Public Trust Doctrine; Standing

January 31, 2008

One always contentious issue in environmental lawsuits is the question of standing. In a New Jersey lawsuit to invalidate the City of Scranton’s agreement to sell public land to a private concern, an appellate court found that a suit under the public trust doctrine conferred standing on individual citizens who wanted to unwind the sale.

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Frank Chopp revisited

January 31, 2008

Frank Chopp apparently told KUOW earlier this month that he wanted to add a couple of Republicans to the Appropriations Committee. This could be an Obama-istic gesture toward conciliation and unification or Speaker Chopp does not feel that he sufficiently represents special interests in the legislature (although I’m unclear about which ones might feel slighted by him).


Contract Drafting/Review Tip

January 31, 2008

When writing or reviewing a contract, there is often a section called “Background,” sometimes labeled with an obsolete latin term. This section is mostly overlooked but it can be critical to the deal. It should be used to identify the material facts upon which the parties are relying. These facts are usually too numerous to list, but care should be taken to see that — to the extent possible — critical facts are identified. This makes it easier to avoid the contract if the underlying assumptions are wrong.

A well-written contract will also state which party bears the risk of mistake. Normally this should allocate some risks to one party other risks to the other party.


Legislation for the Homeless Families

January 31, 2008

homeless-family.jpg You read all sorts of statistics about homelessness, some indicating that it is a monumental tragedy and others suggesting that it is a temporary condition for a few addicts. Bill O’Reilly last week somewhat famously said that there were no recent veterans who are homeless.

Without adding more numbers to the discussion, I would like to note that in 1997, when the economy was going relatively gangbusters, the Washington State Supreme Court in Washington State Coilition for the Homeless v. Department of Social and Health Services found, by statistics that were said to be conservative and likely lower than the actual numbers, that homelessness increased with reduction in the availability of low cost private housing (duh), and in 1990 171,000 people sought homeless shelters and 115,000, including 37,000 children were turned away. In 1991, “of the people who were admitted to emergency shelters, approximately 7,900 were families with 17,200 minor children. Of those children, 75 percent (more than 12,000 children) were under the age of 11 years. During this same period of time approximately 23,500 families, with 49,800 children, were turned away from shelters because of lack of space.” The courts list of statistics goes on.

The Court found that the legislature had passed a law (RCW 74.13.031(1)) mandating the creation of a program for homeless children and that none had been established. It ordered that this be done. (DSHS is a whipping post with a breathtaking breadth of responsibility and chronic underfunding.) The legislature passed funding of $5,000,000 for the 1999-2001 biennium, then ignored the program except to renew the level of funding, leaving it to the Department of Community, Trade and Economic Development to create and monitor the program, which provides funding to nonprofits, local governments, and housing authorities to provide housing and services to families with children.

According to Senate bill Report ESSB 5959 in 2006 the program served — to some extent — about 19% of the families in need of temporary shelter. There are now pending in both the senate and house bills to create an official, statutory program. The house bill is more conservative and would not increase the funding from the original amount in 1999, while the senate bill would increase the funding to $15,000,000 and slightly broaden the scope to include preventative services to those families about to become homeless (which from the perspective of the investment of public funds makes sense).


Result-Oriented Judicial Decisions

January 31, 2008

Contracts are certainly not inviolate, as there are numerous legal doctrines to set them aside, reform them, even add terms to them. The general idea is to effectuate the intention of the parties as discerned by a judge or appellate court. There are numerous judicial tools to discern the parties intent, often leading to conflicting results. Ultimately though once a contract is in the court system its interpretation is left to an individual or individuals who probably have no experience and limited understanding of the area of commerce from which the contract arose.

When the contract materially departs from the agreement of the parties or the contract turns out to involve performance beyond the expectations of the parties, the court will sometimes say that there has been a “mutual mistake of fact.” This can lead to the court rescinding the contract, or reforming it to comport with the actual understanding of the parties, and sometimes awarding damages and attorneys fees.

This situation occurs throughout the law, in almost every conceivable context. People want to get out of adoption agreements, supply contracts, debts of all kinds, personal service agreements, you name it. For the sake of predictability it is quite important that you be able to determine whether a contract will be canceled or reformed or enforced. Because of the sweeping nature of the situations into which these doctrines are applied, they are defined with a broad brush and often it is impossible to anticipate what a court will do with them.

Today the Washington State Supreme Court issued a decision involving an agreement sought to be set aside. Its treatment of the notion of “mutual mistake of fact” is of interest, although I’m not sure that it goes very far in making things any more predictable.

In State v. John Shannon Codiga, a criminal defendant entered into a plea agreement, pleading guilty to three counts of a crime involving a sentence of seven years. At the sentencing hearing the defendant learned that actually the sentence was life, or could be that. The defendant not surprisingly felt that this ought to invalidate the agreement so that he could go to trial. The prosecutor explained when his office prepared a statement of the defendant’s criminal history it omitted a marijuana-related felony conviction because by its terms it was to be expunged if the defendant stayed out of trouble and it had failed to identify one or more misdemeanors that had occurred to prevent the felony from being extinguished. The prosecutor pointed out that the defendant signed off on this mistaken statement of criminal history but the defendant contended that he too had thought that the felony had been expunged. As it turned out this was a pretty big fact to be mistaken about, as the existence or nonexistence of this conviction .

The Washington Supreme Court has been criticized for deciding what result it wanted then rendering the law in a manner to justify the result. Mutual mistake is a doctrine that applies when there has been a mistake about a material fact but it classically does not apply when the parties have been mistaken about their understanding their rights. This is now a little murky. For example in In Re M.D. it was found that a mistake about the person’s rights before entering into a contract could invalidate the agreement. This decision seemed to gloss over the distinction between law and facts and skip lightly over the idea that the mistake should be mutual.

In todays decision, the State Supreme Court upheld the plea agreement, saying in effect that the defendant had waived the right to claim mutual mistake of fact in the standard printed language of the agreement in which he assumed the risk of a mutual mistake of fact. The court then went on to emphasize that this was a mutual mistake of fact, not of law, as if the doctrine applied only to mistakes of law. This is vertigo inducing language to the average lawyer. The readers’ disorientation is heightened when s/he realizes that an acknowledged mutual mistake of fact is being used by the Court to sustain a contract, not avoid it. This was a unanimous decision!

If we pull ourselves back from behind the looking glass, there is a trend in the law to permit contracting parties to allocate the risk of mistake. Generally speaking this should be bargained for and to be enforceable it should be reasonably clear about what mistakes are being allocated and not a sweeping statement that allocates all mistakes, including those of the party that drafted the agreement with superior bargaining position, to the party presented with the agreement. The court did not analyze the plea bargaining agreement in light of this emerging area of law, it just pointed to the language of the agreement, as if that were the sole determining factor.

It might help in your effort to fit these decisions into a conceptual framework to know that In re M.D. where the doctrine of mutual mistake was contorted to avoid a contract involved a Native American mother trying to reclaim her parental rights which had been contracted away. Today’s decision involved a person arrested for the first time for child molestation. In these two decisions the doctrine was used to affirm parental rights over contractual rights and to incarcerate for life, or most of it anyway, a person who confessed to three acts of child molestation. Another factor that may have come into play is that three State Supreme Court seats are up for re-election this fall.

In these decisions most people would not take issue with the outcome and many would not take issue with the reasoning that obtained the results. Later we will look at decisions that involve other interests. If you go along with this approach in these cases, no fair complaining if a result you don’t like is arrived at through unconventional reasoning.


Telephone Bills Violate Consumer Protection Act

January 31, 2008

The Washington State Supreme Court held in IndoorBillboard/Washinton, Inc. v. Integra Telecom of Washington, Inc. that Integra’s billing practices violated the Consumer Protection Act. After dispensing with a blizzard of procedural arguments attacking the Court’s jurisdiction, the Washington State Supreme Court found that Integra’s practice of assessing its Washington local exchange customers a surcharge known as a presubscribed interexchange carrier charge or PICC was actionable. This charge was assessed when there were no such expenses incurred by Integra and when the customer did not even purchase interexchange services. The mislabeling of this surcharge was found to be unfair and deceptive.


Tips for Buying Foreclosed Real Estate

January 28, 2008

A buyer can often get a good-sounding deal after a bank has foreclosed on a parcel of real estate. Like all good-sounding deals, however, this one comes with risks that people ought to understand before making an offer. Typically this property is sold by a subsidiary of a bank, sometimes by a federal agency such as H.U.D. Remember that your seller (the bank or federal agency) knows nothing about the property and will take every imaginable step to immunize itself from responsibility to the buyer. (With banks it is usually a wholly owned subsidiary that has title to the property.) You will be pretty much on your own after closing and cannot look to the seller if the roof collapses the next day or some other disaster befalls you with your acquisition. If you receive a seller’s disclosure statement about foreclosed property, it may be a bit misleading since the seller’s period of ownership is likely to have been just a few months and chances are that the property has been unoccupied during that time.

Another point to bear in mind is that there are many different reasons a person suffers a foreclosure. One reason is that the property is not worth the debt on it. Another reason is that it would cost too much to repair to justify paying on the debt. Sometimes the property cannot be sold for enough to pay off the debt. Some bank owned property has been given back to the bank by a deed-in-lieu- of-foreclosure.

Banks look to recoup their loan balance and carrying expenses when they sell property they received through foreclosure. When large down payments were required of buyers, a purchaser of foreclosed property could count on there being equity in the property at the time of the foreclosure so that the price asked by the bank was likely to be beneath market value. With subprime loans accounting for a good number of the foreclosures, a buyer certainly cannot rely on the expectation that the debt on the property was less than market value. With 100% financing frequently provided to customers, banks in setting the asking price of foreclosed property at the amount of their debt are often putting the price at or above market value.

All of this requires that the buyer have a very clear idea of market value and that absolutely everything on the property be thoroughly inspected. You may also need bids for repair work before you make an offer.

It is often useful to get all the information you can from the bank about the history of the property.

You need to pay attention to the title to the property. If work has been done on the property you need to be sure that there are no disputes with contractors that could result in the filing of a lien after you buy the property. You should try to get a warranty deed at closing and discuss with the title company the array of title insurance options that are available to you through endorsements and extended coverage.

You can also talk with neighbors and through the recorder’s office get the names of prior owners. With luck you will be able to track down a prior owner to discuss the property.