that a huge source of dollars is available to bolster the campaigns of those who merely vote in favor of the interests of the corporations, and need not join any other alliances.