One Car. Two Sisters. Both Arrested for DWI. Wait, what?!

Two sisters in Florida were recently arrested for DWI. At the same time. While driving the same car. Yes, you read that correctly. So, how did these sisters manage to pull this off? Well, the youngest one – 18 years old – was allegedly zig-zagging down a highway, which attracted the attention of a local police officer. When the officer pulled up behind the vehicle, he turned on his lights and siren. Abruptly, the vehicle stopped in the middle of the road. Then, the sisters changed seats by hopping over one another inside the vehicle. Needless to say, the officer had no trouble noticing the switcheroo occurred. The consequence is that the older sister – 24 years old – was now behind the wheel. And even though she didn’t drive the vehicle anywhere, she was in control of the vehicle while under the influence of alcohol. Thus, both sisters were arrested and charged with DWIs – coincidentally enough, they both blew .12.

The key fact leading to the arrest and charge of the older sister is that she was in physical control of the vehicle. In Minnesota, physical control is defined as:

Being in a position to exercise dominion or control over the vehicle. Thus, a person is in physical control of a vehicle if he has the means to initiate any movement of that vehicle and he is in close proximity to the operating controls of the vehicle, and this is true whether the vehicle can be driven on the highway at that point or not.

Minnesota courts have extended this definition to include vehicles that are parked and even when a person is outside the vehicle. In these extenuating circumstances, courts will look to the surrounding facts to determine whether the defendant was in physical control, such as whether the keys are in the ignition, whether the car is running, and if other individuals are in or outside the vehicle.

As in previous years, you can expect local law officials will be doing DWI patrol this Fourth of July weekend. So, if part of your celebration over this holiday weekend involves enjoying a few adult beverages, keep in mind that the switcheroo does not work! Have a safe, enjoyable, and responsible Fourth of July!

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This blog entry is written by James Gempeler, an associate at Thomsen Nybeck. James practices in the litigation area of the firm with a focus on criminal defense, general civil litigation, construction litigation, and is a prosecutor for the Metropolitan Airports Commission.

Business owners – review your year now

Making an annual review or “check-up” part of your corporate routine

Now is the time, as the calendar year comes to a close, to have a business “check-up”.  This is particularly important in small to mid-size businesses, as they do not always have routines and practices where such check ups are automatic.  Large corporations have the benefit of deeply-entrenched and well established corporate policies, routine practices, and risk management procedures.  For many publicly-held companies and those with enough employees to have “mid-level-managers”, the corporate books and risk management oversight are often being tended to by specific employees within the company, in addition to outside advisors.

However, over my years of assisting clients with formation, organization and ongoing operation of small to mid-size businesses, I’ve realized that small business owners often tend to the fires that are burning, rather than the sparks that may ignite a fire.  Small businesses are often so focused on the details of day-to-day business, that it’s easy to overlook the big picture.  They may not see a problem arising until the fire has grown to a size that it cannot be easily contained.

Nearly every individual knows that an annual check up with a doctor and dentist is prudent.  Most small business owners probably know that a regular check-up with their accountant and their attorney may also be prudent, yet they aren’t always as diligent about getting it on the calendar.  Outside of those businesses who use an accountant for tax preparation or ongoing advising, many business owners fail to check in with an attorney or accountant regularly.  As a result, sometimes they miss the “spark” that may ignite the fire of a problem within their organization.  Far too often, it takes a lawsuit, shareholder dispute, breach of contract, or other controversy for a business to look at its internal records, contracts, and policies, only to find obvious deficiencies once it’s too late to correct them.

What kind of “check-up” should you do?

Rely on your accountant and attorney to help you identify what you may want to review in an annual or more regular check up.  Small to mid-size businesses may find that key issues to review include (but are not limited to) the following:

• Maintain good standing.  Verify that your entity is in good standing with the Secretary of State, and that it is authorized to do business in other states in which it transacts business
• Contract review.  Review contracts and vendor agreements to ensure the entity is meeting its obligations to others, and that others are meeting their obligations to your entity
• Lease and real estate status review.  Verify that any leases your company has entered do not expire or renew within the next year.  To the extent they do, identify an action plan for how those will be renewed, amended or what the company intends to do when they expire.
• Corporate record updating.  Review your “major actions” taken during the last year.  Did you hire employees, lease new space, take on new members/owners or take other action that should be properly documented by a written action or resolutions?   If so, your attorney can help you address these changes appropriately in your company records.
• Employment and personnel matters.  Does your company have employees or independent contractors?  If so, do you know how recently you have updated your employment agreement, policy manuals, and independent contractor agreements?  If you can’t remember when they were last updated, it’s probably been too long.
• Risk management review.  Does your company anticipate litigation or have any unresolved or outstanding issues which may be better handled proactively than re-actively?  It’s easy for companies to wait until the last possible moment to address potential controversies, when in fact that is sometimes the least successful approach.

Ultimately, businesses of all sizes should be proactive in their use of legal counsel just as individuals should be proactive in their use of doctors.  Diagnosis and prevention of problems can often be infinitely less expensive, less disruptive, and less challenging than “treating” a problem.  Allocating the time and relatively small expense of regular check-ups can be invaluable when it comes to risk reduction and  cost savings when compared against the clean-up required if a company runs on auto-pilot until a problem arises.

Consider the month of December as an opportune time to check in with your company’s legal counsel to address these issues and more.  If your company does not have counsel, now may be an opportune time to get that resolved.  Mark the issue on your calendar for follow-up, before the pace of day-to-day business takes you to the next issue without getting a proactive plan set into motion.

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This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck.  Brad’s practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  Brad has worked with a wide array of small and mid-size businesses through all stages of the business life-cycle, from formation, to ongoing operation, to shareholder disputes, work-outs, and sale or dissolution.

Are the “mortgage cops” coming after strategic defaulters?

Recent press, including this article in the Chicago Tribune, indicate that the FHFA’s Office of Inspector General may have mortgage cops on the prowl for strategic defaulters.  However, that’s not the only side of the story.  A commentary article I wrote for the National Association of Realtors Realtor Magazine was published yesterday.  If you would like to know more about the issues and controversy surrounding whether and how strategic defaults are being pursued, please take a moment to review the article linked below:

Commentary: Hunt for Strategic Defaulters Overstated

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This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck.  Brad’s practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals, and is a frequent speaker for real estate continuing education throughout the state of Minnesota.

 

 

Conciliation Court Limit in MN increased to $10,000 Today

In Minnesota, Conciliation Court (the term used for small claims court) has been the forum to resolve legal disputes concerning a smaller amount of disputed damages than would otherwise be pursued in District Court.  Until today, the limit on the amount in controversy that can be pursued in Conciliation Court was capped at $7500.

Due to the Minnesota Legislature changing that cap, an amount in controversy up to $10,000 may now be pursued in Conciliation Court.  The $10,000 limit became effective today (August 1, 2012).  While it is still possible to handle a Conciliation Court matter without utilizing an attorney, having the possibility of obtaining a judgment for $10,000 (or conversely having a judgment against you for $10,000) is likely a sufficiently significant financial proposition that is its prudent to consider hiring an attorney to at least advise you about your options, help you prepare for Conciliation Court and so forth.

Now that a dispute up to $10,000 can be held in Conciliation Court, determining whether a matter is “worth litigating” and whether or not to enter an arbitration agreement in various business or real estate transactions is something to consider anew.  If you are faced with a Conciliation Court action, or are contemplating initiating one, some preliminary information can be found at the Minnesota Judicial Branch website (mncourts.gov).  Separately, you might find the guide available at the Attorney General’s Office website useful.  They have a “User’s Guide to Small Claims Court”, which you can find here.  Once you’ve reviewed that information, your next step should be to contact your attorney.

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This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck.  Brad’s practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals, and is a frequent speaker for real estate continuing education throughout the state of Minnesota.

Minnesota Supreme Court Holds That The “Cause of Loss” Is To Be Determined By the Insurance Appraisal Process

In a decision issued on June 13, the Minnesota Supreme Court analyzed whether the cause of loss, in addition to the amount of the loss, was a determination to be made by the insurance appraisal process.

In Quade v. Secura Insurance, there was a dispute regarding property damage from a windstorm.  The insurance company took the position that some of the damage claimed by the insured was not caused by the windstorm, but rather continual deterioration over time.  The insurance policy required that the appraisal process be initiated prior to a lawsuit being commenced.  The insured did not initiate the appraisal process, but instead brought an action directly in district court.  The insured contended that the appraisal clause didn’t apply because the dispute was about whether the damage was covered by the policy, not the cost of that repair, and that the question was a coverage question inappropriate for an appraisal panel.  The district court disagreed with the insured and held that the appraisal process had to be used.  The court of appeals reversed.  The Supreme Court then took up the case.

The Supreme Court held that the insurance policy’s language concerning the appraisal process’s determination of the amount of loss includes a determination of the cause of the loss.  As a result, where there is a dispute about what the cause of certain damage was, the question is one to be determined by an appraisal panel.  The Court was careful to clarify that the appraisal process can’t construe the policy or decide whether an insurer can pay, but it does determine the amount of loss, which includes determining what the cause of the loss claimed was.  The Court noted the public policy in favor of appraisals.

A copy of the decision can be found here.

This blog entry is written by Chris Renz, a shareholder at Thomsen Nybeck. Chris practices in the litigation area of the firm with primary focus on real estate litigation, employment litigation, insurance law, townhome and condominium law, and criminal law.  Chris and his colleagues at Thomsen Nybeck have extensive experience representing clients in insurance appraisal hearings.  More regarding the firm’s abilities in that area can be found here.

Recent Freddie Mac Bulletin May Stop or Stall Short Sales After Sheriff’s Sale

Last Friday the Minnesota Association of Realtors® (“MNAR”) released a member update identifying that there has been some recent disruption in the short sale process (where lenders/servicers are sometimes refusing to allow a short sale after the sheriff’s sale has taken place).  This is apparently due, in large part, to reaction by lenders/servicers to a recent (March 13th) Freddie Mac bulletin.

This bulletin (Freddie Mac Bulletin 2012-7) identified a revised definition for the term “REO Rollback”.  Additionally, it changed the calculation and fee structure for various workout or modification programs, changed fees and costs for researching/reconstructing servicer records, and made other changes that may impact how servicers approach mortgage modification or workout arrangements.  According to the MNAR update, a few days after the Bulletin was published, mortgage servicers began notifying homeowners who were past the sheriff’s sale that the investor would no longer approve short sales during redemption, and that the homeowner should contact Freddie Mac.

So, for those who were planning to accomplish a short sale during the redemption period, after sheriff’s sale, that option may be much more limited.

Exploring Options – Seek Legal Advice

For those who are exploring options in advance of foreclosure, you should speak with an attorney experienced in real estate transactions and distressed property scenarios.  Scenarios such as foreclosure postponement (a process detailed in Minnesota Statute §580.07) may be well worth exploring.  While it is important to seek the advice of a competent attorney to ensure you are not making a decision that creates more risk/problems than benefit, some homeowners in distress do not believe they can afford to do so.  Such individuals may wish to seek out attorneys who may offer a limited scope review or advising at a contained cost.

Exploring Options – Consult Other Resources

Since many foreclosure and short sale related scenarios have significant financial, credit, or tax consequences, exploring scenarios with your financial advisor, tax, advisor, real estate agent and other professionals is also important.  For those who want to make better use of their time with an attorney or who are looking for additional or independent resources while considering options in connection with mortgage foreclosure or distressed property, you may also wish to explore the Minnesota Home Ownership Center’s website.  The MN Home Ownership Center (HOCMN) such as the following:

• the “Know your Options” summary guide, found here
• an overview of foreclosure postponement by a mortgagee (borrower) and an online tool to help with the process, found here
• a summary of common scams and warning signs for those who prey upon individuals in financial distress, found here.

None of the resources above replace or substitute for the advice of an attorney.  However, they can be helpful for those looking for preliminary information or to supplement the advice or information that individuals may be gathering from other (sometimes far less reliable) resources.  Although it is uncertain when or how the short sale process will adjust to the Freddie Mac bulletin that is the subject of this article, we will continue to monitor this issue and try to release new information as it becomes available.

By searching within the Thomsen & Nybeck Legal Update blog, you can find many articles and lots of information about short sale, foreclosure and other legal updates that address similar issues.

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This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck.  Brad’s practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals, and is a frequent speaker for real estate continuing education throughout the state of Minnesota.

Court Limits Scope of Insurance Appraisal Process

In a published decision issued yesterday, March 26, 2012, the Minnesota Court of Appeals clarified that whether there was total loss under a fire insurance policy was an issue for a court to decide, not an appraisal panel. 

In Auto-Owners Insurance Company v. Second Chance, Investments, LLC, Court File No. A11-1145, a commercial building suffered severe fire damage.  The insured—Second Chance, Investments, LLC submitted a claim to is insurer—Auto-Owners Insurance Company under its policy, which policy provided for payments of the policy limits (more than $2,000,000) in the event of a total loss.  The insurer admitted there was a covered loss, but denied the loss was total and paid the insurer less than the policy limits.  The insurer demanded appraisal, to which the insured objected on the basis that appraisal was inappropriate where a total loss occurred.  The District Court ultimately determined that the question of whether there was a total loss was to be decided by a jury, not by an appraisal panel.  The insurer appealed.

The Court of Appeals agreed with the District Court’s decision that an appraisal panel was not the appropriate venue to determine whether there was a total loss.  The Court cited the policy and Minnesota Statute 65A.01 (found here), theMinnesota standard fire insurance policy, for the proposition that policies inMinnesota are valued policies, meaning the policy can not provide for less than policy limits in the event of a total loss.  As a result, the Court reasoned, the appraisal panel whose function is to determine the amount of loss is inappropriate in the event of a total loss is not the appropriate body to make the determination of whether there is a total loss.  In addition, the Court cited language in the statute and policy that specifically excluded the question of whether there is total loss from the circumstance in which the appraisal process is appropriate.  That question is determined under a reasonable person standard, which is not limited to the cost of repair (the only question for an appraisal panel).

There are many insurers, and law firms dedicated to insurance defense, that have taken a shine to appraisal hearings for determination of as many issues as possible.  Insurers appear to find that appraisal hearings are more efficient than court, in addition to not being restricted to the rules and strictures that are part of the court process.  However, insurers and their attorneys seem to also make those hearings into a much more complicated and trial-like process than initially anticipated.  Be sure that you have appropriate knowledge and representation as an insured before going into such a hearing.  And in the case of total loss, per the recent published decision of the Minnesota Court of Appeals, the appraisal process is not the appropriate forum to make a decision about whether total loss occurred.

The decision can be found here.

This blog entry is written by Chris Renz, a shareholder at Thomsen Nybeck. Chris practices in the litigation area of the firm with primary focus on real estate litigation, employment litigation, insurance law, townhome and condominium law, and criminal law.  Chris and his colleagues at Thomsen Nybeck have extensive experience representing clients in insurance appraisal hearings.  More regarding the firm’s abilities in that area can be found here.

GETTING PAID AT CLOSING WITHOUT A RESALE DISCLOSURE CERTIFICATE

            While MCIOA provides for a perfected and secured lien without the necessity of filing a physical lien statement with the county recorder or registrar of titles, and even provides for the six-month “super lien” following foreclosure of a first mortgage, the statute also provides for priority of a first mortgage over the Association’s lien. So, if a property is sold without a Resale Disclosure Certificate being requested, and a new first mortgage is recorded against the property, the new mortgage will have priority over the Association’s lien whether said lien was for amounts due for several years or, just the MCIOA-super lien amounts.

            Our office is seeing a significant increase in re-sales without Resale Disclosure Certificates being requested from the Association. Several months later a new owner is startled to find out there is an unpaid lien against the property. However, if a new first mortgage has been recorded, and, the first mortgage equals or exceeds the value of the property, the value of that Association lien is significantly diminished, if not worthless as a collection tool.

            To avoid this result, file a physical lien statement with the appropriate county index. I have yet to meet a lender who funds a loan without requiring the release of a filed lien statement against the property (not extinguished through mortgage foreclosure). 

            Thomsen & Nybeck can assist you in this regard and strongly advises spending the money to secure an Association in light of the growing trend to re-sell property without obtaining or providing a Resale Disclosure Certificate, especially re-sales by foreclosing mortgage and/or HUD. 

          Entry byGretchen Schellhas.  Gretchen is a shareholder at Thomsen & Nybeck, P.A. and Chief Executive Officer of the firm.  She practices primarily in the areas of real estate, collections, community association law and family law.

Urine Testing Challenge Denied by Minnesota Supreme Court

In a decision issued by the Minnesota Supreme Court today entitled State of Minnesota v. Herman Tanksley, Jr., the Minnesota Supreme Court denied a defendant’s challenge to evidence in a driving while intoxicated (DWI) case.  The evidentiary challenge of the defense was that urine samples which were not taken after a void was first given are inherently inaccurate and are unreliable because they don’t have a reliable correlation to blood alcohol concentration; this argument is sometimes called the “first void” or “pooling” argument.  The Minnesota Supreme Court held that whether a urine sample reliably correlates to blood alcohol concentration is irrelevant to the State proving a DWI case under Minn. Stat. § 169A.20 subd. 1(5).  When the State is prosecuting a DWI based on urine results, the only two points that have to be proven are: 1) that the defendant drove, operated, or physically controlled a motor vehicle within the State of Minnesota; and 2) that the defendant’s alcohol concentration was .08 or more at the time or within 2 hours of the time that they drove or physically controlled the motor vehicle.  Alcohol concentration, by statutory definition, can be any one of three different measurements, one of which is the number of grams of alcohol per 67 milliliters of urine.  The court held that with this independent basis for proving a crime under the statute, the correlation of that urine result to the blood alcohol concentration is not relevant and therefore a court need not hold a Frye-Mack hearing (a hearing challenging the scientific validity of evidence) when there is a challenge of “first void” urine testing.  A copy of the decision can be found here.

This blog entry is written by Chris Renz, a shareholder at Thomsen Nybeck.Chris practices in the litigation area of the firm with primary focus on real estate litigation, employment litigation, townhome and condominium law, and criminal law, particularly as the prosecutor for the Metropolitan Airports Commission.

Real Estate Fraud is Alive and Well in Minnesota

Real estate fraud is alive and well  — a recent prosecution results in 75-month sentence for Minnesota mortgage broker; more scams continue to get uncovered

Some significant mortgage and real estate fraud schemes have been recently prosecuted in Minnesota.   Michael Hadalla, CEO and co-owner of Enzo Mortgage Group, was sentenced to 75 months in prison and ordered to pay $800,000 in restitution and a fine of $10,000.  (http://minnesota.cbslocal.com/tag/enzo-mortgage-group/)  Prosecutions involving the Enzo Mortgage firm have previously resulted in the conviction of other individuals involved in the scams. ( http://www.hennepinattorney.org/NewsPress/tabid/391/EntryId/56/Three-defendants-sentenced-to-serious-time-for-mortgage-fraud-racketeering.aspx)

Another mortgage company (Mortgage Planners, Inc.), alleged to be involved in a “sophisticated” fraud scheme found itself in the eye of the storm in 2011 when a collaborative investigation / prosecution team involving the Commissioner of Commerce, HUD, and the Hennepin County Attorney’s Office initiated charges of racketeering in an alleged fraud scheme involving more than 60 properties.  (http://minnesota.publicradio.org/display/web/2011/06/22/mortgage-fraud-charges/)  This scheme is alleged to have involved “straw buyers” purchasing properties at foreclosure sale, who never intended to be the owners or occupants of the property.

In a June 2011 press release, the U.S. Department of Justice indicated more than 30 individuals in MN were prosecuted for mortgage fraud or related crimes, and that number had reached more than a dozen by the middle of 2011.  http://www.justice.gov/usao/mn/press/jun047.pdf

The June U.S. Department of Justice 2011 press release details the prosecution and conviction of several notable mortgage fraud schemes that have taken place in Minnesota, including the infamous scandal involving the Cloud 9 Sky Flats.  The carnage left by that scandal continues to unfold, with business owners involved in a mortgage brokerage and title company having ties to the Cloud 9 development entering guilty pleas as recently as last month. (http://www.bizjournals.com/twincities/news/2012/01/19/two-more-guilty-cloud-9-fraud-trooien.html)

In March, the author of this blog entry, Thomsen Nybeck shareholder Brad Boyd, will join representatives of the FBI and the Department of Commerce in presenting a seminar to real estate agents and brokers addressing some of the current fraud issues in today’s real estate marketplace.  It is important for real estate professionals (real estate agents, brokers, mortgage brokers, title companies, attorneys) and consumers alike to recognize that we have not emerged from a fraud-ridden marketplace, fraud continues to occur.

While many people mistakenly believe real estate fraud is part of a bygone era, that’s simply untrue.  FBI statistics report that FBI mortgage fraud pending investigations totaled 3129 in FY 2010, up 12% from FY 2009 and up 90 percent from FY 2008 (source: FBI.gov). Minnesota ranks in the top 3 states for mortgage fraud cases nationally, based on dollar amount (as of Q3 2011 based on a MortgageDaily.com report).

Mortgage fraud hurts consumers and taxpayers by taking money away from banks.  While banks are not always a sympathetic victim, what hurts the banks in turn hurts consumers.  Lending standards go from nearly unregulated to hyper-regulated, making financing more difficult to obtain for legitimate and qualified buyers.  In the end, many of the economic woes of a damaged real estate marketplace and devalued housing market can be directly or indirectly linked to fraud scams and real estate values which were simply a mirage, propped up by illicit transactions.

In a market filled with foreclosure and short sale transactions, fraud hasn’t disappeared, it’s simply found a new format, and we all need to remain alert to the new trends.  Everyone can play a role in being alert to avoiding the misrepresentations, omissions, or false information that form the basis of a mortgage fraud scheme.

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This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck.  Brad’s practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals, and is a frequent speaker for real estate continuing education throughout the state of Minnesota.

http://www.startribune.com/local/north/127963973.html