Saturday, August 18, 2012

Two Year Old Rent Strike Continues As Tenants Step Up Campaign To Draw Media Attention To Mold/Vermin Infested Apartment Buildings In Foreclosure

In Sunset Park, Brooklyn, The Village Voice reports:
  • Sunset Park residents engaged in a protracted rent strike packed into a Brooklyn courtroom this morning to find out the fate of their three apartment buildings.

    The rent strike actually began more than two years ago, when Sara Lopez and other tenants of three buildings, 553, 545, and 557 46th Street began organizing against their landlord, Orazio Petito. Tenants have stepped up their campaign in the past month, and with the help of members of Occupy Sunset Park have begun to draw media attention to their plight.

    Residents say they're furious over the neglect of the buildings, which are infested with mold and vermin, frequently go without heat in the winter and without any electricity in the summer. Department of Buildings records for the three buildings list dozens of violations, many of them severe, and hundreds of thousands of dollars in fines.

    Residents say Petito stores trash behind locked doors in the basement, and a recent CBS New York spot showed a desk fan being used to cool and antiquated and underpowered fuse-box.

    Petito, as head of 553 46 Street Corp., is listed as number 26 on Public Advocate Bill DiBlasio's Worst Landlord Watchlist.

    Petito is already being sued in housing court for code violations in two of the buildings, but this morning he appeared in civil court to begin foreclosure proceedings on the three buildings. The owner of the mortgage on the properties, Seryl LLC, has asked the court to take the property away from Petito and appoint a receiver.

Tenants In 32-Unit Apartment Building In Foreclosure Battle To Hang On While Receiverships Fail; Lender Fiddles, Landlord's Whereabouts: Unknown

In Chicago, Illinois, AustinTalks reports:
  • More than a dozen tenants and community members called on BMO/Harris Bank last week to fix the “dangerous” living conditions in one of its Austin apartment buildings it foreclosed in 2008.

    This is not the first time tenants of the 32-unit building, located at 5159 W. West End Ave., voiced their concerns about bedbugs, roaches, rodents, leaking ceilings and broken windows, among other hazards.

    Since April, tenants living at the property held three press conferences and went to court multiple times but have yet to see any substantial changes. The building’s court-appointed receiver, which acts as its temporary landlord during the foreclosure process, changed twice since April.

    A city-appointed emergency receiver, Community Initiative Inc., also stepped in mid-April to speed up pressing issues in the apartment complex, such as turning on the building’s utilities, replacing broken windows and fixing plumbing and electrical problems, according to the court order on April 10 provided by Chicago’s Law Department.

    A representative with the current receiver, Peak Properties, said in a May court appearance that Peak Properties doesn’t have the money to correct the issues with building, AustinTalks reported.

Unpaid Water Bills, Open Termite/Rat/Leaky Roof-Related Code Violations Leave Tenants Feeling Stranded By Rent Skimming Landlord Facing Foreclosure

In Hallandale Beach, Florida, WTVJ-TV Channel 6 reports:
  • Water still flowed from the faucets of a Hallandale Beach apartment complex on the day the city threatened to shut off its water supply. The complex's residents received a notice last Tuesday from the city that said the building’s owner has not paid for water in 21 months, and therefore owes over $14,000.

    Resident Kenny Johnson said the issue has affected his daily activities. "I can't eat. I can't sleep. I'm not going to cry, but I have cried," he said Monday, the day the city said it would shut off the water.

    Johnson and his dogs plan to stay at the home for now, but with health issues, he said the problem couldn't have come at a worse time. "I really need to be in the hospital, but how can I leave the premises under these circumstances?" he asked. The three-year resident told NBC 6 South Florida he has paid his rent, which includes water, on time every month.

    In addition to the notice, Johnson also received a letter from the property owner’s attorney. It said the complex is in the foreclosure process and is asking residents to pay the water bill debt.

    "Regarding the water and garbage account, tenants are advised to keep their rent for August and combine the rents to make a down payment and get a payment plan from the City of Hallandale Beach," the letter read.

    "Why should we have to be on the hook to pay for that?” Johnson asked.

    Peter Dobbens, a spokesman for the city of Hallandale Beach, said the complex’s property owners have also received multiple code violations stemming from termites, rats and leaky roofs.

    Johnson doesn't know who owned the property before the foreclosure process, but had a clear message for them. "It's just outrageous, so to the owners, how dare you. How dare you let us down," he said.
Source: Water Still Running in Hallandale Beach Complex Burdened by Debt (One resident said he has paid his rent, which includes water, every month for three years).

See also Hallandale Beach To Cut Off Water to Apartment Residents Over Huge Bill (Hallandale Beach spokesman Peter Dobbens said the building owner has not paid for water in 21 months).

Residents In Rapidly-Deteriorating Mobile Home Park In Foreclosure Face Loss Of Homes Over Lot Lease Misunderstanding

In Niagara Falls, New York, WIVB-TV Channel 4 reports:
  • A Niagara Falls mobile home park right next to the outlet mall has been the scene of one Call 4 Action complaint after another.

    Back in August of last year, tenants responded with protests when they got notices saying the park would be sold. Then in June of this year the office was burned by an arsonist. Now, we've learned a demolition crew has been ripping through the park.

    There are now more vacant lots and mobile homes at Sabre Park than those that have someone living in them. Some are empty because the owners were evicted. Other residents just left because of the uncertainty hanging over the park.

    But some tenants are being kicked out. Not because they are behind on the rent, or because their homes are dilapidated, but because they didn't sign a new lease.

    Margaret Peters said, "They never said you have to sign it to stay here. So we did not sign it, and I figured I would still go on a month-to-month basis, just like I have all these years."

    Peters told News 4 she has lived in her mobile home since 1976, when her parents owned the home. Now she uses a wheelchair and her son, Kenneth Mahon, is staying with her. She and her son's unit is so old it can't be moved, and they can't just up and start all over.

    "We have nowhere to go," Mahon said. "I just don't know what to do anymore. It is causing so much grief in the household, and it is just so stressful."

    Peters and her son are among the 70 or so tenants who were offered new one year leases from the park's owner, Sabre Park Associates, LLC. Many didn't take the offer seriously because just last summer, they were told new owners were probably going to kick them out anyway, leading to angry protests. Sabre Park Associates is in foreclosure and among the potential buyers is the owner of Fashion Outlets, next door.

    Now Peters and her son want to sign a lease. "If I would have known I had to sign it, I would have signed it, but I didn't know I had to sign it because I've never signed one since 1976," Peters said.

Score One For State Bar; Probe Into Now-Disbarred Lawyer For Ripping Off Clients Leads To Referral To Michigan AG For Criminal Felony Charges

From the Office of the Michigan Attorney General:
  • Michigan Attorney General Bill Schuette [] announced the Attorney General's Criminal Division has charged a Mount Pleasant lawyer for an alleged scam targeting multiple Michigan residents in the vulnerable position of attempting to declare bankruptcy. The lawyer has since been disbarred and now faces criminal charges.

    "Financial scams can devastate the lives of citizens who work hard to provide for their families," said Schuette. "Scams preying on individuals in fear of financial ruin are especially reprehensible.
    "Our office is committed to protecting the interests and dignity of Michigan citizens battling financial hardship."

    The charges allege that between April 2007 through July 2009 James Roslund, 66, of Mount Pleasant, accepted payment from multiple clients with the understanding that he would represent them as they attempted to file for bankruptcy. Allegedly, instead of representing the interests of his victims, Mr. Roslund simply pocketed the money with no intention of completing the legal work he was hired to do.

    The following charges have been filed by Schuette with the 84th District Court in Wexford County against James Roslund:

    o One count of Conducting a Criminal Enterprise, a felony punishable by up to 20 years in prison and/or a $100,000 fine;

    o One count of Acquiring/Maintaining a Criminal Enterprise, a felony punishable by up to 20 years in prison and/or a $100,000 fine;

    o Three counts of False Pretenses - $1,000-$20,000, a felony punishable by up to 5 years in prison and/or a $10,000 fine.

    The charges come as a result of an investigation by the State Bar of Michigan. When the Bar discovered that Mr. Roslund's alleged conduct was not only unethical, but criminal in nature, they contacted the Attorney General's Office for further investigation and prosecution.

    "A primary function of the State Bar is to protect the public," said Julie Fershtman, President of the State Bar of Michigan. "While the vast majority of lawyers hold their clients' interests paramount and serve them ethically and professionally, unfortunately a few do not.

    Lawyers in Michigan fund a program to provide reimbursement in such cases, and it was this Client Protection Fund program that referred the Roslund case to the Attorney General."(1)

    Roslund surrendered to authorities this morning without incident and is expected to be arraigned on the charges later today in Wexford County's 84th District Court.
For the Michigan AG press release, see Schuette Charges Former Lawyer With Racketeering.

(1) The Client Protection Fund of the State Bar of Michigan was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Michigan-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Texas Church Seeks Summary Judgment Against Attorney For Allegedly Ripping Off $1M+ In 'Rita-Damage' Insurance Proceeds

In Jefferson County, Texas, The Southeast Texas Record reports:
  • First United Pentecostal Church of Beaumont is seeking summary judgment against Beaumont attorney Kip Lamb, who allegedly swindled the church's $1 million Hurricane Rita settlement.

    As previously reported, First United Pentecostal Church (The Anchor of Beaumont) filed a lawsuit Feb. 21 in Jefferson County District Court against Lamb Law Firm, Kip Lamb, Leigh Parker and Lonnie C. Treadway.

    Court records show that on June 1 the church filed a motion for partial summary judgment against Lamb and Leigh, asserting that the evidence shows the defendants took the church's money and did not return it.

    Lamb responded to the motion on July 26, stating that no summary judgment evidence has been presented showing that any written demand for payment has ever been made, court papers say.

    The Commission for Lawyer Discipline, an arm of the State Bar of Texas, filed a petition to suspend the Lamb practice on July 10 in Jefferson County District Court.

    Furthermore, Lamb has been charged with two counts of misapplication of fiduciary property. The criminal case is set for trial in September.

    According to the plaintiff's original petition, the church alleges it was awarded $1.09 million from a settlement with Lloyds Insurance Co. in 2006 for damages caused to its property by Hurricane Rita.

    Following the settlement, Treadway, the church's pastor, ordered that the money be deposited into a trust account held by the Lamb Law Firm, the suit states.

    The church seeks recovery of the settlement money and an accounting from Treadway of all his financial dealings with the church in the past 10 years. It also seeks attorneys' fees and demands a jury trial.(1)

(1) The Clients' Security Fund of the State Bar of Texas was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Texas-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Friday, August 17, 2012

Undeterred By State Bar Suspension, California Attorney Continues Peddling Foreclosure Relief Services

In Modesto, California, The Modesto Bee reports:
  • A Modesto attorney suspended for botching real estate cases continues offering services similar to those that got him in trouble.

    John Villines acknowledged Monday that his advertisements might mislead potential clients into thinking he's still practicing law. He will change wording and ask again that his landlord remove building signs indicating his office is a law firm, he said.

    Without running afoul of discipline imposed by the California Supreme Court, Villines intends to offer help to thousands of property owners in danger of losing their homes, he said.

    "I'm no longer representing anyone in court," said Villines, whose nine-month suspension began June 20 and could end in March if he passes an ethics exam and repays five former clients $46,205.

    Villines believes the suspension does not prevent him from negotiating to halt foreclosures or arranging loan modifications, services that landed him in hot water with prosecutors with the State Bar of California.

    According to court papers, four of five complaining clients lost their homes after Villines made legal blunders. The other obtained a loan modification without his help.

    Twice, Villines waited longer than the law allows to file lawsuits against lenders — in one case, more than a year after he was hired and three months after the property had been sold in foreclosure. In two other cases, he failed to file lawsuits for his clients but kept their money.

    One lawsuit was worthless because Villines "discovered that he had not named the proper defendants," a document says, and he dropped two other lawsuits without telling clients.

    "The suits had very little value, if any, for the clients," reads a stipulation that Villines signed in November, admitting wrongdoing as alleged. He kept fees and gave no accounting as required by California attorney Rules of Professional Conduct, the document says.

    Four years' probation

    In what amounts to a plea bargain, Villines agreed to two years' suspension with all but nine months stayed, or forgiven, if he repays the money and complies with other requirements. He will be on probation for four years, the court order says.

Recent Court Ruling Favors TX Land Owners In Effort To Stop Pipeline Firms' Forced Easements By Invoking Purported Condemnation/Eminent Domain Rights

In Austin, Texas, The Associated Press reports:
  • Pipeline operators and landowners called on Texas lawmakers [] to clarify eminent domain laws following a recent court decision that has thrown that authority into question.

    Representatives for pipeline companies complained that the Texas Supreme Court decision to give landowners the power to challenge a company's right to condemn property to make way for a pipeline has injected uncertainty into the industry. Before the court ruling, the company only had to check a box on a permit application to the Texas Railroad Commission to prove it should have the authority to force people to sell their land.

    "To go to a policy change that would make this a judicial review (instead of an administrative one) ... could severely impede the development of pipelines in this state," said Greg Schnacke, a representative for Plano-based Denbury Associates, which lost the Supreme Court case.

    Julia Trigg Crawford, a landowner and farmer in Lamar County, said she was sued by TransCanada Corp. when she refused to turn over part of her land for a pipeline. She complained that no state agency is thoroughly vetting whether pipelines actually qualify under Texas law for eminent domain authority as a common carrier.

    A common carrier is a pipeline that transports substances to or for the public and are for hire by the public. The pipeline must not operate solely for the company that owns it to have eminent domain powers.

    "The process lacks real oversight by any empowered and engaged state agency," Crawford said. "Why is it my responsibility as a Texas landowner to make a foreign corporation prove critical elements that should be step one in the state permitting process?"

    Lindale Fowler, general counsel of the Texas Railroad Commission, said the agency processes 4,400 pipeline permits a year and a little more than 200 are for new pipelines. Applicants check a box on the application form promising to be a common carrier, but the commission does not attempt to verify the claim, he said.
  • Clayton Henry, representing the Texas and Southwestern Cattle Raisers Association, told lawmakers his members want a process where they can argue against a pipeline company using eminent domain authority.

    "To simply check a box on a one page form, submit a pipeline route, and post a $25,000 bond to receive condemnation authority appears to be a very low bar," he said.

    Pipeline operators said they would like the Legislature to give the Railroad Commission control of certifying a pipeline is in the public interest and for public use, rather than force companies to fight legal challenges in perhaps dozens of local courts if the pipeline crosses multiple counties. "The issue is whether we do it once, or will we do it 100 times," said James Mann of the Texas Pipeline Association.

Go here for the State of Texas Landowner’s Bill of Rights, which applies to any attempt by the government or a private entity to take your Texas property through eminent domain (go here for Spanish version).

Go here for Pipeline Eminent Domain and Condemnation Frequently Asked Questions.

Texas Land Owner Challenges Energy Firm's Purported Common Carrier Status With Right Of Eminent Domain, Condemnation In Effort To Prevent Forced Sale

In Jefferson County, Texas, The Southeast Texas Record reports:
  • Golden Triangle Properties is asking the courts to declare that Williams Field Services-Gulf Coast Co. does not have eminent domain powers in a proposed pipeline extension.

    According to the lawsuit filed July 23 in Jefferson County District Court, GTP is the owner of 1,116.39 acres of land in Jefferson County.

    WFS contends it is a common carrier with the right of eminent domain and condemnation with respect to the proposed extension of the BASF 840 pipeline.

    Williams Field Services-Gulf Coast Company LP is a natural gas distribution company located in Tulsa, Okla., and operates as a subsidiary of Williams Partners L.P.

    According to the company website, Williams is an energy infrastructure company focused on connecting North America's hydrocarbon resource plays to markets for natural gas, natural gas liquids and olefins. Williams' operations span from the deepwater Gulf of Mexico to the Canadian oil sands.

    "Plaintiff contends defendant does not have these rights and would show that defendant has produced no evidence establishing even a colorable claim to these rights," the suit states. "In fact, public records show that defendant is not a common carrier with respect to the proposed extension."

    GTP is seeking a declaratory judgment from the court that WFS has not established its status as a common carrier and thus does not have the power of eminent domain. The company is also seeking to recover court costs and attorney's fees.
Source: Golden Triangle Properties questions company's eminent domain powers.

In a related story, see The Associated Press: Pipelines unhappy with Texas eminent domain ruling.

Go here for the State of Texas Landowner’s Bill of Rights, which applies to any attempt by the government or a private entity to take your Texas property through eminent domain (go here for Spanish version).

Go here for Pipeline Eminent Domain and Condemnation Frequently Asked Questions.

Thursday, August 16, 2012

Co-Owners' Inability To Reach Mutually Acceptable Purchase/Buyout Agreement Leads To Partition Suit

In Jefferson County, Texas, The Southeast Texas Record reports:
  • Seeking to properly divide up a tract of land worth around $4 million, Susan McCurry has filed a petition for partition against Texas Mountain Ranch and Mark and Carolyn Fertitta. The petition was filed July 23 in Jefferson County District Court.

    According to the petition, McCurry and the Fertittas are one-third, co-owners of undivided interest in certain real estate in Bandera and Medina Counties. The other third interest belongs to Elizabeth Wadill. The land is estimated to be worth more than $4 million.

    "Defendants ... have expressed an interest in obtaining a one-half divided possessory interest in the tract," the suit states. "Plaintiff has attempted to negotiate an equitable division of the property. However, defendants ... have been unreasonable in proposing a division of the property, thus, necessitating this lawsuit."

    The plaintiff seeks the court to enter a decree as follows:

    Determining the share of each of the joint owners of the property; Determining that the property is susceptible to partition and directing partition; Appoint commissioners to make such partition; and Awarding of court costs and attorney's fees.

Series Of Emails Between Buyer's, Seller's Attorneys Creates Binding Real Estate Contract?

In Boston, Massachusetts, the Boston Business Journal reports:
  • In a case that could chill electronic correspondence among parties of a real estate transaction, the Massachusetts Superior Court ruled that a series of emails between the buyer’s and seller’s attorneys created a binding agreement.

    Plaintiffs Ian Feldberg and Michael Rodgers alleged that, through emails, they entered into a binding agreement to purchase two lots in Sudbury for $475,000 from Harold Coxall. In court documents, Coxall said the emails did not satisfy the state’s fraud statute, which requires contracts for the sale of real estate be, “in writing and signed by the party to be charged.”

    Coxall, therefore, moved to dismiss the plaintiff’s complaint as frivolous. But Judge Douglas Wilkins ruled that electronic mail may satisfy the statute of frauds and in favor of the plaintiffs.

    Still, whether the parties’ email exchange satisfied the statute of frauds in this case is not know in this case since the parties have settled their dispute and dismissed the case.

Title Insurer's Duty To Indemnify Foreclosing Bank's Loss Claim, Duty To Defend Against Borrower's Affirmative Defense Addressed In Minnesota Ruling

From a newsletter from the law firm Traub Lieberman Straus & Shrewsberry LLP:
  • In its recent decision in Associated Bank, N.A. v. Stewart Title Guaranty Co., 2012 U.S. Dist. LEXIS 104528 (D. Minn. July 27, 2012), the United States District Court for the District of Minnesota had occasion to consider when a loss is valued for the purpose of coverage under a title insurance policy.
  • With respect to the indemnity portion [of the litigation], Associated Bank argued that its loss should be measured at the time the loan was initiated, not at the time the foreclosure action concluded.

    Stewart Title, on the other hand, contended that Associated Bank did not recognize a loss until the foreclosure action resolved, at which time it was determined with finality that the mortgage would not be repaid. By then, the property had declined in value from $450,000 to $126,000. Stewart Title argued, therefore, that “the loss sustained by Associated Bank on its loan was not due to the invalidity of the Mortgage, but rather due to a decline in the value of the Property securing the loan,” and as such, was uninsurable.

    While the court could find no Minnesota case law directly on point, it noted the majority view in other jurisdictions that a mortgagee’s loss cannot be measured until the note has not been repaid and the security for the mortgage is shown to be inadequate. The court found this rule to be consistent with the purpose of title insurance, explaining:

    A title insurance policy "does not guarantee either that the mortgaged premises are worth the amount of the mortgage, or that the mortgage debt will be repaid." … Rather, the "insurable value of a mortgage on real estate is the fair market value of the realty which secures the mortgage, and is not controlled by the original purchase-price of the mortgage."

    The court observed that had the borrower not challenged the validity of the mortgage, and Associated Bank simply allowed to proceed with the foreclosure, it likely only would have been able to sell the property for $126,000, which was the market value of the property at the time.

    Having recovered $175,000 as a result of the settlement, the court agreed that Associated Bank did not sustain a loss for which Stewart Title was obligated to indemnify.

    The court nevertheless concluded that Associated Bank was entitled to a defense from Stewart Title [Stewart Title stiffed its insured by never responding to Associated Bank's tender of this matter for a title defense].

    Notwithstanding the fact that the borrower questioned the validity of the title in an affirmative defense, rather than a counterclaim or other form of direct claim, the affirmative defense asserted a claim adverse to Associated Bank’s title, thus triggering Stewart Title’s defense obligations under the policy.(1)

(1) In connection with Stewart Title's stiffing of its insured by failing to step up when Associated Bank tendered the matter to it for a defense, the court made these comments in concluding that Stewart had a duty to defend:

  • The parties also dispute whether Stewart Title had a duty to defend against the Arnesons' claim in the Foreclosure Action that the Mortgage was invalid and unenforceable.

    Associated Bank contends the Arnesons' Answer raised a claim that was adverse to the Mortgage, and therefore Stewart Title was obligated to defend against the claim. Stewart Title argues the duty to defend was not triggered because the Policy does not require Stewart Title to litigate a foreclosure action voluntarily initiated by an insured, and because the Arnesons' claim was excluded from coverage as a defect created by Associated Bank.

    The duty to defend is broader than the duty to indemnify. Enron Corp. v. Lawyers Title Ins. Co., 940 F.2d 307, 310 (8th Cir. 1991); Wooddale Builders, Inc. v. Maryland Cas. Co., 722 N.W.2d 283, 302 (Minn. 2006); Rechtzigel Trust v. Fidelity Nat'l Ins. Co. of N.Y., 748 N.W.2d 312, 320 (Minn. Ct. App. 2008) (citing Franklin, 574 N.W.2d at 406).

    Whether a duty to defend exists is determined by comparing the allegations in the underlying claim to the relevant policy language. Garvis v. Employers Mut. Cas. Co., 497 N.W.2d 254, 258 (Minn. 1993). If the pleadings in the underlying action raise a claim arguably within the scope of coverage, the duty to defend applies. Rechtzigel, 748 N.W.2d at 320 (citing Ross v. Briggs & Morgan, 540 N.W.2d 843, 847 (Minn. 1995)). See also Enron, 940 F.2d at 310 (stating an insured "must defend a claim the policy does not cover if the allegations of the complaint state on their face a claim against the insured to which the policy potentially applies") (emphasis in original) (internal quotation marks omitted).

    The duty to defend is determined at the time the insured tenders defense of the claim to the insurer. Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161, 166 (Minn. 1986). At that time, if the insurer knows of facts indicating there may be a claim, either from what is directly stated or inferred in the underlying complaint, or if the insured tells the insurer of such facts, "the insurer must either accept tender of the defense or further investigate the potential claim." Garvis, 497 N.W.2d at 258.

    The insurer bears the burden of proving that the claim clearly falls outside the coverage afforded by the policy. Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn. 1979). "Any ambiguity is resolved in favor of the insured. . . . If the claim is not clearly outside coverage, the insurer has a duty to defend" Id.

    Stewart Title first argues the Policy does not obligate it to prosecute a foreclosure action that is voluntarily initiated by an insured, and thus the duty to defend was not triggered here. The Policy's duty-to-defend provision states that Stewart Title "shall provide for the defense of an insured in litigation in which any third party asserts a claim adverse to the title or interest as insured. . . ." Policy at AB002701 ¶ 4(a). The Arnesons' Answer challenged the validity of the Mortgage by alleging it was obtained by fraud and misrepresentation. Answer ¶ 8.

    Therefore, the Answer raised a claim adverse to Associated Bank's insured interest. The duty-to-defend provision does not contain an exception for adverse claims raised in proceedings initiated by insureds. Thus, the fact that Associated Bank voluntarily commenced the Foreclosure Action does not excuse Stewart Title from the obligation to defend against the adverse claim raised by the Arnesons' Answer. Cf. Enron, 940 F.2d at 309-11 (finding an insurer's duty to defend triggered by a claim raised in an answer to the insured's affirmatively filed action).

    Stewart Title also contends an affirmative defense does not give rise to a duty to defend. However, the Policy's duty-to-defend provision does not limit the types of pleadings that will trigger the duty; instead, the provision states generally that Stewart Title shall "provide for the defense of an insured in litigation in which any third party asserts a claim adverse to the title or interest as insured." Policy at AB002701 ¶ 4(a) (emphasis added); see also Joyce D. Palomar, 1 Title Insurance Law § 11:2 at 896-97 (2011-2012 ed.) ("Subsequent amendments to a complaint, answers, counterclaims or cross-claims all are included among the pleadings that invoke the insurer's duty to defend.").

Wednesday, August 15, 2012

On Verge Of Foreclosure, Arizona Man Coughs Up $21K+ To Reinstate Loan & Halt Sale; Bank Pockets Cash, Auctions Off Home Anyway

In Maricopa, Arizona, KPHO-TV Channel 5 reports:
  • An Arizona man is accusing his bank of stealing his house and he wants it back. The homeowner was on the verge of foreclosure when he paid off all the money he owed, but the bank sold the house anyway.

    David Reed told CBS5 that he thought he had nothing to worry about when his home and 5-acre property in Maricopa was scheduled to be sold at auction, because he fell behind on his mortgage payments. "I called their payment line and asked them what is the total amount I owed to stop my house from going into foreclosure," said Reed. "They told me $21,573."

    The 52-year old, who's spent the past year battling health problems, sent the full amount straight to Cenlar Bank, which acknowledged receiving the money March 5. Reed was convinced his home was safe, but it wasn't.

    "I came home one day and had a notice on my door that somebody else owned my property and I either had to get out immediately or rent it back from them."

    Cenlar Bank had gone ahead with the trustee sale, March 23, even though Reed was now up to date on his mortgage and had paid all his interest and late fees. "I believe they just figured it was an easy way to make another $20,000," said Reed. "Let me make my payment, then turn around and auction it off and make more money."

    Reed hired a lawyer and filed a lawsuit after Cenlar failed to reverse the trustee sale. [...] Reed said that he was only able to pay off what he owed because of money he inherited recently following a death in the family.

    CBS5 made several calls and sent a number of emails to the attorney for Cenlar Bank to get their side of the story, but have not heard back.

Bankster Handiwork Underlying Foreclosure Fraud Disaster Emerges Again In Connection With Consumer Debt Collection Practices

The New York Times reports:
  • The same problems that plagued the mortgage-foreclosure process -- and prompted a multibillion-dollar settlement with big banks -- are emerging in the debt-collection practices of credit card companies.

    As they work through a glut of bad loans, companies such as American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.

    Lenders, the judges said, are churning out lawsuits without regard for accuracy and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.

Fraudulent Real Estate Tax Exemption Claims For Homesteaded Property Costs One North Florida County Of Up To $1M Per Year

In Escambia County, Florida, reports:
  • Escambia County is being robbed of up to $1 million annually by property owners committing homestead exemption fraud, Property Appraiser Chris Jones said [].

    Unfortunately some property owners claim exemptions to which they are not entitled,” Jones said. “These may include rental or vacation properties, second homes or other properties in which the owner does not reside.”

    There are currently about 650 cases of homestead fraud per year in Escambia County, Jones said. Homestead fraud occurs when a person who is not a resident of Escambia County files for and is granted a homestead exemption; when that person is not in good faith residing on the property which has been granted the exemption; or is claiming a resident benefit in some other location while at the same time claiming an exemption on the property on which they filed. Homestead fraud is punishable by up to a year in jail, a fine of $5,000, or both.

Tuesday, August 14, 2012

C. Florida Woman Named In F'closure Of Home She Sold 15+ Years Ago; Blames Problem On Title Company Screw-Up, Bank Attorney's Failure To Amend Filing

In Clearwater, Florida, The Tampa Tribune reports:
  • Deloris Bell sold her house in 1995, so she was shocked when in March a bank filed for foreclosure on the house and named her in the lawsuit.

    She said she called the attorney's office handing the foreclosure and was told not to worry. "I called and the guy said, 'It's just an error, just file for a new deed, and we'll correct it and take your name out of the paperwork,'" Bell said.

    Bell called her title company and filed for the new deed right away. But two months later, more court filings showed up, and her name was still listed as a defendant. The attorney's office again said it was an oversight.

    "He said, 'Oh, not a problem, I see it right here, it's on the computer, it's been corrected. We'll take your name off,'" Bell said. That was in June, but her name was still on the lawsuit.

    Lawsuits like Bell's, real estate experts say, illustrate the complexity of foreclosure and how innocent people can get pulled into someone else's financial trouble. When Bell sold her home, the title company made an error on the deed. She should have been dropped from the suit as soon as the deed was filed.
  • [A]fter inquires from The Tampa Tribune and News Channel 8, Bell said she got good news. "The attorney called and said they're dropping me from the suit," she said. "I'm so relieved."

HOA Fight Against Dues-Stiffing, Deadbeat Banksters Continues As Lenders Increasingly Find Themselves On Defensive In Foreclosure Actions

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • South Florida homeowner associations are foreclosing on some of the nation's largest banks, accusing the lenders of failing to pay thousands of dollars in maintenance fees on repossessed properties.

    The foreclosure filings are a growing trend as associations become more aggressive in going after delinquent fees that have crippled HOA budgets during the housing bust.

    Banks owe a portion of the past-due maintenance fees and the full amount from the date they take title to the property, attorneys said. If the lenders fall behind, they're subject to foreclosure just as an individual owner would be.

    In one Broward County case, Deutsche Bank didn't pay maintenance fees for nearly three years on a townhome it repossessed in September 2009 at the Southbridge development in Pembroke Pines, said Ben Solomon, a lawyer for the association.

    The Southbridge HOA filed for foreclosure against Deutsche Bank last year. The bank finally paid $25,553 in June — and only then because it had to convey clear title to another buyer, Solomon said.

    "They expect payment from their customers, but once they become our customers, they don't want to pay us," said Marc Lebron, treasurer of the Southbridge HOA. "It's ironic, isn't it?"

    Solomon is representing dozens of other South Florida homeowner associations that have filed foreclosures against Deutsche Bank, JPMorgan Chase, Citibank and others. He expects more than 100 similar cases to be filed by the end of the year.
  • Solomon said lenders often remain delinquent while they market the home for sale to a third party. Once those deals are completed, the banks pay what's owed out of the proceeds of the sale rather than fulfill the legal requirement of paying each month. "Every association needs to pursue delinquent owners, banks or otherwise," he said.

    In another case, he said, JPMorgan Chase hasn't paid the Keys Gate Condominium Association in Miami-Dade County for more than two years after it foreclosed on a condominium there.

    Keys Gate filed for foreclosure against the bank, saying it owes nearly $20,000 in fees. JPMorgan failed to respond, and the association entered a default against the bank and is awaiting a judge's ruling, Solomon said.

Woman's Effort To Stymie Foreclosure On Parents' Home By Filing Phony Documents Gets Her A Year In Jail, 3 Years Probation

In Stanislaus County, California, The Modesto Bee reports:
  • A judge has sentenced a woman to a year in Stanislaus County Jail for filing false documents in an attempt to delay foreclosure on her parents' home. On June 5, Monica Whitten was convicted of two felony counts of offering to record or recording false documents, the district attorney's office reported [].
  • Prosecutors said Whitten's case is an example of a common real estate fraud scheme in which defendants pay money for forms they believe will slow down or stop a foreclosure sale and file them at the county clerk-recorder's office. [...] Along with the jail sentence, Stanislaus County Superior Court Judge Nancy Ashley sentenced Whitten to three years of probation and ordered her to pay restitution.

Monday, August 13, 2012

Buffalo Bankruptcy Attorney Raises Questions About L.I. Foreclosure Mill's Billing Practices; Suspects Systematic Squeezing Of Homeowners Across NYS

In Buffalo, New York, The Buffalo News reports:
  • A Buffalo bankruptcy attorney's attempt to investigate and call into question the fees charged to debtors by a prominent downstate foreclosure law firm has triggered a bitter defamation lawsuit.

    Attorney Peter Grubea, who runs the largest bankruptcy practice in Western New York by volume of cases, has raised questions about what he calls high and unnecessary fees charged by Rosicki, Rosicki & Associates P.C., of Long Island, one of the biggest foreclosure firms in the state.

    He accuses them of racketeering, a charge often used for organized crime and corruption. In a blog posting on his website in late March, Grubea wrote that he is "currently investigating the billing practices" of Rosicki, saying that "we believe that the charges imposed ... are unfairly high."

    He also wrote that he is already litigating the issue in a bankruptcy proceeding and expects additional litigation in state court, and asks for people to contact him if they've dealt with Rosicki in a foreclosure case. "You may have a claim for monetary damages," he wrote.

    In response, Rosicki sued Grubea for defamation and libel, accusing him of "publicly and falsely defaming plaintiffs to the whole world" by making "defamatory statements that are directed squarely at destroying both the business and reputation of plaintiffs."

    The battle between Grubea and the downstate firm illustrates what is already happening in the wake of the dissolution earlier this year of Steven J. Baum's firm, which had been the dominant foreclosure law firm in the state for years.
  • In a legal memorandum, filed as part of the bankruptcy petition for a Lancaster woman to justify reducing her mortgage debt, Grubea accused the Rosicki firm and its affiliated title and legal service firms of being "engaged in the systematic overbilling of New York homeowners for all of the foreclosure-related services they provide."
  • As a result, Grubea alleged, Rosicki actually earns more money on a case through non-lawyer paperwork - handled by the affiliated companies that are owned and run by the law firm's husband-and-wife partners - than it does from the work performed by its lawyers.
For more, see Foreclosure accusations prompt suit (Local attorney questions downstate firm's fees).

Scammer Cut Loose After 3+ Yrs Time Served For Running Rent To Own, Straw Buyer Ripoff That Left Wanna-Be Homeowners Booted, Investors Holding The Bag

In Lee County, Florida, The News Press reports:
  • A man accused of being a major part of an alleged $3 million mortgage fraud scheme pleaded no contest [] in a Lee County court to five counts of obtaining mortgages by fraud, said a state attorney’s office spokeswoman. A judge adjudicated him guilty.

    After his 2007 arrest, Erich Heckler, now 41, faced 62 counts including racketeering, grand theft, obtaining a mortgage by false representation and scheme to defraud a financial institution. The scheme reportedly went back to around 2003, said reports at the time of his arrest.

    Heckler received credit for time served after spending 1,200 days in jail, said Samantha Syoen, a state attorney’s office spokeswoman. He must also pay the victims more than $56,000 and received 100 months of probation, she said. “Our main focus for doing a plea was to get restitution for the victims,” Syoen said. “It’s been a long time coming.”

    Heckler was vice president of Fort Myers-based Alternative Home Finance, which would find renters with bad credit ratings and allow them to pick out a house to rent and eventually own, according to court documents.

    The company would then allegedly find people with good credit and take out multiple loan applications in the name of one borrower while falsifying applications. After collecting money from a bank, they would allow the house to go into foreclosure, leaving renters without a home, borrowers with bad credit and banks to foot the bill.

'County Refused To Give Me Same Break It Gave Others!' Says Tax-Foreclosed Homeowner In Effort To Reclaim Home With 'Equal Protection' Lawsuit

In Livingston County, New York, The Livingston County News reports:
  • A Livonia man is filing suit against Livingston County to reclaim ownership of his property from foreclosure.

    The lawsuit highlights a concession made for a home in Mount Morris — and claims that the same concession should have been be made for anyone whose property was seized for foreclosure auctions in 2011 and 2012.

    Robert E. Chabot’s home at 5147 Blank Road was among over 40 parcels destined for sale in the county’s 2011 foreclosure auction.
  • Chabot’s suit challenges the county’s right to have disallowed his post-June 15 payment of back taxes and penalties. The case centers on the fact that [one] property [...] in Mount Morris and [another] property [...] in Lima have remained in possession of the original owners, even though those two owners likewise failed to pay their taxes before the deadline.

    These exceptions to what the county claims is a blanket policy violates constitutional protections, said [Chabot's attorney Derrick A.] Spatorico. “Our argument is that the county has two sets of rules. One set of rules is for most everybody, but there is another set of rules for those who protest.”

    Such differential treatment is a violation of both the New York and United States constitutions which insist upon equal protection of all citizens. “It’s a fairness argument. We’re arguing that the law needs to be clearly defined and equally applied — and it’s not,” Spatorico said.
  • As a solution to the unfairness, Spatorico would hope to see something along the lines of an amnesty program — tied to a specific time frame where Livingston County would accept back tax payment beyond the redemption deadline.

    Until the county rectifies this situation and starts to apply the law equally to everyone, then I think that they have an established practice of allowing exceptions to the rule,” Spatorico said.

    Liability implications

    If Chabot wins his case, will a similar challenge be opened to every property owner who has experienced loss of his or her property to foreclosure in Livingston County since 2011?

    The county opened the door for this when they failed to apply the law equally to everyone in the county,” Spatorico commented. “They cannot selectively and arbitrarily apply the law.”

Sunday, August 12, 2012

Lawsuit: 'I Bought A Property Pursuant To A Binding Contract For Deed & Now The Seller Is Trying To Unload The Premises Out From Under Me!'

In Galveston, Texas, The Southeast Texas Record reports:
  • Houston resident Archie Patterson has filed suit against Andrew Murphy of Poland, Ind., in response to a dispute over a deed to real property in Galveston County, recent court documents say.

    A lawsuit filed July 25 in Galveston County District Court says Murphy's supposed attempt to sell the property to third parties is a breach of contract against Patterson, additionally stating the defendant trespassed to try title.

    The suit shows both parties entered into a written contract for deed which called for Murphy to sell the subject property to Patterson in 2008.

    According to the original petition, the complainant "has complied with the terms and conditions of the contract, has not received any notice of default concerning the same and is entitled to exclusive possession of the property and specific performance under the subject contract for deed."

    Patterson, however, recently learned that the respondent had listed the place for sale despite the covenant between them.

    "The defendant's listing and offering of the property for sale to third parties expresses the defendant's unequivocal intent to breach its obligations under the contract, including executing and delivering to the plaintiff's warranty deed conveying good and marketable title to the property, free and clear of any liens and encumbrances and subject only to restrictive covenants and easement of record," the suit says.

    Consequently, Patterson seeks a declaratory judgment, injunctive relief and unspecified monetary damages.

Michigan AG Scores Another Criminal Conviction In Probes Targeting Loan Modification Ripoffs; Suspect Cops Plea To Racketeering, False Pretenses

In Holly, Michigan, M Live reports:
  • A Holly woman pleaded guilty for her role in a foreclosure rescue scam that bilked victims out of nearly a quarter-million dollars.

    Tashia L. Winstanley, who did business as TLW Mortgage Solutions, pleaded guilty to one count of conducting criminal enterprises (racketeering), one count of false pretenses more than $20,000 and one count of false pretenses from $1,000 to $20,000, according to court records. Attorney General Bill Schuette announced the charges against Winstanley,who was already incarcerated at the Huron Women's Correctional Facility, in May.

    An attorney general's office investigation led to the charges, showing that from September 2009 until January 2012, Winstanley operated TLW as a mortgage modification business and collected a fee from clients without making any effort to secure the modifications. Schuette's office said victims came from eight counties, including Genesee County.

    Winstanley is serving time for previous convictions for larceny by conversion. She is scheduled to be sentenced Sept. 14. People who believe they are victims of Winstanley or TLW can file a complaint at

Virginia AG Reaches Civil Suit Settlement With Alleged Loan Modification Racket Operator

In Richmond, Virginia, The Virginian Pilot reports:
  • The state has reached a settlement with a Chesapeake-based mortgage loan-modification company that had been accused of charging illegal advance fees to clients seeking foreclosure rescue services, Virginia Attorney General Ken Cuccinelli said [].
  • According to the attorney general's office, the settlement with R.L. Brad Street and [company owner Rhonda L.] Wyland includes a permanent injunction prohibiting them from collecting advance fees as well as a judgment of $32,900 against them to be paid as restitution to customers. Cuccinelli said the settlement also calls for the company and Wyland to pay a combined $25,000 in civil penalties and reimburse the state $5,000 in legal fees.