The Lawletter Vol 35 No 8, May 27, 2011

Brett Turner, Senior Attorney, National Legal Research Group

In Burriss v. Burriss, 2010‑Ohio‑6116, 2010 WL 5140442 (Ct. App.), the trial court awarded $31,673 in personal property to the husband and $7,500 in personal property to the wife.  It then found that an equitable division of marital property was appropriate, so that the husband would have to pay a monetary award to the wife to equalize the division.  The court computed the amount of the equalizing award as $31,673 minus $7,500, or $24,173.

Not surprisingly, the trial court was reversed on appeal.  The proper amount of an equalizing award is not the difference between the parties' respective shares of the marital estate but, rather, half of the difference.  When the full difference is awarded, the division simply reverses the existing imbalance.  In Burriss, for example, the trial court's order left the husband with a net award of $7,500 ($31,673 minus $24,173), while the wife received a net award of $31,673 ($7,500 plus $24,173).  This is the exact reverse of the division which the trial court expressly held to be inequitable.  To equalize the division, the husband should have been ordered to pay half of the difference, or $12,086.50.

The Lawletter Vol 35 No 8, May 27, 2011

Jim Witt, Senior Attorney, National Legal Research Group

The requirements for the execution of a will or codicil are normally regarded as demanding strict compliance.  The requirements under New Jersey law are set forth in the New Jersey Statutes in a section entitled "Requirements for will; handwritten will; evidence establishing intent":

a.         Except as provided in subsection b. and in N.J.S.3B:3‑3, a will shall be:

(1)        in writing;

(2)        signed by the testator or in the testator's name by some other individual in the testator's conscious presence and at the testator's direction; and

(3)        signed by at least two individuals, each of whom signed within a reasonable time after each witnessed either the signing of the will as described in paragraph (2) or the testator's acknowledgment of that signature or acknowledgment of the will.

b.         A will that does not comply with subsection a. is valid as a writing intended as a will, whether or not witnessed, if the signature and material portions of the document are in the testator's handwriting.

c.         Intent that the document constitutes the testator's will can be established by extrinsic evidence, including for writings intended as wills, portions of the document that are not in the testator's handwriting.

N.J. Stat. Ann. § 3B:3‑2.

The Lawletter Vol 35 No 8, May 27, 2011

Tim Snider, Senior Attorney, National Legal Research Group

The United States is in approximately the fourth year of a period that has seen residential mortgage foreclosures at unprecedented levels.  Although the rate of filing of mortgage foreclosure notices has begun to decline recently, most of that decline is attributable to judicial foreclosure states such as Florida, Massachusetts, Connecticut, New York, and New Jersey, where judicial hostility to questionable procedures utilized by mortgage loan services has caused lenders to slow the process of initiating foreclosures.

An illustration of how skeptically courts view mortgage foreclosure procedures in some states is provided by In re Cruz, 446 B.R. 1, 2011 WL 285229 (Bankr. D. Mass. Jan. 26, 2011).  In that case, a Chapter 13 bankruptcy debtor brought an adversary proceeding against a residential mortgage lender for improperly proceeding with foreclosure while the debtor's application for modification of his loan under the Treasury Department's Home Affordable Modification Program ("HAMP") was pending.  The debtor asserted claims not only as an alleged third‑party beneficiary of the lender's obligations under HAMP, but also on the theory that the lender had violated its obligation of good faith and reasonable diligence under Massachusetts law.  The debtor moved for preliminary injunctive relief to prevent foreclosure from proceeding.

The Lawletter Vol 35 No 7, May 6, 2011

John Buckley, Senior Attorney, National Legal Research Group

If an employee's supervisor performs an act motivated by antimilitary animus and if that act is a proximate cause of an ultimate adverse employment action, then the employer is liable under the Uniformed Services Employment and Reemployment Rights Act ("USERRA").  So the Supreme Court recently held in a case in which a U.S. Army reservist relied on the "cat's paw" theory of liability.  Staub v. Proctor Hosp., 131 S. Ct. 1186 (2011).  A "cat's paw" case is one in which a plaintiff employee seeks to hold his or her employer liable for the discriminatory animus of a supervisor who did not make the ultimate employment decision but who nonetheless influenced that decision.  In applying a tort "proximate cause" analysis to the case, the Court reversed the Seventh Circuit's holding that a court cannot admit evidence of a nondecisionmaking supervisor's animus unless it has first determined whether a reasonable jury could find that the supervisor exerted a "singular influence" over the ultimate decisionmaker.

The Lawletter Vol 35 No 7, May 6, 2011

Fred Shackelford, Senior Attorney, National Legal Research Group

Can an insurer rescind a life insurance policy after the period of incontestability has expired?  In Sun Life Assur. Co. of Can. v. Berck, Civ. No. 09‑498‑SLR, 2011 WL 922289 (D. Del. Mar. 16, 2011), a 77-year-old man obtained a life insurance policy and transferred it to investors in the secondary life insurance market.  After the two-year incontestability period had expired, the insurer sought a declaratory judgment that the policy was void as a wagering contract, or stranger-oriented life insurance ("STOLI") policy.  In a STOLI arrangement, speculators collaborate with an individual to obtain life insurance and then sell some or all of the death benefit to stranger investors.  The Berck court noted that an insured must have an insurable interest and that this requirement discourages the use of insurance as a wagering contract.  A wagering contract gives the policyholder "a sinister counter interest in having the life come to an end."  Id. at *5.  The court ruled that expiration of the incontestability period does not preclude rescission of a life policy for which the policyholder lacked an insurable interest at the time the policy was procured, particularly when the incontestability clause was subject to a fraud proviso.  The court noted that no clear consensus exists as to what constitutes a lack of insurable interest at the time of procurement.  However, the court suggested that no insurable interest exists if a scheme to transfer the policy to an identifiable stranger is in place prior to submitting the application for insurance.  Id. at *7.  The court denied the defendants' motion to dismiss, allowing the insurer to conduct discovery in an effort to identify a specific party that was involved in the scheme from the outset.

The Lawletter Vol 35 No 7, May 6, 2011

Matthew McDavitt, Senior Attorney, National Legal Research Group

In the realm of interstate motor carrier law, federal law mandates that any policy of insurance covering the motor carrier contain a special surety endorsement to assure that in the event of damage or loss, a judgment obtained by the injured party against a negligent motor carrier will be paid.  Under the Federal Motor Carrier Act ("FMCA") and its implementing regulations, insurers of interstate motor carriers must pay unpaid judgments of plaintiffs who prevail against motor carrier insureds, up to the policy limits so long as federal minimum coverage is met, in the event that (1) the carrier's insurance denies coverage (e.g., through exclusions, use of nonscheduled vehicles, insured noncooperation, breached policy terms, and the like), and (2) no other insurance will cover the loss.

The most common endorsement used to comply with the FMCA mandate is the so-called MCS-90 form, with the "MCS" standing for "Motor Carrier Safety."  This form may be found at 49 C.F.R. § 387.15.  The MCS-90 endorsement comes into play only regarding acts of negligence by permissive users of the motor carrier; intentional acts are not covered.  Even if a nonscheduled vehicle was employed by the carrier during the actionable loss, the MCS-90 surety clause will pay the claim; the plain language of the MCS-90 form itself compels this reading:

The Lawletter Vol 35 No 7, May 6, 2011

Scott Meacham, Senior Attorney, National Legal Research Group

More than just giving someone permission to use your land, the granting of an easement is the separation of at least one of the sticks in the bundle that represents the ownership of the underlying real property.  This distinction between use and ownership came to the fore in a recent criminal case before the Court of Appeals of Washington, State v. Newcomb, 246 P.3d 1286 (Wash. Ct. App. 2011).

Newcomb started out as a typical dispute between neighboring landowners.  The landlocked dominant estate owned a conventional access easement across the servient estate.  The dominant estate owners used a long driveway across the neighboring land to reach the public road.  The adult son of the servient estate owner, defendant Scott Newcomb, evidently disputed his neighbors' rights, however.  He felled a tree across the driveway that crossed his mother's land, and he threatened to harm the neighbors if they tried to improve the road.  Newcomb's behavior led to a civil suit, and the dominant estate owners won an injunction in 2004.

The Lawletter Vol 35 No 7, May 6, 2011

Doug Plank, Senior Attorney, National Legal Research Group 

April 26, 2011

Jeremy Taylor, Senior Attorney, National Legal Research Group

A recent decision by a U.S. District Court in Pennsylvania combined, in an interesting way, the issues of removal of a case to federal court and of the potential responsibility under a products liability theory of the publisher of an "education monograph" containing warnings about a prescription drug.  See Slater v. Hoffman-La Roche, Inc., Civ. Action No. 10-6956, 2011 WL 1087240, at *1 (E.D. Pa. Mar. 24, 2011).  The plaintiff sued the manufacturer of the acne drug Accutane, alleging that the drug had caused him to develop colitis and ulcerative colitis.  The plaintiff also sued the publisher of a monograph explaining the dangers of Accutane.  The plaintiff was a resident of Wisconsin, the drug manufacturer was a resident of New Jersey, and the publisher of the educational monograph was a Delaware corporation with its principal place of business in Pennsylvania.  Following the plaintiff's filing in Pennsylvania state court, the defendants removed the action to the federal district court.  The plaintiff moved to remand the case to the state court.  The court noted that unless the publisher had been fraudulently joined, the claims against it had to be remanded, in light of the rule that removal to federal court is permissible only if none of the parties in interest properly joined and served as defendants is a citizen of the state in which the action has been brought.  See 28 U.S.C. § 1441(b).

April 22, 2011

Alistair Edwards, Senior Attorney, National Legal Research Group

In 2008, Congress passed the Home Affordable Modification Program ("HAMP"), created under the Emergency Economic Stabilization Act of 2008 ("EESA"), 12 U.S.C. §§ 5201-5261.  To participate in HAMP, companies that service mortgages not owned by a government-sponsored enterprise enter into a contract with Fannie Mae ("HAMP Contract").  HAMP's purpose is to provide eligible homeowners with permanent loan modifications to avoid foreclosures.  In a typical HAMP Contract, the company agrees to review all eligible borrowers who apply for a loan modification under HAMP and to provide permanent loan modifications to eligible borrowers who meet the HAMP criteria.

Recently, the U.S. District Court for the Southern District of Florida held that no private right of action exists under HAMP.  In Ozoria v. Deutsche Bank Trust Co. Ams., No. 10-24070-Civ, 2011 WL 1303270 (S.D. Fla. Mar. 31, 2011) (available on Westlaw only), the plaintiffs sued GMAC Mortgage, LLC ("GMACM"), their mortgage loan servicer, after they had twice applied for a permanent mortgage modification but GMACM had denied their applications both times.  The plaintiffs, claiming to be third-party beneficiaries of the HAMP Contract, alleged that GMACM had breached the Contract when it wrongfully denied their applications for permanent HAMP mortgage loan modification and that it had breached the covenant of good faith and fair dealing when it denied their applications.  In dismissing the plaintiffs' breach-of-contract claims (or third-party beneficiary claims) against GMACM, the court emphasized that there is no private right of action under HAMP.  The court, pointing out that other courts have held likewise, commented:

Defendants argue that Plaintiffs' Complaint should be dismissed because it only concerns breaches of the HAMP Contract, and HAMP does not provide a private cause of action. Indeed, the courts that have been presented with similar cases have held that HAMP does not confer a private right of action. See, e.g., Nelson v. Bank ofAmerica, N.A., No. 10-00929, 2011 WL 545817, at *1 (M.D.Fla. Feb. 8, 2011); Zoher v. Chase Home Financing, No. 10-14135, 2010 WL 4064798, at *3 (S.D.Fla. Oct.15, 2010) (collecting cases). Neither the HAMP Guidelines nor the EESA expressly provide for a private right of action. Instead, Congress provided that Freddie Mac serve as the compliance officer for HAMP. See U.S. Dep't of Treasury, Supp'l Directive 2009-08, at 4 (Nov. 3, 2009). As the compliance officer, Freddie Mac must conduct "independent compliance assessments," including an "evaluation of borrower eligibility." Supp'l Directive 2009-01, at 25-26. By delegating sole compliance authority to Freddie Mac, and staying silent as to a right of action in district courts, Congress intended that a private right of action was not permitted. Cf. Thompson v. Thompson, 484 U.S. 174, 180, 108 S.Ct. 513, 98 L.Ed.2d 512 (1988) ("The intent of Congress remains the ultimate issue, however, and unless this congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.").