Archive for the 'Business Law' Category

The Right to Lease or Rent Foreclosed Property

The Right to Lease or Rent Foreclosed Property

Who has the right to lease a foreclosed property? One guess might be the owner, depending on the stage of the foreclosure process. Another answer may be the bank or financial institution that owns the property after the foreclosure is complete. According to Earl Johnson, a Goose Creek, South Carolina resident, he had the right to lease foreclosed property. However, police claim the Johnson never owned the house, and that Johnson had conned tenants into renting foreclosed property.

What Was Johnson’s Defense?

Earl Johnson claims he has a legal right to lease foreclosed property that he didn’t own under the Declaration on the Rights of Indigenous People signed by President Barack Obama.

Before focusing on who is right or wrong, let’s define foreclosure. Foreclosure is a process where a county or financial institute takes a property from a property owner and sales it. Foreclosures typically occur after a property owner defaults on a mortgage loan or property taxes. Mortgage holders, usually a bank, sell the property to pay off the remaining debt on the loan or taxes.

The right to lease or sell a foreclosed property depends on the stage of the foreclosure. A property owner can avoid foreclosure via a short sale, short refinance, loan modification, repayment plan, or by challenging the foreclosure. A mortgage holder can sell the property through an auction. In many situations, the former homeowner moves out and the property is left vacant until the bank or county sells it. Earl Johnson

Earl Johnson wasn’t in either category. He never owned the property or was a lender holding a mortgage on it. Yet, he leased the property in question to two sisters, Tina Capreole and Nancy Bowman. They paid Johnson $1200 and moved in on August 1, 2015. A couple days later, a realtor dropped by the property to show it to prospective buyers. That is when the new tenants discovered the man they’d leased the home from didn’t own the property. In fact, the property was in bankruptcy.

Typically, a tenant has some rights in a foreclosure when a landlord defaults on his mortgage or taxes. For example, the Mortgage Reform Act passed by Congress in 2009 gives tenants living in foreclosed property 90 days to find a new place to live. This Act and many other tenant rights weren’t available to the tenants living in the “leased” foreclosed property in South Carolina. The bankruptcy trustee, a court appointee who oversees bankruptcies, told the tenants they had to move because the tenants were living there illegally.

It’s a Crime to Lease Property a Person Doesn’t Legally Own

It’s a crime to lease property without the permission of the property owner. Illegally leasing property that one doesn’t own is a repeatedly occurring scam which occurs across the country. For instance, in 2013 a Florida woman was accused of leasing her neighbor’s foreclosed home to tenants for more than one year. Tenants allegedly paid her about $13,000.

In Goose Creek, Johnson was arrested and charged with:

  • Burglary in the third degree
  • Obtaining signatures under false pretenses
  • Operating a business without a license

Burglary is the criminal act of breaking and entering into a structure for the purpose of committing a crime thereafter. The entry doesn’t require the use of force. Johnson is accused of breaking and entering into the property prior to leasing it. According to the tenants, he even gave them keys to the home and made some home improvements to the property.

Obtaining property by false pretenses is a crime when someone makes misrepresentations or lies to get property. In this case, Johnson is accused of misrepresenting himself as the property owner to illegally obtain the tenants’ rent.

A business license is required to operate a business in a particular area. Failure to have a proper or valid license is a crime.

Is the Declaration on the Rights of Indigenous People signed by President Obama a Valid Defense?

The Declaration is a statement addressing the human rights indigenous people have. It was formally adopted by the United Nations in 2007 and formally endorsed by President Obama in 2010. The purpose of the Declaration was to emphasis the fact that indigenous people have the right to enjoy all human rights and fundamental freedoms recognized in the United Nation’s Charter.

Notably, the United States originally voted against the Declaration when the U.N. initially voted on it. Since the Senate has yet to ratify it, the Declaration isn’t legally binding and not a part of U.S. criminal laws. The Declaration doesn’t create new rights for indigenous people. It is unlikely that Johnson will succeed with this defense.

Sirius XM Radio Settles Unpaid Internship Lawsuit

Sirius XM Radio has entered into a settlement agreement to pay up to $1.3 million to its interns who claim that the company was in violation of U.S. labor laws by not compensating its interns. The plaintiffs had performed work on a number of Sirius projects, including the Howard Stern Show, and stated that they had worked up to 40 hours a week without pay. They allege that this violates the Fair Labor Standards Act (FLSA) as well as the minimum wage law in New York State.

The principal test that courts apply in this type of case is whether internships were created mainly to provide an education to young people in a certain field. This is in contrast to the use of unpaid workers for the same duties carried out by employees. According to federal court papers filed on Monday, August 3rd, Sirius still thinks that it was not in violation of any laws by having an unpaid intern program. However, in an effort to avoid expensive litigation, the company has agreed to make payments to over 1,800 previous interns.

The settlement, which was presented by Sirius, and is pending approval by a judge, was announced one month following rulings made by the 2nd U.S. Circuit Court of Appeals in New York. Previous cases with similar decisions include those against Fox Searchlight Pictures Inc. and The Hearst Corp., in which the appeals court also determined that the legality of unpaid internships is dependent on whether they are relevant to the education of interns.  Paid internsihps

After the Fox case was filed in 2013, many other comparable lawsuits followed, including claims against Warner Music Group Corp., which entered into an agreement in June to pay hundreds of interns over $4.2 million. Prior to that, there were even more substantial settlements by Comcast Corp’s NBCUniversal, Condé Nast, and Viacom Inc.

In the complaint against Sirius, an intern for the Howard Stern Show named Melissa Tierney claimed that for a period of four months, she ran errands, placed orders, collected breakfast orders and carried out other menial tasks for Stern’s crew without pay. Her complaint cited the FLSA, which is explained by the Labor Department using a six-point test to decide whether an internship can be legally unpaid. According to the Department of Labor Wage & Hour Division, if the following six factors are present, then there is no employment relationship under the FLSA, and the Act’s minimum wage and overtime provisions are inapplicable to interns. The six factors are:

  1. The internship resembles training that would be provided in an educational environment;
  2. The internship experience is intended to be for the intern’s advantage;
  3. The intern does not take the place of the usual employees, but is closely managed by current staff;
  4. The employer that gives the training does not benefit from the work performed by the intern; in fact, its operations may be hindered;
  5. The intern is not guaranteed a job at the end of the internship; and
  6. There is an understanding that the intern is not to receive compensation for any work performed during the internship.

Given the fact that many of these factors were not present during the plaintiffs’ internship, the court ruled in favor of the interns. It appears that several large media companies are exploiting interns’ desire to work for them by requiring them to work really hard and to work long hours without pay. Some interns have said that they were even promised a job at the conclusion of the internship, but were never offered a position. In light of the recent settlements, hopefully, large media companies will think twice before taking advantage of interns.

Class Action Lawsuit Survives Against Chrysler for Defective Clutch

Chrysler_logoIn a class action lawsuit against Chrysler, a federal judge ruled in favor of the plaintiffs on Monday, June 15, 2015, when he denied a request by Chrysler Group LLC to dismiss the class action alleging Chrysler of selling Dodge Darts from 2013 and 2014 with defective clutches. He found that the plaintiffs provided a sufficient description of the defect in their complaint. He also found that the allegation that the defect caused the vehicles to be unmerchantable, was sufficient.

Although the judge reduced the size of the class action, he rejected Chrysler’s argument that certain plaintiffs were in violation of Federal Rule of Civil Procedure 8(a) by failing to state a defect in adequate detail in order to permit Chrysler to defend itself. According to the lawsuit, the automaker was aware that the vehicles with manual transmissions had a defective hydraulic clutch system. It is also alleged that although Chrysler knew that the clutch system malfunctioned, and was marked by several problems and safety issues, it concealed the defect from customers and instead, resumed marketing the vehicles as “robust and reliable.”

However, the judge did not side with the plaintiffs completely, for he dismissed the claims of express warranty and a violation of the Magnuson-Moss Act to the degree to which the basis of those claims is a design defect. He ruled in this way because Dart’s express warranties do not include design defects.

The Magnuson-Moss Act states that a warrantor must reveal, completely and clearly, in language that is easy to comprehend, the warranty terms and conditions to the degree to which they are required by the Federal Trade Commission. According to the terms of the Act, any ambiguous statements contained in a warranty are construed against the one who drafted the warranty.
Moreover, under the California Consumers Legal Remedies Act, the judge dismissed the lawsuit’s punitive damages claims concerning Chrysler’s representation of the cars’ safety. The court found that a press release containing a vice president’s depiction of pre-market testing did not demonstrate that an officer or other person in a position of authority approved of Chrysler’s alleged wrongful behavior.

Nevertheless, the judge seemed to be mostly in favor of the plaintiffs, and hopefully, Chrysler and other automakers will be deterred from hiding their vehicles’ defects from consumers in the interest of increasing their profits. Surely, the cost of defending a lawsuit and the resulting award or settlement amount must exceed the price of taking preventive measures to ensure the safety of consumer products.

R.J. Reynolds May Be Found Liable for Smoker’s Death

A former smoker’s widow named Joyce Hardin filed a lawsuit in Miami against R.J. Reynolds Tobacco Co. She alleges that the company’s statements and omissions regarding the addictiveness of cigarettes as well as their harmful effects caused her late husband to become ill. She is requesting more than $20 million in compensatory damages.

In 1996, her husband, named Thomas Hardin, was diagnosed with chronic obstructive pulmonary disease (COPD). According to plaintiff’s attorney Allan B. Kaiser, Hardin was raised in rural Alabama, and started smoking at the age of nine. Kaiser alleges that the company conspired with other cigarette makers to hide facts about how addictive and detrimental cigarettes can be over the course of several years.88642-full

Hardin did not know how addictive cigarettes could be when Hardin was younger because the tobacco company and its conspirators hid the facts from people like Hardin. Although tobacco awareness and education is well known today, the jury should not use today’s standards to evaluate cases like Hardin’s. The risks of smoking were not as well advertised in the 1950’s, when Hardin first began smoking. Young Hardin could only rely on statements made by the tobacco industry, which failed to issue any warnings about the risks of smoking. Thus, without any knowledge of the dangers of smoking, Hardin became addicted, and his addiction led to his illness, and eventually to his death.

Preventing Future Hardins

There were thousands of cases, such as this one, arising from the 1994 Engle class action lawsuit against tobacco companies. The Florida Supreme Court permitted up to 700,000 individuals to use a jury’s findings about addictive tobacco to file their own lawsuit. The jury found that smoking causes certain diseases, and that the perils of smoking were concealed by tobacco companies.

In order to win a judgment, Hardin’s estate must persuade the jury that Hardin suffered from an addiction to nicotine that was caused by his cigarette smoking. The Hardin estate must also convince the jury that Hardin’s smoking of R.J. Reynold’s cigarettes caused his COPD and emphysema that ultimately resulted in his demise. In the event that the jury arrives at these conclusions, the jury is then required to decide the percentage of fault that is attributable to each party for Hardin’s disease, and perform a calculation of compensatory damages for his widow.

I think that the jury should render an award as close as possible to the requested amount of $20.2 million to compensate Joyce Hardin for her pain and suffering, and her loss of companionship. The jury should take into consideration Hardin’s early stages of COPD, the severe illness that he suffered for six-and-a-half years, and his projected lifespan of 12 years that was reduced.

I also believe that the jury should render a verdict that includes punitive damages. By adding punitive damages, other tobacco companies will be dissuaded from engaging in the same type of deception about the dangers of smoking that was committed by R.J. Reynolds.

Decriminalization of Marijuana in Delaware

The governor of Delaware, Jake Markell, recently signed a bill that decriminalizes possession and private use of miniature quantities of marijuana. The maximum amount of marijuana you can legally possess and use is one ounce. However, police can still seize the drugs.

According to the statute, the penalty for using marijuana publicly will be reduced to a fine of $100. Previously, possession of marijuana was a misdemeanor for which you could face up to six months in jail, and be fined up to $1,150. However, simple possession of marijuana is still a criminal offense for anyone who is under age 18. In addition, if you are caught using marijuana in a moving vehicle, in a public place, or within 10 feet of property that is open to the public, you will be charged with a misdemeanor.

Governor Markell signed the bill into law on Thursday, June 19th, and the law becomes effective six months from then. The bill passed the Senate and the House of Representatives, both of which are controlled by Democrats, and was opposed by Republicans, who claim that the bill sends the wrong message to youth.   Marijuana

A lobbying group called the National Organization for the Reform of Marijuana Laws has said that 18 states, including Delaware, have enacted laws decriminalizing personal use and possession of marijuana in small quantities. There are 23 states, including Delaware and the District of Columbia, that permit the use of marijuana for medical reasons. Ballot measures legalizing marijuana for recreational adult use were approved by voters in Washington, D.C., Colorado, Oregon, Washington state, and Alaska. Nevertheless, marijuana is still an illegal narcotic under federal law.

The Dark Side of Marijuana Legalization

Despite the growing popularity of marijuana, I am inclined to agree that legalizing the drug sends the wrong message to young people, who are very impressionable, and will be more likely use, and even abuse, the drug. According to the National Institute on Drug Abuse, marijuana can have adverse effects on the brain, such as impaired memory, altered senses,  altered sense of time, mood changes, and impaired body movement. Marijuana can also make it harder to think clearly and solve problems.

Marijuana also has long-term adverse effects on the development of the brain, especially when people start using the drug during their teenage years. Use of the drug can diminish thinking, memory, and learning functions, as well as impact the ways in which the brain forms connections between the areas needed for these functions. The effects of marijuana on these abilities may be lengthy or could even be permanent.

Other health effects of marijuana include lung irritation, which can lead to breathing problems; increased heart rate, which can give rise to heart attacks; and child developmental problems during and after pregnancy. Use of marijuana on a long-term basis can cause mental illness, including temporary hallucinations, temporary paranoia, and aggravated symptoms in patients who have been diagnosed with schizophrenia.

Thus, with the exception of medical marijuana, I think that legalization of the drug can only lead to an increasing lack of awareness concerning its ill effects, and a rise in the use among young people. There may also be an increase in the number of people who suffer from the above-mentioned health problems.