I have a few business clients who are out of state corporations. They have never set foot in Grand Rapids, Michigan.

However, thanks to technology so much of business can now be done virtually.

There isn’t much that can’t be done with a computer, internet and phone.

The same can obviously be said with your business and businesses in every industry.

But the ease of communication with clients in other states comes with a few pitfalls, including complying with other state and federal laws.

However, one such pitfall that was once again brought to my attention is as follows:

What happens in the event of a dispute with an out of state business relationship?

a recent ABA Journal article illustrates the potential pitfalls of doing business “virtually”. You can see the article here

An Arizona Supreme Court ruled on Friday that Arizona residents could sue an out-of-state law firm that offered them legal tax shelter advice.

“I have never met the clients, so I can’t be sued in their state- right?”

The Law firm argued that it could not be sued in Arizona, since it did not have “sufficient purposeful conduct” in Arizona to be brought into the Arizona courts.

Essentially, the firm argued – we did all the legal research in Connecticut, the legal opinion we drafted was done in Connecticut, if the former clients have a dispute with our firm, they should bring it in Connecticut.

The trial court agreed. It found that the Arizona courts did not have “personal jurisdiction” over the law firm.

The Court of Appeals overturned that ruling, and indicated the out of state law firm could be sued in Arizona.

Personal Jurisdiction – Can A Court Require an out of state defendant to show up?

Take Away:

Without such contract language, you are leaving it up to a court to decide whether or not you have sufficient contacts with the state for you to be sued in that state. And in many instances, if you have a dispute with your out of state business relationship, you are likely forced with considering suing them in their home state, as opposed to yours. This obviously comes with inherent costs and inconveniences.

Questions? Comments?

Email me: Jeshua@dwlawpc.com

Visit David & Wierenga, P.C.

As always, nothing contained in my post constitutes legal advice. You should  consult with legal counsel to discuss any issue concerning contract law.

A couple of Michigan real estate law updates:

But first, a Pennsylvania proposed law would ban municipalities from penalizing tenants or their landlords when residents make legitimate 911 calls. See the ABAJournal for more details.

Apparently this law is in response to a local ordinance that authorized police to force tenants out of their apartments after three instances of disorderly behavior within four months.

Such a law gives tenants who might be the victims of domestic violence, unneeded concern about being evicted if they call the police in response to violence against them in their apartment.

This is an unfortunate example of how statutes with generally good intent can have awful and unintended consequences.

In Michigan news,

Landlords can remove Squatters

I posted an article about a new proposed law that would allow landlords to forcibly remove tenants who were simply squatters. This law would essentially make an exemption to the law that prohibits a landlord’s interference with a tenant’s possessory right in certain limited circumstances.

The Judiciary committee on January 15, recommended this bill be given immediate effect.

This bill is moving forward with, apparently an amendment made to specify that the law would not allow the landlord to “commit an assault” on a tenant. Assault is still a crime under this bill. The latest Legislative Analysis mentions this point.

Real Estate Brokers and Salespersons – Revisions

it looks like the State Senate took another steps towards amending the Real Estate Brokers and Salespersons Act under the Occupation Code.

You can check out a summary of the revisions by going to the Legislative Analysis that was just prepared by the House Fiscal Agency on January 13th.

From my cursory review, it simply looks like the Act is being updated and LARA is making it easier for Brokers and Salespersons to maintain their proper licensing through the State of Michigan (a good thing, I would think).

Questions? Comments?

Email me: Jeshua@dwlawpc.com

http://www.dwlawpc.com

I recently posted a guest blog article on Grand Rapids Area Professionals For Excellence about contract pitfalls that small business owners can run into.

You can check it out by clicking here

I’d be happy to hear – have you ever found yourself signing a contract without reading it, and then later having a problem? What did you do about it?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

I had a client talk with me about a real estate matter he had been dealing with.

He entered into a purchase agreement to sell some real estate he owned. The buyer couldn’t  obtain financing within the time

period spelled out in the purchase agreement, and so, my client decided not to give him any more – he didn’t agree to an extension.

This made the buyer angry.

So angry, in fact, he threatened to sue my client (thus, what prompted my client’s phone call to me).

My client asked me, “what if I get a new buyer and this guy tries to hold up the sale by recording his contract with the Register of Deeds? (which the guy threatened to do unless my client sells him the Property).

I introduced my client to the legal claim of “Slander of Title”

Slander of Title

Broken down, the elements that make up slander of title are:

• Malice,
• False statements
• disparage your rights in property; and
• cause special damages. (typically include costs of a lawsuit)

Slander of title is a common cause of action filed in response to a contractor who threatens to put a lien on property for non-payment.  However, in order to succeed on a claim of slander of title all elements must be proven, including “malice” – which asks the question – did the contractor record a lien on the property simply to force payment, even though he knew he wasn’t legally entitled to it?

Going back to my client’s case, if the buyer threatens to file a void purchase agreement on the property to hold up any future sale, simply because he was angry that my client did not grant him an amendment to his purchase agreement, he could have a claim for slander of title.

Questions? Comments?

Email:  Jeshua@dwlawpc.com

http://www.dwlawpc.com

Disclaimer – nothing in any of my posts should be taken to constitute legal advice. With any legal questions please seek the advice of legal counsel.

I recently found myself in an all day mediation.

I was sitting in a conference room for 8 hours straight.

Next to me was seated my client, across the table from me was seated my client’s brother and his lawyers.

The years of animosity between the siblings was obviously apparent to all in the room.

The thought crossed my mind – will this case ever get resolved?

Facts:

Father, business owner passed away at an old age, leaving his business in disarray, multiple parcels of real estate, and several bank and investment accounts.

Father also left six kids who did not get along with each other.

A recipe for disaster.

brother was named personal representative in dad’s will. Brother took control of dad’s estate, and did not keep his siblings apprised of his actions. He provided no accounting of his actions, receipts or disbursements, including the tens of thousands of dollars he paid himself for his time.

He basically failed all of his duties as a fiduciary.

At least one of his siblings did not appreciate brother’s actions.

I filed suit on behalf of one of brother’s siblings,  and raised counts of breach of fiduciary duty and action for surcharge against the brother.

Law: Breach of fiduciary duty

Brother did not realize that when he accepted his role as personal representative he was taking on certain responsibilities as a fiduciary to act in the best interest of the other beneficiaries.

A breach of a fiduciary obligation occurs when a position of influence has been acquired and abused, when confidence has been reposed and betrayed. Smith v Saginaw Savings & Loan Association, 94 Mich App 263, 274, 288 NW2d 613 (Mich Ct App 1979).

As a fiduciary, brother owed certain duties to his siblings based in common law and Michigan statute. Those duties include

Michigan Compiled Laws 700.3703,

• “to settle and distribute decedent’s estate in accordance with the terms of a probated and effective will and this act” and

• to provide “annually, and upon completion of the estate settlement, account to each beneficiary by supplying a statement of the activities of the estate and of the personal representative, specifying all receipts and disbursements and identifying property belonging to the estate.”

A personal representative, is bound by the fiduciary duties of

honesty,

loyalty,

good faith, and

restraint from self-interest.  In re Green Charitable Trust, 172 Mich App, 298 (1988).

A personal representative  is required to “act as what a prudent person dealing with the property of another, including following the standards of the Michigan prudent investor rule.”  To be prudent means to act with care, diligence, integrity, fidelity, and sound business judgment.  In re Messer Trust, 457 Mich, 371, 380 (1998).

Damages may be obtained for a breach of fiduciary duty when a position of influence has been acquired and abused or when confidence has reposed and betrayed.  In re Duane v Baldwin Trust, 274 Mich App 387, 398 (2007).

Surcharge

Under action to surcharge, MCL 700.7306(2) provides that a fiduciary is personally liable for an obligation arising from ownership or control of the estate property or for a tort committed in the course of administration of the estate,  if the fiduciary is personally at fault.

This would require the fiduciary, brother, if found liable, to pay back to the estate any funds that he wrongfully took.

This is a good plug for using professional fiduciaries like Legacy Trust Chemical Bank Macatawa Bank Ameriprise or Edward Jones

Resolving Estate Lawsuits: The Role of Mediation

One thing was quite apparent when we began the process of mediation: whether or not the case got resolved the siblings were not going to reconcile that day.

But the mediator did his job: he showed both sides that they  had much more to gain by resolving the case that day, as opposed to continuing with the dispute and going through trial.

The truth is that despite all of the real and intense emotions that both parties felt (which is quite typical in estate/trust litigation scenarios), it was much more worthwhile to come to a resolution that day and move on with the rest of their lives.

It took 8 hours though to get us there.

Questions? Comments?

jeshua@dwlawpc.com

http://www.dwlawpc.com

Happy New Years Eve!

The Department of Justice announced today that a Real Estate Investor pleaded guilty to 11 counts of fraud related to bid rigging at public real estate foreclosure auctions.

You can see the press release here

The Crime

According to the press release,

A private investor, Joachim, conspired with others not to bid against one another at foreclose auctions and to instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Joaquin County.

Joachim was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected San Joaquin County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have otherwise gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy

The Effect

According to the DOJ: the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Joaquin County public foreclosure auctions at non-competitive prices.

The result is that funds that should have gone to pay off  lien holders, and homeowners is diverted to the private investors involved in the bid rigging.

The Penalty

Joachim pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine.

Joachim also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

The Task Force

The investigation was conducted by the President’s Financial Fraud Enforcement Task Force.  According to the DOJ, “The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.”

Question:

What type of bid rigging (if any) do you believe is going on in your state? In Michigan, for instance, where there has been record numbers of foreclosed properties since 2008, there has been a market for flipping and rehabbing residential real estate. This has also created opportunities for scam artists, including loan modification companies, and other individuals looking to purchase owners remainder interests in their home with the promise of allowing them to “buy back” their home after passing them the deed. These are just a few examples.

Feel free to email me with any questions or comments:

Jeshua@dwlawpc.com

http://www.dwlawpc.com

The latest  news from the Office of Comptroller of Currency (OCC)…

If you aren’t familiar with the OCC, check out the website

Pursuant to the OCC’s mission statement on its website, “The OCC’s primary mission is to charter, regulate, and supervise all national banks and federal savings associations.” [The OCC’s] goal in supervising banks and federal savings associations is to ensure that they operate in a safe and sound manner and in compliance with laws requiring fair treatment of their customers and fair access to credit and financial products.”

On December 19, 2013, the OCC penalized American Express Bank for Unfair Billing and Deceptive Marketing Practices, and further ordered restitution to bank customers.

According to the Stipulation and Consent entered into by American Express Bank:

“From October 2009 to July 2012, the Bank, through its vendors, billed customers of identity protection products who were not receiving public records monitoring, credit monitoring, and/or credit report retrieval services for the full fee of the product, even though those customers were not receiving all of the benefits of the product.”

“By reason of the foregoing billing practices for its identity protection products as described in Paragraphs (1) to (3) of this Article, the Bank engaged in unfair practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a)(1).”

As a result, American Express Bank agreed to a civil penalty in the amount of $3 million.

According to the OCC, “The $3 million civil money penalty reflects a number of factors, including the scope and duration of the violations and financial harm to consumers from the unfair and deceptive practices.  The penalty will be paid to the U.S. Treasury.”

The Consent Order contains a detailed action plan for the bank to comply with, including how it plans on providing restitution to bank customers.

Quite a lengthy process.

Questions? Comments? I’d like to hear.

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

I was in Circuit Court this morning in Ottawa County, Michigan. I was there to make legal arguments in a real estate lawsuit.

During the hearing, I found myself engrossed in making notes, mentally responding to the legal arguments that were being made by opposing counsel, and at the end of his oral argument the Judge asked us to recess for a few minutes to take a “plea on the record” related to a criminal case.

Coming up to the podium standing next to where I was seated in the courtroom was a man who was entering a plea to a crime that he was charged with.

(For those of you who aren’t familiar with Michigan Courts, Circuit Courts are the courts where all felony – serious crimes –  are tried. So, initially, I know the guy must have been charged with something pretty serious)
The prosecutor read the charge that the man was pleading to – Felony Assault/Child Endangerment.

How awful.

The man then explains the facts of what he did – it involved shaking his 3 month old child on several occasions.

Heart-breaking.

The man will spend significant time in prison for this offense.

After the plea was entered, the Judge looked at me and asked me if I was ready to proceed with my oral argument about my real estate lawsuit.

The Judge gave me this look, that I read as: “I don’t know how anybody could be ready after listening to such an awful story, but please go ahead counsel!”

In all honesty, I was overwhelmed with concern for that 3 month old boy and his family. My prayers go out to them in this Christmas season.

Regardless, I proceeded with my oral argument and advocated for justice for my client in his real estate matter.

However, it only took me a moment to listen to the plea that was being entered from the man standing right next to me in the courtroom to alter my perspective.

It reminded me that there is great injustice going on in this world.

There are families and individuals that are truly hurting this holiday season.

There people who have lost loved ones, who are victims of injustice.

It reminds me that often I need to look outside of what is affecting my normal work day, and look around at this hurting world that needs help.

It is then that I thank God for all the great ministries in West Michigan and across the world that support people in need, like Mel Trotter Ministries, Kalamazoo Gospel Mission, Volunteers in Service, Westwood Christian Services, Goodwill Industries of Greater Grand Rapids, World Vision, Compassion International, and many, many more.

I hope you will join me in this Christmas season and send out gifts and prayers for all those victims of injustice in our world.

God bless you all.

Questions? Comments?

email me: Jeshua@dwlawpc.com

http://www.dwlawpc.com

So I received a nice check in the mail a few weeks back addressed to my law firm for approximately $1 Million.

It was related to a “request” from a foreign company (very far away, too far away to meet in person) to retain me as counsel in a business transaction in Michigan.

They wanted me to deposit the approx. $1 million check into our firm trust account, then disburse the check to the other party (less my legal fees, of course)

My first thought when the check came in…

do they really think I am that stupid?

I know better.

Then it got me thinking, if I know better, then why do these scam artists really think I am going to fall for their  ploys?

Honestly, I receive countless of similar emails, fortunately, most of these emails get sent to my spam folder.

The answer becomes obvious when I peruse the headlines of the American Bar Associations Latest Stories:

“Estate planning lawyer gets 6 years in $46 million scheme preying on terminally ill”

How awful is this headline? It breaks my heart just reading it.

http://www.abajournal.com/news/article/lawyer_gets_six_years_in_46_million_scheme_on_the_terminally_ill/?utm_source=maestro&utm_medium=email&utm_campaign=daily_email

“Unwitting lawyer is suspended for arranging client loans to secure Nigerian inheritance”

Well, there is, literally, my answer to my own question.

http://www.abajournal.com/news/article/unwitting_lawyer_is_suspended_for_arranging_client_payments_for_nigerian

What is going on with our world?

As hard as it is for me to believe, these are real stories.

To answer my own question, the reason scam artists direct schemes at lawyers is because some lawyers fall for the schemes!

These con artists are relying on dollar signs trumping common sense and sound judgment in lawyers.

Don’t hear me wrong…

The vast majority of the lawyers I work with and know are men and women of integrity. They, like me, strive to make good choices every day and seek the best interest  of their clients and their community.

However…

It only takes a few individuals to headline the ABA Journal to tarnish our profession.

I take these headlines, and the fact that I continually get spammed, as a further encouragement to continue to run this race and live my life (personally and professionally) with integrity.

Questions? Comments? 

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

These past few weeks I have been inundated with depositions in several real estate lawsuits.

Whenever I prepare my clients for depositions I always emphasize the overarching rule when being deposed:

tell the truth.

There can be serious consequences for giving false statements under oath.

Under Michigan Law, MCL § 750.423 perjury is a felony.

A felony is a serious deal!

Apparently A former chief of the real estate investment and capitalization practice at Troutman Sanders took lightly to the oath to tell the truth he gave while testifying at a deposition.

The ABA Journal reports the story here:

http://www.abajournal.com/news/article/formger_practice_group_chair_at_well-known_firm_takes_plea_in_perjury_case/?utm_source=maestro&utm_medium=email&utm_campaign=daily_email

The testimony concerned a complex real estate litigation involving a real estate mogul Ruby Schron, and a $1.3 billion leverage buyout in 2004 of nursing home operator Mariner Health Services, the article explains.

In a statement made before a court on Wednesday, the former chief of real estate stated : “On January 25, 2011 I testified at a deposition in the civil matters at a law office in Manhattan. Prior to giving my testimony, I affirmed before a notary public that I would testify truthfully. During the deposition, however, I intentionally made a false statement that I did not believe to be true” . “I testified at that deposition that, in the summer of 2009, I told [an associate] that the $100 million loan had not been funded, a relevant fact, when in truth I did not have that conversation.

The District Attorney’s Office for Manhattan provided more details: http://www.manhattanda.org/press-release/da-vance-former-attorney-and-law-firm-partner-convicted-perjury-false-testimony-during

This former chief of real estate practice (and also a former attorney) received a misdemeanor conviction, fine, and 150 hours of community service.

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com