New York Business Divorce: “Finally, almost 16 years after the cryptically-worded statute became law, the Appellate Division, Second Department, in Matter of 1545 Ocean Avenue, LLC, 2010 NY Slip Op 00688 (2d Dept Jan. 26, 2010), offers a carefully considered explanation of what §702 means — and what it doesn’t mean . . . . As discussed below, the 1545 Ocean opinion’s motif is fidelity to the LLC’s operating agreement. This contract-centric approach sharply distinguishes LLC dissolution from partnership and close corporation dissolution cases in which implied fiduciary duties and untethered notions of fairness permeate the courts’ analysis. It also brings New York LLC jurisprudence closer in line with Delaware’s approach to LLC dissolution fueled by the admonition contained in §1101(b) of the Delaware LLC Act, to give ‘maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements’.”
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New York Times: “The Obama administration will begin a drive this week to expel Pepsi, French fries and Snickers bars from the nation’s schools in hopes of reducing the number of children who get fat during their school years. In legislation, soon to be introduced, candy and sugary beverages would be banned and many schools would be required to offer more nutritious fare. To that end, Agriculture Secretary Tom Vilsack will deliver a speech Monday at the National Press Club in which he will insist, according to excerpts provided to The Times, that any vending machines that remain in schools be ‘filled with nutritious offerings to make the healthy choice the easy choice for our nation’s children’.” Excuse me, but where does it say in the U.S. Constitution that the federal government can tell schools in all fifty states or in any state what food and beverages the schools can give to children? Slowly one by one the elites in Washington are taking away our freedom. I thought most of the 2010 Super Bowl commercials were very blah and forgettable. Here are my favorite commercials in no particular order. Phoenix is $242 million in the red, but that number does not include the $300 million it owes on the $600 million new and expanded Phoenix Convention Center. Arizona Republic: “City Manager David Cavazos proposed shutting down senior centers, libraries and sports complexes, and laying off hundreds of police officers and firefighters for the first time in decades. . . . Cavazos’ proposal would eliminate 1,379 of the city’s 16,000 positions . . . . The Police Department would lose about 353 sworn positions, from patrol officers to assistant chiefs. The Fire Department would cut 144 sworn jobs.” In a shocking story in today’s Arizona Republic we learn that Phoenix’ new $600 million convention center is a very expensive money pit. The Republic story says:
Yikes! The center only generates 20% of the money needed to operate it and that number does not include the annual debt service on the $300 million! The Republic article did not say how much money is needed to operate the convention center each year. What happens if the city cannot make the payments on the construction debt? Will the near bankrupt State of Arizona pick up the tab? This is what happens when government spends money it does not have. Maybe the City of Phoenix should follow the lead of the State of Arizona and sell some of its assets to get the money to pay its deficits and keep the new convention center. I am sure Phoenix could sell the light rail system that has exceeded rider projections for a lot more than the $1.4 billion cost of the system. Surely the value of the Phoenix light rail has increased since its completion. New York Times: “Courts to decide whether First Amendment protects lies about being a war hero. The federal courts are wrestling with a question of liberty and patriotism: Does the First Amendment right to free speech protect people who lie about being war heroes? At issue is the Stolen Valor Act, a three-year-old federal law that makes it a crime punishable by up to a year in jail to lie about receiving a U.S. military medal. It is a crime even if the liar makes no effort to profit from his stolen glory. . . . One of the men challenging the law is Xavier Alvarez of Pomona, Calif. He had just been elected to a water district board in 2007 when he said at a public meeting that he was a retired Marine who received the Medal of Honor, the nation’s highest military decoration.” The audacity of a dope! The scuzz-ball’s defense is “I should be able to lie about winning the highest medal for valor given by the United States because the First Amendment protects my right to lie.” The guy claimed he was in the Marines, but never served. Another case involves a man named Rick Strandlof who claimed he was a Captain in the Marines who was got a Purple Heart and a Silver Star for action in Iraq. This guy didn’t stop at just telling the lies. He used the lies to help create the Colorado Veterans Alliance and get donors to give money to the organization. Do we really want to let people lie about earning military medals that our military heroes earn with the blood and lives? The reason Congress passed the Stolen Valor Act was to try to stem the growing tide of people who lie about military service and earning medals. I am particularly sensitive about this problem because I spent six years in the United States Air Force, including five years flying the F-4 Phantom supersonic fighter-bomber and combat missions in Vietnam in 1972. A great book that details hundreds of these types of cases is “Stolen Valor” by B.G. Burkett and Glenna Whitley, which I recommend. The book jacket says:
Virginia Senator and former Secretary of the Navy James Webb said, “Stolen Valor is a tough, courageous book . . . . Its central thesis should make American mainstream media cringe in the shame from their decades of negligence and collusion in this defamation of those who served with honor.” Joseph L. Galloway, Co-author of “We Were Soldiers Once . . . and Young” said, “Stolen Valor exposes more fraud than the Justice Department. Every veteran who served honorably owes Burkett a debt of gratitude.” Guenter Lewy, author of America in Vietnam and Professor Emeritus, University of Massachusetts/Amherst, said “Stolen Valor is required reading for everyone interested in historical truth rather than lie and myth. I recommend it highly. Malcolm McConnell, author of Inside Hanoi’s Secret Archives” said, “Stolen Valor, compelling and authoritative . . . Every American searching for the true history of that long war and its continuing aftermath will find it a compelling work.” Oregon Live: “A McDonald’s drive-thru customer who suffered burns on her thigh from hot coffee she ordered is suing the restaurant, claiming the coffee was too hot and the cup’s lid too loose.” New York Times: “FOR all of the on-screen drama that led ‘Crazy Heart; to three Academy Award nominations this week, an equally poignant tale is unfolding behind the scenes of the film in a battle over the estate of the songwriter Stephen Bruton, who co-produced the ‘Crazy Heart’ soundtrack and tutored Jeff Bridges on guitar for his Oscar-nominated role as an aging country singer seeking love and redemption. The estate battle involves Mr. Bruton’s wife of 13 years, Mary Keating Bruton, a photographer and former model, and T Bone Burnett, the award-winning music producer . . . . “ Washington Post: “The D.C. Department of the Environment published new regulations . . . clarifying which retail stores have to charge the 5-cent tax on plastic bags and how the city will enforce the law. . . . But the law has resulted in widespread confusion about which stores have to charge for bags. The proposed regulations . . .state that the tax will apply to bakeries, delicatessens, grocery stores, convenience stores that sell food, restaurants, street vendors that sell food, liquor stores and ‘any business that sells food items.’ The tax will also apply to stores that sell both food and non-food items, such as many pharmacies, regardless of whether a customer buys food.” See also the Tax Foundation report “D.C. Charge on Plastic Bags is a Tax, Not a Fee.” Seattle, Washington, considered a bag tax, but it never became law. See the Tax Foundation reports, “Proposed Seattle Bag Tax Criticized,” and “No Bag Tax in Seattle.” For more on plastic bag taxes, see “Bootleggers, Baptists, and Ireland’s Bag Tax.” Arizona Republic: “Carrying signs that read ‘Will Flash for Cash’ and ‘Cops Not Cameras,’ several dozen people rallied this afternoon [February 6, 2010] to protest photo enforcement methods. Leaders of Arizona Citizens Against Photo Radar, an organization that is gathering signatures for a ballot initiative to ban use of such traffic monitoring devices, held a press conference and then march outside the office of Reflex Traffic Systems in far north Phoenix. The company has a contract with the state to operate photo enforcement operations.” Arizona Republic: “Former nutritionist Jon Basso [owns the] . . . Heart Attack Grill. The grill is a medical-themed restaurant in Chandler that serves high-calorie foods and no diet drinks. . . . Brasso has become embroiled in a federal lawsuit with the Heart Stoppers Sports Grill on Interstate 95 I-95 in Delray Beach, Fla., over bragging rights to unhealthy food. Basso claims exclusive rights to, among other things, the federally registered trademark, ‘A Taste Worth Dying For.’ The Florida grill advertises ‘Desserts to Die For’.” Phoenix Business Journal: “Stereo headphone maker Koss Corp. settled a trademark infringement lawsuit against a Mesa [Arizona] company [called Zounds, Inc.] that used the Koss slogan ‘Hearing is Believing”.” A video from The Heritage Foundation called “The Death Tax Burden on American Business.” See also “Death Tax: Time to Kill It Forever.” I benefit from the death tax because I am an estate planning attorney who charges $3,500 to prepare an estate plan with a trust that will maximize federal estate tax savings on the deaths of a husband and wife, but I favor repealing the death tax. I think it is immoral to tax people all of their lives as they earn income and accumulate wealth and then tax the accumulated wealth a second time on death. Another Heritage Foundation video on the same topic. Heritage Foundation video number three on the death tax. Heritage Foundation video number four on the death tax. The IRS released IR-2010-80, The Truth about Frivolous Tax Arguments, which debunks the most common frivolous arguments made by taxpayers who believe there is no federal income tax law, the earth is flat and Elvis is alive. The IRS says:
Here are some of the frivolous arguments the IRS rebuts in IR-2010-80:
The Digital Media Lawyer Blog: “While some courts are willing to enforce click-wrap or browse-wrap agreements that a consumer may have never read, a Federal judge in the Southern District of Florida drew the line at enforcing an agreement that a consumer never received. The case is Williams v. MetroPCS Wireless, Inc., S.D. Fla, No. 1:09-cv-22890, Order (Jan. 5, 2010), a proposed class action against a pre-paid wireless phone carrier. The complaint alleged that MetroPCS marketed itself as a provider of unlimited nationwide coverage, but that in reality, its coverage reached less than half of the U.S. population and excluded 11 of the top 25 metropolitan areas. The complaint further alleged that MetroPCS offered flat rate plans in which customers were to pay by the month, not the minute, and were not required to sign a contract. However, lead plaintiff Marcia Williams claimed that after purchasing an unlimited $45/month plan, she was charged $225 for one month’s service. The complaint sought equitable and declaratory relied, damages, attorneys’ fees and a trial by jury.” postcrescent.com: “A woman who attempted to extort money from an upscale restaurant by putting a rat in her lunch entered no-contest pleas Tuesday to two criminal charges. Judge Dee Dyer found Debbie R. Miller, 43, guilty after she entered the pleas to a felony extortion charge and a misdemeanor for obstructing police. She will be sentenced March 8 in Outagamie County Court. Miller planted a rat in her lunch at The Seasons on April 17, 2008, and then demanded $500,000 from the owners. She threatened to alert the media if the money wasn’t paid.” Arizona Republic: “A Sanskrit word meaning ‘gracious gift’ or ‘clarity’ has resulted in anything but for two Surprise business entities. A doctor who recently opened his first practice, Prasada Pediatrics, is involved in a trademark-infringement dispute with Westcor, the developer of the master-planned community of Prasada. Dr. Brian Lawrence Young, whose wife’s mother is Buddhist, said he chose the name for its Sanskrit meanings. ‘We live in Surprise, so we know that there’s a significant need for pediatrics in Surprise,’ said Young, who moved to the Valley from New Jersey in 2005.” Is this a case of the big company with a deep pocket using its ability to spend money on legal fees intimidating the little guy? Consider what Harvard University’s Berkman Center for Internet & Society says about the topice “What Constitutes Trademark Infringement:
A search of the U.S. Patent & Trademark Office’s database shows that an Arizona limited liability company called Westcor/Surprise, LLC, has obtained two federally registered trademarks. They are:
I highlighted the classes for Westcor/Surprise’s two registered marks because its trademark/service mark rights extend to these areas. The registrations are for International Class 36 (real estate affairs) and 37 (building construction; repair; installation services). Note that Westcor/Surprise did not register Prasada in International Class 44, which is for medical services. Hmm! Could it be that Westcor/Surprise did not register its trademark for Prasada in IC 44 because it’s use of Prasada does not involve medical services? Westcor/Surprise has not sought to register a federal trademark for Prasada as a medical practice or doctors’ office, which is nothing like shopping center services or real estate development. Do you think there is a likelihood of confusion between a doctor’s medical practice called “Prasada Pediatrics” and a huge shopping mall and master-plannded community many miles away called “Prasada”? Do you think anybody would go to Prasada Pediatrics because they intended to shop at the Prasada Pediatrics mall? I’m having a hard time finding a likelihood of confusion unless perhaps it is Westcor/Surprise, LLC, that is confused because it cannot tell the difference between a shopping mall and a children’s doctor’s office.
Arizona Republic: “The Arizona Supreme Court’s recent ruling in the CityNorth case has reignited debate in Scottsdale over whether public subsidies and tax incentives truly benefit the community. Some say the more than $220 million the city has committed in subsidies has only wasted taxpayer money by lining the pockets of developers. Others argue that the incentives have proven to be money-making investments, contributing to downtown revitalization and economic growth. Since 1987, Scottsdale has granted roughly $150 million in tax incentives to spur new retail, promote redevelopment, attract new jobs and encourage historic preservation. In return, the city has received new roads, water lines, parking structures and more than $165 million in new revenue to date with millions more expected in the future.” More from the we are doomed department. The other day the Department of Justice placed an ad seeking 10 trial lawyers who are mentally retarded. See “U.S. Department of Justice Seeks to Hire Mentally Retarded Trial Lawyers for Voting Division.” Maybe the DOJ could loan one of its new retarded trial lawyers to the United States Patent & Trademark Office to teach USPTO personnel how to turn an upside down piece of paper right side up. The article below explains that the USPTO actually rejects faxes that are received upside down. Question: Once the fax is removed from the fax machine, how does the USPTO person know that the fax was upside down when received? Answer: The USPTO holds the document in front of his or her face and if the top is on the bottom then the fax must have come in upside down and must be rejected! Possible Solution: Turn the fax machine upside down as it is receiving the upside down fax then the fax will be received right side up. I understand this solution was proposed by a USPTO clerk who unlike 99% of the staff had once worked in the private sector in a for profit business. She had a vague memory of how the “little people outside government” dealt with upside down faxes. Management rejected this solution because federal regulations required that they ask for a request for proposals after first funding a study by an outside consulting firm hired to investigate various environmentally safe solutions to the problem. USPTO management realized that as a result of President Obama’s massive budget freeze, the USPTO did not have the funds to pay for the study, much less pay for all the new double-sided-automatic-page-reversing green (the fax paper is recycled from used tiolet paper) state-of-the-art ethanol-powered fax machines made in China ($126,000/unit when purchased in bulk and the government always purchases these hummers in bulk to get the savings for the taxpayers) and the office space necessary to house the new machines. bnet.com: “I know, the headline seems like a joke. After all, what do you do if someone inadvertently fed a page upside down into the fax machine? You simply turn the page over or, if you get an electronic version, use the reader software to rotate it. Apparently this is not within the standard operating procedures of the U.S. Patent and Trademark Office. No, if your fax comes in upside down, they send you a message in return saying that they can’t accept it and to re-fax. Here’s a copy of the letter that a source, who regularly deals with the USPTO, passed along to me:” NY Daily News: “A 12-year-old Queens girl was hauled out of school in handcuffs for an artless offense – doodling her name on her desk in erasable marker, the Daily News has learned. Alexa Gonzalez was scribbling a few words on her desk Monday while waiting for her Spanish teacher to pass out homework at Junior High School 190 in Forest Hills, she said. “I love my friends Abby and Faith,” the girl wrote, adding the phrases “Lex was here. 2/1/10″ and a smiley face. . . . She was led out of school in cuffs and walked to the precinct across the street . . . .” See “2 Weeks After Class Action Lawsuit Filed Over Police in NYC Schools, Another Child Arrested for Desk Doodling,” which states:
The Real Estate Guy: “So you get the call from your agent that the title company has received the loan documents and needs to set up an appointment. Lucky you! If you are a first time home buyer, everyone tells you to ‘get ready to sign your life away’ or ‘man is your wrist going to tired from all that signing’ or ‘be prepared for a hour of misery’ and so on and so on. My goal with this post is to ‘dissect the loan package’, and take away as much anxiety as I can. I have over 6000 loan signings under my belt, and the average person may do 10 in a lifetime. A skilled signer should be able to get you through the package in about 30 minutes. Every lender is a bit different, but the package I will dissect below is representative of most lender document packages.” The Blog of Legal Times: “The Justice Department is appealing a jury verdict and $300,000 judgment won by a former FBI supervisor in Saudi Arabia who said the agency retaliated against him for complaining about discrimination. . . . Rattigan, a black male of Jamaican descent who converted to Islam in December 2001, said in the suit that in response to complaints about workplace discrimination, the government retaliated against him by monitoring and investigating him. The FBI investigated Rattigan to determine whether he was a security risk.” Phoenix Business Journal: “The Goldwater Institute, an Arizona watchdog group, filed documents in Maricopa County Superior Court on Friday asking that a judge force the city of Phoenix to turn over documents in connection with the rebranding of the Wyndham Phoenix into a Marriott Renaissance property. Goldwater attorney Carrie Ann Sitren said the group filed public document requests with the city Jan. 5 seeking information regarding the proposal, and now has filed suit to compel the city to produce the information.” The Huffington Post: “Had Saints fans chanted, ‘Who Are Those Who Claim They Can Defeat The Saints, Who Are Those?’ then perhaps the NFL would not have found itself in a trademark dispute last week, but instead the fans chanted, ‘Who Dat Who Say Dey Beat Dem Saints, Who Dat, Who Dat’, and there you are. The origins of Who Dat? are lost in the misty recesses of jargon, but some trace the cheer back to a Louisiana high school team. By 1983 Aaron Neville had recorded a version for the Saints, then referred to as the Aints. The Saints, by the way, got their name from the gospel song, which got the name from Catholicism.” Question: I have several investment properties in Arizona that may go into foreclosure. I am looking for an attorney who understands and believes in the “Produce the Note” defense. Can you represent me? Answer: No. The “produce the note” defense is where the borrower attempts to stop a foreclosure on real estate secured by a lien on the basis that the party foreclosing (the lender) cannot produce the original promissory note signed by the borrower(s). Some states have apparently allowed this as a defense to a foreclosure on real estate. I would not take the case for two reasons:
Issue 1: Legal Fees to Defend To defend against the foreclosure under a deed of trust on Arizona real property, the borrower must file a lawsuit in Superior Court asking the Court to stop the foreclosure and find that the lender does not have the right to foreclose because the lender cannot produce the original note. Do you have the money to pay to litigate? To take a case to trial could cost $10,000 – $50,000. Are you willing to pay that kind of money to pursue a lawsuit? If you win at the trial court level and the defendant appeals, the cost to pursue the appeal will further increase your legal fees and costs. I can’t imagine you could find a lawyer to take the case on a contingency so you would have to pay as you go. Most lawyers would require a substantial retainer ($10,000 or more) before accepting your case with assurance from you that you can pay more as the lawsuit proceeds and fees increase. I don’t know any lawyers who have experience defending a borrower who owes the money, but wants to defend on a technicality. One potential problem is the lender could drop the foreclosure and sue on the note in court, which would eliminate the protection from a deficiency judgment provided by ARS Section 33-814(G). The lawsuit to defend on the lack of a note could be the equivalent of jumping out of the frying pan into the fire if the result is the lender waives its right to foreclose on the lien and sues for a judgment on the note and gets a judgment for the full amount against the borrower. If the borrower’s goal is to pay money to buy time to stay in the home, then one option that may succeed is for the borrower to file a lawsuit demanding that the lender produce the original promissory note. However, if the borrower hires a lawyer to file the lawsuit, the legal fees could be very high. Issue 2: Adverse Case Law The Arizona Court of Appeals case Florence Melni vs. Joseph Custer, Trustee, et al., 162 Ariz. 153 (1989), sheds light on how Arizona courts may handle a claim by a borrower that the lender cannot foreclose on a lien because the lender cannot produce the original promissory note. Florence Melni went to an open house on s Sunday in the 1984 in Scottsdale, Arizona, and said she wanted the buy the home. The guy showing the home said “ok, its $500,000 meet me at Metro Home Loans tomorrow and bring a check for $75,000.” That’s what Mrs. Melni did. Florence did not have a purchase contract, open an escrow or get title insurance. The next day she gave the man the check for $75,000 and he gave her the keys to the home. Mrs. Melni moved into the home and about a year later called a realtor to list the home for sale. The realtor checked the records of the Maricopa County Recorder and found out the woman never got a deed to the home. That’s when I got involved. About that time the President of Metro Homes Loans was murdered and the State Department of Banking put MHL into receivership. There were two deeds of trust (a first for $300,000 and a second for $115,000) on Florence’s home, both signed by a “Doctor DM Conrad,” the same person who signed the held legal title to the home that was never conveyed to Florence Melni. It turns out that DM Conrad was a fictitious person created by MHL to scam people into investing in the two loans that were the first and second liens on the home. Mrs. Melni could not or did not want to pay the debt secured by the second deed of trust on the home. The lender threatened to foreclose. The parties then litigated the issue of whether the lender had a valid lien on the home. Florence Melni’s position was that neither the promissory note that evidenced the debt nor the second deed of trust that secured the debt were valid because neither document was signed by an actual person. DM Conrad did not exist. The documents were signed by somebody at Metro Home Loans, which had created this fictitious person including bogus financial statements of “Dr. Conrad.” A notary falsified the acknowledgment of DM Conrad’s signature on the deed of trust. Dr. Conrad looked great on paper, but he did not exist. You’d think that a promissory note and a deed of trust that lacked a signature would not be valid and prevent the second lender from foreclosing on the property. The Arizona Court of Appeals concluded otherwise. It said the lender had an “equitable lien” on the property that gave the lender an enforceable lien to secure payment of a debt evidenced only by a promissory note and secured by a deed of trust, neither of which were ever signed by a real person or the purported owner of the property. This Arizona appellate case could affect the out come of a lawsuit filed in Arizona by a borrower against a lender that is trying to foreclose a lien on Arizona real property if the borrower’s defense to the foreclosure is that the lender cannot produce the original note. State law will control. For example, according to Foreclosure University, the foreclosure law of Virginia says:
For some actual situations involving this issue, see “Foreclosure sales in limbo over title issue” and “Who owns your home? Lost paper trail allows borrower to keep her house.” For a ton of articles on this topic, just Google foreclosure original note. Bitter Lawyer: “As Bitter Lawyer gears up to watch the Colts take on the Saints in Sunday’s Super Bowl XLIV (that’s 44), a few things come to mind—other than how the game is as much of a Miami icon as David Caruso. What do we have—a lopsided game? Check. An endless supply of beer and salty foods? Check, check. An irrational zeal for celebrating American advertising? Check, check and check. Old Super Sunday-related lawsuits? Youbetcha. See, the Super Bowl isn’t just a football game or the biggest media event of the year. It’s also serves as the spawning ground for some super lawsuits. Let’s look at some of history’s best Super Bowl-inspired litigation.” Bloomberg: “Toyota Motor Corp., the world’s largest automaker, faces at least 29 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of cars’ value to a return of profits. The class-action suits, in U.S. state and federal courts and Canadian provinces, demand compensation for flaws including those disclosed in Toyota’s recalls over sudden acceleration of its vehicles. More than half the cases go beyond the floor mats and pedals cited by the company.” Chicago Tribune: “The Illinois Supreme Court struck down the state’s medical malpractice law today, saying it violates separation of powers by allowing lawmakers to interfere with a judge’s ability to reduce verdicts. The much-anticipated ruling, which challenged the constitutionality of damage caps for doctors and hospitals, is being watched closely by the health care industry and employers that see caps on damages as a way to tame rising health care costs.” CNN: “The legal battle over a sex tape allegedly showing former Sen. John Edwards and former mistress Rielle Hunter is expected to further unfold in a North Carolina court Friday. Former Edwards aide Andrew Young and his wife, Cheri, are expected to appear in court to contest a temporary restraining order forbidding them from disseminating the videotape and seeking its return to Hunter.” Two rednecks opine on the Edwards sex tape. Don’t watch/listen to it if you don’t want to hear dirty language. The U.S. Consumer Product Safety Commission (CPSC), aka Toy Police, announced that Schylling Associates Inc., of Rowley, Mass. agreed to pay a $200,000 civil penalty. The penalty settlement . . . resolves staff allegations that the company violated the federal lead paint ban regarding toys with surface paints containing lead that exceed the allowed amount. In 1978, a federal ban was established that prohibited toys and other children’s articles from having more than 600 ppm (by weight) in paints or surface coatings. The regulatory limit was reduced to 90 ppm on August 14, 2009, as a result of the Consumer Product Safety Improvement Act of 2008. CPSC announced the firm’s voluntary recall of the products first in August and for additional toys in November of that year. Incidents/Injuries: None.
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